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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
August 18, 1997
(Date of earliest event reported)
The DII Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-21374 84-1224426
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6273 Monarch Park Place
Suite 200
Niwot, Colorado 80503
(Address and zip code of principal executive offices)
(303) 652-2221
Registrant's telephone number, including area code
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 18, 1997, Multilayer Tek L.P. ("Multek"), a wholly-owned
subsidiary of The DII Group, Inc. (the "Company"), completed the acquisition of
IBM's high volume printed circuit board fabrication facility located in Austin,
Texas pursuant to a Purchase Agreement dated as of August 5, 1997. IBM operated
this high volume facility for internal production since 1981, and more recently
for the merchant market. The acquired assets include approximately 70 acres and
the buildings thereon which comprise approximately 700,000 square feet of
printed circuit board manufacturing and related facilities, production equipment
and inventory. The real estate and buildings are occupied pursuant to a
ninety-nine year lease with the rent included in the purchase price, pending the
subdivision of the Multek site from the IBM complex as well as other separation
matters, at which time fee title will be transferred to Multek. The purchase
price for the assets was approximately $46 million, subject to certain
post-closing adjustments, and was based upon arms'-length negotiation between
IBM and the Company. In connection with the acquisition, IBM and Multek entered
into a three-year Supply Agreement, pursuant to which Multek will supply IBM
with printed circuit boards. Multek intends to utilize the facility's production
capacity to expand its customer base beyond the requirements of IBM. The
acquisition was financed with loan proceeds under the Company's credit facility
with Norwest Bank Colorado, N.A., The Chase Manhattan Bank, Harris Trust and
Savings Bank and NBD Bank.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT NUMBER DESCRIPTION
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*2.1 Purchase Agreement, dated as of August 5, 1997, by and among
International Business Machines Corporation, a New York
corporation ("Seller"), Multilayer Tek, L.P., a Texas limited
partnership ("Buyer") and The DII Group, Inc., a Delaware
corporation ("Guarantor")
2.2 Exhibit A to Purchase Agreement -- Assignment and Assumption
Agreement
*2.3 Exhibit C to Purchase Agreement -- Lease
*2.4 Exhibit E to Purchase Agreement -- Project Operations
Agreement
+2.5 Exhibit F to Purchase Agreement -- Supply Agreement
2.6 Exhibit G to Purchase Agreement -- Bill of Sale
2.7 Exhibit H to Purchase Agreement -- Special Warranty Deed
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* Schedules are not included and will be furnished supplementally to the
Commission upon request.
+ Confidential treatment has been requested as to portions of this exhibit.
2
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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.
The DII Group, Inc.
Date: August 29, 1997 By: /s/ Thomas J. Smach
---------------------------------
Name: Thomas J. Smach
Title: Chief Financial Officer
3
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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*2.1 Purchase Agreement, dated as of August 5, 1997, by and among
International Business Machines Corporation, a New York
corporation ("Seller"), Multilayer Tek, L.P., a Texas limited
partnership ("Buyer") and The DII Group, Inc., a Delaware
corporation ("Guarantor")
2.2 Exhibit A to Purchase Agreement -- Assignment and Assumption
Agreement
*2.3 Exhibit C to Purchase Agreement -- Lease
*2.4 Exhibit E to Purchase Agreement -- Project Operations
Agreement
+2.5 Exhibit F to Purchase Agreement -- Supply Agreement
2.6 Exhibit G to Purchase Agreement -- Bill of Sale
2.7 Exhibit H to Purchase Agreement -- Special Warranty Deed
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* Schedules are not included and will be furnished supplementally to the
Commission upon request.
+ Confidential treatment has been requested as to portions of this exhibit.
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EXHIBIT 2.1
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS. 1
SECTION 1.1. CERTAIN DEFINITIONS. 1
ARTICLE II. PURCHASE AND SALE OF ASSETS. 9
SECTION 2.1. TRANSFERRED ASSETS. 9
SECTION 2.2. EXCLUDED ASSETS. 9
SECTION 2.3. CONSIDERATION. 9
SECTION 2.4. ASSUMED LIABILITIES. 9
Section 2.5 Interim Operations for Buyer's Account 10
ARTICLE III. CLOSING. 10
SECTION 3.1. CLOSING DATE. 10
SECTION 3.2. DELIVERY BY BUYER. 10
SECTION 3.3. DELIVERY BY SELLER. 11
ARTICLE IV. TAX MATTERS. 12
SECTION 4.1. ALLOCATION OF PURCHASE PRICE. 12
SECTION 4.2. FILING OF RETURNS AND PAYMENT OF TAXES. 13
SECTION 4.3. REFUNDS AND CREDITS. 13
SECTION 4.4. TRANSFER TAXES. 14
ARTICLE V. OTHER MATTERS. 14
SECTION 5.1. CONSENTS AND SUBCONTRACTED WORK. 14
SECTION 5.2. EMPLOYEES AND EMPLOYEE BENEFITS. 16
SECTION 5.3. FURTHER ACTION. 19
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SECTION 5.4. DUE DILIGENCE. 19
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BUYER. 19
SECTION 6.1. INCORPORATION. 19
SECTION 6.2. AUTHORITY. 19
SECTION 6.3. NO CONFLICT. 20
SECTION 6.4. GOVERNMENTAL CONSENTS - BUYER. 20
SECTION 6.5. NO BROKER 20
SECTION 6.6. LICENSES AND PERMITS. 20
SECTION 6.7. ENVIRONMENTAL MATTERS. 21
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF 21
SELLER.
SECTION 7.1. INCORPORATION. 21
SECTION 7.2. AUTHORITY. 21
SECTION 7.3. NO CONFLICT. 21
SECTION 7.4. GOVERNMENTAL CONSENTS - SELLER. 22
SECTION 7.5. NO BROKER. 22
SECTION 7.6. TITLE TO PERSONAL PROPERTY. 22
SECTION 7.7. ACTIONS, SUITS, PROCEEDINGS. 22
SECTION 7.8. CONTRACTS. 22
SECTION 7.9. LICENSES AND PERMITS. 23
SECTION 7.10. ENVIRONMENTAL REPRESENTATIONS. 23
SECTION 7.11. FINANCIAL STATEMENTS AND REPORTS. 25
SECTION 7.12. LABOR AND EMPLOYMENT MATTERS. 25
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SECTION 7.13. INVENTORIES. 25
Section 7.14. Equipment. 25
SECTION 7.15. CUSTOMERS. 26
SECTION 7.16. SUPPLIERS; RAW MATERIALS. 26
SECTION 7.17. REAL ESTATE. 26
Section 7.18. Employee Benefit Plans for Transferred Employees. 27
Section 7.19. Forecast. 27
SECTION 7.20. DISCLOSURE. 27
SECTION 7.21. EXCLUSIVE WARRANTIES. 27
ARTICLE VIII. COVENANTS AND AGREEMENTS. 28
SECTION 8.1. HSR FILINGS. 28
Section 8.2 Purchase of Equipment 28
SECTION 8.3. AMENDED SCHEDULES. 28
SECTION 8.4. SALE OF REAL ESTATE. 28
SECTION 8.5. SALE "AS IS" WITH ALL FAULTS 30
SECTION 8.6. BUYER PERMITS AND FINANCIAL ASSURANCE. 30
SECTION 8.7. GUARANTEE OF THE GUARANTOR. 30
SECTION 8.8. NON-SOLICITATION 31
Section 8.9. Satisfaction of Closing Conditions 31
ARTICLE IX - COVENANTS OF SELLER 31
SECTION 9.1. CONDUCT OF THE BUSINESS. 31
SECTION 9.2. ACCESS TO INFORMATION. 31
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ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF 32
BUYER.
SECTION 10.1. PERFORMANCE. 32
SECTION 10.2. AUTHORIZATION, EXECUTION AND DELIVERY OF OPERATIVE 32
AGREEMENTS.
SECTION 10.3. NO DEFAULT. 32
SECTION 10.4. CONSENTS, ETC.; BURDENSOME CONDITIONS. 33
SECTION 10.5. GOVERNMENTAL RULES. 33
SECTION 10.6. STANDARD CLOSING DOCUMENTS. 33
SECTION 10.7. REPRESENTATIONS AND WARRANTIES. 34
SECTION 10.8. PROCEEDINGS. 34
SECTION 10.9. WAIVER OF CONDITIONS BY BUYER. 34
ARTICLE XI. CONDITIONS PRECEDENT TO OBLIGATIONS OF 34
SELLER.
SECTION 11.1. PERFORMANCE. 34
SECTION 11.2. AUTHORIZATION, EXECUTION AND DELIVERY OF OPERATIVE 35
AGREEMENTS.
SECTION 11.3. NO DEFAULT. 35
SECTION 11.4. CONSENTS, ETC.; BURDENSOME CONDITIONS. 35
SECTION 11.5. GOVERNMENTAL RULES. 35
SECTION 11.6. STANDARD CLOSING DOCUMENTS. 35
SECTION 11.7. REPRESENTATIONS AND WARRANTIES. 36
SECTION 11.8. PROCEEDINGS. 36
SECTION 11.9. WAIVER OF CONDITIONS BY SELLER. 37
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ARTICLE XII. ENVIRONMENTAL INDEMNITIES 37
SECTION 12.1. SELLER'S INDEMNITY 37
SECTION 12.2. BUYER INDEMNITY. 38
SECTION 12.3. SURVIVAL. 39
ARTICLE XIII. INDEMNITY. 39
SECTION 13.1. SURVIVAL. 39
SECTION 13.2. BUYER INDEMNIFICATION. 39
SECTION 13.3. SELLER INDEMNIFICATION. 39
SECTION 13.4. PROCEDURES. 40
SECTION 13.5. INSURANCE. 40
SECTION 13.6. INDEMNITY IS THE EXCLUSIVE REMEDY. 41
SECTION 13.7. EXCLUSION OF CERTAIN DAMAGES. 41
ARTICLE XIV. GENERAL. 41
SECTION 14.1. TERMINATION OF AGREEMENT. 41
SECTION 14.2. PUBLIC ANNOUNCEMENTS. 42
SECTION 14.3. NO THIRD-PARTY BENEFICIARIES. 42
SECTION 14.4. COSTS. 42
SECTION 14.5. BULK SALES. 42
SECTION 14.6. MODIFICATION AND WAIVER. 42
SECTION 14.7. CONSTRUCTION; REPRESENTATION. 42
SECTION 14.8. SEVERABILITY. 43
SECTION 14.9. GOVERNING LAW. 43
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SECTION 14.10. NOTICES. 43
SECTION 14.11. ASSIGNMENT. 44
SECTION 14.12. COUNTERPARTS. 44
SECTION 14.13. ENTIRE AGREEMENT. 45
SCHEDULES
SCHEDULE 1.1.(E) ENCUMBRANCES
SCHEDULE 2.1.(II) EQUIPMENT
SCHEDULE 2.1.(III) INVENTORY
Schedule 2.1.(iv) Contracts
Schedule 2.1.(vi) Transferable Permits
SCHEDULE 2.4. ASSUMED LIABILITIES
SCHEDULE 5.2.A. EMPLOYEES
Schedule 5.2(b) Buyer's Terms of Employment for Transferred
Employees
Schedule 5.2(e) Seller's Separation Pay Plan
SCHEDULE 6.7.(A) ENVIRONMENTAL STUDIES AND REPORTS RECEIVED BY BUYER
Schedule 7.4 Governmental Consents -- Seller
Schedule 7.7 Actions, Suits Proceedings
Schedule 7.8.(b) Outstanding PCB Bids
Schedule 7.8.(c) Customer Backlog
SCHEDULE 7.9. LICENSES AND PERMITS
SCHEDULE 7.10.(A) EXCEPTIONS TO SECTIONS 7.10(A)
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SCHEDULE 7.10.(B) ENVIRONMENTAL JUDGMENTS, ORDERS, DECREES,
CHARGES, COMPLAINTS, LAWSUITS OR INVESTIGATIONS
AGAINST REAL ESTATE
SCHEDULE 7.10.(C) PERMITS REQUIRED
Schedule 7.10.(d) Spills or Leaks
Schedule 7.10.(e) Hazardous Substances
Schedule 7.14. Impaired Equipment
Schedule 7.15. Customer Information
Schedule 7.16. Supplier Information
Schedule 7.18. Employee Benefit Plans
Schedule 7.19. Forecast
Schedule 8.2. Purchased Equipment
EXHIBITS
EXHIBIT A: ASSUMPTION AGREEMENT
INTENTIONALLY OMITTED
EXHIBIT C: LEASE
INTENTIONALLY OMITTED
EXHIBIT E: PROJECT OPERATIONS AGREEMENT
EXHIBIT F: SUPPLY AGREEMENT
EXHIBIT G: BILL OF SALE
Exhibit H: Special Warranty Deed
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AGREEMENTS LISTING
1. PURCHASE AGREEMENT
2. INTELLECTUAL PROPERTY AGREEMENTS
a. INTELLECTUAL PROPERTY AGREEMENT
b. PATENT LICENSE AGREEMENT
3. LEASE (INTERIM REAL ESTATE LEASE)
4. PROJECT OPERATIONS AGREEMENT
5. SUPPLY AGREEMENT
6. ASSIGNMENT AND ASSUMPTION AGREEMENT
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AUGUST 5, 1997
PURCHASE AGREEMENT
THIS AGREEMENT, dated as of August 5, 1997, by and among
International Business Machines Corporation , a New York corporation ("Seller"),
Multilayer Tek L.P., a Texas limited partnership ("Buyer") and The DII Group,
Inc., a Delaware corporation ("Guarantor") (herein "Agreement);
W I T N E S S E T H:
WHEREAS, Seller wishes to sell certain assets used in the
manufacturing of certain printed wire boards including the premises used for
such manufacturing in Austin, Texas; and
WHEREAS, Buyer wishes to purchase from Seller, and Seller
wishes to sell to Buyer, such assets for the purchase price and subject to the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises set forth
above and the respective covenants, agreements, representations and warranties
hereinafter set forth, Buyer and Seller (collectively, the "Parties") hereby
agree as follows:
ARTICLE I. DEFINITIONS.
SECTION 1.1. CERTAIN DEFINITIONS. As used in this Agreement,
the following terms shall have the meanings specified below:
"AFFILIATE" shall mean, as to any Person , any other Person
which is directly or indirectly controlling, controlled by or under common
control with such Person.
"ALLOCATION STATEMENTS" shall have the meaning set forth in
Section 4.1., below.
"ANTITRUST DIVISION" shall have the meaning set forth in
Section 8.1., below.
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"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 2.4., below.
"ASSUMPTION AGREEMENT" shall mean the Assignment and
Assumption Agreement in the form set out in Exhibit A to be entered into by
Buyer and Seller on the Closing Date and by which Buyer assumes the Assumed
Liabilities.
"BILL OF SALE" shall mean the Bill of Sale in the form set out
in Exhibit G.
"BEST KNOWLEDGE OF SELLER" shall mean the knowledge acquired
based upon reasonable inquiry of IBM's current management of the IBM printed
wire board plant operations at the Real Estate as of the date hereof and as of
the Closing Date holding the title of Project Manager, Manufacturing Engineering
Support or higher title, and the Site Operations Manager.
"BURDENSOME CONDITION" shall mean any action taken, or
credibly threatened, by or before any Governmental Authority or other Person to
challenge the legality of the transactions contemplated by the Operative
Agreements or that would otherwise deprive a Party of the material benefit of
any such transaction, including (i) the pendency of an investigation by a
Governmental Authority (formal or informal), (ii) the institution of any
litigation, or threat thereof, (iii) an order by a Governmental Authority of
competent jurisdiction preventing consummation of the transactions contemplated
by the Operative Agreements or placing material conditions or limitations upon
such consummation or (iv) the issuance of any subpoena, civil investigative
demand or other request for documents or information relating to such
transactions that is unreasonably burdensome in the reasonable judgment of the
applicable Person; provided, however, that failure to obtain the Subdivision for
any reason shall not be considered a Burdensome Condition.
"CLOSING" shall have the meaning set forth in Section 3.1.,
below.
"CLOSING DATE" shall have the meaning set forth in Section
3.1., below.
"CODE" shall have the meaning set forth in Section 4.1.,
below.
"COMPLEX" shall have the meaning specified in the Project
Operations Agreement.
"CONSENSUAL TRANSFERS" shall have the meaning specified in
Section 5.1., below.
"COVENANT BREACH" shall have the meaning set forth in Section
11.2., below.
"EMPLOYEES" shall have the meaning set forth in Section 5.2.,
below.
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"ENCUMBRANCE" shall mean with respect to any property or
asset, any mortgage, lien, pledge, charge, security interest, encumbrance,
lease, license, easement, encroachment, burden, title defect, restriction,
limitation or other adverse claim of any kind, whether disclosed by the Title
Report, the Survey (as defined in the definition of "Permitted Encumbrances"
below) or otherwise, in respect of such property or asset, other than Permitted
Encumbrances.
"ENVIRONMENTAL BASELINE" shall mean the measurement for each
chemical constituent identified on the Multek Site by ERM - Southwest, Inc.,
based on the mean of existing well data to include, as a minimum, two (2)
sampling events and a maximum of five (5) sampling events. ERM shall provide
each party hereto with a copy of the Environmental Baseline by and dated August
8, 1997.
"ENVIRONMENTAL LAW" shall mean any applicable federal, state
or local law, statute, ordinance, judgment, governmental directives, regulations
or other laws, generally and publicly promulgated by a Governmental Authority
having jurisdiction over the Real Estate, including such environmental laws as
the Resource Conservation and Recovery Act, Comprehensive Environmental
Response, Compensation and Liability Act, Federal Emergency Planning and
Community Rights-to-Know Act, Hazardous Materials Transportation Act, the Clean
Water Act, and the Clean Air Act, and any State of Texas or local counterparts
thereof, as any of the foregoing have been amended prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"EXCLUDED ASSETS" shall have the meaning set forth in Section
2.2., below.
"FACILITY" shall mean the Buildings located on the Real
Estate.
"FTC" shall have the meaning set forth in Section 8.1., below.
"GOVERNMENTAL ACTIONS" shall mean any authorizations,
consents, approvals, waivers, exceptions, variances, franchises, permissions,
permits, and licenses of, and filings and declarations with, Governmental
Authorities.
"GOVERNMENTAL AUTHORITY" shall mean any Federal, state, local
or foreign court, governmental or administrative agency or commission or other
governmental agency, authority, instrumentality or regulatory body having
appropriate jurisdiction.
"GOVERNMENTAL RULE" shall mean any statute, law, treaty, rule,
code, ordinance, regulation, order or publicly promulgated written
administrative guidelines of
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any Governmental Authority or any judgment, decree, injunction, writ, order or
like action of any Federal, state, local, or foreign court, arbitrator or other
judicial tribunal of competent jurisdiction.
"GUARANTOR" shall mean The DII Group, Inc., a Delaware
corporation.
"HAZARDOUS SUBSTANCE" shall mean any hazardous waste,
hazardous material, pollutant, or contaminant and words of similar import,
including any substance defined as such by any applicable Environmental Law.
"HSR" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"INDEMNIFIED PARTY" shall have the meaning set forth in
Section 11.4., below.
"INDEMNIFYING PARTY" shall have the meaning set forth in
Section 11.4., below.
"INTELLECTUAL PROPERTY AGREEMENT" shall mean the agreement in
the agreed-to form to be entered into between Seller and Buyer on the Closing
Date relating to intellectual property matters.
"LAW(S)" shall have the meaning specified in the Project
Operations Agreement.
"LEASE" shall mean the Lease Agreement in the form set out in
Exhibit C to be entered into between Seller and Buyer on the Closing Date.
"LOSS" shall mean any and all damage, loss, liability and
expense, including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any claim, action,
suit or proceeding.
"MAKING THE UTILITIES/SERVICES INDEPENDENT" shall have the
meaning set forth in Section 8.4., below.
"MULTEK SITE" shall have the meaning specified in the Project
Operations Agreement.
"NEWLY DISCOVERED CONTAMINATION" shall mean contamination
discovered by Buyer within two (2) years of the anniversary of the Closing Date
that existed on the Real Estate prior to the Closing Date and that either
violated an Environmental Law or exceeded a published standard or guideline
established on or prior to the Closing Date by a Governmental Authority pursuant
to an Environmental Law or violated a Law or exceeded a published standard or
guideline established on or
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prior to the first anniversary of the Closing Date by a Governmental Authority
pursuant to a Law in effect on the first anniversary of the Closing Date, and
which continues to be a violation of said Law or in exceedance of said published
standard or guideline at the time of its discovery.
"OPERATIVE AGREEMENTS" shall mean this Agreement, the
Intellectual Property Agreement, the Patent License Agreement, the Lease, the
Bill of Sale, the Assignment and Assumption Agreement, the Project Operations
Agreement and the Supply Agreement.
"PATENT LICENSE AGREEMENT" shall mean the agreement in the
agreed-to form to be entered into between Seller and Buyer on the Closing Date
relating to patent license matters.
"PERMITTED ENCUMBRANCES" shall mean:
(i) [intentionally ommitted]
(ii)(A) any servitudes, easements, restrictions,
rights-of-way, reservations or other similar rights in the Real Estate or any
interest therein, (w) described in that certain Title Commitment No.
GF129920-Z-34 dated March 26, 1997 and revised June 24, 1997 (the "Title
Commitment") prepared by Fidelity National Title Company (the "Title Company"),
(x) to use the Access Roads (as defined in the Project Operations Agreement)
provided the same are in form and substance acceptable to the parties, their
respective counsel and the Title Company; (y) reasonably determined by Seller to
be required in connection with making the Utilities/Services Independent
provided the same are in form and substance acceptable to the parties, their
respective counsel and the Title Company; and (z)reasonably required by either
party in connection with the services to be provided by one Party to the other
pursuant to the Project Operations Agreement provided the same are in form and
substance acceptable to the parties, their respective counsel and the Title
Company; (B) preprinted exclusions from coverage and conditions and stipulations
contained in a title policy issued by Fidelity or any other nationally
recognized title company selected by Buyer; (C) facts disclosed by that certain
survey dated January 16, 1997, and last revised June 25, prepared by McAngus
Surveying Company, Inc. (the "Survey"); and any (D) other Encumbrances which are
consented to or caused by Buyer or anyone claiming by or through Buyer;
(iii) liens existing as of the Closing Date for Taxes either
not due and payable or due but for which notice of assessment has not been
given;
(iv) undetermined or inchoate liens, charges and privileges
existing as of the Closing Date incidental to current operations and any
statutory liens, charges, adverse claims, security interests or encumbrances of
any nature whatsoever existing as of the Closing Date and claimed or held by any
Governmental Authority that have
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not at the time been filed or registered against title to the Transferred Assets
or that relate to obligations that are not due or delinquent;
(v) security given in the ordinary course of business as of
the Closing Date to any public utility, Governmental Authority or to any
statutory or public authority in connection with the Transferred Assets; and
(vi) the Encumbrances described on Schedule 1.1.(E).
Notwithstanding the foregoing, no Encumbrance arising under
the Code or ERISA with respect to the operation, termination, restoration or
funding of any employee benefit plan or arrangement sponsored by, maintained by
or contributed to by Seller or any member of its ERISA Group or arising in
connection with any excise tax or penalty tax with respect to such plan or
arrangement shall be a Permitted Encumbrance.
"PERSON" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, joint venture, Governmental
Authority or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"PRE-CLOSING TAX PERIOD" shall have the meaning set forth in
Section 4.2., below.
"PROJECT OPERATIONS AGREEMENT" shall mean the agreement for
site operational services in the form set out in Exhibit E to be entered into
between Seller and Buyer on the Closing Date.
"PURCHASE PRICE" shall have the meaning specified in Section
2.3., below.
"REAL ESTATE" shall mean the real estate described and defined
as the "Leased Premises" in the Lease.
"REAL ESTATE CLOSING" shall have the meaning set out in
Section 8.4.(b), below.
"REMEDIATION" shall have the meaning specified in the Services
Agreement attached as Exhibit B to the Project Operations Agreement.
"RETAINED LIABILITIES" shall mean all liabilities of Seller
other than the Assumed Liabilities, and the obligations assumed by Buyer
pursuant to the terms of this Agreement, including Section 5.1., below and the
Assumption Agreement. Retained Liabilities, specifically includes, without
limitation, the liabilities identified in items (iii), (iv) and (v) of the
definition of Permitted Encumbrances.
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"SUBCONTRACTED WORK" shall have the meaning set forth in
Section 5.1., below.
"SUBDIVISION" shall mean (i) the issuance by the City of
Austin, Texas (the "City") of a land status report which confirms that the
Multilayer Site (as defined in the Project Operations Agreement) is a
"grandfathered" legal lot and the separation of the Multilayer Site by the
Travis Central Appraisal District as a separate tax parcel from the IBM Property
(as defined in the Project Operations Agreement), and, if required, the
recording, at IBM's expense, of all documents necessary to effect the legal
separation of the Multilayer Site as a separate tax parcel, or (ii) if not
"grandfathered," the issuance of all other final approvals from the City of
Austin to effect the legal separation of the Multilayer Site as a separate tax
parcel and the recording, at Seller's expense, of all documents necessary to
effect the legal separation of the Multilayer Site as a separate tax parcel. The
word "grandfathered" in this context means that the Multilayer Site and the IBM
Property in their current configuration are not required to go through the
City's subdivision process and are considered legal lots by the City.
"SUBSIDIARY" of any Person shall mean a corporation, company,
or other entity (i) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of directors or other managing
authority) are, or (ii) which does not have outstanding shares or securities (as
may be the case in a partnership, limited liability company, joint venture or
unincorporated association), but more than 50% of whose ownership interest
representing the right to make decisions for such entity is, now or hereafter
owned or controlled, directly or indirectly, by such Person, but such
corporation, company or other entity shall be deemed to be a Subsidiary only so
long as such ownership or control exists.
"SUPPLY AGREEMENT" shall mean the agreement in the form set
out in Exhibit F to be entered into between Seller and Buyer on the Closing
Date.
"TAX" OR "TAXES" shall mean all taxes, charges, fees, duties,
excises, assessments, levies, impositions and withholdings or other charges
imposed by any Governmental Authority, whether foreign or domestic (including,
but not limited to, taxes based upon or measured by gross receipts, income,
capital stock or net worth, estimated profits, sales, use or occupation, value
added, ad valorem, transfer, conveyance, franchise, withholding, payroll, social
security, employment, severance, excise, property, stamp or other taxes),
together with any and all interest, penalties and additions to tax attributable
to, or imposed with respect to such amounts and any obligations under any
agreements or arrangements with any Person with respect to such amounts.
"TAX RETURNS" shall have the meaning set forth in Section
4.2., below.
"TRANSFERRED ASSETS" shall mean (i) the leasehold interest in
the Real Estate pursuant to the terms of the Lease ; (ii) all machinery,
equipment, furniture,
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office equipment, communications equipment, vehicles, storage tanks, spare and
replacement parts and other tangible property (and interests in any of the
foregoing) listed on sub-schedule 2.1.(ii), whether or not located at the
Facility (the "Equipment"); (iii) all raw materials, work-in-process, finished
goods, supplies, spare parts, samples and stores listed on sub-schedule
2.1.(iii), whether or not located at the Facility (the "Inventory"), as the same
may be depleted or augmented prior to the Closing Date while being managed in
the ordinary course of business (or otherwise, with the prior consent of Buyer);
(iv) subject to Section 5.1., below, all contracts, agreements, options, leases,
licenses, sales and purchase orders, commitments and other instruments of any
kind, to which Seller is a party, that are listed on sub-schedule 2.1.(iv)
(collectively, the "Contracts"); (v) except with respect to Taxes, subject to
Section 5.1., below, all of Seller's rights, claims, credits, causes of action
or rights of setoff against third parties under the Consensual Transfers,
whether liquidated or unliquidated, fixed or contingent, and all rights of
Seller under or pursuant to all warranties, representations and guarantees made
by suppliers, manufacturers, contractors and other third parties in connection
with any of the Transferred Assets; (vi) subject to Section 5.1., below, all
licenses, permits, approvals, certificates, consents, orders or other
authorizations issued or granted by any Governmental Authority that are owned
by, granted to or held by Seller and are listed on sub-schedule 2.1.(vi) (the
"Transferable Permits"); (vii) subject to the provisions of Section 2.1., below,
with respect to intellectual property matters, originals or copies of all books,
records, files and papers of Seller (or any portions thereof) that relate to and
which are required to continue the operations of Seller's printed wire board
plant in Austin, Texas, either in hard copy or computer format, including,
invoices, sales and promotional literature, sales and purchase correspondence,
lists of suppliers, customers, personnel and employment records of the
Transferred Employees, maintenance records and schedules for the Facility and
the Equipment, and documentation developed or used for accounting and marketing,
(other than Tax returns, reports, forms, documents or memoranda); (viii) all
goodwill associated with the Transferred Assets; and (ix) insurance proceeds
received by Seller under any insurance policy of Seller which are attributable
to any loss or damage to the Transferred Assets from and including the date of
execution of this Agreement to but excluding the Closing Date, other than any
such loss or damage substantially repaired, replaced or made whole by Seller.
"TRANSFERRED EMPLOYEES" shall have the meaning set forth in
Section 5.2., below.
"WARRANTY BREACH" shall have the meaning set forth in Section
11.2., below.
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ARTICLE II. PURCHASE AND SALE OF ASSETS.
SECTION 2.1. TRANSFERRED ASSETS. Upon the terms and subject to
the conditions hereof, as of the Closing Date (as defined in Section 3.1.
hereof) with respect to all Transferred Assets other than the conveyance of fee
title to the Real Estate, and as of the Real Estate Closing with respect to the
conveyance of fee title to the Real Estate, Seller hereby agrees to sell,
transfer, convey, assign and deliver to Buyer free and clear of all
Encumbrances, and Buyer hereby agrees to purchase and accept from Seller, all
right, title and interest of Seller in and to the Transferred Assets, but
excluding cash accounts. Intellectual property matters are addressed exclusively
in the Patent License Agreement and the Intellectual Property Agreement (herein
the "Intellectual Property Agreements") and are not a subject matter of this
Agreement.
SECTION 2.2. EXCLUDED ASSETS. Notwithstanding anything to the
contrary in this Agreement or any agreements contemplated by this Agreement, the
following assets (collectively, the "Excluded Assets") will be retained by
Seller, and are excluded from the Transferred Assets:
(a) any interest in or right to use any trademark or service
mark owned by Seller or any of its Affiliates, any associated logo or any
derivative thereof, either alone or in conjunction with other words;
(b) any interest in any contractual arrangement with Seller or
any of its Affiliates;
(c) all other assets of Seller or any of its Affiliates which
do not comprise the Transferred Assets or the Real Estate; and
(d) any interests of Seller or any of its Affiliates in the
Complex other than the Real Estate.
SECTION 2.3. CONSIDERATION. The price to be paid by Buyer to
Seller for the Transferred Assets and Assumed Liabilities ("Purchase Price")
shall be (a) forty million dollars $40,000,000; (b) plus any additional
consideration to be paid by Buyer pursuant to Section 8.2., below. Buyer shall
pay to Seller by electronic funds transfer, such sum in immediately available
funds at the Closing, in U.S. dollars.
SECTION 2.4. ASSUMED LIABILITIES. Upon the terms and subject
to the conditions hereof, as of the Closing but retroactive to August 1, 1997,
Seller will assign and transfer to Buyer, and Buyer will assume, and shall fully
perform and discharge, on a timely basis and in accordance with their respective
terms, the liabilities and obligations of Seller listed on Schedule 2.4. and
Schedule 2.1., hereto (the "Assumed Liabilities") pursuant to the terms and
conditions of the Assumption Agreement but solely to the extent arising out of
goods supplied or acquired or services rendered or
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received after August 1, 1997. The Assumed Liabilities shall, except as
otherwise set forth herein, exclude liabilities and obligations of Seller to or
from any of its Affiliates.
SECTION 2.5. INTERIM OPERATIONS FOR BUYER'S ACCOUNT. (a) The
parties expressly agree that, from and after August 1, 1997, through the Closing
Date (the "Interim Period"), Seller has conducted the printed wire board
manufacturing operations and all related operations and activities at the Real
Estate (the "Manufacturing Operations") and will continue to do so through the
Closing Date for the account of, and at the risk of, Buyer. To the maximum
extent legally permissible without title to the Transferred Assets passing to
Buyer before the Closing Date, Buyer and Seller intend that, unless the Closing
does not occur as provided in this Agreement, Buyer shall be in the economic
position of the owner of the Transferred Assets (other than the Real Estate)
from August 1, 1997, and that, notwithstanding any of the other provisions of
the Operative Agreements, Seller has hereby transferred to Buyer, effective
August 1, 1997, and Buyer has assumed, effective August 1, 1997, any and all
risks associated with the conduct of the Manufacturing Operations (and it is
accordingly the intention of the parties that the Closing under this Agreement
shall relate primarily to the timing of the payment of the Purchase Price
hereunder, Buyer assuming management and control of the Transferred Assets and
the passage of title to the Transferred Assets). During the Interim Period,
Seller shall continue to conduct the Manufacturing Operations in the ordinary
course as the current management of Seller's Manufacturing Operations reasonably
determines to be in the best interests of the Manufacturing Operations, subject
to Section 9.1. Any increase or decrease in the value of the Transferred Assets
during the Interim Period shall accrue to and be for the account of Buyer,
without any adjustment to the Purchase Price; provided, however, that title to
the Transferred Assets shall not pass to Buyer before the Closing Date.
Notwithstanding the provisions of this Section 2.5., Buyer assumes no
responsibility for any retirement or post-employment benefits respecting
Employees who retire from Seller during the Interim Period.
(b) During the Interim Period, (i) all cash received by Seller
by or in respect of the Manufacturing Operations (other than any cash received
in respect of the Excluded Assets and the Retained Liabilities) and the
Transferred Assets and proceeds from the disposition of assets that would
otherwise have been Transferred Assets shall be deemed to have been received by
Seller for the account of Buyer and (ii) all cash expended by Seller with
respect to the Manufacturing Operations (other than any cash expended in respect
of the Excluded Assets and the Retained Liabilities), the Tenant's Obligations
as defined in Section 2.02. of the Lease and the Transferred Assets but
excluding amounts paid by Seller pursuant to Section 8.2., below, shall be
deemed to have been expended from the account of Buyer.
(c) As soon as practicable after the Closing Date, Buyer shall
invoice Seller for all products and services provided by the Manufacturing
Operations to Seller during the Interim Period (the "Invoice Amount").
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(d) As soon as practicable after the Closing Date, Seller
shall determine: (A) the overhead charges (including corporate allocations and
payments and allocations related to the Employees) provided by or on behalf of
Seller to or in respect of the Manufacturing Operations and the Transferred
Assets during the Interim Period (the amount of such charges to be determined on
a basis consistent in all material respects with the basis on which such charges
were made during the period ending June 30, 1997); (B) the 15% discount on stock
of Seller purchased by Employees through Seller's Employee Stock Purchase Plan
during the Interim Period; and (C) any Taxes attributable to the Manufacturing
Operations during the Interim Period.
(e) In the event that (i) the sum of the cash received in
accordance with Section 2.5.(b)(i) and the Invoice Amount exceeds the sum of the
cash expended in accordance with Section 2.5.(b)(ii) and the amounts determined
in accordance with Section 2.5.(c), then Seller shall promptly pay to Buyer the
amount of such excess in immediately available funds, in U.S. dollars; or (ii)
the sum of the cash expended in accordance with Section 2.5.(b)(ii) and the
amounts determined in accordance with Section 2.5.(c) exceeds the sum of the
cash received in accordance with Section 2.5.(b)(i) and the Invoice Amount then
Buyer shall promptly pay to Seller the amount of such excess in immediately
available funds, in U.S. dollars in addition to the payment made by Buyer to
Seller pursuant to Section 2.3.
(f) In the event the Closing does not occur for any reason,
the parties agree that the provisions of this Section 2.5. shall be null and
void.
ARTICLE III. CLOSING.
SECTION 3.1. CLOSING DATE. Subject to the conditions set forth
in Articles X and XI, below, the closing of the transactions provided for in
this Agreement and the other Operative Agreements (other than the Real Estate
Closing) (the "Closing") shall take place at the offices of Seller at 10:00AM on
the later of the tenth calendar day following the date this Agreement is
executed and the fifth business day following the expiration or early
termination of all HSR waiting periods and the satisfaction or waiver of the
other conditions set forth in Articles X and XI hereof, or at such other time or
on such other date as may be agreed by Seller and Buyer (the "Closing Date").
All transactions provided for herein to occur on and as of the Closing Date
shall be deemed to have occurred simultaneously and to be effective as soon as
the Parties have executed the Operative Documents or as of the close of business
on the Closing Date, whichever first occurs.
SECTION 3.2. DELIVERY BY BUYER. At the Closing, Buyer will
deliver or cause to be delivered to Seller the following:
(a) payment of the Purchase Price in the manner specified in
Section 2.3 hereof;
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(b) the Assumption Agreement, duly executed by Buyer;
(c) the Lease, duly executed by Buyer.
(d) the Project Operations Agreement, duly executed by Buyer;
(e) the Intellectual Property Agreements, duly executed by
Buyer;
(f) the Supply Agreement, duly executed by Buyer;
(g) a copy of the Certificate of limited partnership of Buyer,
certified as of a recent date by the Secretary of State of the State of Texas;
(h) a copy of the Certificate of Incorporation of Guarantor,
certified as of a recent date by the Secretary of State of the State of
Delaware; and
(i) the certificates required by Section 11.6., below.
SECTION 3.3. DELIVERY BY SELLER. At the Closing, Seller will
deliver or cause to be delivered to Buyer the following:
(a) The Bill of Sale duly executed by Seller, vesting in Buyer
all right, title and interest of Seller in and to the Transferred Assets, other
than the Real Estate, as provided in this Agreement;
(b) the Assumption Agreement, duly executed by Seller;
(c) the Lease, duly executed by Seller;
(d) the Project Operations Agreement, duly executed by Seller;
(e) the Supply Agreement, duly executed by Seller;
(f) the Intellectual Property Agreements, duly executed by
Seller; and
(g) a copy of the Certificate of Incorporation of Seller,
certified as of a recent date by the Secretary of State of the State of New
York; and
(h) the certificates required by Section 10.6., below.
ARTICLE IV. TAX MATTERS.
SECTION 4.1. ALLOCATION OF PURCHASE PRICE. Buyer and Seller
hereby agree that (a) one million five hundred thousand dollars ($1,500,000) of
the Purchase Price shall be allocated to intellectual property licensed pursuant
to the Intellectual
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Property Agreements; (b) no more than thirty-million dollars ($30,000,000 )
shall be allocated to the Real Estate and Facility, at Buyer's discretion; and
(c) the balance of the Purchase Price shall be allocated to the manufacturing
equipment, furniture and fixtures and inventory at Buyer's discretion. In
addition, as soon as practicable after the Closing Date, but in no event later
than 90 days prior to the due date of the Internal Revenue Service Form 8594,
Buyer shall provide to Seller statements ("Allocation Statements") allocating
the total of the Purchase Price (and other payments properly treated as
additional Purchase Price for Tax purposes) to the different Transferred Assets,
pursuant to Section 1060 of the Internal Revenue Code of 1986, as amended, and
the treasury regulations promulgated thereunder (hereinafter, the "Code").
The allocation with respect to the Real Estate and Facility
will be prepared based on a valuation from a nationally recognized appraisal
firm.
Buyer and Seller shall each file all income, franchise and
other Tax returns, reports and forms ("Tax Returns") and execute such other
documents as may be required by any Governmental Authority, in a manner
consistent with the Allocation Statements. Buyer shall prepare the Form 8594
under Section 1060 of the Code within 30 days after preparation of the
Allocation Statements, and deliver such form to Seller within thirty (30) days
after finalization, but no later than sixty (60) days prior to the due date of
such form. Buyer and Seller agree to file such form with each relevant taxing
authority and to refrain from taking any position inconsistent with such form or
the Allocation Statements.
SECTION 4.2. FILING OF RETURNS AND PAYMENT OF TAXES. Seller
shall prepare and file, or cause to be prepared and filed, with the appropriate
Governmental Authority all Tax Returns, and shall pay, or cause to be paid, when
due all Taxes relating to the Transferred Assets and the Real Estate
attributable to any time period ending on or prior to the Closing Date (herein
the "Pre-Closing Tax Period"). Buyer shall prepare and file, or cause to be
prepared and filed, with the appropriate Governmental Authority all Tax Returns,
and shall pay, or cause to be paid, when due all Taxes relating to the
Transferred Assets and the Real Estate attributable to any taxable period which
is not part of the Pre-Closing Tax Period. If, in order to properly prepare its
Tax Returns or other documents required to be filed with Governmental
Authorities, it is necessary that a Party be furnished with additional
information, documents or records relating to the Transferred Assets or the Real
Estate, both Seller and Buyer agree to use reasonable efforts to furnish or make
available such nonprivileged information at the other's request, cost and
expense: provided, however, that neither Party shall be entitled to review or
examine the Tax Returns of the other Party.
SECTION 4.3. REFUNDS AND CREDITS. Any refunds and credits
attributable to the Pre-Closing Tax Period shall be for the account of Seller
and any refunds and credits attributable to the period which is not part of the
Pre-Closing Tax Period shall be for the account of Buyer.
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SECTION 4.4. TRANSFER TAXES.
(a) All transfer, documentary, sales, use, registration,
value-added and any other similar Taxes and related fees incurred in connection
with this Agreement and the other Operative Agreements, and the transactions
contemplated hereby and thereby, shall be borne by Buyer. To the extent legally
able to do so, Buyer and Seller shall cooperate with each other to obtain
exemptions from such Taxes, provided that neither Party shall be obligated to
seek any exemption that would require any audit by a Governmental Authority of
its books and records. Notwithstanding any other provision of this Agreement,
Buyer shall not bear any income, windfall or Profits Taxes that are the legal
obligation of Seller.
(b) Notwithstanding the foregoing, Seller shall be responsible
for any tax imposed on the transfer of the Real Estate.
ARTICLE V. OTHER MATTERS.
SECTION 5.1. CONSENTS AND SUBCONTRACTED WORK. Seller and Buyer
shall use reasonable efforts to obtain, as soon as practicable, all requisite
consents to transfers, assignments and novations, of all of the Contracts,
Transferred Assets and the Assumed Liabilities (the "Consensual Transfers"). The
Parties shall cooperate (including, where necessary, entering into appropriate
instruments of novation and assumption as shall be agreed upon) to have Seller
released from all liability to third parties with respect to the Consensual
Transfers and the Parties will each solicit such releases concurrently with the
solicitation of consents from third parties to the transfer, assignment and
novation, to Buyer of the Consensual Transfers as soon as practicable). Anything
in this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign any Consensual Transfers or any claim, right
or benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
or other contravention thereof, be ineffective with respect to any party thereto
or in any way adversely affect the rights of Buyer or Seller thereunder. In no
event shall Seller or Buyer be obligated to pay any money to any Governmental
Authority or any other Person or to offer or grant other financial or other
accommodations to any Governmental Authority or any other Person in connection
with obtaining any consent, waiver, confirmation, novation or approval with
respect to any Consensual Transfers. If any such consent, waiver, confirmation,
or novation or approval is not obtained with respect to any Consensual
Transfers, then Seller and Buyer will cooperate to establish an arrangement
reasonably satisfactory to Buyer and Seller under which Buyer would obtain, to
the extent practicable, the claims, rights, and benefits and assume the
corresponding liabilities and obligations thereunder in accordance with this
Agreement (including by means of any subcontracting, sublicensing or subleasing
arrangement) or under which Seller would enforce for the benefit of Buyer, with
Buyer assuming and agreeing to pay Seller's obligations, any and all claims,
rights and benefits of Seller
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against a third party thereto. In such event (i) Seller will promptly pay to
Buyer when received all moneys received by it under any Consensual Transfers or
any claim, right or benefit arising thereunder and (ii) Buyer will promptly pay,
perform or discharge when due any obligation or liability arising thereunder. If
and to the extent that consents to assignment or novation, as the case may be,
are obtained after the Closing Date, Seller and Buyer agree that such Consenual
Transfers shall thereafter be Transferred Assets and Assumed Liabilities for all
purposes under this Agreement.
SECTION 5.2. EMPLOYEES AND EMPLOYEE BENEFITS.
(a) Schedule 5.2.A. contains a list of the individuals
employed by Seller at the date hereof in connection with the Transferred Assets
(including active employees and employees who are on leave of absence or sick
leave, but excluding employees who are receiving benefits as of the Closing Date
under Seller's Long Term Disability Plan or Medical Disability Income Plan)
(herein the "Employees") (and will be updated by Seller to reflect ordinary
course changes to such list between the date hereof and the Closing Date).
(b) Buyer shall hire, and employ, effective as of the Closing
Date, all Employees (the "Transferred Employees") at not less than the same
salary as each such Transferred Employee received from Seller as of the Closing
Date and on the terms, conditions, and benefits plans, specified on Schedule
5.2.(b), and Buyer hereby covenants and agrees not to decrease such salaries or
change the terms, condition or benefit plans specified on Schedule 5.2.(b) for
the period beginning on the Closing Date and ending December 31, 1997.
(c) Buyer hereby covenants and agrees not to terminate the
employment of more than one hundred (100) Transferred Employees, (actually or
constructively) during the period which begins on the Closing Date and ends six
months after the Closing Date.
(d) In accordance with the provisions of Section 13.4., below,
Buyer shall defend, indemnify and hold Seller harmless from any and all
liabilities, obligations, and Losses with respect to all employment matters
concerning the employment by Buyer of, or offers or terms and conditions of
employment by Buyer to, Transferred Employees including, without limitation, any
Loss arising from or associated with the Worker's Adjustment and Retraining
Notification Act, 29 U.S.C. Sections 2101 et. seq. (the "WARN Act") as well as
separation payments in accordance with the express agreement of Buyer and Seller
in Section 5.2.(e), below), and for complying on and after the Closing Date with
the requirements of all applicable laws with respect to all such Transferred
Employees Subject to Sections 5.2.(e), 5.2.(g), and 5.2.(j) below, Buyer and
Seller agree that Buyer is not assuming any obligation of Seller to the
Transferred Employees.
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(e) If Buyer terminates the employment of any Transferred
Employee (actually or constructively), other than for cause, at any time within
the six-month period following the Closing Date, Buyer shall pay to each such
Transferred Employee a severance payment equal to those benefits to which such
Transferred Employee would have been entitled under Seller's severance benefit
plans as disclosed on Schedule 5.2.(e) had Seller terminated the employment of
such Transferred Employee, other than for cause, immediately prior to the
Closing.
(f) Prior to but not including the Closing Date, the Seller
shall comply in all material respects with the WARN Act with respect to
employment terminations caused by Seller prior to the Closing Date and shall
indemnify and hold the Buyer harmless from and against any and all Losses that
the Buyer may incur by reason of Seller's noncompliance with the WARN Act. Prior
to the Closing Date, Seller shall notify Buyer of all employment terminations by
Seller of Employees previously employed by Seller in connection with the
Transferred Assets at the Real Estate. On and after the Closing Date, Buyer
shall comply in all material respects with the WARN Act and shall indemnify and
hold Seller harmless from and against any and all Losses that Seller may incur
by reason of any non-compliance.
(g) With respect to any benefit plans, programs and services
of Buyer in existence or adopted hereafter, all the years of service with Seller
of each Transferred Employee, as reflected in Seller's records for use in its
plans, shall be taken into account by Buyer for all relevant purposes, including
credit for eligibility and vesting and, in the case of Buyer's vacation
benefits, for benefit accrual. For the foregoing purpose, Seller shall provide
Buyer with copies of records with respect to each Transferred Employee's service
on the Closing Date.
(h) Other than as specified in Section 5.2(j), below, no
Transferred Employee or any spouse or beneficiary under any of Seller's employee
plans, or under any plan from time to time established by Buyer for the benefit
of the Transferred Employees, shall be entitled to assert any claim based on any
of the provisions of this Agreement against either party to this Agreement (or
any of its Subsidiaries or Affiliates).
(i) Seller shall be responsible for paying, in accordance with
its applicable benefit plan provisions, those welfare benefit plan liabilities
(including worker's compensation, unemployment, and other government-mandated
obligations) which are submitted on behalf of a Transferred Employee (or his or
her covered dependents) for claims arising out of events occurring prior to the
Closing Date. Buyer shall be responsible for paying all claims arising out of
accidents, injuries or events which occur on and after the Closing Date.
(j) Buyer shall develop and implement a 1997 profit-sharing
plan for the benefit of all Transferred Employees. Regardless of business
results for 1997, the profit-sharing plan shall, at a minimum, make a guaranteed
payment no later than
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March 14, 1998 to each Transferred Employee other than Transferred Employees who
either retire from Seller or commence a pre-retirement leave of absence from
Seller within thirty (30) days of the Closing Date ("Retirees"). This
guaranteed, minimum payment shall be based on each Transferred Employee's most
recent Personal Business Commitments (PBC) rating in Seller's records and on
each Transferred Employee's Earnings (as such term is defined in Seller's 1997
U.S. Variable Pay Program) from Seller up to the Closing Date. Buyer shall be
free, in its sole discretion, to provide additional profit-sharing payments in
addition to the guaranteed minimum payments described herein.
The guaranteed minimum payments shall be calculated in
accordance with the following table:
<TABLE>
<S> <C>
PBC Rating Percentage of Transferred Employees'
Earnings (as such term is defined in
Seller's 1997 U.S. Variable Pay Program)
Extraordinary (1) 15 percent
Achieved (2) 10 percent
Achieved some (3) 6 percent
or no rating of record
</TABLE>
Seller shall calculate the amount of the guaranteed minimum
payment due to each Transferred Employee other than Retirees within 30 days
after the Closing Date and shall transfer an amount equal to the sum of the
payments so calculated on or before March 14, 1998 to Buyer which shall make the
guaranteed minimum payments to each of the Transferred Employees other than
Retirees and shall withhold such taxes as may be required by law no later than
March 14, 1998. At the option of Buyer, Seller shall make the transfer of the
amount so calculated within 30 days of the Closing Date discounted to the date
of payment back from March 14, 1998 at a rate of 9 percent per annum. Buyer
shall hold all moneys transferred by Seller under this provision in escrow for
the benefit of the Transferred Employees other than Retirees and shall not
commingle such transferred moneys with its other assets. Once Seller has
transferred such amount to the Buyer, Buyer shall assume all liability for the
guaranteed minimum payments to the Transferred Employees other than Retirees and
shall indemnify and hold Seller harmless with respect to any claims against
Seller with respect to the payments described herein. Seller shall make variable
pay program payments to Retirees in accordance with Seller's 1997 U.S. Variable
Pay Program.
Buyer warrants and covenants that it shall make the guaranteed
minimum payments described above without a setoff of any kind against Seller or
the Transferred Employees including those Transferred Employees other than
Retirees who separate
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from Buyer's employment for any reason. In the event of the death of a
Transferred Employee other than Retirees prior to March 14, 1998, Buyer shall
make the guaranteed payment to the estate of such Transferred Employee.
Notwithstanding anything to the contrary elsewhere in this Agreement,
Transferred Employees other than Retirees shall be entitled to enforce any claim
to payment under this provision of the Agreement against Buyer.
(k) Subject to the other provisions of this Section 5.2.,
nothing herein shall prevent Buyer or its Affiliates from (i) terminating,
reassigning, promoting, or demoting individual personnel or changing adversely
or favorably the titles, powers, duties, responsibilities, functions, locations,
salaries, other compensation or terms and conditions of employment of individual
personnel or (ii) adopting benefits plans that are different from Seller's or
modifying, adding or eliminating any employee benefit plan, arrangement,
program, policy or procedure.
(l) At Closing, Seller will provide Buyer with information
regarding each Transferred Employee's 1997 annual vacation entitlement under
Seller's vacation plan, prorated through Closing. The information will also
indicate the amount of vacation each Transferred Employee has taken from January
1, 1997 through Closing. Seller shall pay each Transferred Employee his or her
equivalent daily salary for the number of days by which his or her 1997 annual
vacation days, prorated through the Closing Date, exceed the number of vacation
days actually taken by each such Transferred Employee prior to the Closing Date.
(m) Except as approved by Buyer (which approval will not be
unreasonably withheld), prior to Closing Seller will not take any of the
following actions with respect to or affecting Transferred Employees other than
such actions which are taken on a company-wide basis : (i) increase the rate or
terms of compensation payable generally or to become payable generally to such
Employees other than routine salary increases; (ii) commit itself to any
additional pension, profit sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance pay, continuation pay, termination pay, retirement or other employee
benefit plan, agreement or arrangement, or increase the rate or terms of any
employee plan or benefit arrangement, or (iii) enter into any employment
agreement with or for the benefit of any such Employee, provided, however, that
nothing in this clause (iii) shall preclude payments under the terms of the
existing incentive compensation plans of Seller in accordance with past
practice;
(n) Prior to the Closing Date, Seller agrees to obtain Buyer's
consent to any communication by Seller to be generally distributed to
Transferred Employees regarding employee benefits arrangements to be implemented
by Buyer after the Closing Date.
SECTION 5.3. FURTHER ACTION. Except as otherwise provided in
Section 8.4, below, with respect to conveyance of fee title to the Real Estate,
each of
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the Parties agrees to execute and deliver after the Closing Date such other
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable, in the opinion of both parties'
counsel jointly, in order to consummate or implement expeditiously the
transactions contemplated by the Operative Agreements. In addition, Seller
agrees, promptly upon the request of Buyer, and at no additional expense to
Seller, other than the expenses associated with the preparation of appropriate
instruments of transfer, assignment, or novation, as the case may be, to take
all actions reasonably requested by Buyer to perfect the transfer to Buyer of
the Transferred Assets.
SECTION 5.4. DUE DILIGENCE. Buyer has engaged in the entire
due diligence effort it deemed appropriate prior to signing this Agreement.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer and Guarantor each hereby jointly and severally
represents and warrants to Seller as follows:
SECTION 6.1. INCORPORATION. Buyer is a duly organized and
validly existing limited partnership in good standing under the laws of the
State of Texas, and Guarantor is a duly incorporated and validly existing
corporation in good standing under the laws of the State of Delaware, each with
all requisite power and authority to own its properties and conduct its
business, including, in the case of Buyer, its performance of the Assumed
Liabilities, and each is duly qualified in each jurisdiction in which its
ownership of property, including, in the case of Buyer, the Transferred Assets
and the Real Estate, and its conduct of business, including, in the case of
Buyer, its performance of the Assumed Liabilities, requires such qualification
except where the failure to so qualify would not have a material adverse effect
upon Buyer's acquisition of the Transferred Assets hereunder or the performance
by Buyer or Guarantor of its respective obligations under this Agreement or the
other Operative Agreements.
SECTION 6.2. AUTHORITY. Each of Buyer and Guarantor has the
requisite power and authority to execute and deliver this Agreement and each of
the other Operative Agreements, and to perform its respective obligations
hereunder and thereunder. This Agreement has been, and each of the other
Operative Agreements will be, duly and validly authorized, executed and
delivered by each of Buyer and Guarantor and this Agreement constitutes, and
each of the other Operative Agreements will constitute, the valid and binding
agreement of Guarantor and Buyer enforceable against each of Guarantor and Buyer
in accordance with its respective terms. No other partnership proceedings on the
part of Buyer or corporate proceedings on the part of Guarantor are necessary to
authorize Buyer's or Guarantor's execution or performance of this Agreement or
any of the other Operative Agreements and the transactions contemplated hereby
or thereby.
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SECTION 6.3. NO CONFLICT. The execution and delivery by each
of Buyer and Guarantor of this Agreement and each of the other Operative
Agreements does not, and the performance of its obligations hereunder and
thereunder will not:
(a) conflict with, or result in a breach of, any of the
provisions of Buyer's Agreement of Limited Partnership or Guarantor's
Certificate of Incorporation or By-Laws;
(b) (i) breach, violate or contravene any applicable
Governmental Rule, or (ii) create any right of termination or acceleration or
encumbrance that in the aggregate would have a material adverse effect on the
authority or ability of either to perform either its obligations under this
Agreement or the other Operative Agreements; or
(c) conflict in any respect with, or result in a breach of or
default under, any contract, license, franchise, permit or any other agreement
or instrument to which either Buyer or Guarantor is a party or by which either
Buyer or Guarantor or any of the properties of either one of them may be
affected or bound that in the aggregate would have a material adverse effect on
the authority or ability of either Buyer or Guarantor to perform its obligations
under this Agreement or the other Operative Agreements.
SECTION 6.4. GOVERNMENTAL CONSENTS - BUYER. No material
consent, approval or authorization of, or designation, declaration or filing
with, any Governmental Authority or other Person on the part of Buyer or
Guarantor is required in connection with the execution or delivery by Buyer or
Guarantor of this Agreement or any of the other Operative Agreements or the
consummation by Buyer or Guarantor of the transactions contemplated hereby or
thereby, other than the premerger notification required by HSR and expiration or
early termination of the HSR waiting period.
SECTION 6.5. NO BROKER. Neither Buyer nor Guarantor has
engaged any Person who is entitled to any fee or commission as a finder or a
broker in connection with the negotiation of this Agreement or the other
Operative Agreements or the consummation of the transactions contemplated hereby
or thereby, and Buyer and Guarantor shall be responsible for all liabilities and
claims (including costs and expenses of defending against same) arising in
connection with any claim by a finder or broker that it acted on behalf of Buyer
or Guarantor in connection with the transactions contemplated hereby or thereby.
SECTION 6.6. LICENSES AND PERMITS. Each of Buyer and Guarantor
has made its own investigation of the Governmental Actions Buyer or Guarantor
will require on and after the Closing Date and agrees that Buyer is responsible
for obtaining such Governmental Actions for its operations on and after the
Closing, subject to Seller's obligations hereunder to transfer from Seller to
Buyer the Transferable Permits and the provisions of Section 5.1., above.
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SECTION 6.7. ENVIRONMENTAL MATTERS. Each of Buyer and
Guarantor represents that it has received and read the reports and related data
set forth on Schedule 6.7(a) hereto.
ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer as follows:
SECTION 7.1. INCORPORATION. Seller is a duly incorporated and
validly existing corporation in good standing under the laws of the State of New
York, with all requisite corporate power and authority to own its properties and
conduct its business, and is duly qualified in each jurisdiction in which its
ownership of property requires such qualification except where the failure to so
qualify would not have a material adverse effect upon the Transferred Assets.
SECTION 7.2. AUTHORITY. Seller has the requisite corporate
power and authority to execute and deliver this Agreement and each of the other
Operative Agreements, and to perform its obligations hereunder and thereunder.
This Agreement has been, and each of the other Operative Agreements will be,
duly and validly authorized, executed and delivered by Seller and this Agreement
constitutes, and each of the other Operative Agreements will constitute, the
valid and binding agreement of Seller enforceable against Seller in accordance
with its respective terms. No other corporate proceedings on the part of Seller
are necessary to authorize Seller's execution or performance of this Agreement
or any of the other Operative Agreements and the transactions contemplated
hereby or thereby.
SECTION 7.3. NO CONFLICT. The execution and delivery by Seller
of this Agreement and each of the other Operative Agreements does not, and the
performance by Seller of its obligations hereunder and thereunder will not:
(a) conflict with, or result in a breach of, any of the
provisions of its Certificate of Incorporation or By-Laws;
(b) (i) breach, violate or contravene any applicable
Governmental Rule, or (ii) create any right of termination or acceleration or
encumbrance that, in the aggregate would have an adverse effect on the
Transferred Assets or the Real Estate or the authority or ability of Seller to
perform either its obligations under this Agreement or the other Operative
Agreements; or
(c) conflict in any respect with, or result in a breach of or
default under, any contract, license, franchise, permit or any other agreement
or instrument (other than the assignment provisions of any Consensual Transfer
which shall be subject to Section 5.1., hereof) ) to which it is a party or by
which it or any of the Transferred Assets or Real Estate may be bound that would
have an adverse effect on the
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Transferred Assets or the Real Estate or the authority or ability of Seller to
perform either its obligations under this Agreement or the other Operative
Agreements.
SECTION 7.4. GOVERNMENTAL CONSENTS - SELLER. Other than as set
forth on Schedule 7.4., no consent, approval or authorization of, or
designation, declaration or filing with, any Governmental Authority or other
Person on the part of Seller, is required in connection with the execution or
delivery by Seller of this Agreement or any of the other Operative Agreements or
the consummation by Seller of the transactions contemplated hereunder or
thereunder, other than the premerger notification required by HSR and expiration
or early termination of the HSR waiting period.
SECTION 7.5. NO BROKER. Seller has engaged no Person who is
entitled to any fee or commission as a finder or a broker in connection with the
negotiation of this Agreement or the other Operative Agreements or the
consummation of the transactions contemplated hereby or thereby, and Seller
shall be responsible for all liabilities and claims (including costs and
expenses of defending against same) arising in connection with any claim by a
finder or broker that it acted on behalf of Seller in connection with the
transactions contemplated hereby or thereby.
SECTION 7.6. TITLE TO PERSONAL PROPERTY. Seller has good and
valid title to all tangible Transferred Assets listed on Sub-Schedules 2.1(ii)
and 2.1(iii) hereto, free and clear of any Encumbrances (except those assets
disposed of in the ordinary course of business after the date hereof).
SECTION 7.7. ACTIONS, SUITS, PROCEEDINGS. Other than as set
forth on Schedule 7.7., there are no actions, suits, hearings, arbitrations, or
proceedings pending or, to the Best Knowledge of Seller, threatened in writing
against the Transferred Assets, at law or in equity, including any
administrative proceedings with any regulatory authority. There is no existing
default by Seller or, to the Best Knowledge of Seller, any of its Affiliates,
with respect to any judgment, order, writ, injunction or decree of any
Governmental Authority which will affect the Transferred Assets. Other than as
set forth on Schedules 7.7 or 7.10(a),(b),(c),(d), or (e), there are no existing
orders, judgments or decrees of any Governmental Authority which will affect the
Transferred Assets.
SECTION 7.8. CONTRACTS. (a) Except as specifically disclosed
on Schedule 2.1.(iv), each Contract is a legal, valid, and binding obligation of
Seller, and, to the Best Knowledge of Seller, of each other party thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditor's rights generally, or by general
principles of equity. Seller has performed or is performing all material
obligations required to be performed by it under such contracts and is not (with
or without notice, lapse of time or both) in breach or default in any material
respect thereunder; and, except as otherwise specifically disclosed on Schedule
2.1.(iv), to the Best Knowledge of Seller, no other party to any of such
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contracts is (with or without notice, lapse of time or both) in breach or
default in any material respect thereunder.
(b) Except as disclosed in Schedule 7.8(b), to the Best
Knowledge of Seller, Seller has not submitted any bid for its printed wire board
products or services manufactured or provided at the Real Estate which is
currently outstanding and which, if accepted or awarded, would result in a
Contract where the volume of purchases of materials, supplies, goods, services,
equipment or other assets from Seller's printed wire board manufacturing
operations at the Real Estate under any such resulting contract could be
reasonably expected to exceed $1,000,000 (one million dollars). To the Best
Knowledge of Seller, Schedule 7.8(b) identifies each such bid and party to which
such bid was made. To the Best Knowledge of Seller, all such bids (y) were
submitted in the ordinary course of business and (z) were based on assumptions
believed by the management of Seller's printed wire board manufacturing
operations at the Real Estate to be reasonable when the bid was made.
(c) To the Best Knowledge of Seller, Schedule 7.8(c) sets
forth, with respect to each customer (including divisions of Seller) Contract
having unfilled backlog as of the date hereof in excess of one hundred thousand
dollars ($100,000), the backlog of Seller thereunder as of such date, the name
of the customer and a brief description of the products and services to be
provided.
(d) Except as set forth in Schedule 7.8(c), to the Best
Knowledge of Seller, all of the Contracts constituting the backlog of the Seller
as it relates to Seller's printed wire board manufacturing operations at the
Real Estate, were entered into the ordinary course of business and based upon
assumptions believed by the management of Seller's printed wire board
manufacturing operations at the Real Estate to be reasonable at the time such
Contract was entered into.
SECTION 7.9. LICENSES AND PERMITS. Seller or its Affiliates
have the licenses and permits and other governmental authorizations and
approvals as set forth on Schedule 7.9., and such licenses and permits
constitute all material licenses and permits required by Seller pursuant to
Governmental Rules to conduct its printed wire board manufacturing operations at
the Real Estate immediately prior to the Closing Date. All such licenses and
permits held by Seller which are material to Seller's use of the Transferred
Assets prior to the Closing are valid and in full force and effect. Seller or
its Affiliates will use its reasonable efforts to cooperate with Buyer (a) at
Seller's expense, to transfer the Transferable Permits to Buyer; and (b) at
Buyer's expense, to obtain any additional permits required by Buyer.
SECTION 7.10. ENVIRONMENTAL REPRESENTATIONS. The following
representations and warranties are the sole and exclusive representations and
warranties made by Seller to Buyer relating to environmental matters at the Real
Estate:
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(a) Except as set forth on Schedule 7.10.(a), to the Best
Knowledge of Seller as of the Closing Date, Seller's operations at the Real
Estate are in compliance in all material respects with all applicable
Environmental Law.
(b) Except as set forth on Schedule 7.10.(b), to the Best
Knowledge of Seller as of the Closing Date, neither the Seller's operations at
the Real Estate nor the Real Estate is subject to any judgment, order or consent
decree of any court, or quasi-judicial or administrative agency having
jurisdiction over the Real Estate, and to the Best Knowledge of Seller as of the
Closing Date there are no charges, complaints, lawsuits or governmental
investigations pending or threatened in writing against the Real Estate or
Seller involving violations of Environmental Law at the Real Estate, in each
case that would have a material adverse effect on Buyer's possession of the Real
Estate or use of the Real Estate in the same manner as used by Seller
immediately prior to the Closing Date.
(c) Except as set forth on Schedule 7.10.(c), at the Closing
Date, Seller has in full force and effect, all material permits, licenses and
other authorizations that are required under Environmental Law with respect to
the operation of Seller's business at the Real Estate as of the Closing Date.
(d) Except as set forth on Schedule 7.10.(d), to the Best
Knowledge of Seller as of the Closing Date, there have been no leaks, spills or
releases of Hazardous Substances by Seller on or to the Real Estate which
violate an Environmental Law or which are required to be remediated by
Governmental Authorities.
(e) Except as set forth in Schedule 7.10.(e), to the Best
Knowledge of Seller as of the Closing Date, there are no Hazardous Substances
under the Real Estate of Seller except as may be naturally occurring.
(f) Without having performed any investigations or inquiries
or other due diligence concerning the presence of any asbestos containing
material ("ACM") on the Multek Site (including all improvements thereon) Seller
is aware of no ACM on or under the Multek Site, other than the ACM present in
the gasket material in the steam piping system. To the Best Knowledge of Seller,
as of the Closing Date, there is no friable asbestos on the Real Estate.
(g) To the Best Knowledge of Seller as of the Closing Date,
there are no known underground storage tanks located on the Real Estate of
Seller.
(h) Except as set forth in Schedules 7.10.(a) through
7.10.(e), to the Best Knowledge of Seller, Seller has not received (i) any
written notice or claim that it is or may be liable to any party as a result of
a release or threatened release of Hazardous Substances on or which has migrated
from the Real Estate of Seller to the property of adjoining landowners, or (ii)
any letter or written request for information under Section
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104 of the Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. Section 9604) affecting the Real Estate or comparable state laws
affecting the Real Estate, and (iii) to the Best Knowledge of Seller, none of
its operations at the Real Estate are subject to any investigation by any
Governmental Authority evaluating whether any remedial action is needed to
respond to a release or threatened release of Hazardous Substances on or from
the Real Estate of Seller.
SECTION 7.11. FINANCIAL STATEMENTS AND REPORTS. Seller has
previously delivered or made available to Buyer historical management reports on
Seller's expense, cost and assets related to Seller's printed wire board
manufacturing operations at the Real Estate. To the Best Knowledge of Seller,
this financial information is based on Seller's ledger and cost system reports.
SECTION 7.12. LABOR AND EMPLOYMENT MATTERS. To the Best
Knowledge of Seller, (a) Seller is not engaged in, nor since January 1, 1995,
has it engaged in, unfair labor practices with respect to the Employees, and
there is no labor strike, dispute (other than routine individual grievances),
slowdown or stoppage pending or, to the Best Knowledge of Seller, threatened,
against or directly affecting the Transferred Assets; (b) no union
representation question or union or other organizational activity that would be
subject to the National Labor Relations Act (29 U.S.C. Sections 151 et seq.)
exists respecting the Employees; (c) no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is pending by any of
the Employees; (d) no collective bargaining agreement exists with respect to the
Employees, which is binding on Seller; (e) Seller has not experienced any
material work stoppage or other material labor difficulties with respect to the
Employees during the period beginning January 1, 1995; (f) Seller is not
delinquent in any material respect in payments to any of its current or former
Employees for any wages, salaries, commissions or other direct compensation for
any services performed by them or amounts required to be reimbursed to such
Employees; and (g) Seller has not received any written notice nor does it have
any knowledge or any threatened labor or civil rights dispute, controversy or
grievances (other than routine individual grievance) by any of the Employees or
any other unfair labor practice proceeding to claims of, or obligations to, any
Employee or group of Employees.
SECTION 7.13. INVENTORIES. The levels of Inventory have been
maintained by Seller in the ordinary course of business, and except as
specifically stated on Schedule 2.1(iii), all such Inventories are owned free
and clear of all Encumbrances.
SECTION 7.14. EQUIPMENT. To the Best Knowledge of Seller: (a)
the Equipment listed on Schedule 2.1.(ii) constitutes all material machinery and
manufacturing equipment required by Seller to conduct its printed wire board
manufacturing operations at the Real Estate immediately prior to the Closing
Date; and (b) except as indicated on Schedule 7.14., on the Closing Date, the
Equipment listed on Schedule 2.1.(ii) is in working order in all material
respects, ordinary wear and tear
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excepted, and subject to downtime for normal repairs and routine preventative
maintenance conducted in the ordinary course of business.
SECTION 7.15. CUSTOMERS. To the Best Knowledge of Seller,
Schedule 7.15 sets forth (a) the names and addresses of all customers of Seller
that ordered goods and services from Seller's printed wire board plant in
Austin, Texas during the twelve-month period ended December 31, 1996 and (b) the
amount for which each such customer was invoiced during such period. To the Best
Knowledge of Seller, no such customer described in clause (a) of the first
sentence of this Section has otherwise threatened in writing to cease using such
products, goods or services, or to substantially reduce the use of such
products, goods or services solely as a result of the consummation of the
transactions contemplated by this Agreement.
SECTION 7.16. SUPPLIERS; RAW MATERIALS. To the Best Knowledge
of Seller, Schedule 7.16 sets forth (a) the names and addresses of all suppliers
(including without limitation Seller and any Affiliates thereof) from which
Seller's printed wire board plant in Austin, Texas ordered raw materials,
supplies, merchandise and other goods and services with an aggregate purchase
price for each such supply of $120,000 (one hundred twenty thousand dollars) or
more during the twelve-month period ended December 31, 1996 and (b) the amount
for which each such supplier invoiced Seller during such period.
SECTION 7.17. REAL ESTATE.
(a) Seller will continue to operate the Real Estate in a
manner which is consistent with the manner in which the Real Estate is now
operated by Seller and will not enter, except with the written consent of Buyer,
into new service or maintenance agreements which will be Consensual Transfers
from the date of this Agreement until the Closing Date, except for those which
are cancelable at will or upon thirty (30) days' notice.
(b) To the Best Knowledge of Seller, Seller has furnished to
Buyer copies of all existing agreements in Seller's physical possession at the
Real Estate affecting the Real Estate requested by Buyer, including all
contracts for service or maintenance of the Real Estate, all governmental
documents relating to the occupancy of the Real Estate and "as built" plans and
specifications, and Seller has provided Buyer access to the books and records
relating to the operation of the Real Estate and copies of any other documents
relating to the Real Estate that are within the possession of Seller and have
been requested by Buyer.
(c) To the Best Knowledge of Seller, Seller has not received
any written notice from any insurance company which has issued a policy with
respect to the Real Estate requesting performance of any structural or other
major repairs or alterations to the Real Estate which has not been complied
with.
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(d) To the Best Knowledge of Seller, on the Closing Date, the
material structural components of the Facility have not materially and adversely
interfered with Seller's conduct of its printed wire board manufacturing
operations at the Real Estate as of the Closing Date.
(e) Seller's Complex, as a whole, was originally ISO 9001
certified on December 11, 1992, has received a "revision date" to such
certification of December 2, 1996, and such certification has a renewal date of
December 11, 1998.
SECTION 7.18. EMPLOYEE BENEFIT PLANS FOR TRANSFERRED
EMPLOYEES. Except as set forth on Schedule 7.18., with respect to the
Transferred Employees. Seller does not maintain or contribute to any pension,
profit sharing, retirement, fringe benefit, deferred compensation, stock
purchase, stock option, incentive, bonus, vacation, severance, disability,
hospitalization, medical insurance or life insurance plan, oral or written
commitment of any nature regarding retiree health care, or program or any other
type of employee benefit plan, program or arrangement within the meaning of
Section 3(3) of ERISA, including without limitation any defined benefit plan
("Defined Benefit Plan") within the meaning of Section 3(35) of ERISA or Section
414(j) of the Code or any defined contribution plan ("Defined Contribution
Plan") within the meaning of Section 3(34) of ERISA or Section 414(j) of the
Code or any multiemployer plan ("Multiemployer Plan") within the meaning of
Section 3(37) and 4001(a)(3) of ERISA (hereinafter each individually referred to
as a "Plan" and collectively referred to as the "Plans") for the benefit of any
Transferred Employee.
SECTION 7.19. FORECAST. Schedule 7.19. contains a copy of
Seller's 9707 forecast. To the Best Knowledge of Seller, Schedule 7.19 was
prepared by the management of Seller's printed wire board manufacturing plant at
the Real Estate in the ordinary course of business consistent with past
practice.
SECTION 7.20. DISCLOSURE. No representation or warranty made
by Seller in this Agreement or any Schedule hereto or certificate required to be
furnished by or on behalf of Seller to Buyer pursuant to the terms hereof
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to make the statements contained
herein or therein not misleading.
SECTION 7.21. EXCLUSIVE WARRANTIES. (a) Except for the express
representations and warranties set forth in this Agreement, Seller makes no
representation or warranty, express or implied, with respect to the Transferred
Assets, the Real Estate and the Assumed Liabilities which are being sold "AS IS"
in all respects with all faults, including all environmental matters and
liabilities (other than such environmental liabilities expressly retained by
Seller pursuant to the express terms of this Agreement). SELLER SPECIFICALLY
DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OF BUYER'S, WHETHER OR NOT SELLER HAS BEEN MADE AWARE OF ANY
SUCH PURPOSE.
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ARTICLE VIII. COVENANTS AND AGREEMENTS.
SECTION 8.1. HSR FILINGS. In connection with the filings by
Seller and Buyer with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
of premerger notification in accordance with HSR with respect to the purchase
and sale of the Transferred Assets, the Real Estate and Assumed Liabilities
pursuant to this Agreement and the other Operative Agreements, Seller and Buyer
each agrees to furnish, and to cause its Affiliates to furnish, promptly to the
FTC and the Antitrust Division any additional information reasonably requested
by either of them pursuant to HSR in connection with such filings and shall
diligently take, or cooperate in the taking of, all steps that the Parties
mutually agree are necessary or reasonably desirable and proper to expedite the
termination of the waiting period under HSR; provided, however, that neither
Seller nor Buyer shall be required to comply with any Burdensome Condition.
SECTION 8.2. PURCHASE OF EQUIPMENT. As requested by Buyer,
Seller shall buy out the remaining lease obligations and/or obtain title to the
equipment and machinery specified on Schedule 8.2. effective as of the Closing
Date and conditional upon the Closing for a total aggregate purchase price for
all such equipment and machinery not to exceed $6,500,000 (six million five
hundred thousand dollars). Buyer shall pay to Seller the actual aggregate price
negotiated and paid by Seller pursuant to this Section 8.2 as additional
consideration at Closing in accordance with Section 2.3., above.
SECTION 8.3. AMENDED SCHEDULES. If, prior to the date which is
six months after the date of this Agreement, Buyer identifies in writing to
Seller any assets which were not listed in Schedule 2.1(ii) through 2.1(vi)
hereunder as Transferred Assets and which Seller agrees are assets which were
required by Seller to conduct its printed wire board manufacturing operations at
the Real Estate immediately prior to Closing, Seller shall, subject to the
applicable terms and conditions of this Agreement, amend the relevant schedule
to add such assets thereto and such assets shall thereafter be considered
Transferred Assets for all purposes under this Agreement.
SECTION 8.4. SALE OF REAL ESTATE. (a) From and after the
Closing Date, Seller shall proceed to use its reasonable good faith efforts to
complete the Subdivision, and to make the utilities/services Independent in
certain respects as more fully described in the Project Operations Agreement
("making the Utilities/Services Independent"). Seller shall pay all expenses
associated with the Subdivision and for making the Utilities/Services
Independent; provided that in no event shall Seller be obligated to spend more
than four million U.S. dollars ($4,000,000) in the aggregate for making the
Utilities/Services Independent. A failure of or refusal by the City of Austin
and/or Travis Central Appraisal District to take all required actions to
complete the Subdivision for any reason shall not constitute a breach by Seller
hereunder. If the Subdivision is not completed as aforesaid, or if making the
Utilities/Services
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Independent cannot, in Seller's good faith and sole opinion, be performed for an
aggregate expense less than or equal to four million U.S. dollars ($4,000,000),
then Buyer's exclusive remedy and Seller's exclusive liability shall be for
Buyer to continue to occupy the Real Estate for the balance of the ninety-nine
(99) year term of the Lease and otherwise the Lease shall remain in full force
and effect upon the same terms and conditions stated therein.
(b) If the Subdivision has been accomplished, and Seller has
completed making the Utilities/Services Independent , the Parties shall schedule
a closing (the "Real Estate Closing") to occur no later than ten (10) days after
the date on which both the Subdivision and making the Utilities/Services
Independent shall have been completed ("Real Estate Closing Date"). At the Real
Estate Closing, Seller shall convey to Buyer insurable fee simple title to the
Real Estate (the Title Company insuring indefeasibility of title), in its "As
Is" condition in all respects "with all faults," together with (i) non-exclusive
easements in recordable form to use the Access Roads (as defined in the Project
Operations Agreement), (ii) all other easements in recordable form determined by
Seller and Buyer to be required in connection with making the Utilities/Services
Independent, and (iii) all other easements in recordable form required by either
Party in connection with the services to be provided by one Party to the other
pursuant to the Project Operations Agreement; subject, however, to (y) Permitted
Encumbrances, and (z) any taking under powers of eminent domain (the word
"taking" as used herein shall encompass, without limitation, a taking by or for
utility easements). Notwithstanding the foregoing, Seller shall cause to be
discharged at or prior to the Real Estate Closing (or cause Buyer's Title
Company to insure against collection out of the Real Estate on account of) any
fee mortgages or liens against the Real Estate except if caused by Buyer or
anyone claiming by, through or under Buyer. Fee title shall be conveyed by a
Texas statutory form of Special Warranty Deed in the form attached as Exhibit H.
Any conveyance or similar transfer Taxes imposed upon the transfer of the Real
Estate shall be paid by Seller, and the cost of any surveys, other than the
Survey, updates to the Title Commitment and the cost of any title policies,
environmental reports other than the Environmental Baseline, and any other costs
or fees associated with such purchase shall be paid by Buyer. Seller shall
execute and deliver such customary affidavits as are reasonably required by the
Title Company to issue Buyer's Title Policy, without exception for matters other
than the Permitted Encumbrances.
(c) At the Real Estate Closing, adjustment shall be made as of
11:59PM of the day immediately preceding the Real Estate Closing, in accordance
with the customs of the Real Estate Board of New York, Inc., between the parties
for:
(i) real estate Taxes;
(ii) water rates and charges;
(iii) sewer Taxes and rents;
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(iv) any other utilities/services, whether or not they have
been made independent as part of making the Utilities/Services Independent and
which customarily require adjustment; and
(v) periodically recurring fees, and governmental and
transferable licenses or permits, if any, issued in respect of the fee ownership
of the Real Estate.
(d) At the Real Estate Closing, the Lease shall be canceled
effective as of the transfer of fee title to the Real Estate to Buyer as
required herein. The Project Operations Agreement shall survive the Real Estate
Closing and shall remain in full force and effect in accordance with its terms.
SECTION 8.5. SALE "AS IS" WITH ALL FAULTS. Except for the
express representations set forth in Sections 7.10. and 7.17., above, the
Parties acknowledge and agree that the Basic Fixed Rent, defined in the Lease,
and the Purchase Price allocated to the Real Estate, were established in
material reliance on Buyer accepting the Real Estate in its "AS IS" condition
"WITH ALL FAULTS."
SECTION 8.6. BUYER PERMITS . Buyer shall exercise its
reasonable efforts to satisfy and to effectuate on or prior to the Closing Date,
or as soon thereafter as is practicable, the transfer or issuance of all
licenses and permits it may require to operate its business on the Real Estate
on and after the Closing Date.
SECTION 8.7. GUARANTEE OF THE GUARANTOR. The Guarantor hereby
unconditionally and absolutely guarantees to Seller the performance and payment
of any and all monetary and other obligations of Buyer under this Agreement and
the Operative Agreements to which Buyer in accordance herewith and therewith is
a party, independently of the obligations of Buyer, and the Guarantor hereby
agrees to indemnify Seller against any Loss incurred by reason of any failure of
Buyer to perform and pay such obligations in such manner. This guarantee is a
direct, absolute, unconditional, irrevocable, present and continuing guarantee
of performance and payment, and is a direct and primary obligation of the
Guarantor, and is in no way conditional or contingent upon any attempt to
enforce performance upon, or collection from, Buyer or upon any other event,
contingency or circumstances whatsoever. This shall be a continuing guarantee
and shall cover and secure any balance owing by Buyer under this Agreement and
the Operative Agreements to which Buyer is a party and Seller shall not be
obligated to exhaust its recourse against Buyer before being entitled to payment
from the Guarantor, of all and every of the obligations hereby guaranteed. The
obligations of the Guarantor set forth above shall not be subject to any
deduction, diminution, abatement, setoff, recoupment, suspension, deferment,
reduction, or defense (other than valid defenses Buyer has against Seller and
all other rights of Buyer under this Agreement and the Operative Agreements, and
full and strict compliance by the Guarantor of its obligations hereunder) and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way
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affected by, any circumstance or condition whatsoever (whether or not the
Guarantor or Buyer shall have any knowledge or notice thereof), other than full
and strict compliance by the Guarantor of its obligations hereunder.
SECTION 8.8. NON-SOLICITATION. (a) Seller agrees that, for a
period of two years from the Closing Date, it will not, directly or indirectly,
solicit for employment or hire any Transferred Employee (so long as such person
is employed by Buyer); provided, however, that the foregoing provision will not
prevent Seller from employing any such person who contacts Seller on his or her
own initiative without any direct or indirect solicitation by or encouragement
from Seller and provided, further, that solicitation shall not include general
employment advertising or the use of an independent employment agency or search
firm not specifically directed to employees of Buyer or any of its Affiliates.
(b) Each of Buyer and Guarantor agree that, for a period of
two years from the Closing Date, it will not, directly or indirectly, solicit
for employment or hire any employee of Seller or any of its subsidiaries
employed at the Complex or with whom Buyer had contact in connection with this
transaction (so long as such person is employed by Seller); provided, however,
that the foregoing provision will not prevent either Buyer of Guarantor from
employing any such person who contacts either Buyer or Guarantor on his or her
own initiative without any direct or indirect solicitation by or encouragement
from Buyer or Guarantor and provided, however, that solicitation shall not
include general employment advertising or the use of an independent employment
agency or search firm not specifically directed to employees of Seller or any of
its Affiliates.
SECTION 8.9. SATISFACTION OF CLOSING CONDITIONS. Buyer and
Seller shall use their reasonable good faith efforts to cause all conditions to
the Closing within the control of such Party to be timely satisfied and, subject
to the conditions in Articles IX and X, respectively, to consummate the Closing.
ARTICLE IX - COVENANTS OF SELLER
SECTION 9.1. CONDUCT OF THE BUSINESS. (a) From the date hereof
until the Closing Date, Seller shall continue to operate the printed wire board
plant in Austin, Texas in the ordinary course and use its reasonable good faith
efforts to preserve intact the Transferred Assets and relationships with third
parties (including other business units of Seller), and to keep available the
services of those of the Employees who are regular, full-time Employees (subject
to the rights of any Employees to resign, retire or take a retirement bridge
leave of absence, and the right of Seller to dismiss any Employee in accordance
with existing policies of Seller).
SECTION 9.2. ACCESS TO INFORMATION. Except as may be deemed
appropriate to ensure compliance with respect to any applicable Laws (including,
without limitation, any requirements with respect to security clearances and any
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antitrust regulations) and subject to any confidentiality obligations or
applicable privileges (including, without limitation, the attorney-client
privilege), from the date of this Agreement until the Closing Date, Seller (a)
will give Buyer and its authorized representatives reasonable access to the
offices, properties, books, and records of Seller relating to the Transferred
Assets during normal business hours and upon reasonable prior notice, (b) will
furnish to Buyer and its authorized representatives such financial and operating
data and other information relating to the Transferred Assets as Buyer may
reasonably request and (c) will instruct its employees and representatives to
cooperate with Buyer in its investigation of the Transferred Assets, all for the
purpose of enabling Buyer and its authorized representatives to conduct, at
their own expense, business and financial reviews, investigations and studies of
the Transferred Assets. Notwithstanding the foregoing or any other provision of
this Agreement, Buyer shall not have access to such price and other competitive
information as may invoke antitrust or similar legal restrictions. Each Party
shall use its good faith reasonable efforts after the Closing Date to provide to
the other Party and its representatives at the other Party's expense information
reasonably requested by the other Party relating to the Transferred Assets to
the extent required by the other Party to permit the other Party to determine
any matter relating to its rights and obligations under the Operative Agreements
and its compliance with applicable tax and financial reporting requirements, and
in connection with any claim asserted in connection with an Assumed Liability.
ARTICLE X. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
All obligations of Buyer to effect the Closing hereunder are,
subject to the satisfaction at Closing of the following conditions precedent:
SECTION 10.1. PERFORMANCE. Seller shall have performed and
complied in all material respects with each agreement, covenant and condition in
each Operative Agreement to which it is or is specified to be a Party, which
agreement, covenant or condition is required to be performed or complied with by
Seller at or before the Closing.
SECTION 10.2. AUTHORIZATION, EXECUTION AND DELIVERY OF
OPERATIVE AGREEMENTS. Seller shall have duly authorized, executed and delivered
each Operative Agreement to which it is or is specified to be a Party, and an
executed counterpart thereof shall have been delivered to Buyer.
SECTION 10.3. NO DEFAULT. Each Operative Agreement shall be in
full force and effect without any event having occurred or condition existing
that constitutes, or with the giving of notice or passage of time (or both)
would constitute, a default thereunder or breach thereof (other than a default
or breach on the part of Buyer or any of its Affiliates) or would give any party
thereto (other than Seller or any such Affiliate) the right to terminate or not
to perform any obligation thereunder.
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SECTION 10.4. CONSENTS, ETC.; BURDENSOME CONDITIONS. (a) With
the exception of the transfer of the Transferable Permits all Governmental
Actions required to be taken, given or obtained by Seller in connection with the
transactions contemplated by this Agreement and the other Operative Agreements
shall (i) have been taken, given or obtained, (ii) be in full force and effect
and (iii) not be subject to any pending proceedings or appeals, administrative,
judicial or otherwise (and the time for appeal shall have expired or, if an
appeal shall have been taken, it shall have been dismissed);
(b) the waiting period under HSR shall have expired or been
terminated; and
(c) no Burdensome Condition shall exist with respect to Buyer
in connection with any transactions contemplated by the Operative Agreements.
SECTION 10.5. GOVERNMENTAL RULES. (a) No Governmental Rule
shall have been instituted, issued or proposed to restrain, enjoin or prevent
the transactions contemplated by the Operative Agreements or to invalidate,
suspend or require modification of any material provision of any Operative
Agreement.
(b) No change shall have occurred since the date of this
Agreement in any Governmental Rule that, in the good faith opinion of Buyer,
would make it illegal for Buyer to consummate the transactions contemplated by
the Operative Agreements or subject Buyer to any material fine, penalty or other
liability under or pursuant to any Governmental Rule because of its consummation
of the transactions contemplated by the Operative Agreements.
SECTION 10.6. STANDARD CLOSING DOCUMENTS. Buyer shall have
received, with respect to Seller:
(a) a certificate, dated the Closing Date, of the secretary,
assistant secretary or another appropriate authorized signatory of Seller
certifying:
(i) that a true and correct copy of the resolutions,
delegations or other written evidence of corporate action of the appropriate
authority within Seller duly authorizing or ratifying its execution, delivery
and performance of the Operative Agreements to which it is or is specified to be
a Party and the consummation of the transactions contemplated thereby, is
attached to such certificate, and as to the absence of other resolutions,
delegations or other corporate action relating thereto; and
(ii) as to the absence of proceedings for the merger,
consolidation, sale of all or substantially all the assets, dissolution,
liquidation or similar proceedings with respect to Seller;
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(b) an incumbency certificate signed by an appropriate officer
or other authorized signatory of Seller dated the Closing Date as to the
signatures and titles of the officers or authorized signatories of Seller
executing any Operative Agreement and any other documents delivered in
connection with any Operative Agreement;
(c) a certificate signed by an appropriate officer or other
authorized signatory of Seller dated the Closing Date certifying that the
conditions set forth in Section 10.1., 10.2., 10.3., 10.4., and 10.7. (with
respect to Seller) have been satisfied; and
(d) a certificate signed by an appropriate officer or other
authorized signatory of Seller dated the Closing Date certifying that the
representations and warranties set forth in Article VII are true and correct in
all respects (in case of any representation or warrant qualified by materiality)
or in all material respects (in the case of any representation or warranty not
qualified by materiality) as of the Closing Date.
SECTION 10.7. REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Article VII shall be true and
correct in all respects (in case of any representation or warranty containing
any materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualifications) as of the
date of this Agreement and as of the Closing Date with the same effect as if
made at and as of the Closing Date.
SECTION 10.8. PROCEEDINGS. All corporate and legal proceedings
taken by Seller in connection with the transactions contemplated hereby and all
documents relating thereto shall be reasonably satisfactory in form and
substance to Buyer, and certified or other copies of all relevant documents as
Buyer shall have reasonably requested shall have been provided to Buyer or its
counsel.
SECTION 10.9. WAIVER OF CONDITIONS BY BUYER. Buyer may waive
any or all of these conditions in whole or in part without prior notice;
provided, however, that no such waiver of a condition shall constitute a waiver
by Buyer of any of its rights pursuant to Article XII or XIII of this Agreement
if Seller shall be in default of any of its express representations, warranties
or covenants set forth in this Agreement.
ARTICLE XI. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
All obligations of Seller to effect the Closing hereunder are,
at its option, subject to the satisfaction at Closing of the following
conditions precedent:
SECTION 11.1. PERFORMANCE. Each of Buyer and Guarantor shall
have performed and complied in all material respects with each agreement,
covenant and condition in each Operative Agreement to which it is or is
specified to be a Party, which
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agreement, covenant or condition is required to be performed or complied with by
Buyer or Guarantor at or before the Closing.
SECTION 11.2. AUTHORIZATION, EXECUTION AND DELIVERY OF
OPERATIVE AGREEMENTS. Each of Buyer and Guarantor shall have duly authorized,
executed and delivered each Operative Agreement to which it is or is specified
to be a Party, and an executed counterpart thereof shall have been delivered to
Seller.
SECTION 11.3. NO DEFAULT. Each Operative Agreement shall be in
full force and effect without any event having occurred or condition existing
that constitutes, or with the giving of notice or passage of time (or both)
would constitute, a default thereunder or breach thereof (other than a default
or breach on the part of Seller or any of its Affiliates) or would give any
party thereto (other than Buyer or its Affiliates) the right to terminate or not
to perform any obligation thereunder.
SECTION 11.4. CONSENTS, ETC.; BURDENSOME CONDITIONS. (a) All
Governmental Actions required to be taken, given or obtained by each of Buyer
and Guarantor in connection with the transactions contemplated hereby shall (i)
have been taken, given or obtained, (ii) be in full force and effect and (iii)
not be subject to any pending proceedings or appeals, administrative, judicial
or otherwise (and the time for appeal shall have expired or, if an appeal shall
have been taken, it shall have been dismissed).
(b) The waiting period under HSR shall have expired or been
terminated.
(c) No Burdensome Condition shall exist with respect to Seller
in connection with any transactions contemplated by the Operative Agreements.
SECTION 11.5. GOVERNMENTAL RULES. (a) No Governmental Rule
shall have been instituted, issued or proposed to restrain, enjoin or prevent
the transactions contemplated by the Operative Agreements or to invalidate,
suspend or require modification of any material provision of any Operative
Agreement.
(b) No change shall have occurred since the date of this
Agreement in any Governmental Rule that, in the good faith opinion of Seller,
would make it illegal for Seller to consummate the transactions contemplated by
the Operative Agreements or subject Seller to any material fine, penalty or
other liability under or pursuant to any Governmental Rule in connection with
any such transaction.
SECTION 11.6. STANDARD CLOSING DOCUMENTS. Seller shall have
received, with respect to each of Buyer and Guarantor:
(a) a certificate, dated the Closing Date, of the secretary,
assistant secretary or another appropriate authorized signatory of each of Buyer
and Guarantor certifying:
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(i) that a true and correct copy of the Agreement of Limited
Partnership of Buyer and the charter and By-laws of Guarantor is attached to
each such certificate:
(ii) that a true and correct copy of the resolutions,
delegations or other written evidence of corporate action of the appropriate
authority within each of Buyer and Guarantor and, if applicable, the
stockholders of each of Buyer and Guarantor duly authorizing or ratifying its
execution, delivery and performance of the Operative Agreements to which each is
or is specified to be a Party and the consummation of the transactions
contemplated thereby, is attached to each such certificate, and as to the
absence of other resolutions, delegations or other corporate action relating
thereto; and
(iii) as to the absence of proceedings for the merger,
consolidation, sale of all or substantially all the assets, dissolution,
liquidation or similar proceedings with respect to each of Buyer and Guarantor;
(b) an incumbency certificate signed by an appropriate officer
or other authorized signatory of each of Buyer and Guarantor dated the Closing
Date as to the signatures and titles of the officers or authorized signatories
of each of Buyer and Guarantor executing any Operative Agreement and any other
documents delivered in connection with any Operative Agreement;
(c) a certificate signed by an appropriate officer or other
authorized signatory of each of Buyer and Guarantor dated the Closing Date
certifying that the conditions set forth in Section 11.1., 11.2., 11.3., 11.4.,
and 11.7. (with respect to each of Buyer and Guarantor) have been satisfied; and
(d) a certificate signed by an appropriate officer or other
authorized signatory of each of Buyer and Guarantor dated the Closing Date
certifying that the representations and warranties set forth in Article VI are
true and correct in all material respects as of the Closing Date.
SECTION 11.7. REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Article VI shall be true and correct
in all material respects (in case of any representation or warranty containing
any materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualifications) as of the
date of this Agreement and at the Closing with the same effect as if made at and
as of the Closing Date.
SECTION 11.8. PROCEEDINGS. All limited partnership and legal
proceedings taken by Buyer and all corporate and legal proceedings taken by
Guarantor in connection with the transactions contemplated hereby and all
documents relating thereto shall be reasonably satisfactory in form and
substance to Seller, and certified or other copies of all relevant documents as
Seller shall have reasonably requested shall have been provided to Seller or its
counsel.
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SECTION 11.9. WAIVER OF CONDITIONS BY SELLER. Seller may waive
any or all of these conditions in whole or in part without prior notice;
provided, however, that no such waiver of a condition shall constitute a waiver
by Seller of any of its rights pursuant to Article XII or XIII of this Agreement
if Buyer shall be in default of any of its express representations, warranties
or covenants set forth in this Agreement.
ARTICLE XII. ENVIRONMENTAL INDEMNITIES
SECTION 12.1. SELLER'S INDEMNITY. (a) Subject to the maximum
aggregate liability of eight million dollars ($8,000,000) specified in Section
13.3.(c), below, Seller agrees that it shall bear the expenses of, and
responsibility for, any monitoring or remediation, required by a Governmental
Authority at time of Closing or required by any Governmental Authority to
address any violation of Environmental Law or an exceedance of a published
standard or guideline established by a Governmental Authority in effect at the
Closing Date with respect to any contaminant identified in the Environmental
Baseline. Subject to the maximum aggregate liability of eight million dollars
($8,000,000) specified in Section 13.3.(c), below, Seller shall also bear the
cost of any Remediation required to address Newly Discovered Contamination.
Seller's obligation to conduct such monitoring or remediation shall terminate
upon the earlier of (i) receipt of notice from any Governmental Authority with
jurisdiction that the Remediation is acceptable or (ii) three (3) years after
the last monitoring requirement imposed by a Governmental Authority has been
completed, it being understood that no other Remediation has been required of
Seller for any such contamination specified in the first sentence of this
Section by such Governmental Authority prior to the expiration of such period.
All Remediation shall be performed to the remediation levels and requirements in
effect at the Closing Date as established by any Governmental Authority with
jurisdiction over the Real Estate, except that Remediation required as a result
of Newly Discovered Contamination shall be performed to the published
remediation standards or guidelines established within one year of the Closing
Date. Seller shall have the sole right to negotiate with any Governmental
Authority, and all Remediation shall be conducted under Seller's exclusive
direction, provided that Seller may not agree to any condition, clause or
settlement that (i) creates liability on behalf of Buyer, (ii) burdens Buyer's
title to the Real Estate, or (iii) could reasonably be anticipated to have a
significant adverse effect upon the health and safety of Buyer's employees,
without the written consent of Buyer, which consent shall not be unreasonably
withheld. (All monitoring and remediation activities required to be performed by
Seller pursuant to this Section 12 shall be referred to collectively as the
"Seller's Remediation.") Except as herein provided, Seller's Remediation shall
not be subject to Sections 13.3.(b) and (c).
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(b) Buyer agrees to use its reasonable good faith efforts to
cooperate with Seller in all matters relating to Seller's Remediation. During
the course of any Seller's Remediation, Buyer shall, and hereby does, grant to
Seller, its agents, employees, contractors and consultants, all access
reasonably necessary to perform such Seller's Remediation at reasonable times
and in compliance with any health, safety or security requirements of Buyer.
Such access shall include use of utilities at the parking and storage space.
Buyer also hereby agrees to allow Seller to install and maintain any remediation
devices at, on or under the Real Estate, including, but not limited to,
monitoring wells or groundwater recovery and treatment systems, that are
required by any Governmental Authority or that Seller deems reasonably necessary
to perform Seller's Remediation, provided that, whenever possible, such
remediation devices shall be located to minimize impact on Buyer's operations.
During the course of Seller's Remediation, Seller shall use reasonable good
faith efforts to avoid or minimize interference with the ongoing business of
Buyer. Buyer may, at its own expense, monitor the Remediation. Upon request,
Seller shall provide to Buyer, at no expense, copies of all data, draft and
final reports, and correspondence from or to any Governmental Authority relating
to Seller's Remediation. Seller shall provide such documentation as soon as it
is received and, where practical, at least five Business Days prior to filing it
with any Government Authority. Seller shall consult with Buyer prior to
executing any Consent Order or otherwise accepting any obligation imposed by a
Governmental Authority. Buyer shall be entitled, at its own expense, to
participate in any meetings with any Governmental Authority concerning Seller's
Remediation. Seller shall give Buyer reasonable access to information necessary
to allow Buyer to undertake such activities, including, but not limited to, any
materials or data created by any of Seller's consultants after the Closing Date,
other than any such information that would otherwise be protected by the
attorney-client privilege, or any attorney work product doctrine or other
privilege pertaining to confidentiality.
(c) Subject to the maximum aggregate liability of eight
million dollars ($8,000,000) specified in Section 13.3.(c), below, Seller shall
indemnify and hold Buyer harmless from all Losses (i) arising from Seller's
negligent act or omission in performing Seller Remediation brought by
Governmental Authorities or third parties other than Affiliates of Buyer, (ii)
arising from the off-site transportation, treatment, storage or disposal of
Hazardous Material from the Real Estate by Seller at any time prior to the
Closing Date, or (iii) arising from any violation of any Environmental Law in
effect at the Closing Date, due to conditions existing or events occurring prior
to the Closing Date. This indemnification obligation shall not include indirect
or consequential Loss or expenses, but shall include Loss incurred by Buyer
attributable to the diminution of value of the Real Estate proven by Buyer to
have been caused by additional Liens, deed restrictions or deed recordations not
otherwise in effect as of the Closing Date and imposed pursuant to Environmental
Law solely as a result of Seller's Remediation. Except as herein provided,
Seller's obligations under this paragraph (c) shall not be subject to Sections
13.3.(b) and (c).
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SECTION 12.2. BUYER INDEMNITY. Notwithstanding any other
provisions of this Agreement to the contrary, Buyer shall: (i) bear the expense
and the responsibility for any monitoring or remediation of, (ii) indemnify and
hold Seller harmless from all Losses arising out of, and (iii) assume all
liabilities for any violation of Law or exceedance of a published standard or
guideline established by a Governmental Authority relating to the Real Estate
that is not a Seller Remediation and that occurs after the Closing Date and
during the time of Buyer's ownership or operation of the Real Estate.
SECTION 12.3. SURVIVAL. The indemnification provisions in this
Section shall survive the Closing indefinitely.
ARTICLE XIII. INDEMNITY.
SECTION 13.1. SURVIVAL. Subject to Section 12.3., above, (a)
the representations set forth in Sections 6.1., 6.2., 7.1., 7.2., and 7.6. shall
survive the Closing until the third anniversary of the date of this Agreement;
and (b) all other representations and warranties of the Parties contained in
this Agreement shall survive the Closing until the first anniversary of the date
of this Agreement.
SECTION 13.2. BUYER INDEMNIFICATION. Subject to Section 13.7.,
below, Buyer hereby indemnifies Seller against and agrees to hold Seller
harmless from any Loss incurred or suffered by Seller arising out of any
misrepresentation or breach of warranty contained in this Agreement (a "Warranty
Breach") by Buyer or any breach of covenant or agreement made or to be performed
pursuant to this Agreement (a "Covenant Breach") by Buyer.
SECTION 13.3. SELLER INDEMNIFICATION. (a) Subject to the
limitations in Article XII and Sections 13.3.(b) and (c), and 13.7. below,
Seller hereby indemnifies Buyer against and agrees to hold Buyer harmless from
(i) any Loss incurred or suffered by Buyer arising out of a Warranty Breach by
Seller or Covenant Breach by Seller; or (ii) a Retained Liability; provided that
Seller's indemnity with respect to any Retained Liability (other than Seller's
indemnity obligations under Article XII) and with respect to any Warranty Breach
relating to Section 7.6., above, shall not be subject to Sections 13.3.(b) or
(c) below; provided further however, that Seller's indemnity under Article XII
shall be subject to the maximum aggregate liability of eight million dollars
($8,000,00) specified in Section 13.3.(c) below.
(b) Seller shall not be liable under this Section 13.3. with
respect to any individual Warranty Breach or Covenant Breach by Seller where the
Loss resulting therefrom is less than $100,000, and no such individual Warranty
Breach or Covenant Breach shall be aggregated for purposes of Section 13.3.(c),
below; and
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(c) Seller shall not be liable under this Section 13.3. with
respect to any Warranty Breach and or Covenant Breach by Seller unless the
aggregate amount of Losses with respect to all Warranty Breaches and Covenant
Breaches by Seller exceeds $400,000 and then only to the extent of such excess
up to a maximum aggregate liability of $8,000,000.
SECTION 13.4. PROCEDURES. (a) Each of Buyer pursuant to
Sections 5,2,12.1. and 13.3. and Seller pursuant to Sections 5.2, 12.2., and
13.2. (the "Indemnified Party") agrees to give prompt notice to the other Party
(the "Indemnifying Party") of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which indemnity may be sought under
this Agreement, including the amount and other details of such claim ; provided,
however, that the failure of the Indemnified Party to so notify the Indemnifying
Party shall not relieve the Indemnifying Party of its indemnification
obligations hereunder, except to the extent that the Indemnifying Party shall
have been prejudiced by such lack of timely and adequate notice. The
Indemnifying Party, if it shall acknowledge in writing to the Indemnified Party
that it is fully liable (up to the indemnification limits) to the Indemnified
Party for any and all Losses associated with such claim, shall have the right,
at its election, to take over the defense or settlement of such claim at its own
expense by giving prompt notice to that effect to the Indemnified Party. If the
Indemnifying Party shall have so assumed the defense of any claim, the
Indemnifying Party shall be authorized to consent to a settlement of, or the
entry of any judgment arising from, any such claim, without the prior written
consent of the Indemnified Person; provided, however, that a condition to any
such settlement shall be a complete release of the Indemnified Person with
respect to such claim. The Indemnified Party shall at all times have the right,
at its option and expense, to participate fully in, but not to control, any such
defense. If the Indemnifying Party does not, within thirty days after receipt of
the Indemnified Party's notice of claim, (x) give such notice to take over the
defense of such claim and proceed diligently to defend the claim or (y) object
to such claim in writing to the Indemnified Party, then the Indemnified Party
shall have the right, but not the obligation, to undertake the defense of such
claim for the account of and at the risk of the Indemnifying Party and the
Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make as to such claim. The parties shall cooperate in
defending any third party claim, and the defending party shall have reasonable
access to the books, records and personnel which are pertinent to the defense
and which are in the possession or control of the other party. The parties agree
that any Indemnified Party may, at its own expense, join an Indemnifying Party
in any action, claim or proceeding brought by a third party, as to which any
right of indemnity created by this Agreement would or might apply, for the
purpose of enforcing any right of indemnity granted to such Indemnified Party
pursuant to this Agreement.
(b) Any claim for indemnification made directly by a party and
which does not result from a third party claim or action, shall be asserted by
written notice. The other party shall have a period of sixty days within which
to respond thereto. If the other party does not respond within such sixty-day
period, such party shall be deemed
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to have accepted responsibility to make payment and shall have no further right
to contest the validity of such claim.
SECTION 13.5. INSURANCE. The amount of any Loss for which
indemnification is provided shall be net of any amounts that the Indemnified
Party recovers under insurance policies or agreements with respect to such Loss.
The Indemnified Party shall take all reasonable actions to secure payment from
insurance policies before putting forward a claim for any Loss to the
Indemnifying Party.
SECTION 13.6. INDEMNITY IS THE EXCLUSIVE REMEDY. Each party
hereto acknowledges and agrees that, after the Closing Date, its sole and
exclusive remedy with respect to any and all claims relating to or arising out
of a breach of any representation, warranty, covenant or agreement made by the
other party in this Agreement shall be pursuant to the indemnification
provisions herein. Nothing set forth in this Agreement shall be deemed to
prohibit or limit either party's right at any time before, on or after the
Closing Date, to seek injunctive or other equitable relief for the failure of
the other party to perform any covenant or agreement contained herein.
SECTION 13.7. EXCLUSION OF CERTAIN DAMAGES. NEITHER BUYER NOR
SELLER SHALL BE RESPONSIBLE FOR ANY INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES WHATSOEVER, INCLUDING LOSS OF PROFITS OR GOODWILL, IN CONNECTION WITH
ANY ASPECT OF THIS AGREEMENT.
ARTICLE XIV. GENERAL.
SECTION 14.1. TERMINATION OF AGREEMENT. (a) This Agreement and
the obligations to consummate the transactions contemplated hereby and by the
other Operative Agreements may be terminated upon written notice to the other
Party hereto at any time before the Closing Date as follows:
(i) by Seller, on the one hand, or by Buyer, on the other
hand, if the Closing shall not have occurred on or prior to September 15, 1997;
(ii) by Seller, at any time prior to the Closing, if there has
been a material Warranty Breach or Covenant Breach by Buyer;
(iii) by Buyer, at any time prior to Closing, if there has
been a material Warranty Breach or Covenant Breach by Seller; or
(iv) by either Seller or Buyer if, in its reasonable opinion,
a Burdensome Condition exists with reference to Seller or Buyer, respectively;
provided, however, that prior to such termination such Party shall have
exercised reasonable efforts to negotiate with the relevant Governmental
Authority for removal of the Burdensome Condition;
-50-
<PAGE> 50
in which case this Agreement and all obligations of the Parties hereunder,
except obligations under Sections 14.2. and 14.4. shall terminate, unless the
Parties otherwise mutually agree.
(b) Notwithstanding the provisions of this Section,
termination of this Agreement shall not relieve any Party of its liability for
breach of any of the provisions of this Agreement or its obligations under
Sections 14.2. and 14.4.
SECTION 14.2. PUBLIC ANNOUNCEMENTS. No public release,
announcement or other form of publicity concerning this Agreement or the
transactions contemplated by this Agreement shall be issued by either party
hereto without the prior consent of the other party, except as such release or
announcement may be required by law or the rules and regulations of any
securities exchange (including the NASDAQ Stock Market), in which case the party
required to make the release or announcement shall allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance, provided that a period of 24 hours shall be deemed to be reasonable
time for purposes of this provision.
SECTION 14.3. NO THIRD-PARTY BENEFICIARIES. Except as provided
to the contrary in Article V hereof, this Agreement is for the sole benefit of
the Parties hereto and nothing herein expressed or implied herein or therein
shall give or be construed to give to any Person, other than the Parties, any
legal or equitable rights hereunder or thereunder.
SECTION 14.4. COSTS. Each Party shall be responsible for the
costs and expenses incurred by it in the negotiation, execution and delivery of
this Agreement and, except as otherwise provided elsewhere herein or in the
other Operative Agreements, the consummation of the transactions contemplated
hereby or thereby.
SECTION 14.5. BULK SALES. Buyer hereby waives compliance with
any applicable bulk sales or similar laws. Buyer shall discharge the Assumed
Liabilities in accordance with their terms and Buyer agrees that Seller shall
have no liability for any failure of Buyer to discharge the Assumed Liabilities
in accordance with their terms. Seller shall indemnify and hold harmless Buyer
against any and all liabilities which may be asserted by third parties against
Buyer as a result of Seller's noncompliance with any such bulk sales or similar
laws, other than the Assumed Liabilities.
SECTION 14.6. MODIFICATION AND WAIVER. No modification or
waiver of any provision of this Agreement and no consent by either Party to any
departure therefrom shall be effective unless in a writing referencing the
particular article hereof or thereof to be modified or waived and signed by a
duly authorized officer or representative of each Party, and the same will only
then be effective for the period and on the conditions and for the specific
instances and purposes specified in such writing.
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<PAGE> 51
SECTION 14.7. CONSTRUCTION; REPRESENTATION. This Agreement has
been negotiated by the Parties and their respective counsel and will be fairly
interpreted in accordance with its and their terms and without any strict
construction in favor of or against either Party.
SECTION 14.8. SEVERABILITY. If any one or more provisions
contained in this Agreement, or the application of such provision to any person
or circumstance, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
SECTION 14.9. GOVERNING LAW. (a) This Agreement, valued in
excess of One Million Dollars ($1,000,000), shall be deemed to have been made at
Armonk, New York, and shall be interpreted, and the rights and liabilities of
the parties hereto determined, in accordance with the laws of the State of New
York applicable to agreements executed, delivered and performed within such
State, without regard to the principles of conflicts of laws thereof.
(b) Each of the Parties hereby consents to the exclusive
jurisdiction of any state or federal court located within the county of New York
in the State of New York. Each of the Parties hereby: (i) waives trial by jury,
(ii) waives any objection to venue of any action instituted under this
Agreement, and (iii) consents to the granting of such legal or equitable relief
as is deemed appropriate by any aforementioned court.
SECTION 14.10. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
shall be effective (a) when delivered by messenger or courier, or (b) five days
after deposit for mailing by registered or certified mail, postage prepaid,
return receipt requested, when also transmitted by telecopy, as follows:
(a) if to Seller, to: International Business Machines Corporation
New Orchard Road
Armonk, New York 10504
Attention: Mr. Lee A. Dayton
Vice President, Corporate Development and
Real Estate
Facsimile: (914) 499-7803
with a copy to: International Business Machines Corporation
New Orchard Road
Armonk, New York 10504
-52-
<PAGE> 52
Attention: Mr. Donald D. Westfall
Associate General Counsel
Facsimile: (914) 499.6006
(b) if to Buyer, to: Multilayer Tek L.P.
11400 Burnet Road
Austin, Texas 87858
Attention: General Manager
Facsimile: (512) 838.7141
with a copy to: The DII Group, Inc.
6273 Monarch Park Place
Suite 200
Niwot, CO 80503
Attention: Senior Vice President and Chief Financial Officer
Facsimile: (303) 652.0602
and a copy to:
Curtis, Mallet-Prevost, Colt & Mosle
101 Park Avenue
New York, NY 10178
Attention: Jeffrey N. Ostrager
Facsimile: (212) 697.1559
or to such person or address as either of the Parties shall hereafter designate
to the other from time to time by similar written notice.
SECTION 14.11. ASSIGNMENT. This Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by, the successors and
assigns of the Parties; provided, that, neither Party may assign its rights or
obligations hereunder without the written consent of the other Party, which
consent shall not be unreasonably withheld.
-53-
<PAGE> 53
SECTION 14.12. COUNTERPARTS. This Agreement may be executed by
the Parties in one or more counterparts, each of which shall be an original and
all of which shall constitute one and the same instrument.
SECTION 14.13. ENTIRE AGREEMENT. This Agreement, together with
the other Operative Agreements and the Agreement for Exchange of Confidential
Information dated February 2, 1997 , between Buyer and Seller, comprise the
entire agreement between the Parties with respect to the subject matter hereof
and thereof and supersede all prior agreements, understandings and
representations, oral or written, between Seller and Buyer relating hereto or
thereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives and become effective as of
the date and year first above written.
<TABLE>
<S> <C>
MULTILAYER TEK L.P. INTERNATIONAL BUSINESS
MACHINES CORPORATION
By: /s/ Carl R. Vertuca, Jr. By: /s/ K.P. Tang
-------------------------------------- --------------------------------
Senior Vice President, Chief
Financial Officer and Secretary
of Multek Texas, Inc., in its Capacity
Title: as General Partner Title: Corporate Development Officer
-------------------------------------- -----------------------------
Date: August 5, 1997 Date: August 5, 1997
---------------------------------------- -----------------------------
THE DII GROUP, INC.
By: /s/ Carl R. Vertuca, Jr.
------------------------------
Senior Vice President, Chief
Financial Officer and Secretary
of Multek Texas, Inc., in its Capacity
Title: as General Partner
------------------------------
Date: August 5, 1997
------------------------------
</TABLE>
-53-
<PAGE> 1
EXHIBIT 2.2
ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION
AGREEMENT dated as of August 18, 1997
(this "Agreement"), between Multilayer Tek
L.P. ("Buyer"), and INTERNATIONAL
BUSINESS MACHINES CORPORATION, a
New York corporation ("Seller").
WHEREAS Buyer and Seller have entered into a Purchase
Agreement dated as of August 5, 1997 (the "Purchase Agreement"), providing for,
among other things, the purchase by Buyer of the Transferred Assets from Seller;
and
WHEREAS, in conjunction with such purchase, Seller desires to
sell, transfer, convey, assign and deliver to Buyer, and Buyer wishes to accept
and assume, all of Seller's rights, obligations, title and interest in and to
the Assumed Liabilities.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
1. DEFINED TERMS. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Purchase Agreement.
Nothing contained herein shall be deemed to alter or amend the terms and
provisions of the Purchase Agreement, and in the event of any conflict between
the terms and provisions of this Agreement and the Purchase Agreement, the terms
and provisions of the Purchase Agreement shall be deemed to govern and be
controlling in all circumstances.
2. ASSIGNMENT. Seller hereby irrevocably sells, transfers,
conveys, assigns and delivers to Buyer all of its rights, title and interest in
and to the Assumed Liabilities.
3. ASSUMPTION. Buyer does hereby accept such sale, transfer,
conveyance, assignment and delivery of all of Seller's right, title and interest
in and to the Assumed Liabilities by Seller and assumes all obligations and
liabilities of Seller thereunder pursuant to the terms and conditions of the
Purchase Agreement.
4. EFFECTIVE TIME. The assignment by Seller, and the
acceptance thereof by Buyer, of the Assumed Liabilities, pursuant to this
Agreement, shall be effective as of the date hereof.
5. NONCONTRAVENTION. Pursuant to Section 5.1. of the Purchase
Agreement, certain of the Assumed Liabilities may require the consent of third
parties to any assignment. Such assignments to Buyer are made subject to the
obtaining of such consents and shall be effective as of the date of such
consent. The execution of
<PAGE> 2
this Agreement shall not be interpreted, and is not intended to be interpreted,
as any action taken by Seller that would be contrary to the terms and conditions
of any contract requiring the consent of any third party to such assignment.
Buyer and Seller shall fully cooperate with each other in an attempt to obtain
such consents, as set forth in the Purchase Agreement.
6. NOTICES. All notices and other communications hereunder
shall be as set forth in the Purchase Agreement.
7. AMENDMENT. This Agreement may be amended, modified or
supplemented, and any provision hereof may be waived, only by written agreement
of the parties.
8. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not limit or otherwise affect the meaning or
interpretation of this Agreement.
9. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of New York without reference to its principles of
conflict of law.
10. SEVERABILITY. If any one or more provisions contained in
this Agreement, or the application of such provision to any person or
circumstance, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
11. THIRD PARTY ACTIONS. Seller and Buyer hereby agree to
cooperate in defending or prosecuting any claims or litigation relating to the
transfer of title as provided herein, and to make available and furnish
appropriate documents and testimony in connection therewith.
12. ASSIGNMENT. Pursuant to Section 12.10. of the Purchase
Agreement, neither this Agreement nor any of the rights or obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party, such consent not to be unreasonably withheld. Any purported
assignment of this Agreement other than in accordance with this paragraph 12
shall be null and void and of no force or effect.
13. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
Multilayer Tek L.P.
By: /s/ Carl R. Vertuca, Jr.
-----------------------------------------
Title: Senior Vice President,
Chief Financial Officer and
Secretary of Multek Texas Inc., in its
capacity as General Partner
--------------------------------------
Date: August 18,1997
---------------------------------------
The DII Group, Inc.
By: /s/ Carl R. Vertuca, Jr.
-----------------------------------------
Title: Senior Vice President,
Chief Financial Officer and
Secretary of Multek Texas Inc., in its
capacity as General Partner
--------------------------------------
Date: August 18,1997
---------------------------------------
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By: /s/ Mark S. Payton
-----------------------------------------
Title: Corporate Development Consultant
--------------------------------------
Date: August 18, 1997
---------------------------------------
-3-
<PAGE> 1
EXHIBIT 2.3
LEASE
BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
(LANDLORD)
AND
MULTILAYER TEK L.P.
(TENANT)
________, 1997
<PAGE> 2
TABLE OF CONTENTS
ARTICLE PAGE
1. Other Agreements................................. 1
2. Lease of Premises................................ 2
Section 2.01. Lease of Premises.................. 2
Section 2.02. Net Lease.......................... 2
Section 2.03. IBM Property....................... 3
Section 2.04. Access to the Complex.............. 3
3. Term............................................. 3
Section 3.01. Term............................... 3
Section 3.02. Termination Upon Conveyance of
Fee Title.......................... 4
Section 3.03 Ownership of Leased Premises....... 4
4. Rent and Tenant's Obligations.................... 4
Section 4.01. Basic Fixed Rent................... 4
Section 4.02. Tenant's Obligations............... 4
Section 4.03. Real Estate Taxes.................. 4
Section 4.04. Personal Property Taxes............ 5
5. Leased Premises "As Is".......................... 6
6. Services......................................... 6
7. Parking.......................................... 6
8. Use of Leased Premises........................... 7
9. Repairs and Maintenance.......................... 7
10. Insurance........................................ 7
Section 10.01. Casualty Insurance................ 7
Section 10.02. Liability Insurance............... 8
Section 10.03. Default........................... 9
11. Alterations and Improvements..................... 9
12. Access by Landlord............................... 10
<PAGE> 3
TABLE OF CONTENTS
ARTICLE PAGE
13. Compliance with Laws............................. 10
14. Mechanics' Liens................................. 10
15. Separation of Utilities/Services................. 11
16. Default.......................................... 11
Section 16.01. Default by Tenant................. 11
Section 16.02. Default by Landlord............... 11
Section 16.03. Payment Offset.................... 12
Section 16.04. Separate Agreement ............... 13
17. Notices.......................................... 13
18. Transfer or Encumbrance.......................... 14
Section 18.01. Transfer or Encumbrance........... 14
Section 18.02. Liability of Landlord............. 16
Section 18.03. Transfer of Landlord.............. 16
19. Equal Employment Opportunity..................... 16
20. Quiet Enjoyment.................................. 16
21. No Waiver........................................ 17
22. Partial Invalidity............................... 17
23. Estoppel Certificates............................ 17
Section 23.01. Tenant's Estoppel Certificate..... 17
Section 23.02. Landlord's Estoppel Certificate... 17
24. Memorandum of Lease.............................. 18
25. The DII Group, Inc. Guarantee.................... 18
EXHIBIT A DESCRIPTION OF LEASED PREMISES AND ENCUMBRANCES
EXHIBIT B SECURED AREAS
<PAGE> 4
LEASE
THIS LEASE, made as of the ____ day of ________, 1997, between
INTERNATIONAL BUSINESS MACHINES CORPORATION, a New York corporation, having its
principal office at Armonk, New York 10504 (hereinafter referred to as
"Landlord"), and MULTILAYER TEK L.P., a Texas limited partnership, having an
office at 11400 Burnet Road, Austin, Texas 78758 (hereinafter referred to as
"Tenant").
RULES OF CONSTRUCTION
Except as otherwise specifically defined herein, all words shall be
given the meaning assigned to them in the Project Operations Agreement; each
provision hereof shall be deemed both a covenant and a condition running with
the Land; except as otherwise expressly provided in this Lease and its EXHIBITS
and other attachments, the singular includes the plural and the plural includes
the singular; "or" is not exclusive; a reference to an agreement or other
contract includes supplements and amendments thereto to the extent permitted by
this Lease; a reference to the Laws includes any amendment or supplement to such
Laws; all EXHIBITS hereto shall be considered as part of this Lease, subject to
Article ONE and Section 16.03; accounting provisions have the meanings assigned
to them by generally accepted accounting principles applied on a consistent
basis; the words "such as," "include," "includes" and "including" are not
limiting; except as specifically agreed upon in this Lease, any right may be
exercised at any time and from time to time and all obligations are continuing
obligations throughout the term of this Lease; in calculating any time period,
the first day shall be excluded and the last day shall be included and all days
are calendar days unless otherwise specified; and, when used herein with its
initial letter capitalized, a word shall be given the meaning assigned to it in
this Lease.
ARTICLE ONE
Other Agreements
Landlord and Tenant are parties to the Asset Purchase Agreement,
Project Operations Agreement and other agreements executed and delivered as of
the date hereof in connection with the sale of Landlord's panel manufacturing
business to Tenant
1
<PAGE> 5
(such agreements are collectively called the "Other Agreements" and the Other
Agreements together with this Lease are collectively called the "Operative
Agreements"). Landlord and Tenant shall comply with all of the provisions of the
Other Agreements (including the Project Operations Agreement) and, anything
herein to the contrary notwithstanding, the provisions of this Lease shall not
supersede, alter, amend or modify the provisions of the Other Agreements
(including the Project Operations Agreement). If there is any conflict between
the provisions of this Lease and any provisions of the Other Agreements, the
provisions of the Other Agreements shall control.
ARTICLE TWO
Lease of Premises
SECTION 2.01. Lease of Premises. Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, upon and subject to the covenants,
agreements, provisions and conditions of this Lease, that certain parcel of land
("Land") located in the City of Austin, State of Texas and more particularly
described in EXHIBIT A, annexed hereto and those certain buildings located on
the Land, known as Buildings 60, 61, 63, 64 and 65 (herein collectively called
the "Buildings") together with all mechanical, electrical, plumbing, sewage and
waste treatment, sprinkler, telecommunications and any other building equipment
and systems located within or outside of the Buildings, and other improvements
owned by Landlord and located on and under the Land, excepting all Excluded
Assets as that term is defined in the Asset Purchase Agreement, subject only to
the "Permitted Encumbrances" as defined in the Asset Purchase Agreement,
including the Encumbrances described in EXHIBIT A. The Land, the Buildings and
all other improvements now or hereafter located on the Land or in the Buildings,
excepting Excluded Assets, are herein collectively called the " Leased
Premises."
SECTION 2.02. Net Lease. (a) It is the intent of the parties that this
Lease is in effect "triple net" so as to provide for the assumption by Tenant of
all obligations and responsibilities with respect to the Leased Premises and
Multek's use and operations thereon, excepting only Landlord's obligation with
respect to Subdivision and making the Utilities/Services Independent as
described in the Project Operations Agreement.
2
<PAGE> 6
All costs, expenses, charges, fees, liabilities and obligations (herein
collectively "Tenant's Obligations") of every kind, character and nature
whatsoever relating to the Leased Premises and its use and operation which may
arise during the term of this Lease or the Project Operations Agreement, whether
foreseeable or not foreseeable, structural or non-structural, reasonable or
unreasonable, major or minor, shall be the sole responsibility of and be paid by
Tenant excepting only the following, which shall be paid for by Landlord: (a)
certain agreed upon costs and expenses to be incurred by Landlord to complete
the Subdivision and to make the Utilities/Services Independent, (b) costs and
expenses incurred by Tenant by reason of the negligence or wilful misconduct of
Landlord and (c) costs and expenses of Remediation of IBM's Contamination.
Without limiting the foregoing, the obligations of Tenant under this Lease shall
not be affected by reason of loss or damage to or destruction of the Leased
Premises or any of the Buildings, or portion thereof, from any cause or the
taking of the Leased Premises or any of the Buildings or any portion thereof by
eminent domain, except that Tenant's Obligations hereunder shall be equitably
abated in the proportion that the damaged or taken property bears to the
remaining Leased Premises. To the extent permitted by Law, Tenant hereby waives
any and all rights which it may now have or which at any time hereafter may be
conferred upon it by statute or otherwise, to terminate, cancel, quit or
surrender this Lease.
(b) Supplementing but not limiting paragraph (a), Tenant shall not be
relieved of any obligation to complete the Real Estate Closing pursuant to the
conditions of the Asset Purchase Agreement, and Tenant shall not be entitled to
any refund of any part of the consideration paid by Tenant as Buyer to IBM as
Seller pursuant to the Asset Purchase Agreement, or be relieved of Tenant's
Obligations, by reason of any loss or damage to or destruction of the Leased
Premises on or after the Term Commencement Date (defined in Section 3.01), it
being the intent of the parties that this Lease be "triple net" as aforesaid.
SECTION 2.03. IBM Property. The Multek Site is contiguous to the IBM
Property on which Landlord operates a business operation and from which Landlord
will provide certain Services to the Leased Premises in accordance with and
subject to the provisions of the Project Operations Agreement.
3
<PAGE> 7
SECTION 2.04. Access to the Complex. In accordance with and subject to
the provisions of the Project Operations Agreement (including Section 1.1 of
EXHIBIT B thereto), (a) Landlord shall continue to own and shall maintain,
repair and replace the Access Roads, (b) Landlord hereby irrevocably grants to
Tenant, and to Tenant's employees, contractors, subcontractors, licensees,
tenants and other agents and invitees (collectively "Tenant's Agents"),
non-exclusive access to the Leased Premises over the Access Roads, and (c)
Tenant hereby grants to Landlord and to Landlord's employees, contractors,
subcontractors, licensees and agents access to the Leased Premises as is
reasonably required for Landlord to perform its obligations under the Project
Operations Agreement.
ARTICLE THREE
Term
SECTION 3.01. Term. Tenant hereby leases the Leased Premises for a term
of ninety-nine (99) years plus ten (10) successive renewal terms of ten (10)
years each, exercisable by Tenant giving Landlord notice at least six (6) months
prior to the expiration of the Term (the initial ninety-nine (99) year period
and each renewal period collectively referred to herein as the "term of this
Lease" or the "Term"), to commence on the date hereof (the "Term Commencement
Date") and expire at 11:59 pm on the day preceding the ninety-ninth (99th)
anniversary of the Term Commencement Date, as the Term may be extended by
Tenant, or as the Term may be terminated earlier in accordance with the
provisions of this Lease.
SECTION 3.02. Termination Upon Conveyance of Fee Title. If Landlord
completes "making the Utilities/Services Independent" and the "Subdivision" (as
each term is defined in the Project Operations Agreement), then upon Landlord's
conveyance to Tenant of fee title to the Leased Premises, issuance of a fee
title insurance policy to Tenant which insures indefeasible title, and subject
only to the Permitted Encumbrances, this Lease shall be canceled in accordance
with Section 8.4(d) of the Asset Purchase Agreement.
SECTION 3.03. Ownership of Leased Premises. Landlord shall not claim
ownership of the Leased Premises for purposes of United
4
<PAGE> 8
States federal, state or local taxation except as required by Section 4.03 and
by the Laws.
ARTICLE FOUR
Rent and Tenant's Obligations
SECTION 4.01. Basic Fixed Rent. Part of the consideration paid by
Tenant to Landlord pursuant to the provisions of the Asset Purchase Agreement
includes payment in full for all basic fixed rent due and owing hereunder.
SECTION 4.02. Tenant's Obligations. In addition to Basic Fixed Rent,
which Landlord acknowledges it has received in full, Tenant shall be responsible
for all of Tenant's Obligations (defined in Section 2.02), including all
payments arising therefrom. In the event of nonpayment of Tenant's Obligations,
Landlord may exercise any of the rights and remedies to which Landlord is
entitled under Article 6 of the Project Operations Agreement. Tenant shall pay
Tenant's Obligations to Landlord at IBM Corporation, 11400 Burnet Road, Austin,
TX 78758, Attention: Mr. Steve O'Connor, or to such other Person or at such
other place as Landlord may designate in writing from time to time.
SECTION 4.03. Real Estate Taxes.
(a) Landlord shall pay when due all ad valorem taxes, special
assessments and other charges of Governmental Authorities which shall be levied
or assessed or which become liens at any time upon the Leased Premises,
including Substitute Taxes (hereinafter called "Real Estate Taxes"). The parties
agree that, pending the Subdivision and sale of the Leased Premises to Tenant
and creation of a separate tax lot and separate assessment of the Leased
Premises by the taxing Governmental Authority (after which Tenant shall pay Real
Estate Taxes directly to the taxing Governmental Authority), Tenant's share of
Real Estate Taxes imposed on the Complex shall be twenty-four percent (24%) for
Real Estate Taxes. If the Subdivision is not completed, then this Lease shall
remain in full force and effect and Tenant shall have the right, upon reasonable
advance notice to Landlord, to audit Landlord's books and records with respect
to the tax allocation for the purpose of verifying or contesting the twenty-four
percent (24%) allocation applicable to the balance of the
5
<PAGE> 9
Term. Any dispute with respect to the allocation shall be resolved by Mediation.
Tenant shall pay Landlord one-twelfth (1/12) of Tenant's share of estimated Real
Estate Taxes, which is agreed to be one of Tenant's Obligations, within ten (10)
days after receipt of Landlord's monthly bill for Real Estate Taxes. Such
estimated taxes will be the Real Estate Taxes paid in the current year plus
three percent (3%) of such Real Estate Taxes. When actual Real Estate Taxes for
the current year become known, Landlord shall issue a reconciliation statement
within forty-five (45) days after it receives the Real Estate Tax bill issued by
the taxing authority. If Tenant overpaid, Landlord will reimburse Tenant at the
time it issues the reconciliation statement and shall include such Real Estate
Tax bill. If Tenant underpaid, Tenant shall pay Landlord the underpaid amount
within thirty (30) days after receipt of Landlord's reconciliation statement and
a copy of such Real Estate Tax bill.
(b) Tenant shall pay any increased Real Estate Taxes resulting from and
to the extent expressly allocable to: (i) any improvements or alterations made
after the date hereof on or in the Leased Premises by or for Tenant, (ii) the
installation of any Tenant's Personal Property (defined below), (iii) any use of
the Leased Premises by Tenant, (iv) any Multek Contamination, and (v) any other
activity on the Leased Premises by or on behalf of Tenant.
SECTION 4.04. Personal Property Taxes. Within ten (10) days after
receipt of Landlord's monthly bill for taxes assessed on Personal Property,
Tenant shall pay one-twelfth (1/12) of all estimated ad valorum taxes,
assessments and other charges of Governmental Authorities (including Substitute
Taxes) which shall be levied or assessed or which become liens at any time upon
fixtures, machinery, equipment, furniture and other personal property ("Personal
Property") located on, or used in connection with the occupancy, operation,
maintenance, repair or management of the Leased Premises. Such estimated taxes
shall be the taxes paid in the current year plus three percent (3%) and
estimated payments shall be reconciled against actuals in the same manner and in
the same time frame as Real Estate Taxes.
ARTICLE FIVE
Leased Premises "AS IS"
6
<PAGE> 10
Except for (i) Landlord's work required to be performed by Landlord
pursuant to Article FIFTEEN hereof, (ii) such representations, warranties and
covenants with respect to the "Real Estate," as provided in the Asset Purchase
Agreement and (iii) such representations, warranties, covenants and indemnities
with respect to environmental matters, as provided in the Asset Purchase
Agreement and the Project Operations Agreement, Tenant accepts possession of the
Leased Premises in their "AS IS" condition "WITH ALL FAULTS" and Landlord shall
not be required to perform any additional work or furnish any additional
materials or provide any additional services to or in connection with the Leased
Premises during the term of this Lease except as specifically provided in this
Lease or the Project Operations Agreement. The parties acknowledge and agree
that the Basic Fixed Rent was established in material reliance on Tenant
accepting the Leased Premises in their "AS IS" condition "WITH ALL FAULTS."
ARTICLE SIX
Services
Landlord shall furnish to Tenant and Tenant shall accept and pay for
the Services in accordance with and subject to the provisions of the Project
Operations Agreement, including Section 1.9 of EXHIBIT B thereof, and Landlord
shall have no obligations or responsibilities to Tenant or in connection with
the Leased Premises excepting only those expressly stated herein and in the
Project Operations Agreement.
ARTICLE SEVEN
Parking
Located on the Land are parking areas (the "Parking Areas") for the
exclusive use of Tenant. Subject to specific grants of access agreed upon
elsewhere in this Lease, Landlord, and Landlord's employees, contractors,
subcontractors, licensees, tenants and other agents and invitees (collectively,
"Landlord's Agents") shall not be permitted to use the Parking Areas without
Tenant's consent unless there is an emergency, a requirement to comply with a
Law or directive of a Governmental Authority, or by
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reason of a labor disturbance. Supplementing Section 2.02 and Article FIVE,
Tenant shall keep, maintain, repair and replace the Parking Area and all
sidewalks and paved dock areas located on the Land at its sole cost and expense.
Landlord shall, in accordance with and subject to the provisions of the Project
Operations Agreement, repair and replace the Access Roads.
ARTICLE EIGHT
Use of Leased Premises
Tenant or any other Affiliate of The DII Group, Inc. may use the Leased
Premises for the manufacturing operations currently conducted on the Leased
Premises by Landlord as well as any other uses by them which is authorized by
Law; provided, however, that Tenant shall obtain the written consent of Landlord
to any change in Tenant's use of the Leased Premises for purposes other than the
manufacturing operations, which consent shall not be unreasonably withheld or
delayed if Landlord determines that the proposed change in use (a) does not
materially change the volume of traffic or type of vehicle use at the Complex,
(b) does not violate or threaten violation of the provisions of the Project
Operations Agreement, and (c) complies with Law.
ARTICLE NINE
Repairs and Maintenance
Except as provided in Section 2.02 and Article FIVE, Tenant shall
perform or caused to be performed all maintenance and make all repairs and
replacements, without exception except for those necessitated by the negligence
or willful misconduct of Landlord, its employees, contractors, subcontractors,
licensees, and agents, as may be necessary to the Leased Premises at its sole
cost and expense. Without limitation, Tenant shall perform all repairs and
restoration required by reason of a casualty or condemnation.
ARTICLE TEN
Insurance
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SECTION 10.01. Casualty Insurance. During the term of this Lease,
Tenant shall purchase and maintain, at Tenant's sole cost and expense, property
damage insurance, written on an "all risk" of physical loss or damage basis, to
cover all loss or damage to or destruction of any portion of the Leased Premises
and Personal Property (defined in Section 4.04) in an amount of not less than
eighty percent (80%) of the full cost to replace the Buildings and other
structures located on the Leased Premises (including all Personal Property
necessary to maintain Tenant's business operations on the Leased Premises but
excluding foundations). Such amounts shall meet any co-insurance clause of
Tenant's policies. Landlord and Tenant each hereby waives its respective right
of recovery against the other and each releases the other from any claim arising
out of loss, damage or destruction to any improvements located in or on the
Leased Premises (in the case of Tenant) and to any improvements located in or on
the IBM Property (in the case of Landlord), including all Personal Property on
either property, to the extent such party actually receives full and complete
payment or reimbursement (excepting deductible amounts) for any such loss,
damage or destruction under an insurance policy required to be carried hereunder
but notwithstanding the fact that such loss, damage or destruction may be
attributable to the negligence of either party or Landlord's Agents (defined in
Article 7) or Tenant's Agents (defined in Section 2.04). Each casualty insurance
policy shall include a waiver of the insurer's rights of subrogation against the
party hereto who is not an insured under said policy. Each party shall look
first to the proceeds of its respective casualty insurance policy (and to its
own funds to the extent it is self-insured) to compensate it for any such loss,
damage or destruction. This waiver and release applies to any self-insured
(deductible) portion of the loss, damage or destruction, and such waiver and
release is fully effective and enforceable notwithstanding the fact that Tenant
or Landlord failed to purchase and maintain insurance coverage required herein
which may have reimbursed it for such loss, damage or destruction.
SECTION 10.02. Liability Insurance.
(a) During the term of this Lease, Tenant shall purchase and maintain,
at Tenant's sole cost and expense, general commercial public liability insurance
against any claims by reason of personal injury (including death) or property
loss,
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damage or destruction, occurring on the Leased Premises, except for the gross
negligence or misconduct of Landlord, its employees, suppliers, contractors or
subcontractors, in an amount of not less than one million U.S. dollars
($1,000,000.00) combined single limit for injury (including death) and for
damage to property, with umbrella coverage of not less than twenty million U.S.
dollars ($20,000,000.00). Tenant shall cause Landlord to be included as an
additional insured under each such policy. Each policy shall contain provisions,
if and to the extent available at no additional cost to Tenant, that the policy
will not be cancelable except upon at least thirty (30) days prior notice to all
insureds, including Landlord, and that the act or omission of one insured will
not invalidate the policy coverage of any of the other insureds. Tenant shall
furnish evidence reasonably satisfactory to Landlord that the insurance is in
effect at or before the Term Commencement Date. Tenant may self insure for up to
Two Million Five Hundred Thousand U.S. dollars ($2,500,000.00).
(b) During the Term of this Lease, Landlord shall purchase and
maintain, at Landlord's sole cost and expense, general commercial public
liability insurance against any claims by reason of personal injury (including
death) or property damage occurring on or about the IBM Property, except for the
gross negligence or misconduct of Tenant, its employees, suppliers, contractors,
or subcontractors, in an amount not less than one million U.S. dollars
($1,000,000.00) combined single limit for injury (including death) and for
damage to property, with umbrella coverage of not less than twenty million U.S.
dollars ($20,000,000.00). Landlord shall cause Tenant to be included as an
insured under each such policy. Each policy shall contain provisions, if and to
the extent available, that the policy will not be cancelable except upon at
least thirty (30) days prior notice to all insureds, including Tenant, and that
the act or omission of one insured will not invalidate the policy of any of the
other insureds. Landlord shall furnish evidence reasonably satisfactory to
Tenant that the insurance is in effect at or before the Term Commencement Date.
IBM may self insure for up to five million U.S. dollars ($5,000,000.00).
SECTION 10.03 Default. If either party fails to maintain and pay for
the insurance coverage required above, that party shall be in default hereunder
and, in addition to other rights
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and remedies available to the non-defaulting party under this Lease or under the
Project Operations Agreement, the non-defaulting party may purchase the required
insurance coverage and the defaulting party shall reimburse the non-defaulting
party for all costs and expenses incurred therefor within thirty (30) days after
the defaulting party receives an invoice demanding payment. Tenant's obligation
to purchase and pay for such insurance coverage is one of Tenant's Obligations.
ARTICLE ELEVEN
Alterations and Improvements
Supplementing Section 2.02 and Article FIVE, Tenant may perform any and
all initial construction, and may make any alterations and improvements within
the Leased Premises, whether structural or non-structural, foreseeable or not
foreseeable, reasonable or unreasonable, minor or major, at its sole cost and
expense, subject to compliance with the Laws and the provisions of this Lease
and the Project Operations Agreement; provided, however, that none of the
foregoing adversely affects or requires modification to wastewater, materials
storage, or any other environmental permit or license issued to Landlord, or
requires Landlord to obtain a new or substitute permit or license. Without
exception, Landlord shall have no obligations with respect to initial
construction or subsequent alterations or improvements except as provided in
Article FIFTEEN.
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ARTICLE TWELVE
Access by Landlord
(a) Landlord shall have the right to enter the Leased Premises on prior
reasonable oral notice to Tenant's representative, designated from time to time,
to complete Landlord's work described in Article FIFTEEN and for purposes agreed
upon in the Project Operations Agreement; otherwise, Landlord shall not have the
right to enter the Leased Premises without prior written notice to Tenant's
representative. In both cases, Landlord shall use reasonable good faith efforts
not to disturb Tenant's use and occupancy of the Leased Premises.
(b) Tenant has designated the areas outlined on EXHIBIT B as secured
areas, and Landlord shall have no right of access thereto without being
accompanied by Tenant's designated representative except in the case of
emergencies. If there is an emergency, Landlord shall exercise reasonable good
faith efforts to contact Tenant's designated representative by telephone for
such purposes.
(c) For purposes of this Article, Tenant's designated representative is
its General Manager (telephone number 512-823-7181).
ARTICLE THIRTEEN
Compliance with Laws
Subject to the representations, covenants, warranties and indemnities
provided in the Project Operations Agreement with respect to environmental
matters, Tenant shall comply with all Laws applicable to the Leased Premises.
Without limitation, Tenant shall be responsible, at Tenant's sole cost and
expense, for any restoration, alterations, replacements or repairs required to
be made pursuant to any Laws and as provided in the Project Operations
Agreement.
ARTICLE FOURTEEN
Mechanics' Liens
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During the term of this Lease, Tenant shall discharge by payment, bond
or otherwise those mechanics' liens filed against the Complex (or any part
thereof) for work, labor, services or materials claimed to have been performed
at or furnished to the Leased Premises (or any part thereof) for or on behalf of
Tenant. If not so discharged within sixty (60) days after the date of filing,
Landlord may discharge the lien in any manner it selects and Tenant shall pay
Landlord as one of Tenant's Obligations all reasonable costs and expenses
incurred by Landlord therefor, including attorneys' fees.
ARTICLE FIFTEEN
Separation of Utilities/Services
Landlord shall make application for and use reasonable good faith
efforts to complete the Subdivision, if required by the City of Austin, and make
the Utilities/ Services Independent subject, however, to the provisions of the
Project Operations Agreement.
ARTICLE SIXTEEN
Default
SECTION 16.01. Default by Tenant. Without limiting Landlord's rights
and remedies which are granted in the Operative Agreements (defined in the Asset
Purchase Agreement), and except as agreed upon in Section 10.03, if Tenant shall
default in the payment of Tenant's Obligations and such default shall continue
for ten (10) days after receipt of notice thereof from Landlord, or if Tenant
shall default in the performance or observance of any other covenants or
obligations set forth in this Lease, and if such default shall continue for
thirty (30) days after receipt of notice thereof from Landlord specifying in
what manner Tenant has defaulted (except that if such default cannot be cured
within said thirty (30) day period, this period shall be extended for a
reasonable additional time, provided that Tenant commences to cure such default
within the thirty (30) day period and proceeds diligently thereafter to effect
such cure), Landlord may (1) cure such default and any costs and expenses
incurred by Landlord therefor shall be deemed Tenant's Obligations and shall be
paid on demand or (2) exercise any one or more rights or remedies to
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which Landlord is entitled under the Project Operations Agreement.
SECTION 16.02. Default by Landlord. Except for events of default
specified in and remedies granted in the Other Agreements, and except as agreed
upon in Section 10.03, if Landlord shall default in the performance or
observance of any covenants or obligations set forth in this Lease, and if such
default shall continue for thirty (30) days after receipt of notice thereof from
Tenant specifying in what manner Landlord has defaulted (except that if such
default cannot be cured within said thirty (30) day period, this period shall be
extended for a reasonable additional time, provided that Landlord commences to
cure such default within the thirty (30) day period and proceeds diligently
thereafter to effect such cure), Tenant may exercise any one or more rights or
remedies to which Tenant is entitled under the Other Agreements.
SECTION 16.03 Payment Offset.
(a) If after notice to Landlord of its failure (i) to furnish Services
to be furnished to Tenant by Landlord hereunder, or (ii) to pay Tenant sums due
under the Project Operations Agreement for Services furnished by Tenant to
Landlord, Landlord fails or refuses to cure such default within the time period
agreed upon in this Agreement therefor (or otherwise within a reasonable time
specified by Tenant in its notice if such time period has not been agreed upon
herein), Tenant may declare an event of default and purchase such Services from
a third party. If Landlord disputes any default declared by Tenant pursuant to
this Section, or the costs incurred by Tenant to cure the default, or the
reasonableness of time granted to cure the default, Landlord may submit the
disputed matter to Mediation in accordance with Article SIX of the Project
Operations Agreement within five (5) business days after receiving Tenant's
notice or invoice. If the matter is submitted to Mediation as aforesaid and the
Mediator renders a decision in favor of Tenant, within thirty (30) days after
the decision is rendered, Landlord shall pay Tenant the amount stipulated to be
paid to Tenant in the decision, failing which Tenant may deduct such amount from
the sums due and to become due to Landlord for Services furnished to Tenant. If
Tenant declares an event of default and Landlord fails to exercise its right to
Mediation, within thirty (30) days
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after Landlord receives Tenant's invoice, Landlord shall pay Tenant all costs
and expenses claimed by Tenant by reason of the default, failing which Tenant
may deduct any such costs and expenses from the sums due and to become due to
Landlord for Services furnished to Tenant.
(b) If after notice to Tenant of its failure (i) to furnish Services to
be furnished to Landlord by Tenant hereunder, or (ii) to pay Landlord sums due
under the Project Operations Agreement for Services furnished by Landlord to
Tenant, Tenant fails or refuses to cure such default within the time period
agreed upon in this Agreement therefor (or otherwise within a reasonable time
specified by Landlord in its notice if such time period has not been agreed upon
herein), Landlord may declare an event of default and purchase such Services
from a third party. If Tenant disputes any default declared by Landlord pursuant
to this Section, or the costs incurred by Landlord to cure the default, or the
reasonableness of time granted to cure the default, Tenant may submit the
disputed matter to Mediation in accordance with Article SIX of the Project
Operations Agreement within five (5) business days after receiving Landlord's
notice or invoice. If the matter is submitted to Mediation as aforesaid and the
Mediator renders a decision in favor of Landlord, within thirty (30) days after
the decision is rendered, Tenant shall pay Landlord the amount stipulated to be
paid to Landlord in the decision, failing which Landlord may deduct such amount
from the sums due and to become due to Tenant for Services furnished to
Landlord. If Landlord declares an event of default and Tenant fails to exercise
its right to Mediation, within thirty (30) days after Tenant receives Landlord's
invoice, Tenant shall pay Landlord all costs and expenses claimed by Landlord by
reason of the default, failing which Landlord may deduct any such costs and
expenses from the sums due and to become due to Tenant for Services furnished to
Landlord.
SECTION 16.04. Separate Agreement. This Lease is separate from and
independent of the Other Agreements. No default by Landlord or Tenant under any
of the Other Agreements shall constitute a default hereunder, and no default by
Landlord or Tenant under this Lease shall constitute a default under the Other
Agreements.
ARTICLE SEVENTEEN
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Notices
Any notice, request or demand under this Lease shall be in writing and
shall be considered properly delivered when addressed as hereinafter provided,
and served (a) by telecopy, (b) five (5) days after deposit for mailing by
registered or certified mail, postage prepaid, (return receipt requested), or
(c) sent by a reputable messenger or nationally recognized overnight courier.
Any notice, request or demand by Landlord to Tenant shall be addressed to Tenant
at the Leased Premises, Attention the General Manager, with copies addressed and
sent simultaneously to Multilayer Technology Inc. at 16 Hammond, Irvine, CA
92718, Attention: President, and to The DII Group, Inc., 6273 Monarch Park
Place, Longmont, CA 80503, Attention: Chief Financial Officer, until otherwise
directed in writing by Tenant and, if requested in writing by Tenant,
simultaneously served on or sent to such other parties as Tenant may request.
Any notice, request or demand by Tenant to Landlord shall be addressed to
Landlord, IBM Corporation, Real Estate Services, Armonk, New York 10504,
Attention: Mr. Thomas P. Crohan, with copies addressed and sent simultaneously
to Landlord, at the same address, Attention: Associate General Counsel, and to
the Austin Contract Administrator, IBM Corporation, 11400 Burnet Road, Austin,
Texas 78758, until otherwise directed in writing by Landlord, or to such person
or address as either of the parties shall hereafter designate to the other from
time to time by similar written notice.
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ARTICLE EIGHTEEN
Transfer or Encumbrance
SECTION 18.01. Transfer or Encumbrance.
(a) Except as otherwise provided in this Article, Tenant shall not
without first obtaining the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed (i) sublet all or any part of the
Leased Premises or (ii) assign, mortgage, pledge, hypothecate or otherwise
encumber or transfer this Lease or any interest therein. Neither Landlord nor
Tenant shall make application to subdivide the Land or modify the existing
zoning designation of the Land, without the written consent of the other party,
except that Landlord is hereby authorized to proceed with the completion of the
Subdivision.
(b) Notwithstanding the foregoing, without the consent of Landlord,
Tenant may sublet the Leased Premises or mortgage, pledge, or assign its
leasehold interest in the Leased Premises only to an Affiliate or as security
for any financing required by Tenant; provided that Tenant first notifies
Landlord at least thirty (30) days before Tenant plans to close any such
transaction; provided, however, that the foregoing thirty (30) day notice
requirement shall not be applicable to any financing in connection with the
transaction contemplated by the Operative Agreements.
(c) Tenant may, from time to time during the term of this Lease,
mortgage, hypothecate, or encumber, in whole or in part, its leasehold estate,
provided in each case that Tenant or holder of the leasehold mortgage shall
promptly deliver to Landlord, in the manner herein provided for the giving of
notice to Landlord, a true copy of the leasehold mortgage and any assignment
thereof, and shall notify Landlord of the address of the holder of the leasehold
mortgage to which notices from Landlord may be sent.
(d) If Tenant encumbers or hypothecates its interest in this Lease as
security for a loan, and provided that Tenant delivers written notice to
Landlord of the name and address of the lender of such loan, then Landlord
hereby agrees that Landlord will give written notice of any default under the
terms of this Lease, by registered or certified mail, to such lender at
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the address contained in such notice. Provided Tenant gives to Landlord written
notice of the name and address of such lender as required above, no notice of
default by Landlord to Tenant shall be deemed to have been duly given to Tenant
unless and until a copy thereof has been mailed to such lender at the address
provided. Such lender, in case Tenant shall be in default under this Lease,
shall, within the period and otherwise as herein provided, have the right to
remedy such default, or cause the same to be remedied, and Landlord shall accept
such performance by or at the instance of such lender as if the same had been
made by Tenant, provided the remedy is in accordance with the terms of this
Lease. Provided Tenant gives to Landlord written notice of the name and address
of such lender as required above, Landlord shall not exercise any remedies
granted to Landlord under the Operative Agreements because of any default or
breach thereunder on the part of Tenant if such lender (i) within sixty (60)
days after mailing of written notice to such lender from Landlord of its
intention to exercise any remedies granted to Landlord under the Operative
Agreements for such default or breach, shall cure such default or breach if the
same can be cured by the payment of expenditure of money, or (ii) shall
diligently take action to obtain possession of the Leased Premises (including
possession by receiver) and to cure such default or breach in the case of a
default or breach which cannot be cured unless and until such lender has
obtained possession and shall, during such time, pay all rental and all other
payments required to be made under this Lease and the Project Operations
Agreement, or (iii) if such default or breach is not so curable under the
foregoing subparagraphs (i) or (ii), shall institute and carry forward with due
diligence foreclosure or sale proceedings under its mortgage securing such loan
and pay all rental and all other payments required to be made under this Lease
and the Project Operations Agreement until such time as Tenant's interest in
this Lease and the Project Operations Agreement shall be sold upon such
foreclosure or sale proceedings pursuant to said mortgage; provided, however,
such lender shall not be required to continue such action for possession or such
foreclosure or sale proceedings if such default or breach shall be cured by
Tenant. Upon completion of any such foreclosure or sale proceedings under said
mortgage, the purchaser (whether such lender or otherwise) at such sale will be
recognized by Landlord as Tenant under the terms of this Lease and as successor
to Tenant under the Project Operations Agreement for all purposes and the
purchaser and
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Landlord shall be bound hereby for the remaining term of this Lease and the
Project Operations Agreement. A lender who acquires title to Tenant's interest
in this Lease and the Project Operations Agreement by acceptance of a deed in
lieu of foreclosure shall be deemed a "purchaser" for these purposes.
(e) In connection with any financing to consummate the transaction
contemplated by the Operative Agreements, Landlord shall execute such amendments
or modifications of this Lease as Tenant's lender may reasonably request
provided that such amendment or modification shall not (i) alter the financial
obligations of Tenant or Landlord, nor (ii) materially diminish Landlord's
rights or materially increase Landlord's obligations hereunder, nor (iii)
require representations, warranties or indemnities in addition to those set
forth in the Asset Purchase Agreement.
SECTION 18.02. Liability of Landlord. If Tenant mortgages, pledges,
hypothecates, assigns or otherwise encumbers or transfers its interest in the
Leased Premises to an Affiliate or as security for financing as aforesaid,
Tenant shall notify Landlord thereof and provide Landlord with a duplicate
executed original of the instrument of assignment. Any instrument of assignment
shall include the assumption by the assignee of all of Tenant's obligations,
responsibilities, and liabilities set forth in the Operative Agreements
including Tenant's Obligations. Notwithstanding any such encumbrance, Tenant
shall remain responsible for the faithful performance and observance of all of
the covenants and obligations on Tenant's part to be performed under the
Operative Agreements.
SECTION 18.03. Transfer by Landlord. Landlord may assign, mortgage,
pledge, hypothecate or otherwise encumber or transfer its interest in this Lease
and the Project Operations Agreement as landlord and owner at any time without
the consent of Tenant or any successor in interest to Tenant; provided that such
assignment, mortgage, pledge, hypothecation or other encumbrance or transfer is
subordinated to any first lien on the Leased Premises and Tenant's leasehold
estate and shall not adversely affect Tenant's mortgage, pledge or assignment of
its leasehold interest as a tenant of the Leased Premises or the rights of any
lender which is secured by Tenant's leasehold estate.
ARTICLE NINETEEN
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Equal Employment Opportunity
There are incorporated in this Lease the provisions of Executive Order
11246 (as amended) of the President of the United States on Equal Employment
Opportunities and the rules and regulations issued pursuant thereto with which
Landlord and Tenant represent that they will comply unless exempted.
ARTICLE TWENTY
Quiet Enjoyment
Provided Tenant performs the covenants and obligations in this Lease on
Tenant's part to be performed, Landlord covenants and agrees to secure and to
maintain for the benefit of Tenant the quiet and peaceful possession of the
Leased Premises for the term of this Lease, without unlawful hindrance, claim or
molestation by Landlord or any other Person.
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ARTICLE TWENTY ONE
No Waiver
Failure by either party to complain of any action, inaction or
default of the other party shall not constitute a waiver of the aggrieved
party's rights hereunder. Waiver by either party of any right for any default of
the other party shall not constitute a waiver of any right for either a
subsequent default of the same obligation or for any other default, past,
present or future.
ARTICLE TWENTY TWO
Partial Invalidity
If any covenant, condition or provision of this Lease, or the
application thereof to any Person or circumstance, shall be held to be invalid
or unenforceable by a court of law, then in each such event the remainder of
this Lease or the application of such covenant, condition or provision to any
other Person or any other circumstance (other than those as to which it shall be
invalid or unenforceable) shall not be thereby affected, and each covenant,
condition and provision hereof shall remain valid and enforceable to the fullest
extent permitted by the Laws.
ARTICLE TWENTY THREE
Estoppel Certificates
SECTION 23.01. Tenant's Estoppel Certificate. Tenant agrees, at any
time and from time to time, upon not less than ten (10) business days prior
notice from Landlord, to execute, acknowledge and deliver to Landlord or any
Person designated by Landlord a statement in writing providing substantially the
following: (1) certifying that this Lease is unmodified and in full force and
effect (or if there have been modifications, that this Lease is in full force
and effect as modified and stating the modifications); (2) whether or not the
term of this Lease has commenced and if it has commenced, stating whether all of
Tenant's Obligations have been paid by Tenant; and (3) stating, to the best of
Tenant's knowledge, whether or not Landlord is in default in the performance of
any covenant, agreement or
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condition contained in this Lease, and if Tenant has knowledge of such a
default, specifying each such default.
SECTION 23.02. Landlord's Estoppel Certificate. During the term of this
Lease, at any time and from time to time, Landlord shall, within ten (10)
business days after Tenant's request, deliver an estoppel certificate to Tenant
or a Person designated by Tenant, in the form described in Section 23.01
(modified insofar as clause (3) is concerned to reflect Landlord's knowledge of
a Tenant default), relative to the status of this Lease.
ARTICLE TWENTY FOUR
Memorandum of Lease
Unless Tenant's lender requires this Lease to be recorded, this Lease
shall not be recorded by either Landlord nor Tenant, but either party may record
a memorandum of this Lease and the other party, if requested, shall execute a
memorandum of this Lease for recording purposes. If Tenant's lender requires
that this Lease be recorded, Tenant shall pay the cost thereof.
ARTICLE TWENTY FIVE
The DII Group, Inc. Guaranty
The DII Group, Inc. (the "Guarantor") hereby unconditionally and absolutely
guarantees to Landlord the performance and payment of any and all monetary and
other obligations of Tenant under this Lease and the other Operative Agreements
to which Tenant in accordance herewith and therewith is a party, independently
of the obligations of Tenant, and the Guarantor hereby agrees to indemnify
Landlord against any Loss (as defined in the Asset Purchase Agreement) incurred
by reason of any failure of Tenant to perform and pay such obligations in such
manner. This guarantee is a direct, absolute, unconditional, irrevocable,
present and continuing guarantee of performance and payment, and is a direct and
primary obligation of the Guarantor, and is in no way conditional or contingent
upon any attempt to enforce performance upon, or collection from, Tenant or upon
any other event, contingency or circumstances whatsoever. This shall be a
continuing guarantee and shall cover and secure any balance owing
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by Tenant under this Lease and the other Operative Agreements to which Tenant is
a party, and Landlord shall not be obligated to exhaust its recourse against
Tenant before being entitled to payment from the Guarantor, of all and every of
the obligations hereby guaranteed. The obligations of the Guarantor set forth
above shall not be subject to any deduction, diminution, abatement, setoff,
recoupment, suspension, determent, reduction, or defense (other than valid
defenses Tenant has against Landlord and all other rights of Tenant under this
Lease and the other Operative Agreements, full and strict compliance by the
Guarantor of its obligations hereunder) and shall remain in full force and
effect without regard to, and shall not be released, discharged or in any way
affected by, any circumstance or condition whatsoever (whether or not the
Guarantor or Tenant shall have any knowledge or notice thereof), other than full
and strict compliance by the Guarantor of its obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year
first above written.
INTERNATIONAL BUSINESS MACHINES
CORPORATION
/s/Alex Makler By: /s/Mark S. Payton
- ----------------------------- -------------------------------
ATTEST
CORPORATE DEVELOPMENT
Title: CONSULTANT
---------------------------
Date: August 18, 1997
---------------------------
MULTILAYER TEK L.P.
/s/Alex Makler By: /s/Carl R. Vertuca, Jr.
- ----------------------------- -------------------------------
ATTEST
Senior Vice President, Chief
Financial Officer and
Secretary of Multek Texas,
Inc.,in its capacity as
Title: General Partner
---------------------------
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Date: August 18, 1997
AS TO ARTICLE 25 ONLY:
THE DII GROUP, INC.
/s/Alex Makler By: /s/Carl R. Vertuca, Jr.
- ----------------------------- -------------------------------
ATTEST
Senior Vice President, Chief
Financial Officer and
Secretary of Multek Texas,
Inc.,in its capacity as
Title: General Partner
---------------------------
Date: August 18, 1997
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STATE OF NEW YORK )
: ss.:
COUNTY OF WESTCHESTER )
On the 18th day of August, 1997, before me personally appeared Mark S.
Payton to me known, who, being duly sworn did depose and say that he resides at
318 Garder Road, Monroe, CT that he is CORPORATE DEVELOPMENT CONSULTANT of
International Business Machines Corporation, the corporation described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
/s/Paulette Lemay Peters
------------------------
Notary Public
STATE OF New York )
: ss.:
COUNTY OF New York )
On the 18th day of August, 1997, before me personally appeared Carl R.
Vertucan, Jr. to me known, who, being duly sworn did depose and say that he is
President of Multek Texas, the General Partner of Multilayer Tek L.P., the Texas
limited partnership described in and which executed the foregoing instrument;
and that he signed his name thereto on behalf of said partnership.
/s/Kathleen Lee Skubina
-----------------------
Notary Public
<PAGE> 29
STATE OF New York )
: ss.:
COUNTY OF New York )
On the 18th day of August, 1997, before me personally appeared Carl R. Vertuca,
Jr. to me known, who, being duly sworn did depose and say that he resides at
_______________, that he is Chief Financial Officer of The DII Group, Inc., the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the board of directors of said
corporation.
/s/Kathleen Lee Skubina
-----------------------
Notary Public
<PAGE> 30
EXHIBIT A*
DESCRIPTION OF LEASED PREMISES AND ENCUMBRANCES
*Exhibit A is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 31
EXHIBIT B
SECURED AREAS
(a) Building No. 064 - Shipping/Receiving (CAS badge access area)
(b) Building No. 061 - Chemical Distribution Center
(c) IT Server Room - Location to be determined and provided in writing
to Landlord within thirty (30) days from the Term
Commencement Date.
<PAGE> 32
ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION
AGREEMENT dated as of August 18, 1997
(this "Agreement"), between Multilayer Tek
L.P. ("Buyer"), and INTERNATIONAL
BUSINESS MACHINES CORPORATION, a
New York corporation ("Seller").
WHEREAS Buyer and Seller have entered into a Purchase
Agreement dated as of August 5, 1997 (the "Purchase Agreement"), providing for,
among other things, the purchase by Buyer of the Transferred Assets from Seller;
and
WHEREAS, in conjunction with such purchase, Seller desires to
sell, transfer, convey, assign and deliver to Buyer, and Buyer wishes to accept
and assume, all of Seller's rights, obligations, title and interest in and to
the Assumed Liabilities.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
1. DEFINED TERMS. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Purchase Agreement.
Nothing contained herein shall be deemed to alter or amend the terms and
provisions of the Purchase Agreement, and in the event of any conflict between
the terms and provisions of this Agreement and the Purchase Agreement, the terms
and provisions of the Purchase Agreement shall be deemed to govern and be
controlling in all circumstances.
2. ASSIGNMENT. Seller hereby irrevocably sells, transfers,
conveys, assigns and delivers to Buyer all of its rights, title and interest in
and to the Assumed Liabilities.
3. ASSUMPTION. Buyer does hereby accept such sale, transfer,
conveyance, assignment and delivery of all of Seller's right, title and interest
in and to the Assumed Liabilities by Seller and assumes all obligations and
liabilities of Seller thereunder pursuant to the terms and conditions of the
Purchase Agreement.
4. EFFECTIVE TIME. The assignment by Seller, and the
acceptance thereof by Buyer, of the Assumed Liabilities, pursuant to this
Agreement, shall be effective as of the date hereof.
5. NONCONTRAVENTION. Pursuant to Section 5.1. of the Purchase
Agreement, certain of the Assumed Liabilities may require the consent of third
parties to any assignment. Such assignments to Buyer are made subject to the
obtaining of such consents and shall be effective as of the date of such
consent. The execution of
<PAGE> 33
this Agreement shall not be interpreted, and is not intended to be interpreted,
as any action taken by Seller that would be contrary to the terms and conditions
of any contract requiring the consent of any third party to such assignment.
Buyer and Seller shall fully cooperate with each other in an attempt to obtain
such consents, as set forth in the Purchase Agreement.
6. NOTICES. All notices and other communications hereunder
shall be as set forth in the Purchase Agreement.
7. AMENDMENT. This Agreement may be amended, modified or
supplemented, and any provision hereof may be waived, only by written agreement
of the parties.
8. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not limit or otherwise affect the meaning or
interpretation of this Agreement.
9. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of New York without reference to its principles of
conflict of law.
10. SEVERABILITY. If any one or more provisions contained in
this Agreement, or the application of such provision to any person or
circumstance, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
11. THIRD PARTY ACTIONS. Seller and Buyer hereby agree to
cooperate in defending or prosecuting any claims or litigation relating to the
transfer of title as provided herein, and to make available and furnish
appropriate documents and testimony in connection therewith.
12. ASSIGNMENT. Pursuant to Section 12.10. of the Purchase
Agreement, neither this Agreement nor any of the rights or obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party, such consent not to be unreasonably withheld. Any purported
assignment of this Agreement other than in accordance with this paragraph 12
shall be null and void and of no force or effect.
13. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
-2-
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
Multilayer Tek L.P.
By: /s/ Carl R. Vertuca, Jr.
-----------------------------------------
Title: Senior Vice President,
Chief Financial Officer and
Secretary of Multek Texas Inc., in its
capacity as General Partner
--------------------------------------
Date: August 18,1997
---------------------------------------
The DII Group, Inc.
By: /s/ Carl R. Vertuca, Jr.
-----------------------------------------
Title: Senior Vice President,
Chief Financial Officer and
Secretary of Multek Texas Inc., in its
capacity as General Partner
--------------------------------------
Date: August 18,1997
---------------------------------------
INTERNATIONAL BUSINESS
MACHINES CORPORATION
By: /s/ Mark S. Payton
-----------------------------------------
Title: Corporate Development Consultant
--------------------------------------
Date: August 18, 1997
---------------------------------------
-3-
<PAGE> 1
EXHIBIT 2.4
PROJECT OPERATIONS AGREEMENT
BY AND BETWEEN
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND
MULTILAYER TEK L.P.
_______, 1997
<PAGE> 2
TABLE OF CONTENTS
RULES OF CONSTRUCTION
ARTICLE 1. DEFINITIONS/GLOSSARY
ARTICLE 2. MANAGEMENT OF THE COMPLEX
Section 2.1 Management of the Complex
Section 2.2 Utilities, Services and Access Roads
Section 2.3 Gift Policy
Section 2.4 Labor Harmony
ARTICLE 3. PAYMENT OF OPERATING EXPENSES/CHARGES
Section 3.1 Approved Budget
Section 3.2 Expenses and Charges
Section 3.3 Annual Statement; Reconciliation
Section 3.4 Audit; Cost of Audit
Section 3.5 Tax on Expenses/Charges
Section 3.6 Regulated Services
ARTICLE 4. UTILITY METERS
Section 4.1 Pricing
Section 4.2 Meter Readings
Section 4.3 Meter Calibration and Adjustment
Section 4.4 Failure of a Meter
ARTICLE 5. INSURANCE
Section 5.1 Liability Insurance
Section 5.2 Casualty Insurance
Section 5.3 Liability Insurance
Section 5.4 Waiver of Claims and Subrogation
ARTICLE 6. DISPUTE RESOLUTION; DEFAULT
Section 6.1 Initiation of Dispute Resolution
Section 6.2 Mediation
Section 6.3 Pending Resolution
Section 6.4 Events of Default
Section 6.5 Remedies
Section 6.6 Attorneys Fees; Jury Trial
Section 6.7 Limitation on Subcontractor/Consultant
Liability
ARTICLE 7. TERM
ARTICLE 8. RESTRICTIONS
i
<PAGE> 3
Section 8.1 Uses
Section 8.2 Signs
Section 8.3 Rules and Regulations
Section 8.4 Compliance with Laws
ii
<PAGE> 4
TABLE OF CONTENTS
ARTICLE 9. RIGHT OF FIRST OPPORTUNITY
Section 9.1 First Opportunity
Section 9.2 Continuing Right
Section 9.3 IBM Affiliate
Section 9.4 Third Party Offer
Section 9.5 Termination
Section 9.6 Successors and Assigns
Section 9.7 Financing/Refinancing
ARTICLE 10. INDEPENDENT UTILITIES/SERVICES - SUBDIVISION
ARTICLE 11. MISCELLANEOUS
Section 11.1 Notices
Section 11.2 Estoppel Certificates
Section 11.3 Governing Law
Section 11.4 Entire Agreement; Amendments
Section 11.5 Transfers
Section 11.6 Severability
Section 11.7 Binding Effect
Section 11.8 Separate Agreement
Section 11.9 No Third Party Beneficiary
Section 11.10 Force Majeure
Section 11.11 No Warranties
Section 11.12 No Waiver
ARTICLE 12. THE DII GROUP, INC. GUARANTEE
Exhibit A Description of the IBM Property
Exhibit A1 Description of the Multek Site
Exhibit B Services Agreement
Exhibit C Sign Criteria
Exhibit D Rules and Regulations
Exhibit E Holidays
Exhibit F 1997/1998 Approved Budget
iii
<PAGE> 5
PROJECT OPERATIONS AGREEMENT
This Agreement (hereinafter the "Agreement"), is made as of ______, 1997,
by and between INTERNATIONAL BUSINESS MACHINES CORPORATION ("IBM") a New York
corporation, having its principal office at Armonk, New York 10504, and
MULTILAYER TEK L.P. ("Multek") a Texas limited partnership, having its principal
office at 11400 Burnet Road, Austin, Texas 78758.
WITNESSETH:
WHEREAS, IBM is the owner of the Complex and has leased the Multek
Site, which is a portion of the Complex, to Multek; and
WHEREAS, it is the intention of the parties hereto that IBM sell the
Multek Site to Multek and Multek purchase the Multek Site from IBM, upon and
subject to the provisions of the Asset Purchase Agreement; and
WHEREAS, during the term of the Lease and subsequent ownership of the land
comprising the Multek Site by Multek, IBM will provide the Services described in
EXHIBIT B to Multek, and Multek shall provide the Services, also described in
EXHIBIT B, to IBM; and
WHEREAS, because the Multek Site shall remain an integral part of the
Complex by reason of Central Utility
4
<PAGE> 6
Services to be provided from a location off the Multek Site, the configuration
of the access roads, and economies of operations, IBM and Multek wish to
establish agreements for management of the entire Complex.
NOW, THEREFORE, IBM and Multek agree as follows.
RULES OF CONSTRUCTION
In this Agreement the singular includes the plural and the plural includes
the singular; "or" is not exclusive; a reference to an agreement or other
contract includes supplements, addenda and amendments thereto to the extent
permitted by this Agreement; a reference to the Law includes any amendment or
supplement to the same; all EXHIBITS hereto shall be considered a part of this
Agreement; accounting provisions have the meanings assigned to them by generally
accepted accounting principles and practices applied on a consistent basis; the
words "such as," "include," "includes," and "including" are not limiting; except
as specifically agreed upon in this Agreement, any right hereunder may be
exercised at any time and from time to time and all obligations hereunder are
continuing obligations throughout the Term; in calculating any time period, the
first day shall be excluded and the last day shall be included unless the last
day is a Saturday, Sunday or Holiday, and then it is also excluded; all days are
calendar days unless otherwise specified; words of masculine gender shall be
deemed and construed to include correlative words of the feminine and neuter
genders; and, when used herein with its initial letter capitalized, a word shall
be given the meaning assigned to it in this Agreement.
ARTICLE 1. DEFINITIONS/GLOSSARY
Accountant. An independent certified public accounting firm of
national reputation for quality and integrity which is mutually selected.
Affiliate. A Person controlled by IBM or DII Group, Inc., directly or
indirectly, through one or more intermediaries controlled or under common
control with one of them. The word control is intended to mean, in this context,
with respect to a Person that is a corporation, the right to exercise, directly
or indirectly, the number of
2
<PAGE> 7
voting shares of the controlled corporation necessary to possess the power to
direct or cause the direction of the management and policies of the controlled
corporation, and, with respect to a Person that is not a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled Person.
Approved Budget. Defined in Article 3.
Buildings. Those structures located on the Multek Site.
Central Utility System. The Utility System and Utility Plant located
at the Complex.
Closing Date. The date that IBM sells Multek the assets used for the
manufacture of panel circuit boards, including lease of the Multek Site pursuant
to the terms of the Lease.
Complex. The land designated "Lot 1" and "Lot 2" as more particularly
described in EXHIBITS A and A1, together with all improvements thereon, and as
shown on the Survey. The Complex includes the Multek Site and the IBM Property.
Consent. Written consent, which shall not be unreasonably withheld or
delayed, but which may be granted subject to reasonable conditions and
restraints.
Consumer Price Index. The Consumer Price Index for Urban Wage Earners and
Clerical Workers published by the Bureau of Labor Statistics of the United
States Department of Labor, All Items (1982-1984 = 100), or any successor index
thereto, appropriately adjusted; provided that if there shall be no successor
index and the parties shall fail to agree upon a substitute index within thirty
(30) days, or if the parties shall fail to agree upon the appropriate adjustment
of such successor or substitute index within thirty (30) days, a substitute
index or the appropriate adjustment of such successor or substitute index, as
the case may be, shall be determined by mediation pursuant to Article 6.
Force Majeure. Acts of God and organized or wildcat labor strikes or
lockouts which have the direct and
3
<PAGE> 8
immediate effect of preventing performance of an obligation set forth in this
Agreement; acts of the public enemy; insurrection; riot; sabotage; war;
government orders, moratoriums, curtailment of or interference with utility
supply, or restraints which usurp, temporarily or otherwise, the right to
construct, use or occupy any part of the Complex; those catastrophic
meteorological or geological events which have the direct and immediate effect
of preventing performance of an obligation set forth in this Agreement, or any
other event beyond the reasonable control of the party claiming such event.
Governmental Authorities. Local, state, federal or foreign court,
governmental or administrative agency or commission or other governmental
agency, authority, instrumentality or regulatory body.
Hazardous Substance. "Hazardous waste," "hazardous material,"
"pollutant" or "contaminant" and words of similar import including any
substance defined as such by any applicable Environmental Laws.
Holiday. State or federal holidays recognized as holidays by IBM and
Multek, consisting initially of those listed on EXHIBIT E and subject to
adjustment with the Consent of the other if they result in a shutdown or
curtailment of the Services to be provided each to the other pursuant to EXHIBIT
B hereto.
IBM Property. The land designated as "Lot 2," as more particularly
described in EXHIBIT A, together with all improvements thereon, and as partially
shown on the Survey.
IBM Service Charges. Defined in Section 3.1.
Impositions. Any ad valorem taxes, special assessments and all other
charges imposed by Law which are assessed, levied or imposed against the
Complex. They include special and unforeseen taxes, and all interest paid with
respect to the foregoing when the Impositions are paid in installments and
interest is charged. Impositions include "Substitute Taxes" and payments in lieu
of taxes, or other charges imposed on property owners as a class or on the
Complex by the Laws.
4
<PAGE> 9
Laws. All applicable existing and future laws, ordinances, codes,
regulations and other requirements of Governmental Authorities and having the
force of law of Governmental Authorities and having jurisdiction over the
Complex and its operation.
Lease. The Lease dated as of even date herewith under which IBM leases
the Multek Site (referred to in the Lease as the "Leased Premises") to Multek
as "Tenant."
Major Increases. Defined in Section 3.2.
Making the Utilities/Services Independent. IBM's obligation to physically
separate the Services described in Sections 2, 7, 9 and 10 of EXHIBIT B, and to
disconnect the telephones and computer network systems from IBM's telephone and
computer systems in accordance with the terms agreed upon between the parties in
ATTACHMENT G-3 to EXHIBIT B, and the obligation of IBM to pay and incur the cost
thereof as agreed upon in Article 10, so that the IBM Property and Multek Site
shall each independently receive the same utilities and services.
Manager. The Person engaged to operate and maintain the Central Utility
System and to perform the overall management and administration of the IBM
Property, common areas of the Complex, and to provide Services to Multek
pursuant to EXHIBIT B hereto. Initially, IBM shall be the Manager. A successor
Manager may be selected by IBM after consultation with Multek.
Mediation. The dispute resolution process described in Article 6.
Multek Site. The land designated as "Lot 1," as more particularly
described in EXHIBIT A1, together with all Buildings and other improvements
thereon, and as shown on the Survey.
Multek Operating Expenses. Defined in Section 3.1.
Operative Agreements. This Agreement, unless specifically excluded, the
Intellectual Property Agreement, the Patent License Agreement, the Lease, the
Assignment and Assumption Agreement, the Supply Agreement and the Asset
5
<PAGE> 10
Purchase Agreement, each made between the parties hereto and, except for the
Asset Purchase Agreement, dated as of even date herewith.
Permitted Encumbrances. The Encumbrances listed on EXHIBIT A and
EXHIBIT A1.
Person. An individual, partnership, limited liability company, trust,
joint venture, Governmental Authority, corporation, firm or other entity, and
shall include any successor (by merger or otherwise) of such entity.
Services. Described in EXHIBIT B.
Subdivision. (i) (a) The issuance by the City of Austin, Texas (the
"City") of a land status report which confirms that the Multek Site is a
"grandfathered" legal lot and (b) the separation of the Multek Site by the
Travis Central Appraisal District as a separate tax parcel from the IBM Property
and, if required, the recording, at IBM's expense, of all documents necessary to
effect the legal separation of the Multek Site as a separate tax parcel or, (ii)
if not "grandfathered," all other final approvals from the City of Austin and
Travis Central Appraisal District to effect the legal separation of the Multek
Site as a separate tax parcel, all at IBM's expense. The word "grandfathered"
in this context means that the Multek Site and the IBM Property in their current
configuration are not required to go through the City's subdivision process and
are considered legal lots by the City and Travis Central Appraisal District.
Substitute Taxes. A tax, assessment or charge imposed by Law which is
payable as a substitute for any existing tax, assessment or charge which is
imposed on real or personal property owners as a class or on the Complex or
personal property thereon; a supplement to existing taxes, assessments or
charges imposed by Law; or any tax, assessment or charge imposed by Law, other
than an Imposition, which is related to the Complex or personal property
thereon, but expressly excluding any general income, franchise, capital stock,
estate or inheritance taxes, and rent or other receipts received from the rental
of the Leased Premises, unless such income, revenues or/and taxes, to the extent
they relate directly to the lease or
6
<PAGE> 11
ownership of the Complex, are determined by a Governmental Authority to be in
lieu of Real Estate Taxes.
Survey. The survey map (job no. 96-387) prepared by McAngus Surveying
Company, Inc., dated January 16, 1997, last revised June 25, 1997.
Term. Defined in Article 7.
Term of the Lease. Defined in the Lease.
Utility Plant. The machines, equipment, valves, pipes and the like which
produce cooling tower water, steam, chilled water and compressed air, and meters
which measure electricity, together with the structure which houses these items
and the parcel of land on which it is located.
Utility System. Each of the following systems to the extent located on or
servicing the Complex, each as described in EXHIBIT B, excluding systems or
parts thereof that only serve or will only serve Multek and IBM: chilled water,
cooling tower water, steam and compressed air, subject to the addition of new
systems or elimination of existing systems. The Utility System includes all
equipment used to the point of entry to the Buildings as set forth in EXHIBIT B.
ARTICLE 2. MANAGEMENT OF THE COMPLEX
Section 2.1 Management of the Complex.
Multek has leased the Multek Site from IBM on a "triple net" basis
pursuant to the provisions of the Lease, and Multek shall purchase the Multek
Site if and when IBM makes the Utilities/Services Independent and completes the
Subdivision. Whether Multek leases or purchases the Multek Site, as determined
by the applicable provisions of the Operative Agreements, IBM and Multek shall
in good faith cooperate in the management of the Complex by IBM and any
successor Manager, as herein provided.
Section 2.2 Utilities, Services and Access Roads.
In accordance with and subject to Article 10, the parties have agreed that
IBM shall make the Utilities/Services Independent, prior to which IBM shall
7
<PAGE> 12
supply certain regulated Services to Multek as a tenant under the Lease, upon
and subject to the provisions of EXHIBIT B. Thereafter, IBM shall continue to
furnish certain non-regulated Services to Multek, and Multek shall furnish
certain Services to IBM, in each case upon and subject to the provisions of
EXHIBIT B. Each party hereto shall be entitled to non-exclusive use of the
Access Roads, as herein provided in and subject to EXHIBIT B, including
ATTACHMENT E and SCHEDULE 10 hereto.
Section 2.3 Gift Policy.
IBM and Multek acknowledge that their respective business practice is to
prohibit employees from accepting trade discounts which are not available to
others and from accepting gifts or gratuities arising out of business
relationships. Therefore, IBM and Multek agree to adopt the same business
practice with respect to the Complex and with respect to all employees thereof
engaged in management and operation of the Complex. Neither IBM or Multek shall
give or offer trade discounts to employees of the other or their respective
family members which are not available to the general public, nor give or offer
employees of IBM or Multek or their respective employees or family members gifts
or gratuities of any type.
Section 2.4 Labor Harmony.
(a) IBM and Multek acknowledge the importance of maintaining a work
environment at the Complex that will not subject any neutral employer to any
interruption of its operations due to a labor disturbance or activity, whether
or not such disturbance or activity is protected by labor Laws involving the
employees of another employer at the Complex, or the employees of any of their
respective contractors, subcontractors, suppliers or other invitees (herein a
"labor disturbance"). IBM and Multek shall make reasonable good faith efforts to
avoid strikes, picketing and other labor disturbances at the Complex by their
respective employees, contractors, subcontractors, suppliers and other invitees.
(b) If there is a labor disturbance adversely affecting the Multek Site or
IBM Property, IBM or Multek, as appropriate, agrees to take prompt, reasonable
and lawful
8
<PAGE> 13
action to isolate the location of that disturbance so as not to interrupt the
business operations of the other or its occupants. As soon as either becomes
aware that a labor disturbance is threatened, it shall notify the other and
shall take prompt, reasonable and lawful action to ensure that any labor
disturbance will not affect the business operations of the other and is limited
to as small and specific an area as possible. Such action may include
establishing a separate gate reserved for the employees, contractors, suppliers,
or other invitees of the employer primarily involved in the labor disturbance
and another separate gate or gates for the employees, contractors,
subcontractors, suppliers and other invitees of all those not involved in the
dispute. The party involved in the labor disturbance shall promptly post the
gates located on its property with appropriate signs and shall notify, in
writing, the labor organization or other group creating the labor disturbance
that separate reserved gates have been established. The party involved in the
labor disturbance shall take any action reasonably necessary to ensure that each
Person uses only the gate reserved and designated for that Person's use.
However, all actions taken by IBM or Multek hereunder shall be limited to those
permitted by Laws, including the National Labor Relations Act.
9
<PAGE> 14
ARTICLE 3. PAYMENT OF OPERATING EXPENSES/CHARGES
Section 3.1 Approved Budget.
The cost of Services to be furnished by IBM to Multek pursuant to EXHIBIT
B, which shall include a pro rata share of the estimated fixed costs (such as
Utility Plant overhead costs) as well as the cost of commodities (such as
chilled water costs) which were consumed by Multek the previous month as well as
the cost of other Services, shall be collectively called "Multek Operating
Expenses." The cost of Services to be furnished by Multek to IBM pursuant to
EXHIBIT B shall be collectively called "IBM Service Charges." For the period
beginning on the first day of the Term and ending December 31, 1997 and,
thereafter, no later than September 1 of the year prior to the commencement of
each ensuing calendar year, IBM, after consultation with Multek, shall submit to
Multek a proposed budget for Multek Operating Expenses and IBM Service Charges
which shall cover a good faith estimate of Multek Operating Expenses and, based
on Multek's input during consultation, IBM Service Charges for the ensuing
calendar year. Multek and IBM shall provide such backup information relating to
the proposed budget which the other may reasonably request. Upon Consent of both
parties to the proposed budget, the budget shall be an "Approved Budget" for the
ensuing calendar year. If at any time during the Term, there is a Major Increase
(defined in subsection 3.2(c) below), Multek shall receive a statement from IBM
which identifies the Major Increase. IBM shall provide such back up information
relating to the Major Increase which Multek may reasonably request. Upon consent
of both parties to the proposed changes in the Approved Budget arising out of
the Major Increase, the revised budget shall supersede and replace and become
the new "Approved Budget." If the parties are unable to agree on the proposed
changes, the issues shall be submitted for Mediation. The Approved Budget for
the balance of the year 1997 and for calendar year 1998 is set forth in EXHIBIT
F and is a summary of the agreed upon charges set forth in SCHEDULES 1-14 of
EXHIBIT B.
Section 3.2 Expenses and Charges.
(a) No later than forty-five (45) days after the end of the calendar month
during which Services were provided to
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<PAGE> 15
Multek, Multek shall pay IBM a sum equal to one twelfth of the annual sums set
forth in the Approved Budget. Each shall be due from Multek, net of one twelfth
of any IBM Service Charges which are set forth in the Approved Budget.
(b) Subject to the rights of Multek herein, IBM is hereby authorized to
make the expenditures and incur the obligations provided for in the Approved
Budget. If Multek or IBM cannot reach agreement on the Approved Budget by
November 15 of any year, or if Multek or IBM exercises rights granted herein to
dispute any item of Multek Operating Expenses, IBM Services Charges or Major
Increases, IBM shall continue to manage and operate the Complex in accordance
with the most recent Approved Budget plus, because the parties cannot reach
agreement on the Approved Budget by November 15 of the current year for the
ensuing year, an increase of the then current years' Approved Budget by the
greater of the percentage increase in the Consumer Price Index during a twelve
(12) month period starting on September 1 of the prior year and ending on August
31 of the then current year, or four percent (4%). On of before December 15 of
the then current year, the controverted portions of the proposed budget shall be
submitted to Mediation and the decision of the Mediator shall be final and
binding on the parties hereto.
(c) IBM and Multek shall each from time to time inform the other about any
"Major Increases" in actual costs and expenses that were not anticipated in the
Approved Budget. "Major Increases" shall mean any expenditure that is reasonably
expected to cause actual annual costs to exceed (i) any line item of the
Approved Budget by more than ten percent (10%) or (ii) five percent (5%) of the
total Annual Budget. Neither Multek nor IBM shall be entitled to dispute any
Major Increase by IBM with respect to Multek Operating Expenses and by Multek
with respect to IBM Service Charges if each in its reasonable discretion after
consultation with the other determines that (x) there is an emergency requiring
immediate action for the protection of the Complex, Multek, IBM or the general
public, or (y) sums exceeding or which are not part of the Approved Budget need
to be spent to avoid the suspension of necessary Services or to comply with
Laws, or (z) the expenditure is for purchase of a non-regulated utility,
currently located on the Complex, which is necessary for the operations of
Multek or
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<PAGE> 16
IBM; provided in any case under (x) or (y), each party shall inform the other as
soon as possible of the necessity for and the nature and cost of such emergency
repairs or compliance.
Section 3.3 Annual Statement; Reconciliation.
Within a reasonable time, not to exceed ninety (90) days after the end of
the estimated duration set forth in ATTACHMENT F to EXHIBIT B, IBM shall deliver
to Multek statements of the aggregate payments made by Multek for Multek
Operating Expenses and actual Multek Operating Expenses, and Multek shall
deliver to IBM statements of the aggregate payments made by IBM for IBM Service
Charges and actual IBM Service Charges, in each case for the period covered.
Each such statement shall include the difference between payments and actuals.
Within forty-five (45) days after IBM receives Multek's statement of IBM Service
Charges, IBM shall issue a reconciliation statement which includes a summary of
both statements and determines whether Multek owes additional sums or is
entitled to a rebate, net of IBM Service Charges. Any sums owed by or to Multek
shall be payable to or by IBM within forty-five (45) days after delivery of such
statement. Any continuation of Calibration/Instrument Support, Tool Room Support
and Analytical Lab Support after expiration of the initial time periods set
forth in ATTACHMENT F to EXHIBIT B shall be furnished at competitive market
prices to be negotiated by the parties.
Section 3.4 Audit; Cost of Audit.
(a) Complete and accurate books, records, documents, accounts and other
evidence (hereinafter collectively called "the Records") shall be established
and maintained by IBM if directly pertinent to the Multek Operating Expenses and
by Multek if directly pertinent to the IBM Service Charges. The Records must be
kept for the balance of the calendar year in which they were made and for five
(5) additional years thereafter. No more often than once each calendar year
during the Term and within twelve (12) months after the end of the Term, Multek
and IBM, or their respective representative and any other Person authorized to
conduct an examination, including the Accountants, shall have access to the
Records during normal business hours at an office of IBM
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or Multek, as appropriate, in Austin, Texas or, if no such office is available,
at a mutually agreeable and reasonable venue, for the purpose of inspection,
auditing and copying. Each party shall take reasonable steps to protect any of
the Records from public disclosure.
(b) Each party may examine the Records established and maintained by the
other for any purpose, including compliance with generally accepted accounting
principles consistently applied and with all cost allocation formulae or
guidance set forth in this Agreement. Such audit may include a reconciliation of
any charges, assessments or other cost allocations found to be made in a manner
inconsistent with this Agreement. If found to be so, the reconciliation shall
include reimbursement to the adversely affected party of any interest or similar
cost incurred as a result of such initially inconsistent charge, assessment or
allocation, including interest not earned as a result of having made payment of
such charge. Interest shall be paid from the date the party paid such sums to
the date of payment at the floating prime rate of Chase Manhattan Bank N.A. in
effect in New York, New York, on short-term business loans to customers of the
highest credit standing.
Section 3.5 Tax on Expenses/Charges.
If any Governmental Authority having jurisdiction determines pursuant to
Law that any component of Multek Operating Expenses or IBM Service Charges is
subject to taxation (such as, without limitation, a sales or value added tax),
such tax shall be paid by the Person who benefited from the Service covered by
the Multek Operating Expenses or IBM Service Charges; except that taxes shall
not include income, franchise and corporate taxes. IBM and Multek shall each
separately account for and identify such component if claiming payment therefor.
Section 3.6 Regulated Services.
Notwithstanding any provision in this Agreement to the contrary, IBM shall
furnish electricity, Domestic Water and Waste Water services to Multek in
accordance with Section 1.9 of EXHIBIT B to this Agreement, including charges
allowed for such utilities and billing periods required by
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Law. Any inclusion of these utility charges in the Approved Budget shall be
consistent with Section 1.9 and the Law.
ARTICLE 4. UTILITY METERS
Section 4.1 Pricing.
Supplementing Section 3.1, Multek shall pay Multek Operating Expenses for
the supply of commodity/utility Services by IBM pursuant to the pricing formulas
set forth in EXHIBIT B. These charges shall include a pro rata share, based on
usage, of operating expenses and capital improvements associated with the
production and distribution of such Services from the Central Utility System or
elsewhere and delivered to the Multek Site, including those associated with the
maintenance, repair and replacement of the Utility Plant and, unless unlawful
with respect to regulated utilities, the meters which measure consumption.
Consumption charges and the cost of meters and metering shall be billed to
Multek as herein provided in this Article 4 and in EXHIBIT B. The parties agree
that the Building 60 metered utilities for Chilled Water, Compressed Air and
steam shall be the quantity measured by the meter in Building 60 minus the
quantity measured by the meter in Building 45.
Section 4.2 Meter Readings.
IBM shall read all meters according to IBM's regular meter reading
schedule. Upon a timely request from Multek prior to a scheduled reading, an
employee of Multek may attend. Not later than thirty (30) days after the end of
each scheduled metering period, IBM shall send Multek a statement in accordance
with Section 3.2 which shows the usage of metered utilities during the monthly
metering period.
Section 4.3 Meter Calibration and Adjustment.
(a) Each meter used for the purposes of billing Multek shall be tested and
calibrated by IBM at intervals consistent with manufacturers recommendations
and, as required by the City of Austin regulations. Multek shall provide IBM
representatives reasonable access to the Multek Site for such purposes. Any
meter found to be inaccurate
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shall be restored to accurate condition or an accurate meter substituted. Multek
shall reimburse IBM for fifty percent (50%) of all costs incurred by IBM for the
foregoing as a Multek Operating Expense, except that IBM shall pay for the
testing and recalibration within ten (10) days prior to or after the Closing
Date.
(b) IBM shall make or cause to be made special tests of meters used to
measure Multek's usage upon reasonable request of Multek and at reasonable
times. Except as prohibited by the City of Austin regulations, the cost of all
such tests of these meters and required calibrations shall be included in Multek
Operating Expenses. The result of all tests and calibrations shall be open to
examination by Multek upon reasonable request and at reasonable times. If, as a
result of any test, any meter is found to be inaccurate, then the readings of
such meter previously taken shall be re-examined and, if there is greater than a
two percent (2%) deviation from the manufacturer=s tolerances, a reconciliation
statement shall be issued to Multek within thirty (30) days after such
determination together with a payment to Multek or a request for additional sums
from Multek (to be paid within forty-five (45) days of receipt of the
reconciliation), as the case may be. IBM shall recalibrate and test the
inaccurate meters and each party shall pay fifty percent (50%) of the expense
incurred by IBM therefor.
Section 4.4 Failure of a Meter.
Should any metering equipment at any time fail to register or should the
registration thereof be so erratic as to be meaningless, the usage being
measured by any such meters shall be determined from (a) estimates on the basis
of past usage during a similar period and under similar conditions, or if
paragraph (a) cannot be determined, (b) estimates on the basis of usage
registered by a new or repaired meter during a subsequent period.
ARTICLE 5. INSURANCE
Section 5.1 Liability Insurance.
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(a) IBM and Multek shall each maintain in effect at all times during the
Term the coverages described in this Article 5, including "property damage" and
a "commercial general liability insurance" policy providing coverage on an
"occurrence," rather than on a "claims made" basis. The liability policy shall
include coverage for property damage, personal injury (including death) as well
as independent contractors and products-completed operations liability.
Section 5.2 Casualty Insurance. During the Term, Multek shall furnish and
maintain, at Multek's sole cost and expense, property damage insurance, written
on an "all risk" of physical loss or damage basis, to cover all loss or damage
to or destruction of any portion of the Leased Premises in an amount of not less
than eighty percent (80%) of the full cost to replace the Buildings and other
structures located on the Multek Site (excluding the foundations but including
all personal property, fixtures, equipment and machinery necessary to operate
and maintain Multek's business operations on the Multek Site). Such amounts
shall meet any co-insurance clause of Multek's policies.
Section 5.3 Liability Insurance.
(a) During the Term, Multek shall purchase and maintain, at Multek's sole
cost and expense, general commercial public liability insurance against any
claims by reason of personal injury (including death) and property loss, damage
or destruction, occurring on or about the Multek Site except for the gross
negligence or misconduct of IBM, its employees, suppliers, contractors or
subcontractors, in an amount of not less than one million U.S. dollars
($1,000,000.00) combined single limit for injury (including death) and for
damage to property, with umbrella coverage of not less than twenty million U.S.
dollars ($20,000,000.00). Multek shall cause IBM to be included as an additional
insured under such policy. Each such policy shall contain provisions, if and to
the extent available at no additional cost to Multek, that the policy will not
be cancelable except upon at least thirty (30) days prior notice to all
insureds, including IBM, and that the act or omission of one insured will not
invalidate the policy coverage of any of the other insureds. Multek shall
furnish evidence reasonably satisfactory to IBM that the
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insurance is in effect at or before the commencement of the Term. Multek may
self insure for up to Two Million Five Hundred Thousand U.S. Dollars
($2,500,000.00).
(b) During the Term, IBM shall purchase and maintain, at IBM's sole cost
and expense, general commercial public liability insurance against any claims by
reason of personal injury (including death) and property damage occurring on or
about the IBM Property, except for the gross negligence or misconduct of Multek,
its employees, suppliers, contractors, or subcontractors, in an amount not less
than one million U.S. dollars ($1,000,000.00) combined single limit for injury
(including death) and for damage to property, with umbrella coverage of not less
than twenty million U.S. dollars ($20,000,000.00). IBM shall cause Multek to be
included as an additional insured under such policy. Each such policy shall
contain provisions, if and to the extent available, that the policy will not be
cancelable except upon at least thirty (30) days prior notice to all insureds,
including Multek, and that the act or omission of one insured will not
invalidate the policy of any of the other insureds. IBM shall furnish evidence
reasonably satisfactory to Multek that the insurance is in effect at or before
the commencement of the Term. IBM may self insure for up to five million U.S.
dollars ($5,000,000.00).
(c) Each party shall have provided the other with evidence that the
insurance coverage required under this Article 5 is in full force and effect. At
least thirty (30) days prior to termination of any such coverage, each party
shall provide the other with evidence that such coverage will be renewed or
replaced upon termination with insurance that complies with these provisions.
Such evidence of insurance shall be in the form of a standard certificate of
insurance and shall contain sufficient information to allow each party to
determine whether there has been compliance with these provisions.
(d) All policies of insurance required under this paragraph shall be
issued by financially responsible insurers with a current A.M. Best Company
rating of at least A-VIII.
Section 5.4 Waiver of Claims and Subrogation.
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IBM and Multek each hereby waives its respective right of recovery against
the other and each releases the other from any claim arising out of loss, damage
or destruction to any improvements located in or on the Multek Site (in the case
of Multek) and to any improvements located in or on the IBM Property (in the
case of IBM), including all personal property, fixtures, equipment and machinery
on either property, to the extent such party actually receives full and complete
payment or reimbursement (excepting deductible amounts) for any such loss,
damage or destruction under any insurance policy required to be carried
hereunder but notwithstanding the fact that such loss, damage or destruction may
be attributable to the negligence of either party or Landlord's Agents or
Tenant's Agents. Each casualty insurance policy shall include a waiver of the
insurer's rights of subrogation against the party hereto who is not an insured
under said policy. Each party shall look first to the proceeds of its respective
casualty insurance policy (and to its own funds to the extent it is
self-insured) to compensate it for any such loss, damage or destruction. This
waiver and release applies to any self insured (deductible) portion of the loss,
damage or destruction, and such waiver and release is fully effective and
enforceable notwithstanding the fact that IBM or Multek has failed to purchase
and maintain insurance coverage required herein which may have reimbursed it for
such loss, damage or destruction.
ARTICLE 6. DISPUTE RESOLUTION; DEFAULT
Section 6.1 Initiation of Dispute Resolution.
Except for disputes for which different dispute resolution procedures have
been agreed upon in EXHIBIT B, if there is a dispute under this Agreement, the
following shall control.
(a) If informal discussions have not resolved a dispute between the
parties, any party hereto may at any time by written notice ("Initiation
Notice") to the other, initiate the dispute resolution procedure set forth
herein. All such disputes shall be subject to the procedures set forth in this
Section 6.1 and Section 6.2 below.
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(b) Upon issuance and receipt of any Initiation Notice, the matter in
question shall be referred in writing for resolution to Multek or IBM, as
applicable, at the addresses set forth in Article 9.1.
Section 6.2 Mediation.
(a) If the matter in question has not been resolved by the parties within
fifteen (15) days after receipt of any Initiation Notice, and if any party
wishes to pursue the matter, it shall initiate the following non-binding
procedure (herein called "Mediation"), by written notice to the other party.
Upon initiation of Mediation, the parties agree to try in good faith to settle
the matter under the Commercial Mediation Rules of the American Arbitration
Association before resorting to litigation.
(b) The Mediation shall be held within thirty (30) days after selection of
a Mediator. The parties shall agree on the selection of one Mediator who
demonstrates at least fifteen (15) years' experience with the subject matter of
the Mediation. If the parties cannot agree upon the selection of a Mediator
within fifteen (15) days after receipt of the notice initiating the Mediation,
the Mediator shall be selected in accordance with the Commercial Mediation Rules
of the American Arbitration Association.
(c) At least five (5) business days prior to the first scheduled Mediation
session, each party shall provide the Mediator with a brief written memorandum
on the issues to be resolved, the facts surrounding the dispute and its position
with regard to the issues. Such memoranda shall be filed on a confidential basis
and shall not be exchanged between the parties. If either party to the Mediation
has a substantial need for information and documents in the possession of the
other party in order to prepare for the Mediation, the parties shall attempt to
agree upon the extent of and the schedule for the expeditious exchange of such
information, with the help of the Mediator, if required.
(d) If any such dispute, claim or controversy remains unresolved as of the
earlier of (i) the 31st day after the first Mediation session, or (ii) the 61st
day after receipt of the notice initiating Mediation, or (iii) the 61st day
after receipt of the notice is received by the alleged
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offending party from the aggrieved party, whether or not a party has initiated
Mediation, either party may exercise all rights and remedies set forth in this
Article 6, subject to the limitations and conditions, if any, agreed upon in
this Agreement.
Section 6.3 Pending Resolution.
During any period after the Initiation Notice and during the Mediation,
(a) neither party shall be relieved of its obligation to timely pay amounts
claimed by the other in good faith to be due on account of Multek Operating
Expenses or IBM Service Charges and IBM or Multek (as the case may be) may
proceed to exercise all remedies available in Section 6.5 on account of
non-payment; (b) neither party shall be relieved of its obligation to timely pay
any reconciliation amounts due the other pursuant to reconciliation statements
issued by either party or its Accountant and IBM or Multek (as the case may be)
may proceed to exercise all remedies available in Section 6.5 on account of
non-payment, except that such payments shall be deposited with counsel for the
party who gave the Initiation Notice until the matter in dispute is finally
resolved; (c) neither party shall be relieved of its obligation to cause
Services to be provided in accordance with the provisions of this Agreement,
except as authorized in Section 6.5, and each may proceed to exercise all
remedies available in Section 6.5 on account thereof; (d) except to enforce the
obligations in paragraphs (a),(b) and (c) above, and except to avoid the running
of any applicable statute of limitations or similar rule, no party may exercise
the remedies granted to it below until it has completed the processes (to the
extent applicable) set forth in Sections 6.1 and 6.2, but nothing in this
Article 6 shall be construed as limiting or delaying notice of an Event of
Default or running of cure periods; (e) notwithstanding any delay arising out of
the Mediation, interest on any amount determined to be due shall accrue,
commencing as of the date the contested sums have been paid or are owed, on all
amounts mutually agreed upon or determined by the Mediator to be due to a party,
to be calculated in the manner agreed upon in subsection 3.4(b); and (f)
notwithstanding any delay arising out of the Mediation, any party mutually
agreed upon or determined by the Mediator to have committed an Event of Default
shall be liable for damages, if any, from the date
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of such Event of Default. The remedies reserved in paragraphs (a),(b) and (c)
above may be exercised simultaneously with any of the processes set forth in
Sections 6.1 and 6.2.
Section 6.4 Events of Default.
(a) IBM. The following shall constitute an Event of Default by IBM:
(i) failure of IBM to pay money due Multek in accordance with the
terms of this Agreement and such failure shall continue for at least
thirty (30) days after written notice thereof; or
(ii) failure of IBM to comply with any other provision of this
Agreement on its part to be performed hereunder and such failure
shall continue for more than forty-five (45) days after written
notice from Multek to IBM which specifies in reasonable detail the
alleged act or omission of non-compliance; provided, however, that
if and so long as (1) the failure is reasonably curable by IBM, (2)
Multek does not have reasonable grounds for establishing that Multek
could cure the failure materially more rapidly than IBM, (3) the
continuation of the failure is not materially prejudicial to Multek,
and (4) IBM promptly commences and thereafter diligently and
continuously prosecutes the curing of the failure, IBM shall have
such additional time as is reasonably necessary to cure the failure;
or
(iii) a general assignment by IBM for the benefit of creditors;
(iv) the institution by or against IBM of a case or other proceeding
under any section or chapter of any Texas bankruptcy/insolvency Law
or the Federal Bankruptcy Code, now existing or hereafter amended or
effective, which proceeding is not dismissed, stayed or discharged
within a period of sixty (60) calendar days after the filing
thereof, or if stayed, which stay is thereafter lifted
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without a contemporaneous discharge or dismissal of such proceeding;
(v) a proposed plan of arrangement is adopted or other action by
IBM's creditors is taken as a result of a general meeting of IBM's
creditors;
(vi) the appointment of a receiver, custodian, trustee or like
officer to take possession of assets of IBM, which receivership
remains undischarged for a period of thirty (30) calendar days from
the date of its imposition;
(vii) admission by IBM in writing of its inability to pay its
debts as they mature; or
(viii) attachment, execution or other judicial seizure of all or any
substantial part of IBM's assets.
(b) Multek. The following shall constitute an Event of Default by
Multek:
(i) failure of Multek to pay money due IBM in accordance with the
terms of this Agreement and such failure shall continue for at least
thirty (30) days after written notice thereof;
(ii) failure of Multek to comply with any other provision of this
Agreement on its part to be performed and such failure shall
continue for more than forty-five (45) days after written notice
from IBM to Multek which specifies in reasonable detail the alleged
act or omission of non-compliance; provided, however, that if and so
long as (i) the failure is reasonably curable by Multek, (ii) IBM
does not have reasonable grounds for establishing that IBM could
cure the failure materially more rapidly than Multek, (iii) the
continuation of the failure is not materially prejudicial to IBM,
and (iv) Multek promptly commences and thereafter diligently and
continuously prosecutes the curing of the failure, Multek shall have
such additional time as is reasonably necessary to cure the failure;
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(iii) a general assignment by Multek for the benefit of
creditors;
(iv) the institution by or against Multek of a case or other
proceeding under any section or chapter of any Texas
bankruptcy/insolvency Law or the Federal Bankruptcy Code, now
existing or hereafter amended or effective, which proceeding is not
dismissed, stayed or discharged within a period of sixty (60)
calendar days after the filing thereof, or if stayed, which stay is
thereafter lifted without a contemporaneous discharge or dismissal
of such proceeding;
(v) a proposed plan of arrangement is adopted or other action by
Multek's creditors is taken as a result of a general meeting of
Multek's creditors;
(vi) the appointment of a receiver, custodian, trustee or like
officer to take possession of assets of Multek, which receivership
remains undischarged for a period of thirty (30) calendar days from
the date of its imposition;
(vii) admission by Multek in writing of its inability to pay its
debts as they mature; or
(viii) attachment, execution or other judicial seizure of all or any
substantial part of Multek's assets.
Section 6.5 Remedies.
(a) Multek: Upon the occurrence of an Event of Default by IBM, Multek
shall have the right to pursue any one or all of the following remedies in
addition to any other remedies available at Law or in equity which are not
inconsistent with the following remedies of this Article 6:
(i) direct damages incurred by Multek as well as other remedies
available at Law or in equity, excepting consequential, indirect,
punitive, and special damages which are hereby excluded and waived
by Multek;
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(ii) specific performance and all other injunctive remedies;
(iii) the right to cure an Event of Default at the expense of IBM;
and
(iv) the right to terminate any and all Services except Services,
(including the Nonterminable Services described in Section 26.1 of
EXHIBIT B,) which are provided to IBM and are essential to IBM's
manufacturing operations, as determined in good faith by IBM.
(b) IBM: Upon the occurrence of an Event of Default by Multek, IBM shall
have the right to pursue any one or all of the following remedies in addition to
any other remedies available at Law or in equity which are not inconsistent with
the following remedies of this Article 6:
(i) direct damages incurred by IBM as well as other remedies
available at Law or in equity, excepting consequential, indirect,
punitive, and special damages which are hereby excluded and waived
by IBM;
(ii)specific performance and all other injunctive remedies; and
(iii) the right to cure an Event of Default at the expense of
Multek.
(iv) the right to terminate any and all Services except Services,
(including the Nonterminable Services described in Section 26.1 of
EXHIBIT B,) which are provided to Multek and are essential to
Multek's manufacturing operations, as determined in good faith by
Multek.
Section 6.6 Attorneys Fees; Jury Trial.
(a) In the event of any Mediation or/and litigation between IBM and Multek
hereunder, the Person who substantially prevails shall be entitled, in addition
to all other remedies granted to it above, to reimbursement of all
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reasonable attorneys fees and costs and expenses of Mediation or/and litigation
incurred by such substantially prevailing Person. The Mediator or judge shall
determine which Person substantially prevailed.
(b) In any action, proceeding or counterclaim brought by IBM or Multek
against the other concerning any matters whatsoever arising out of or in any way
connected with this Agreement or the relationship hereunder of IBM and Multek,
each hereby waives trial by jury.
Section 6.7 Limitation on Subcontractor/Consultant Liability.
In no event shall the subcontractors or consultants or other third party
providers retained by IBM be liable hereunder to Multek, or subcontractors or
consultants or other third party providers retained by Multek be liable
hereunder to IBM, in either case under any equitable or legal theory, for Losses
arising out of failure of such subcontractor, consultant or other third party
providers to furnish Services as required herein. The word "Losses" shall mean
all losses, liabilities, damages and claims and all related costs and expenses,
including any and all attorneys' fees and costs of investigation, litigation,
settlement, judgment, interest and penalties.
ARTICLE 7. TERM
The term of this Agreement shall commence as of the date hereof and shall
continue for a period of ninety-nine (99) years.
ARTICLE 8. RESTRICTIONS
Section 8.1 Uses.
Multek or any other Affiliate of DII Group, Inc. may use the Multek Site
for the manufacturing operations currently conducted on the Multek Site by IBM
as well as any other uses by them which is authorized by Law; provided, however,
that Multek shall obtain the written consent of IBM to any change in Multek's
use of the Multek Site for purposes other than manufacturing operations, which
consent shall not be unreasonably withheld or delayed if IBM determines in good
faith that the proposed change in use (a)
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does not materially change the volume of traffic or type of vehicle use at the
Complex, (b) does not violate or threaten violation of the provisions of the
Project Operations Agreement, and (c) complies with Law.
Section 8.2 Signs.
All signs posted upon or within the Complex by IBM, Multek or any other
Person occupying the Complex shall conform to the sign criteria set forth in
EXHIBIT C.
Section 8.3 Rules and Regulations.
IBM and Multek shall each comply with the Rules and Regulations set forth
in EXHIBIT D, and each shall make reasonable good faith efforts to cause its
partners, directors, employees, agents, licensees, contractors, tenants,
subtenants and other invitees to comply therewith. IBM may from time to time,
with the consent of Multek which shall not be unreasonably withheld or delayed,
amend or supplement the Rules and Regulations for the general safety, benefit
and convenience of IBM and Multek; provided that in no event shall any amended
or supplementary Rules and Regulations be inconsistent with the terms of this
Agreement. IBM shall give thirty (30) days written notice to Multek of any
proposed, amended or supplementary Rules and Regulations at least forty-five
(45) days prior to the proposed effective date thereof. IBM represents that up
to the day prior to the Term Commencement Date, the operations and activities
performed at the Multek Site have been, to Best Knowledge of IBM, within the
scope of the Rules and Regulations and have not violated these Rules and
Regulations. The words "Best Knowledge of IBM" means the knowledge acquired
based upon reasonable inquiry of IBM's Site Operations Manager of the IBM
printed wire board plant operations at the Multek Site as of the date hereof and
as of the Closing Date.
Section 8.4 Compliance with Laws.
IBM and Multek shall each comply with all Laws applicable to the
condition, occupancy, use and manner of use of the Multek Site and IBM Property,
as applicable, except that violation of any Laws which relate solely to IBM's
operations on the IBM Property or Multek's operations
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on the Multek Site and which do not adversely affect the other party in any way
or the condition, use or manner of use of any other areas of the Complex, shall
not constitute an Event of Default by the violator.
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ARTICLE 9. RIGHT OF FIRST OPPORTUNITY
Section 9.1 First Opportunity.
(a) Multek agrees that (i) if at any time it considers selling, assigning,
subletting, or otherwise transferring its interest in the Multek Site or/and any
of the Buildings or other improvements now or hereafter located on the Multek
Site, or (ii) if Multek at any time considers subdividing or rezoning the Multek
Site, in each case Multek shall first notify IBM of such plans before soliciting
third parties to pursue such plans, and shall include with the notification a
business term sheet which sets forth the terms of Multek's proposed transaction
(whether it is a sale, lease, or otherwise). IBM is hereby granted thirty (30)
days after receipt of Multek's proposal to submit a counterproposal and enter
into negotiations with Multek based on the business term sheet proposed. The
counterproposal may take the form of an offer to purchase or lease the assets
proposed to be marketed, rezoned or subdivided by Multek. Multek agrees that it
shall neither take any of the actions set forth above in (i) or (ii), nor
solicit or consider proposals received from others during the thirty (30) day
period unless and until (x) IBM waives its rights hereunder; (y) IBM fails to
submit a counterproposal as required below; or (z) IBM and Multek have been
unable to reach an acceptable agreement after complying with the terms set forth
below.
(b) Upon receipt of an IBM counterproposal, IBM and Multek shall work
together for a period of thirty (30) days in good faith to refine and revise
aspects of the IBM counterproposal to make it acceptable to Multek and IBM. If
after using their good faith efforts, Multek and IBM are unable to reach a
mutually acceptable agreement, IBM shall, at the end of such thirty (30) day
period, deliver to Multek in writing a detailed plan (the "Rejected Plan")
setting forth all material terms and conditions of the final proposal proffered
by IBM and rejected by Multek. Thereafter, Multek may solicit proposals from
others, but only on the same terms set forth in the Rejected Plan or terms which
are more favorable to Multek than those set forth in the Rejected Plan. If
Multek does not accept a third party proposal which is more favorable to Multek
than those set forth in the Rejected Plan, this process shall be repeated until
Multek transfers the asset to IBM pursuant to
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the terms of the Rejected Plan or to a third party on terms more favorable to
Multek than those set forth in the Rejected Plan. For purposes of this
Agreement, the above referenced thirty (30) day period, as applicable, are
hereinafter individually referred to as a "Negotiation Period."
Section 9.2 Continuing Right.
(a) This right of first opportunity shall be a continuing right with
respect to all or any portion of the Multek Site and any one or more of the
Buildings and other improvements thereon. The failure by IBM to submit a
proposal with respect to a particular portion of the Multek Site or particular
Building or improvement, or the rejection by Multek of an IBM proposal with
respect to a particular portion of the Multek Site or particular Building or
improvement shall not limit, alter or terminate IBM's right of first opportunity
hereunder with respect to the remaining portion of the Multek Site or particular
Building or improvement. In addition, if Multek rejects an IBM proposal or IBM
fails to timely make a proposal with respect to a particular portion of the
Multek Site or particular Building within the parameters given by Multek in its
business term sheet, and the Multek Site or particular Building or improvement
is not transferred or encumbered within two hundred seventy (270) days after the
expiration of (i) the applicable thirty (30) day period if IBM fails to deliver
a proposal or (ii) the applicable Negotiation Period if Multek has rejected an
IBM proposal, Multek shall again comply with the terms of Section 9.1 of this
Agreement by resubmitting its latest business term sheet to IBM, together with
all of the then relevant information, and working in good faith with IBM for a
period of thirty (30) days to reach a mutually acceptable agreement as required
by Section 9.1.
Section 9.3 IBM Affiliate. If Multek and IBM reach a mutually acceptable
agreement as to the transfer or encumbrance of a portion of the Multek Site or a
particular Building or improvement, IBM may assign its rights with respect to
such transfer or encumbrance to an Affiliate of IBM at the closing of the
transaction without the consent of Multek. Any such assignment shall not alter
or affect IBM's rights with respect to the remaining portions of the Multek Site
or a particular Building or improvement.
29
<PAGE> 34
Section 9.4 Third Party Offer. If Multek receives an unsolicited bona fide
offer from a third party, which is acceptable to Multek, for a transaction of
the type contemplated in subsection 9.1(a)(i), Multek shall notify IBM of such
transaction, the name of the offeror, the offered consideration and provisions
of the offer. Within thirty (30) days after receipt of Multek's notice, IBM may
elect by notice to Multek to enter into the offered transaction for the
consideration and upon the other provisions stated in Multek's notice; except
that the transaction shall close the later of thirty (30) days after IBM elects
to enter into the offered transaction or the date agreed upon by the offeror.
Should IBM fail to exercise this right within the time and in the manner
required above, or waives such right in writing, Multek shall be free to
consummate such transaction to the named offeror, for the consideration and upon
the other provisions set forth in Multek's notice to IBM; however, Multek agrees
that such transaction shall be subject to the provisions of this Agreement and
the Lease, including this Article 9. If such transaction is not consummated
within two hundred seventy (270) days after the expiration of the earlier of the
date IBM fails to exercise its right as hereinabove required or the date IBM
waives such right in writing, the rights granted to IBM and the restrictions on
Multek in this subsection shall once again apply to the offer described above as
well as to any new offer.
Section 9.5 Termination. Notwithstanding anything in this Agreement to the
contrary, all rights and obligations of Multek and IBM set forth in this Article
9 shall terminate effective upon the date ten (10) years after the date hereof.
Section 9.6 Successors and Assigns. All rights and obligations of Multek
and IBM set forth in this Article 9 shall inure to the benefit of and be binding
upon the successors and assigns of each party, including third parties who
acquire title to the Multek Site by foreclosure or deed in lieu of foreclosure
or otherwise. Either party may file a short form memorandum of this Article 9 on
the public record.
30
<PAGE> 35
Section 9.7 Financing/Refinancing. Notwithstanding any provision of this
Agreement to the contrary, in no event shall Article 9 apply (i) to any
financing or (ii) to any sale, sublease, assignment, pledge, mortgage or other
transfer or encumbrance to an Affiliate.
ARTICLE 10. INDEPENDENT UTILITIES/SERVICES - SUBDIVISION
From and after the Closing Date (as defined in the Asset Purchase
Agreement) IBM shall proceed to use its reasonable good faith efforts to obtain
the Subdivision and to make the Utilities/Services Independent as more fully
described in Sections 2, 7, 9 and 10 of EXHIBIT B hereto, and to disconnect the
telephone and computer network systems as agreed upon in ATTACHMENT G-3 of
EXHIBIT B. IBM shall pay all reasonable expenses associated with the Subdivision
and for making the Utility/Services Independent as agreed upon in the Asset
Purchase Agreement. A failure of or refusal by the City of Austin or any other
Governmental Authority to approve the Subdivision for any reason shall not
constitute a breach by IBM under the Operative Agreements. If the Subdivision is
not approved or so long as IBM fails to make the Utilities/Services Independent,
then Multek's exclusive remedy and IBM's exclusive liability hereunder shall be
for IBM to lease the Leased Premises to Multek and Multek to lease the Leased
Premises from IBM in accordance with the terms of the Lease which shall remain
in full force and effect upon the same terms and conditions stated therein.
31
<PAGE> 36
ARTICLE 11. MISCELLANEOUS
Section 11.1 Notices.
Any notice, request or demand under this Lease shall be in writing and
shall be considered properly delivered when addressed as hereinafter provided,
and served (i) by telecopy, (ii) five (5) days after deposit for mailing by
registered or certified mail, postage prepaid, (return receipt requested), or
(iii) sent by a reliable messenger or nationally known overnight courier. Any
notice, request or demand by IBM to Multek shall be addressed to Multek at the
Multek Site, Attention General Manager, with copies addressed and sent
simultaneously to Multilayer Technology, Inc. at 16 Hammond, Irvine, CA 92718,
Attention President, and to The DII Group, Inc., 6273 Monarch Park Place,
Longmont, CA 80503, Attention: Chief Financial Officer, until otherwise directed
in writing by Multek and, if requested in writing by Multek, simultaneously
served on or sent to such other parties as Multek may request. Any notice,
request or demand by Multek to IBM shall be addressed to IBM Corporation, Real
Estate Services, Armonk, New York 10504, Attention: Director, US Real Estate
Operations and Investments, with copies addressed and sent simultaneously to
IBM, at the same address, Attention: Associate General Counsel, and to the
Austin Contract Administrator, IBM Corporation, 11400 Burnet Road, Austin, Texas
78758, until otherwise directed in writing by IBM, or to such person or address
as either of the parties shall hereafter designate to the other from time to
time by similar written notice.
Section 11.2 Estoppel Certificates.
IBM and Multek each agree, at any time and from time to time upon not less
than ten (10) days prior notice from one to the other, to execute, acknowledge
and deliver to the other or any other Person designated by the requesting
Person, an "estoppel" certificate, so called, confirming information customarily
found in such certificates with respect to this Agreement or the Lease.
Section 11.3 Governing Law.
32
<PAGE> 37
(a) This Agreement and the other Operative Agreements, valued in excess of
One Million Dollars ($1,000,000.00), shall be deemed to have been delivered at
and made at Armonk, New York, and shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the Laws of the
State of New York applicable to agreements executed, delivered and performed
within New York State, without regard to the principles of conflicts of Laws
thereof.
(b) IBM and Multek hereby consent to the jurisdiction of any state or
federal court located within the county of New York, the State of New York. Each
hereby (i) waives trial by jury, (ii) waives any objection to venue of any
action instituted under this Agreement or under the other Operative Agreements,
and (iii) consents to the granting of such legal or equitable relief as is
deemed appropriate by any aforementioned court. These consents and waivers apply
to all Operative Agreements.
Section 11.4 Entire Agreement; Amendments.
This Agreement together with the other Operative Agreements and the
Confidentiality and Nondisclosure Agreement dated February 27, 1997, between IBM
and Multek, including all exhibits and other attachments referred to herein and
therein, contain the entire agreement of IBM and Multek with respect to the
subject matter hereof and thereof and supersede all prior agreements,
understandings and representations, oral or written, between IBM and Multek
relating thereto or hereto.
Section 11.5 Transfers.
This Agreement and the obligations and rights hereunder shall not be
assigned, hypothecated, pledged or otherwise transferred or encumbered by either
party hereto except that either party may, in its sole discretion, transfer or
assign its rights and obligations hereunder (a) to any one of its Affiliates and
(b) to a purchaser, lessor, lessee or source of funding if a party sells, leases
or otherwise transfers or assigns its leasehold or fee interest in the Complex.
Section 11.6 Severability.
33
<PAGE> 38
If any covenant, condition or provision of this Agreement, or the
application thereof to any Person or circumstance, shall be held to be invalid
or unenforceable, then in each such event the remainder of this Agreement or the
application of such covenant, condition or provision to any other Person or any
other circumstance (other than those as to which it shall be invalid or
unenforceable) shall not be thereby affected, and each covenant, condition and
provision hereof shall remain valid and enforceable to the fullest extent
permitted by applicable Laws.
Section 11.7 Binding Effect.
This Agreement shall be binding upon the signatories hereto and their
respective successors and permitted assigns to the same extent as if each
successor and permitted assign were named as a party to this Agreement.
Section 11.8 Separate Agreement.
This Agreement is separate from and independent of the Operative
Agreements. Without Limitation, no Event of Default by IBM or Multek under any
of the Operative Agreements other than the Lease shall constitute a default
under the Lease, and no default by IBM or Multek under the Lease shall
constitute an Event of Default under any of the other Operative Agreements.
Section 11.9 No Third Party Beneficiary.
This Agreement is intended for the exclusive benefit of the parties
hereto, and except as otherwise expressly provided herein, shall not be for the
benefit of, and shall not create any rights in, or be enforceable by any other
Person.
Section 11.10 Force Majeure.
If either party hereto (the "Delayed Party") is at any time delayed or
interrupted in providing a Service or any other non-monetary obligation on its
part to be performed hereunder by reason of a Force Majeure event, then the
Delayed Party shall use all reasonable efforts to again provide such Service or
perform such obligation as required by this Agreement but such delay or
interruption shall not
34
<PAGE> 39
be an Event of Default of the Delayed Party. The occurrence or happening of a
Force Majeure event which has the effect of preventing performance of one or
more obligations shall suspend time conditions or limitations with respect to
performance of the affected obligations(s) but only for so long as the event or
its direct consequences continue to preclude such performance.
Section 11.11 No Warranties.
(a) MULTEK AND IBM AGREE THAT THE PARTY PROVIDING A SERVICE HAS NOT,
EXPRESSLY OR BY IMPLICATION OR INFERENCE, MADE ANY REPRESENTATIONS, WARRANTIES
OR GUARANTEES WITH RESPECT THERETO, AND EACH SPECIFICALLY DISCLAIMS ANY WARRANTY
OF MERCHANTABILITY OR SUITABILITY OR FITNESS OF ANY OF THE SERVICES FOR A
PARTICULAR PURPOSE OF THE OTHER PARTY, WHETHER OR NOT EITHER PARTY HAS BEEN MADE
AWARE OF ANY SUCH PURPOSE BY ANY PERSON.
(b) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES
ACKNOWLEDGE AND AGREE THAT THE BASIC FIXED RENT, DEFINED IN THE LEASE, AND
PURCHASE PRICE ALLOCATED TO THE MULTEK SITE, DEFINED IN THE ASSET PURCHASE
AGREEMENT, WERE ESTABLISHED IN MATERIAL RELIANCE ON MULTEK ACCEPTING THE MULTEK
SITE IN THEIR "AS IS" CONDITION "WITH ALL FAULTS."
Section 11.12 No Waiver.
Failure by either party to complain of any action, inaction or default of
the other party shall not constitute a waiver of the aggrieved party's rights
hereunder. Waiver by either party of any right for any default of the other
party shall not constitute a waiver of any right for either a subsequent default
of the same obligation or for any other default, past, present or future.
ARTICLE 12. THE DII GROUP, INC. GUARANTEE
The DII Group, Inc. (the "Guarantor") hereby unconditionally and absolutely
guarantees to IBM the performance and payment of any and all monetary and other
obligations of Multek under this Agreement and the other Operative Agreements to
which Multek in accordance herewith and therewith is a party, independently of
the obligations of Multek, and the Guarantor hereby agrees to indemnify IBM
against any Loss
35
<PAGE> 40
(as defined in the Asset Purchase Agreement) incurred by reason of any failure
of Multek to perform and pay such obligations in such manner. This guarantee is
a direct, absolute, unconditional, irrevocable, present and continuing guarantee
of performance and payment, and is a direct and primary obligation of the
Guarantor, and is in no way conditional or contingent upon any attempt to
enforce performance upon, or collection from, Multek or upon any other event,
contingency or circumstances whatsoever. This shall be a continuing guarantee
and shall cover and secure any balance owing by Multek under this Agreement and
the other Operative Agreements to which Multek is a party, and IBM shall not be
obligated to exhaust its recourse against Multek before being entitled to
payment from the Guarantor, of all and every of the obligations hereby
guaranteed. The obligations of the Guarantor set forth above shall not be
subject to any deduction, diminution, abatement, setoff, recoupment, suspension,
determent, reduction, or defense (other than valid defenses Multek has against
IBM and all other rights of Multek under this Agreement and the other Operative
Agreements, and full and strict compliance by the Guarantor of its obligations
hereunder) and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Guarantor or Multek shall have any
knowledge or notice thereof), other than full and strict compliance by the
Guarantor of its obligations hereunder.
36
<PAGE> 41
INTERNATIONAL BUSINESS MACHINES
CORPORATION
Kevin Halloran By:/s/ Mark S. Payton
ATTEST ------------------------------------
Title:Corporate Development Consultant
Date: August 18, 1997
MULTILAYER TEK L.P.
Alex B. Makler By:/s/Carl R. Vertuca, Jr.
ATTEST ------------------------------------
Title: Senior Vice President, Chief
Financial Officer and
Secretary of Multek Texas,
Inc. in its capacity as
General Partner.
Date: August 18, 1997
AS TO ARTICLE 12 ONLY:
THE DII GROUP, INC.
Alex B. Makler By:/s/Carl R. Vertuca, Jr.
ATTEST ------------------------------------
37
<PAGE> 42
Title: Senior Vice President, Chief
Financial Officer and
Secretary
Date: August 18, 1997
38
<PAGE> 43
STATE OF NEW YORK )
: ss.:
COUNTY OF WESTCHESTER )
On the 18th day of August, 1997, before me personally appeared MARK S.
PAYTON to me known, who, being duly sworn did depose and say that he resides at
318 Garder Road, Monroe, CT, that he is Corporate Development Consultant of
International Business Machines Corporation, the corporation described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
/s/ Paulette Lemay Peters
------------------------------------
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the 18th day of August, 1997, before me personally appeared Carl R.
Vertuca, Jr. to me known, who, being duly sworn did depose and say that is the
Senior Vice President, Chief Financial Officer and Secretary of Multek Texas,
Inc., in its capacity as General Partner of Multilayer Tek L.P., the Texas
limited partnership described in and which executed the foregoing instrument;
and that he signed his name thereto on behalf of said limited partnership.
/s/ Kathryn Lee Skubina
------------------------------------
Notary Public
<PAGE> 44
STATE OF )
: ss.:
COUNTY OF )
On the 18th day of August, 1997, before me personally appeared Carl R.
Vertuca, Jr. to me known, who, being duly sworn did depose and say that he
resides at , that he is
Chief Financial Officer of The DII Group, Inc., the corporation described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
/s/ Kathryn Lee Skubina
-----------------------------------
Notary Public
<PAGE> 45
EXHIBIT A*
DESCRIPTION OF THE IBM PROPERTY
* Exhibit A is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 46
EXHIBIT A1*
DESCRIPTION OF THE MULTEK SITE
* Exhibit A1 is not included and will be furnished supplementally to the
Commission upon request.
EXHIBIT B
SERVICES AGREEMENT
(attached hereto and made a part hereof)
(Part of the Project Operations Agreement)
Except as otherwise specifically defined herein, all words shall be given
the meaning assigned to them in the Project Operations Agreement, to which this
Agreement is attached. All references herein to Multek shall include, without
limitation, Multek and each of its Affiliates.
In accordance with and subject to the provisions of this Project
Operations Agreement, certain services, utilities, supplies and facilities (the
"Services") shall be furnished by IBM to Multek and to the Multek Site,
including Buildings 60, 61, 63, 64, and 65 (the "Buildings"), and certain
Services shall be furnished by Multek to IBM.
1. General Provisions:
1.1 (a) IBM reserves the right to stop any Services or restrict or
prohibit access to the Access Roads, and Multek reserves the right
to stop any Services, in each case when required by Laws, or when
necessary by reason of accident, emergency, Force Majeure event,
required maintenance, repairs or replacements, rule or regulation of
a third party Service provider (e.g. utility company), in each case
for as long as may be reasonably required; provided, however, that
IBM and Multek shall each exercise reasonable good faith efforts, in
accordance with commercially reasonable standards, to minimize any
interference with the
<PAGE> 47
operation of the business of the other and shall, if practicable,
provide reasonable notice thereof to the other (which may be oral).
Neither party shall be liable to the other for any loss or damage
which it incurs because of the interruption of any Service if the
party causing the interruption acts reasonably under the
circumstances.
(b) IBM and Multek shall negotiate in good faith to mutually agree
upon arrangements for IBM to stop any Services for repairs,
alterations, replacements or improvements which are necessary or
desirable in IBM's sole judgement. If IBM and Multek fail to agree
on the time of the shutdown within a reasonable period under the
circumstances, as determined by IBM, IBM shall have the right to
stop any Services for a period not greater than twenty-four (24)
hours. However, (i) except in an emergency or as required by Law,
IBM may not stop any Services for a period greater than twenty-four
(24) hours without the consent of Multek, which consent shall not be
unreasonably withheld or delayed; (ii) if IBM stops any Services,
IBM shall exercise reasonable efforts to minimize any interference
with the operation of Multek's business and shall provide reasonable
notice thereof to Multek.
(c) Further and notwithstanding anything to the contrary contained
herein, IBM shall have the right to have planned, seventy-two (72)
hour continuous, simultaneous shutdown of all Services once during
each calendar year of the Term at a time to be mutually agreed upon
in good faith by both parties at least forty five (45) days prior to
such shutdown date. If, however, the parties do not agree on a
planned shutdown within thirty (30) days after notice to Multek of
IBM's planned shutdown date, the shutdown may be scheduled by IBM in
its sole discretion during the Memorial Day or Labor Day weekend as
IBM shall specify in a notice from IBM to Multek not later than
thirty (30) days prior to the scheduled
<PAGE> 48
shutdown by IBM. If additional shutdowns should, in IBM's sole
judgement, be required for maintenance, alterations, replacements or
improvements, IBM and Multek shall negotiate in good faith to
mutually agree upon the times and duration of any additional
shutdown.
1.2 Multek shall first notify IBM before making any modifications to the
systems of the Buildings which may impact the existing firm maximum
(which means existing plus available) capacities/volumes/ pounds/
gallons, or which impact agreed upon delivery variations, as each is
set forth in SCHEDULE 12 of this Agreement, specifying the proposed
scope and manner of proposed modifications and when they are planned
to be done. IBM and Multek, acting in good faith, shall mutually
agree upon the times and dates Multek shall make such modifications
and whether these changes will, in IBM's reasonable judgment,
adversely affect its ability to provide Services as required by this
Agreement. Failure by Multek to notify IBM, and to resolve any
dispute regarding the impact of the proposed change shall relieve
IBM of any responsibility or liability hereunder in connection with
any Services affected by the proposed change.
1.3 If there is a curtailment of a utility Service ("curtailed
Service") to the Multek Site by action or fault of a third party
Service provider, such as a "brownout," IBM shall endeavor in good
faith to provide to Multek, if reasonably feasible, an equitable pro
rata share of the curtailed Service which remains available to the
Complex. Multek and IBM shall each pay fifty percent (50%) of any
costs required to allocate the curtailed Service.
1.4 All mechanical Services which require water treatment, including
steam, cooling tower water and chilled water, will be chemically
treated by IBM in accordance with the then current practice. IBM
will advise Multek of the chemicals used to treat such water.
However, IBM shall not be
<PAGE> 49
liable for degradation of piping and equipment located on the Multek
Site.
1.5 IBM shall promptly provide Multek with copies of all notices of
possible health hazards and similar raw utility concerns received by
IBM from IBM's suppliers of raw utilities.
1.6 IBM shall promptly provide Multek with copies of any notices of
impending rate changes received by IBM from third party Service
providers which affect rates being charged to Multek hereunder.
However, IBM's failure to do so shall not constitute an Event of
Default by IBM or excuse Multek from paying increases on account of
any such rate changes; provided, that if IBM has not billed Multek
for charges based on the revised rate change within twenty-four (24)
months after IBM is notified of the change, IBM shall have
conclusively waived any claim to be paid such charges.
1.7 Multek shall own and maintain, repair and replace, at its sole cost
and expense, all meters presently installed or to be installed by or
on behalf of Multek on the Multek Site; except that until the term
of the Lease ends, IBM shall own all submeters which measure
regulated utilities. As provided in Article 4 of the Project
Operations Agreement, IBM shall determine the accuracy of all
utility meters and certify the accuracy to Multek. Multek shall
allow IBM access to all meters at all reasonable times.
1.8 If Multek requests additional Services which will result in
requirements for capacities/volumes/pounds/ gallons which exceed the
existing firm maximum (which means existing plus available)
capacity/volumes/pounds/ gallons, or which impact agreed upon
delivery variations, as each is set forth in SCHEDULE 12 of this
Agreement on the date hereof, and IBM (in its reasonable discretion)
determines that capacity must be added, IBM shall notify Multek of
such determination and the estimated cost of adding
<PAGE> 50
such capacity. If Multek still requests such additional services,
IBM shall manage the design and construction of the added facilities
with architects and contractors selected by IBM, and Multek shall
pay all design, construction and other costs and expenses, including
the fees of consultants, attorneys and Governmental Authorities,
which are incurred by IBM to satisfy Multek's request. Similarly, if
IBM requests that Multek store additional new chemicals and/or waste
product at the existing CDC, or that Multek treat greater volumes of
waste product at the WFC (defined in Section 11), and Multek (in its
reasonable discretion) determines that capacity must be added,
Multek shall notify IBM of such determination and the estimated cost
of the additional capacity. If IBM still makes its request, Multek
shall manage the design and construction of the added facilities
with architects and contractors selected by Multek, and IBM shall
pay all design, construction and other costs and expenses, including
the fees of consultants, attorneys and Governmental Authorities, to
satisfy IBM's request.
1.9 Until such time as IBM has completed making the Utilities/Services
Independent and has obtained the Subdivision, and the Real Estate
Closing (defined in the Asset Purchase Agreement) has been
completed, IBM shall facilitate the supply of electricity, Domestic
Water and Waste Water service to Multek in accordance with and
subject to provisions of the Project Operations Agreement, including
Sections 2, 9 and 10 of this Agreement and the following provisions.
(a) All electricity, Domestic Water, and Waste Water service
provided by IBM to Multek is furnished at IBM's cost (without markup
of any kind), solely as an incident of Multek's tenancy under the
Lease and only for Multek's use. Multek shall not resell or allow
the use by others of any Waste Water service, electricity, or
Domestic Water furnished by IBM hereunder.
<PAGE> 51
(b) Supplementing and confirming other provisions of the Project
Operations Agreement:
(i) Multek's electricity, Domestic Water and Waste Water
service shall be submetered.
(ii) Electrical consumption, Domestic Water consumption, and
Waste Water charges based on Domestic Water consumption for
common areas and facilities will be IBM's and not Multek's
responsibility.
(iii) Any disputes relating to the computation of Multek's
bill for electricity, Domestic Water consumption or Waste
Water charges, or the accuracy of the submetering device, will
be resolved by Mediation between Multek and IBM.
(iv) Multek acknowledges that by signing the Project
Operations Agreement, IBM has provided Multek with a true and
correct copy of 30 T.A.C. Section 291.125.
(c) Bills for Multek's electricity consumption, Domestic Water
consumption and Waste Water services shall be rendered by IBM for
the same period as the bills issued by the City of Austin or its
successor. Bills will be issued to Multek based upon submeter usage.
(d) A bill for any of these services is delinquent if not paid by
the due date indicated on the bill, unless the bill is issued less
than seven (7) days before the due date, in which case the due date
is seven (7) days after the date the bill was issued. The date the
bill is issued is the postmark date on the envelope of the bill or
on the bill itself. If the due date falls on a weekend or Holiday,
the due date for payment purposes shall be the next date after the
due date.
<PAGE> 52
(e) Estimated bills will be rendered if the meter has been tampered
with or is out of order and, in such case, the bill shall be
distinctly marked as such.
(f) If billings are determined to be in error, IBM shall calculate a
billing adjustment. If Multek has overpaid, the adjustment shall be
made for the entire period of the overcharges. If Multek was
underbilled, IBM will backbill Multek for the amounts underbilled
for a period not to exceed six (6) months. If the underbilling is
$25.00 or more, Multek may enter into a deferred payment plan for
the same length of time as that of the underbilling.
(g) Unless clearly designated by Multek, all payments received from
Multek shall be applied first to sums due IBM under the Project
Operations Agreement other than utilities, and then to utilities. A
reconnect fee of $10.00 shall be applied if electric service is
reconnected after being disconnected for nonpayment of bills.
(h) Electric, Domestic Water and Waste Water service may be
disconnected if:
(i) Multek fails to pay its electric, Domestic Water and Waste
Water bill within twelve (12) days from the date the bill was
issued (this provision shall supersede Article 6 of the
Project Operations Agreement for purposes of this clause); and
(ii) IBM has mailed or hand-delivered to Multek a termination
notice at least five (5) days prior to the date of
disconnection.
(i) Prior to furnishing Domestic Water and electricity to Multek
during the term of the Lease, IBM shall calibrate all submeters
which will be used to measure Domestic Water and electricity. Costs
of calibration shall be shared as agreed upon in Section 4.3 of the
Project
<PAGE> 53
Operations Agreement to which this EXHIBIT B is attached.
2. Electrical Power Service
IBM agrees that electrical power is one of four (4) Utility/Services
that IBM shall make Independent. Until accomplished, the following shall
apply:
2.1 All electrical substations (the "Substations") are located in the
Buildings. The existing switch gear is located on the IBM
Property as part of the Utility Plant. The intent of the parties
is to run a direct feed from the City of Austin electrical
facility to a new switch gear to be located on the Multek Site.
Until that work is completed, IBM shall make reasonable efforts
to arrange with the City of Austin to rent IBM's switch gear to
the City so that electrical service will be supplied to Multek by
the City through IBM's existing switchgear. Until then or until
electricity is made Utility/Services Independent, IBM shall
provide the Services described on SCHEDULE 1.
2.2 Electric meters are located within the Utility Plant and operational
to measure consumption of electricity furnished to Multek. These
meters have not been certified, but readings from them shall be
conclusive and binding on IBM and Multek unless clearly shown by one
party to be inaccurate and, if the parties are unable to agree,
through Mediation. Multek shall pay for electricity provided through
the Substations as measured by these electric meters in accordance
with the following. The City of Austin or, if the City and IBM or
the City and Multek agree, IBM shall cause the meters to be read on
a monthly basis to determine the electrical consumption during each
particular monthly billing period. The electrical consumption as
determined by such meter readings shall be multiplied by the then
(at the time of the particular meter readings) applicable service
classification rates at which IBM purchases electricity from the
utility company (including any and all sales taxes, fuel charges,
time of day
<PAGE> 54
charges, as well as any and all other component charges thereof).
The product thus obtained shall constitute the electric consumption
charge to be paid by Multek for the particular monthly billing
period to which the meter readings and the City's or IBM's bill
relates, and shall be payable within forty-five (45) days after the
receipt of the bill therefor by Multek.
2.3 IBM owns and shall maintain, repair and replace, subject to reimbursement as
herein provided in SCHEDULE 1, the electrical power feed from the
electrical service center or point of delivery from the public
utility up to points it enters the Buildings. Multek owns and
shall maintain, repair and replace, at its sole cost and expense,
the electrical system extending from the entry point into the
Buildings, including all cables, wiring, conduit and equipment such
as panels, lights, switches, and tools. In addition, Multek owns and
shall maintain, at its sole cost and expense, the diesel generators,
associated controls, batteries, equipment and distribution system
located within the Buildings. Both parties shall comply with all
Laws applicable to the maintenance, repair and replacement of its
electrical equipment and facilities, and IBM with respect to the
supply of electricity to Multek during the transition period.
<PAGE> 55
3. Steam Service
3.1 IBM shall provide non-potable Uncontaminated process steam to the
Buildings (with condensate return) in accordance with SCHEDULE
2. For purposes of this Sections 3, 5, and 6, the word
"Uncontaminated" shall mean free of process chemicals or other
pollutants which would impair the use of the steam or water, as
the case may be, for its intended purpose or use. Steam meters
are in place and operational to measure Multek's use of steam.
These meters have not been certified, but readings from them
shall be conclusive and binding on IBM and Multek unless
clearly shown by one party to be inaccurate and, if the parties
are unable to agree, through Mediation.
3.2 IBM owns and shall maintain, repair and replace, subject to
reimbursement as herein provided in SCHEDULE 2, the steam,
condensate and pipe distribution systems located in the Utility
Plant as well as the Utility System extending up to the points
they enter the Buildings. Multek owns and shall maintain,
repair and replace, at its sole cost and expense, the steam and
condensate systems in the Buildings from the Buildings' entry
points.
3.3 IBM shall cause the steam meters to be read on a monthly basis to
determine the use of steam during each particular monthly
billing period. The steam use as determined by such meter
readings shall be multiplied by the then, at the time of the
steam meter(s) reading, "Steam Rate." The Steam Rate agreed
upon for calendar year 1997 is set forth in SCHEDULE 2. The
product thus obtained shall constitute the equivalent of the
steam use charge to be paid by Multek in respect of the
particular monthly billing period to which IBM's bill shall
relate.
3.4 IBM represents that the steam and condensate system is a closed loop
system and, as currently operated and existing on the Closing
Date, is (i) in working order; (ii) Uncontaminated; and (iii)
sufficient to return all condensate in an Uncontaminated
<PAGE> 56
condition. Multek shall use all steam in a closed loop system
and return all condensate to the Utility Plant in an
Un-contaminated condition. If there is any such impairing
contamination caused or discovered by Multek or IBM in the
steam and/or condensate system, the party which causes or
discovers such contamination shall immediately orally notify
the other party (confirmed in writing within forty-eight (48)
hours of the oral notice). The party who caused such
contamination (the "offending party") shall take action within
twenty-four (24) hours to correct the cause of such
contamination. To the extent the offending party does not take
action within the twenty-four (24) hour period to correct the
cause of such contamination (and prosecute same with due
diligence and continuity to completion), the other party may
correct such contamination and bill the offending party for any
and all costs incurred by the other party therefor. The
offending party shall reimburse the other party for such costs
within forty-five (45) days after receipt of a bill therefor as
well as for any costs incurred by the other party to repair or
replace any parts or equipment damaged by such contamination by
the offending party.
4. Compressed Air Service
4.1 IBM shall provide the compressed air, cooled and dried for
production only and not for human consumption (hereinafter the
"Compressed Air") to Buildings in accordance with the
provisions of SCHEDULE 3.
4.2 IBM owns and shall maintain, repair and replace, subject to
reimbursement as herein provided in SCHEDULE 3, sufficient air
compressors and compressed air piping distribution system
necessary to supply the Compressed Air to the Buildings' entry
points.
4.3 Multek owns and shall maintain, repair and replace, at its sole cost
and expense, internal Compressed Air piping (to receive and
convey the Compressed Air)
<PAGE> 57
in the Buildings, from the Buildings' entry points.
4.4 IBM has installed consumption meters in the Buildings to measure
energy required to produce the Compressed Air used by Multek.
These meters have not been certified, but readings from them
shall be conclusive and binding on IBM and Multek unless
clearly shown by one party to be inaccurate and, if the parties
are unable to agree, through Mediation.
4.5 IBM shall cause the consumption meters to be read on a monthly basis
to determine the use of Compressed Air during each particular
monthly billing period. The use of Compressed Air, as
determined by such meter readings, shall be multiplied by the
Compressed Air Rate in effect at the time of the particular
meter readings. The Compressed Air Rate agreed upon for 1997 is
set forth in SCHEDULE 3. The product thus obtained shall
constitute the Compressed Air use charge to be paid by Multek
in respect of the particular monthly billing period to which
IBM's bill shall relate. The bill shall be payable within
forty-five (45) days after the receipt thereof by Multek.
4.6 If there is an unplanned equipment outage, IBM, at Multek's request,
shall exercise reasonable efforts to obtain rental air
compressors to continue to supply compressed air to Multek and
will endeavor to do so in a reasonable period of time. Multek
shall pay IBM for such rental air compressors within forty-five
(45) days after receipt of IBM's bill therefor.
4.7 Multek may elect to permanently discontinue purchasing Compressed
Air from IBM. To make such election, Multek shall give not less
that thirty (30) days prior notice to IBM. As of the effective
termination date as provided in the notice, IBM shall no longer
be required to furnish Compressed Air to Multek, and IBM in its
sole discretion may sell to third parties or otherwise dispose
of its
<PAGE> 58
compressors that it used to produce Compressed Air for Multek.
5. Chilled Water Service
5.1 IBM shall provide non-potable Uncontaminated chilled water ("Chilled
Water"), in accordance with the provisions of SCHEDULE 4.
5.2 IBM owns and shall maintain, repair and replace, subject to
reimbursement as herein provided in SCHEDULE 4, a chilled water
Utility System necessary to supply such Chilled Water from the
Utility Plant to the Buildings' entry points. Multek owns and
shall maintain, repair and replace, at its sole cost and
expense, a chilled water piping system to receive and convey
the Chilled Water, from the Buildings' entry points.
5.3 IBM has installed meters in the Buildings to measure Multek's use of
Chilled Water. These meters have not been certified, but
readings from them shall be conclusive and binding on IBM and
Multek unless clearly shown by one party to be inaccurate and,
if the parties are unable to agree, through Mediation.
5.4 IBM shall cause the Chilled Water meters to be read on a monthly
basis to determine the use of Chilled Water during each
particular monthly billing period. The Chilled Water use, as
determined by such meter readings, shall be multiplied by the
Chilled Water Rate in effect at the time of the particular
meter readings. The Chilled Water Rate agreed upon for 1997 is
set forth in SCHEDULE 4. The product thus obtained shall
constitute the Chilled Water use charge to be paid by Multek in
respect of the particular monthly billing period to which IBM's
bill shall relate. The bill shall be payable within forty-five
(45) days after the receipt thereof by Multek.
5.5 IBM represents that the Chilled Water system is a closed loop system
and, as currently operated and existing on the Closing Date, is
(i) in working order; (ii) Uncontaminated; and (iii) sufficient
to return all Chilled Water in an Uncontaminated condition.
Multek shall use all Chilled Water in
<PAGE> 59
a closed loop system and return all chilled Water to the
Utility Plant in an Uncontaminated condition. If there is any
such impairing contamination caused or discovered by Multek or
IBM in the Chilled Water System, the party which causes or
discovers such contamination shall immediately orally notify
the other party (confirmed in writing within forty-eight (48)
hours of the oral notice). The party who caused such
contamination (the "offending party") shall take action within
twenty-four (24) hours to correct the cause of such
contamination. To the extent the offending party does not take
action within the twenty-four (24) hour period to correct the
cause of such contamination (and prosecute same with due
diligence and continuity to completion), the other party may
correct such contamination and bill the offending party for
any and all costs incurred by the other party therefor. The
offending party shall reimburse the other party for such costs
within forty-five (45) days after the receipt of a bill
therefor as well as for any costs incurred by the other party
to repair or replace any parts or equipment damaged by such
contamination by the offending party.
6. Cooling Tower Water
6.1 IBM shall provide non-potable Uncontaminated cooling tower water
("Cooling Tower Water") in accordance with the provisions of
SCHEDULE 5.
6.2 IBM owns and shall maintain, repair and replace, subject to
reimbursement as herein provided in SCHEDULE 5, a cooling tower
water system necessary to supply such Cooling Tower Water from
the Utility Plant to the Buildings' entry points. Multek owns
and shall maintain, repair and replace, at its sole cost and
expense, a cooling tower water piping system to receive and
convey the Cooling Tower Water from the Buildings' entry
points.
6.3 The Cooling Tower Water Rate agreed upon for 1997 is set forth in
SCHEDULE 5 and shall constitute the Cooling Tower Water use
charge to be paid by
<PAGE> 60
Multek in respect of the particular monthly billing period to
which IBM's bill shall relate. The bill shall be payable within
forty-five (45) days after the receipt thereof by Multek.
6.4 IBM represents that the Cooling Tower Water system is a closed loop
system and, as currently operated and existing on the Closing
Date, is (i) in working order; (ii) Uncontaminated; and (iii)
sufficient to return all Cooling Tower Water in an
Uncontaminated condition. Multek shall use all Cooling Tower
Water in a closed loop system and return all cooling tower
water to the Utility Plant in an Uncontaminated condition. If
there is any such impairing contamination caused or discovered
by Multek or IBM in the Cooling Tower Water System, the party
which causes or discovers such contamination shall immediately
orally notify the other party (confirmed in writing within
forty-eight (48) hours of the oral notice). The party who
caused such contamination (the "offending party") shall take
action within twenty-four (24) hours to correct the cause of
such contamination. To the extent the offending party does not
take action within the twenty-four (24) hour period to correct
the cause of such contamination (and prosecute same with due
diligence and continuity to completion), the other party may
correct such contamination and bill the offending party for any
and all costs incurred by the other party therefor. The
offending party shall reimburse the other party for such costs
within forty-five (45) days after the receipt of a bill
therefor as well as for any costs incurred by the other party
to repair or replace any parts or equipment damaged by such
contamination by the offending party.
6.5 Multek understands that IBM has reduced the cost of Cooling Tower
Water as well as Chilled Water by implementing a recycling
program. To the extent that Multek does not continue this
recycling program, a written description of which has been
delivered to Multek, the cost of Cooling Tower Water as well as
Chilled Water shall increase.
<PAGE> 61
7. Fire Protection Water System, Detectors and Extinguisher Service
IBM agrees that the fire protection water system is one of four (4)
Utility/Services that IBM shall make Independent. Until accomplished, the
following shall apply:
7.1 (a) IBM shall make available to Multek the existing fire loop system
servicing the Buildings. This fire loop system consists of
piping which connects to the City of Austin water supply system
up to the entry points to the Buildings, as well as the
hydrants and backflow preventers which are located on the IBM
Property.
(b) IBM owns and shall maintain, repair and replace, subject to
reimbursement herein provided, the existing fire loop system. Multek
owns and shall maintain, repair and replace, at its sole cost and
expense, the internal fire protection water system (including
alarms, detectors, extinguishers, piping, and wiring) from the point
the system enters the Multek Site, including any systems which serve
the Buildings, tank farms, industrial waste treatment plant and the
chemical distribution center located on the Multek Site. Both
parties shall comply with all Laws applicable to the maintenance,
repair and replacement of its fire protection equipment and
facilities, and IBM with respect to the supply of the fire
protection water to Multek during the transition period.
7.2 At such times when there has been use of fire protection water for
the benefit of the Multek Site, IBM shall cause a reading to be
made from the water meters. These meters have not been
certified, but readings from them shall be conclusive and
binding on IBM and Multek to determine the amount of water that
was used unless clearly shown by one party to be inaccurate
and, if the parties are unable to agree, through Mediation. IBM
shall bill Multek therefor in accordance with SCHEDULE 6, using
the then City of Austin's water rate (including sales, use and
other taxes and charges) charged to IBM. Multek shall pay IBM's
bill(s) therefor within forty-five (45) days after the receipt
thereof by
<PAGE> 62
Multek. If fire protection water shall be used at locations at
other areas on the Complex at the same time when used for the
benefit of the Multek Site, then IBM, in good faith, shall
solely determine the allocation of such use when reading the
water meters and prorate its bill to Multek accordingly.
8. Fuel Oil
8.1 Multek shall own and shall maintain, at its sole expense, the
existing fuel oil tanks and all associated piping and equipment
located on the Multek Site. Multek, in its sole discretion, may
demolish and close any or all such tanks on thirty (30) days
prior notice to IBM. All fuel oil tanks on the Multek Site are
marked on ATTACHMENT I.
8.2 Multek shall make its own arrangements for supply of fuel oil to the
Buildings. Multek shall receive or otherwise transfer fuels to
or from transport trucks or vehicles only at places that
provide secondary containment so as to prevent the unplanned
releases of fuel to the environment. Multek shall use its best
efforts to cause its suppliers to use the shortest route from
off-site to the tank farm and shall be responsible, as provided
in Sections 16 and 17, for all spills and other releases to the
environment from such fuel oil tanks anywhere on or about the
Complex.
9. Domestic Water Service
IBM agrees that domestic water is one of four (4) Utilities/ Services
that IBM shall make Independent. Until accomplished, the following shall apply:
9.1 IBM shall provide Multek with potable domestic water ("Domestic
Water") in accordance with the provisions of SCHEDULE 6.
9.2 IBM owns and shall maintain, repair and replace, subject to
reimbursement as herein provided in SCHEDULE 6, domestic water
piping and equipment necessary to supply Domestic Water from
the point of delivery
<PAGE> 63
from the City of Austin to the Building's entry points. Multek
owns and shall maintain, repair and replace, at its sole cost
and expense, internal domestic water piping and equipment from
the Buildings' entry points. Both parties shall comply with all
Laws applicable to the maintenance, repair and replacement of
its Domestic Water System, and IBM with respect to the supply
of Domestic Water to Multek during the transition period.
9.3 IBM has installed meters to measure Multek's use of Domestic Water.
These meters have not been certified, but readings from them
shall be conclusive and binding on IBM and Multek unless
clearly shown by one party to be inaccurate and, if the parties
are unable to agree, through Mediation.
9.4 IBM shall cause the Domestic Water meters to be read on a monthly
basis to determine the use of Domestic Water during each
particular monthly billing period. The Domestic Water use, as
determined by such meter readings, shall be multiplied by the
rates in effect at the time of the meter readings (including
sales, use and other taxes and charges) at which IBM purchases
water from the City of Austin. The product thus obtained and
other charges agreed upon in SCHEDULE 6 shall constitute the
Domestic Water use charge to be paid by Multek in respect of
the particular monthly billing period to which IBM's bill shall
relate. The bill shall be payable within forty-five (45) days
after the receipt thereof by Multek.
10. Sanitary Waste System Service
IBM agrees that the sanitary waste system is one of four (4)
Utilities/Services that IBM shall make Independent.
Until accomplished, the following shall apply:
10.1 IBM owns and shall maintain, repair and replace, subject to
reimbursement as herein provided in SCHEDULE 6, the sanitary
waste system which services the entire Complex, except for the
Internal Sanitary
<PAGE> 64
System. Multek owns and shall maintain, repair and replace, at
its sole cost and expense, the internal sanitary waste system
from the point of entry into the Buildings, including pumps and
piping within the Buildings (the "Internal Sanitary System").
Both parties shall comply with the Laws applicable to the
maintenance, repair and replacement of its Sanitary Waste
System, and IBM with respect to the supply of sanitary waste
Services during the transition period.
10.2 If there is any blockage or stoppage in the system, other than in
the Internal Sanitary System, which is caused by Multek's
negligence or misconduct, Multek shall reimburse IBM for any
costs incurred by IBM to clear or to correct the same. If there
is any blockage or stoppage in the Internal Sanitary System
which is caused by IBM's negligence or misconduct, IBM shall
reimburse Multek for any costs incurred by Multek to clear or
correct the same. Multek shall use and maintain, repair and
replace the Internal Sanitary System in accordance with Laws at
its sole cost and expense. Multek shall be liable for and shall
promptly perform at its sole cost and expense any and all
cleanup of the Internal Sanitary System required by any Laws
due to the discharge of any unlawful substances into the
Internal Sanitary System or any other part of the sanitary
system serving the Complex.
10.3 The parties have agreed that for 1997, Multek shall pay to IBM the
amount set forth in SCHEDULE 6 for this Service. Such payments
shall be made within forty-five (45) days after Multek's
receipt of IBM's bills therefor, which bills shall be
accompanied by a copy of the underlying bill received from the
City of Austin. IBM shall bill Multek on the same cycle as IBM
is billed by the City of Austin.
11. Industrial Waste Water Service
The existing industrial waste water treatment plant ("WCF") is located on
the Multek Site. The plant shall be operated by Multek, at its sole expense,
whether or not title to the Multek Site is
<PAGE> 65
transferred to Multek; except that if IBM decides not to construct a new
industrial waste water treatment plant on another part of the Complex, the
following shall apply and Multek shall provide WCF Services to IBM for a fee:
11.1 Multek shall maintain, repair and replace, subject to reimbursement
by IBM as herein provided, the WCF which is comprised of the
industrial waste water structures, piping, transfer tanks and
pumping equipment located on the Multek Site.
11.2 Multek shall process, in compliance with all applicable Laws
(including IBM's City of Austin Waste Water Permit), IBM's
industrial waste water in accordance with the provisions of
SCHEDULE 7.
11.3 The parties have agreed that for 1997, IBM shall pay Multek the
amount set forth in SCHEDULE 7 for this Service. IBM shall pay
Multek such amount within forty-five (45) days after the month
during which the Service was provided.
11.4 IBM will provide data to Multek establishing the levels or
concentrations of all pollutants in IBM's effluent which are
regulated and required to be reported to the City of Austin and
that demonstrates that IBM's wastewater discharges will meet
the City of Austin's wastewater effluent limitation standards
after being properly treated at the WCF. In accordance with
current procedures, IBM will provide such data to Multek twice
a week. IBM, upon discovery, shall immediately notify Multek of
any concentration of contamination in its discharge or any
upset which would cause the permit limits to be exceeded. IBM
shall reimburse Multek for any fine or penalty levied against
Multek because of any such exceedance.
12. Security
IBM shall provide control of access to the Complex by badge readers,
subject to its right to terminate this Service pursuant to Section 26, in
accordance with the provisions of SCHEDULE 8.
13. Stormwater Runoff
<PAGE> 66
13.1 As part of the cost of making the Utility/Services Independent, IBM,
at its sole cost and expense, has completed or will complete
physical modifications to the stormwater collection system so
that stormwater will not run off from the Multek Site or IBM
Property to the other; the one exception will be the runoff of
Multek's two (2) parking lots which are located to the east of
Building No. 60. The parties have agreed that once these
physical modifications are complete, IBM will test the runoff
to determine and define the quality of the stormwater runoff
from the Multek Site. To the extent that such monitoring
demonstrates that the runoff is sufficiently uncontaminated and
IBM and Multek reasonably conclude that no additional
collection and/or treatment requirements will be imposed in
connection with obtaining a permit for the discharge of such
stormwater pursuant to Federal regulations, Multek shall assume
all responsibility for and with respect to the stormwater
runoff from the Multek Site at its sole cost and expense. If
there is a dispute with respect to stormwater runoff, the
parties will resolve the issue by Mediation.
13.2 As part of the Services to be provided under Section 13, IBM shall
provide the Services described in SCHEDULE 9.
14. Landscaping, Grounds Service and Access Roadway Maintenance
Consistent with the current service contracts and service levels stated
therein, as determined by IBM and its service provider, IBM shall provide
landscape, grounds, and access roadway maintenance services to the applicable
portions of the Complex in accordance with the provisions of SCHEDULE 10. To the
extent IBM uses treated industrial waste waters to irrigate the Multek Site
under IBM's Service contracts, these waters will not contain any Hazardous
Substance that would cause Multek to incur liability for remedial activity under
any environmental Laws. IBM shall indemnify Multek for any costs Multek incurs
to remediate contamination required by Law to be remediated and which results
from contaminated irrigation waters supplied by IBM; provided, Multek can
demonstrate that such
<PAGE> 67
contamination was the proximate cause of any such required remediation.
15. Environmental General
15.1 Notwithstanding the provisions of this Section 15 to the contrary,
neither IBM or Multek shall install any underground storage
tanks, injection or dry wells, or surface impoundments of any
kind on the Complex. Either may install or use above ground
storage tanks (including piping and valves), so long as the
installation of the tanks and use of the contents in the tanks
is for operations at the Complex; is in compliance with
applicable Laws; is necessary for the conduct of the business
activities at the Complex, and is in accordance with safe and
workmanlike procedures that reasonably minimize any threat to
and are protective of human health and the environment. The
party hereto who installs or uses an above ground storage tank
is solely responsible for any liability or claim resulting
from, relating to or arising out of such installation or use,
and it shall indemnify and hold the other party hereto and
their respective directors, employees, and lenders, successors
and assigns harmless from and defend them against any liability
or claim resulting from, relating to or arising out of such
installation or use.
15.2 IBM and Multek are strictly prohibited from disposing of any
Hazardous Substances on the Complex. Each party hereto shall be
solely responsible for arranging for the proper and
legally-authorized temporary storage on or off the Complex,
transportation to and from the Complex, and for off-site
disposal of all Hazardous Substances brought upon, used,
stored, transported to or generated by it or its agents at the
Complex. If required by Laws, the party hereto intending to
transport and dispose of Hazardous Substances shall obtain an
EPA hazardous waste generator identification number for the
transportation to and disposal of such wastes and waste waters
at off-site disposal areas.
<PAGE> 68
15.3 Neither IBM nor Multek (other than as required by Law) shall,
without the approval of the other, which either may withhold
from the other in its sole discretion, permit any part of the
Complex to become, under any applicable Laws, (1) a hazardous
waste treatment or disposal facility except an industrial waste
water treatment plant; (2) a solid waste treatment or disposal
facility (including an incineration facility, a solid waste
landfill or a public disposal facility); (3) a solid or
hazardous waste transfer station; (4) a nuclear or radioactive
material storage facility; (5) a medical waste treatment or
disposal facility; (6) a waste tire collection site; (7) a
mining waste storage or disposal facility; (8) a used oil
recycling, marketing or burning facility; (9) a special wastes
treatment or disposal facility; or (10) a facility that
accepts, receives, collects, stores, treats, or disposes of
solid wastes, Hazardous Substances or other wastes that are
generated off the Complex.
15.4 IBM and Multek are each responsible for compliance of their
respective employees, contractors, subcontractors, tenants,
subtenants and other invitees with these provisions.
15.5 (a) IBM and Multek shall each be responsible for obtaining (except
during any transition period, as herein provided) and
maintaining any environmental permits or approvals, or making
any notifications or reports, that are required under any
applicable Laws or permits for conduct of, on or related to the
portion of the Complex it or their respective employees,
contractors, subcontractors, tenants, subtenants and other
invitees control or possess. If, as contemplated, Multek
operates its facilities under a permit or license issued to
IBM, Multek shall comply with all obligations and
responsibilities imposed on IBM by such permit or license.
Until the permits are transferred into Multek's name, if Multek
causes IBM to violate any provision of such permit or license,
then Multek shall indemnify and save IBM and its employees and
directors harmless from and defend them against
<PAGE> 69
any claim, liability, cost, fee, expense or damage arising out
of such violations; provided, that such violation is not caused
by IBM.
(b) IBM will continue to perform at its sole expense the groundwater
monitoring and sampling obligations associated with the Corrective
Action part of IBM's State RCRA Hazardous Waste Permit, HW50130, as
more fully explained in that Permit, as it applies to the tank farms
located on the Multek Site. Multek will allow access to IBM and its
contractors to perform such monitoring and sampling. IBM shall be
responsible for closure of all wells associated with its RCRA
Corrective Action compliance plan. IBM will also cap any voluntary
monitoring wells on the Multek Site that Multek designates in
writing to IBM within six (6) months following the Closing Date that
Multek does not want to continue. For any voluntary well that Multek
does not want capped, Multek shall assume all responsibility and
maintenance for such well(s) within six (6) months following the
Closing Date.
15.6 If either IBM or Multek receives prior notification of any planned
visits or inspections of any part of the Complex by any
Governmental Authority having jurisdiction over environmental
matters, IBM or Multek, as applicable, must, as soon as
reasonably possible after the date for the visit or inspection
is scheduled, orally notify the other party of such planned
visit. If any Governmental Authority having jurisdiction over
environmental matters makes an unplanned visit to or inspection
of any portion of the Complex, the Person (Multek or IBM) first
made aware of such visit or inspection must, as soon as
reasonably possible, orally notify the other party. Unless
required by Law or a Governmental Authority having jurisdiction
over environmental matters, neither IBM or Multek shall be
entitled to participate in any such visit or inspection of the
portion of the Complex occupied by the other without the
consent of the other; except that during the period of time
that either IBM or Multek is operating its facilities under a
permit or license issued to the other, the other shall be
entitled to participate
<PAGE> 70
in any such visit or inspection of the Multek Site.
16. Environmental Conditions
16.1 (a) IBM and Multek agree that the level of Hazardous Substances, if
any, present in the soil and groundwater in, on and under the
Multek Site shall be as set forth in the Environmental Baseline
described in the Asset Purchase Agreement; except that (i) for
a period of one (1) year from the Closing Date, monthly
samplings shall be taken at the Building 60 sump on Multek's
Site to determine the Baseline for copper and 1,1,1 TCA
(trichloroethane) in that area, and (ii) for a period of two
(2) years from the Closing Date, Multek shall have the right to
establish that the chemicals 1,1 dichloroethane, 1,1
dichloroethylene, methyl chloride and 1,1,1 TCA
(trichlorethane) in the Southwest sump area on Multek's Site
are Newly Discovered Contamination, provided that Multek does
not use those four (4) chemicals in any of its operations
during the said two (2) year period.
(b) Multek and IBM agree that the Baseline shall be determinative of
the environmental conditions, the types of contaminants, their
volumes, quantities and levels of concentration in the soil and
groundwater on the Multek Site as of the Closing Date with respect
to any Hazardous Substances identified in the Baseline.
(c) If after the Closing Date, Multek discovers a Hazardous
Substance on the Multek Site that was not identified in the
Baseline, Multek shall have the burden of proving that any such
Hazardous Substance existed on the Multek Site prior to the Closing
Date or was otherwise caused by IBM. If a dispute arises as to the
existence of a Hazardous Substance on the Multek Site before the
Closing Date that was not identified in the Baseline, the parties,
if they cannot agree that it existed prior to the Closing Date,
shall first submit the matter to Mediation.
16.2 (a)(1) Multek shall be solely responsible for the following which
shall be called "Multek Contamination": (i)
<PAGE> 71
Hazardous Substances which become present on, in or under the
Complex after the Closing Date and which were caused by Multek,
its employees, agents, contractors, suppliers and/or other
invitees, and/or (ii) Hazardous Substances which were spilled
on or released to the Multek Site prior to the Closing Date but
which become violations of Law or which exceed cleanup
standards established by Law only after the Closing Date unless
such Hazardous Substances constitute Newly Discovered
Contamination (as defined in the Asset Purchase Agreement), in
which case Multek shall only be responsible for changes in Law
that occur after the first anniversary of the Closing Date.
(2) In no event, however, shall Multek be liable or responsible
for Hazardous Substances caused by a spill or release by IBM, its
employees, agents, contractors, suppliers and/or other invitees
after the Closing Date when such spill or release, which is caused
by IBM, has impacted the Multek Site by constituting a violation of
the Laws or by exceeding a cleanup standard established by Law or by
increasing the levels of any contaminant on the Multek Site above
the Baseline plus any Multek Contamination. Such Hazardous
Substances are hereinafter called "IBM Contamination."
(b) If Multek discovers Newly Discovered Contamination, IBM shall be
responsible for Remediation to the cleanup levels imposed by Law in
effect at the Closing Date or those in effect on the first
anniversary of the Closing Date. If IBM is already engaged in
remediating chemicals identified as Newly Discovered Contamination,
and if the level of cleanup imposed by Law becomes more stringent
after the first anniversary of the Closing Date for such chemicals,
IBM shall continue to be responsible for Remediation to the more
stringent standard, but Multek shall reimburse IBM for incremental
costs of Remediation required to comply with the more stringent
cleanup level.
16.3 (a) If Multek Contamination violates a Law or exceeds a standard
established by Law, then Multek shall be solely responsible for
the Remediation thereof to
<PAGE> 72
the cleanup standards or guidelines established by a Law.
(b) If IBM Contamination violates a Law or exceeds a standard
established by Law, then IBM shall be solely responsible for the
Remediation thereof to the cleanup standards or guidelines
established by a Law.
(c) If a Governmental Authority institutes administrative action or
a lawsuit in which IBM or Multek is named as a party (including as a
third-party defendant) for failure or refusal of the "responsible
party" (which shall mean Multek if Multek's Contamination or IBM if
IBM's Contamination) to perform Remediation at the Complex, and such
action or suit determines that the responsible party has failed to
perform Remediation, the responsible party shall reimburse the other
party hereto and otherwise pay for any and all direct damages,
penalties, fines, settlements, costs or expenses, including
reasonable attorneys' fees, consultant fees, laboratory fees, and
investigation and defense costs and direct costs of Remediation
(hereinafter collectively called the "Environmental Costs") incurred
by the other party by reason of a directive or order of a
Governmental Authority or court of law requiring the other party to
perform Remediation which is the responsibility hereunder of the
responsible party. Without limitation, Environmental Costs may
result from or be attributable to the other party's participation in
such action or law suit or to the failure or refusal of the
responsible party, as determined by a Governmental Authority or
court of law, to comply with the Laws relating to Remediation at the
Complex. Notwithstanding any provisions of this Agreement to the
contrary, in no event shall either party be liable to the other or
any other Person for consequential, special or indirect damages of
any kind.
(d) As used herein, the word "Remediation" means and includes
investigation, sampling, testing, reporting, analysis, laboratory
work, removal, cleanup, and similar activities relating to IBM's
Contamination (if IBM is the responsible party) or Multek's
Contamination (if Multek is the responsible party), above, on or
under the Complex.
(e) Upon discovery and notice to the responsible party of any
release of Hazardous Substances to the environment at
<PAGE> 73
the Complex, the responsible party shall promptly investigate the
same, report its findings to the other party and report the actions
taken or proposed to be taken by the responsible party with respect
to any such release.
(f) In the event of a sudden spill or abrupt release to the
environment which is immediately discovered after its release, the
responsible party will promptly take steps to clean up the release
and/or contain it so that it will not impact the property or
operations of the other party on the Complex.
(g) Notwithstanding anything herein to the contrary, the foregoing
shall not be deemed to constitute a waiver of the other party's
rights at Law, if any, to seek recovery for damage it sustains by
reason of the spill or other release caused by or attributable to
the responsible party, its employees, contractors, agents, suppliers
and/or other invitees, but in no event shall the other party be
entitled to recover damages for levels of contamination below
Baseline plus either Multek's Contamination levels (if Multek is the
other party) or IBM's Contamination levels (if IBM is the other
party).
16.4 IBM and Multek recognize that Multek's activities on the Multek Site
and IBM's activities on the IBM Property may impact upon the
other party's property, employees, invitees, equipment, and
operations. Therefore, Multek and IBM agree that if there is a
release, spill, discharge, malfunction, other episodic event or
any condition or use of the party's property that might
reasonably be expected to impact on the other party's property
in any significant respect, each shall provide prompt notice
thereof with sufficient detail to enable the other to take
appropriate actions in response thereto; provided, however,
that any and all legal obligations of the party with respect to
such event, including reporting and emergency response actions
as required, shall take precedence over the requirement to
notify the other party but such notification of the other party
shall occur as soon as possible after compliance with such
legal
<PAGE> 74
obligations (if it is not practicable to have same occur
simultaneously therewith).
16.5 If Multek or IBM shall make any application for new or changed
operating permits applicable to any operations conducted at the
Complex, the party filing the application shall promptly notify
the other party of its action(s).
16.6 If either Multek or IBM is required by a Governmental Authority to
provide environmental information that is best known by the
other party, within thirty (30) days of the request therefor,
Multek and/or IBM will each provide to the other all such
pertinent information.
<PAGE> 75
17. Chemical Storage and Handling
17.1 IBM agrees that the chemical distribution center ("CDC") is located
on the Multek Site and has been used by IBM to store unused
chemicals and chemical waste products. The existing CDC shall
be owned and maintained, repaired and replaced by Multek, at
its sole expense. Until IBM removes IBM's Chemicals and its
chemical waste products from the existing CDC, Multek shall
provide chemical storage and disposal Services in accordance
with the provisions of SCHEDULE 11. IBM shall remove such
chemicals and wastes from the existing CDC upon completion of a
new CDC on the IBM Property and receipt of all required
municipal approvals to use the new CDC. IBM agrees to remove or
cause to be removed any IBM chemical waste products stored by
Multek within ninety (90) days following their first storage.
IBM also agrees to diligently pursue completion of the new CDC
on the IBM Property as well as the receipt of all required
municipal approvals to use the new CDC.
17.2 The unused chemicals used by IBM on the IBM Property are listed on
ATTACHMENT B ("IBM's Chemicals"). The unused chemicals used by
Multek on the Multek Site are listed on ATTACHMENT C ("Multek's
Chemicals"). The unused chemicals that are listed both on
ATTACHMENTS B and C are listed on ATTACHMENT D. Multek shall
receive, store and handle IBM's Chemicals and, in addition,
other unused chemicals and waste products of IBM in accordance
with the provisions of SCHEDULE 11 to the extent only, however,
that, with respect to additional unused chemicals and waste
products, there is current capacity to store such additional
unused chemicals and waste products as well as Multek's and
IBM's Chemicals. If IBM shall request that a new type of unused
chemical, not listed on ATTACHMENT B, be received, stored
and/or handled by Multek, IBM shall give notice to Multek,
specifying the type of unused chemical and quantities it wishes
to have received, stored and/or handled. Each such notice shall
be accompanied by the manufacturer's
<PAGE> 76
material safety data sheets applicable to such chemical.
Similarly, if Multek intends to store and/or handle a new type
of unused chemical, which is not listed on ATTACHMENT C, Multek
shall give notice to IBM, specifying the type of unused
chemical and quantities it wishes to store and/or handle. Each
such notice shall be accompanied by the manufacturer's material
safety data sheet applicable to each such chemical. IBM shall
have the right to review and approve such storage and handling
of a new chemical if Multek is then operating under IBM's
permit, or IBM's permit will require modification, provided,
however, such approval by IBM shall not be unreasonably
withheld. IBM agrees to assist Multek in its application to
transfer either permit to Multek.
17.3 (a) All storage, labeling and handling of IBM's Chemicals or waste
products by Multek's personnel shall be in accordance with
IBM's RCRA Hazardous Waste permit and with the City of Austin's
Hazardous Substances ordinance permit. IBM's permit shall not
be modified except with the consent of IBM which it may not
unreasonably withhold. IBM agrees to assist Multek in its
application to transfer permits to Multek.
(b) Multek shall, subject to TNRCC approval, conduct certain
activities authorized under IBM's RCRA Part B Hazardous Waste Permit
until such time as units have been characterized by the TNRCC as
less than ninety (90) day storage facilities or temporary
accumulation units. While Multek operates under IBM's RCRA Part B
Hazardous Waste Permit, Multek will comply with all obligations and
responsibilities imposed by the Permit on Multek's operations.
Multek further agrees not to make any changes, modifications,
alterations or the like to the current operations, production,
chemical usage or any other change that would cause IBM to be in
violation of the Permit without first obtaining IBM's written
consent, which consent shall not be unreasonably withheld. Multek
shall indemnify and save IBM and its employees and directors
harmless from and defend them against any claim, liability, loss,
cost,
<PAGE> 77
fee or damage arising out of any such violation; provided, that any
such violation is not caused by IBM.
17.4 All of IBM's Chemicals and waste products shall be physically
segregated in and about the CDC from Multek's Chemicals and
waste products.
17.5 After IBM completes construction of a new CDC and removes IBM's
Chemicals and waste products from the existing CDC, Multek
shall be responsible, at its sole cost and expense, for all
chemical handling, distribution, storage and transportation in
connection with the existing CDC. Without limitation, Multek
shall provide its own bulk unloading of Multek's Chemicals from
transport vehicles into Multek's tank farm located on the
Multek Site. Multek shall be fully responsible for such bulk
unloading responsibility and shall conduct appropriate
inspections for the potential leakage and spillage of
chemicals, both along the Access Roads and on the Multek Site.
Multek shall at all times be required and prepared to promptly
respond to leaks, spills and other environmental incidents
arising out of this activity (a Multek Contamination) so as to
limit the extent and duration of incidents and to effectively
implement remedies in accordance with Laws and directives of
Governmental Authorities. Multek shall receive or otherwise
transfer chemicals to or from transport vehicles (truck) only
on the Multek Site and only at places that provide secure
secondary containment to prevent the unplanned release of
chemicals to the environment.
17.6 Multek represents that with respect to IBM's Chemicals and waste
products, Multek has, and with respect to new chemicals and
waste products accepted by Multek, will have the necessary
equipment, facilities, personnel, expertise and resources to
handle all of IBM's Chemicals and waste products, and
represents further that Multek shall handle IBM's Chemicals and
waste products in a proper, lawful and safe manner. Multek
shall be responsible for any and all damage and liability
<PAGE> 78
caused by or arising out of IBM's Chemicals and waste products
while located on the Multek Site, except to the extent of any
damage resulting from defective packaging of IBM's Chemicals by
the manufacturer or IBM prior to their receipt by Multek, and
except to the extent of damage caused by negligent acts or
omissions of IBM's employees, contractors or others acting on
behalf of IBM.
17.7 For the chemical storage and handling services provided to IBM
pursuant to this Section 17, the parties have agreed that for
1997 IBM shall pay to Multek, on the first day of each calendar
month for so long as IBM's Chemicals and waste products remain
in the existing CDC, the amount set forth in SCHEDULE 11.
18. Temporary Occupancy
IBM now occupies and uses about 24,000 square feet on the second floor of
Building No. 64 for administrative purposes. Multek hereby authorizes IBM
employees to remain in and to continue using the space for a period of two (2)
months upon and subject to the provisions of SCHEDULE 13.
19. Cost of Utility Plant
Multek agrees to pay IBM for a pro rata share based on usage of the cost
and expense of operating the Utility Plant in accordance with the provisions of
SCHEDULE 14.
20. Waste Generator
20.1 Multek shall be deemed to be the sole generator and owner of any and
all waste, whether hazardous waste or not, generated by Multek,
its agents, employees, contractors or anyone claiming by or
through Multek in connection with the operation of its business
and use of the Multek Site and IBM shall not have any liability
with respect to such waste. Multek shall dispose of such waste
at its sole cost and expense and liability in such manner as it
determines is appropriate and in accordance with all Laws.
<PAGE> 79
20.2 IBM shall be deemed to be the sole generator and owner of any and
all waste, whether hazardous waste or not, generated by IBM,
its agents, employees, contractors or anyone claiming by or
through IBM in connection with the operation of its business
and use of the IBM Property and Multek shall not have any
liability with respect to such waste. IBM shall dispose of such
waste at its sole cost and expense and liability in such manner
as it determines is appropriate and in accordance with all
Laws.
21. Natural Gas
Multek owns and shall maintain, repair and replace, at its sole expense,
the existing natural gas supply lines and associated meters and equipment which
are located on the Multek Site and used for the operation of the treater tower
incineration operation.
22. Easements
22.1 Notwithstanding any provisions in the Project Operations Agreement
or the Lease to the contrary, Multek is prohibited from entry
to the buildings and other structures located on the IBM
Property, or entry to the parcel shown on ATTACHMENT I and
improved by softball fields, tennis courts and other
recreational improvements, and IBM is prohibited from entry to
the Buildings and other structures on the Multek Site, in each
case unless specifically authorized herein or under another
Operative Agreement, or invited to enter by the other. Subject
to these prohibitions, IBM and Multek each hereby grants to the
other nonexclusive reciprocal easements appurtenant to the IBM
Property and Multek Site, over and across the exterior
walkways, sidewalks, entrances, exits and access roads
(described in ATTACHMENT E and, to the extent agreed upon to
date, marked on ATTACHMENT I) as they now exist or as may exist
in the future for vehicular and pedestrian traffic as may be
from time to time necessary and desirable for ingress, egress
and passage to and from and about the Complex for the benefit
of the respective employees and invitees of IBM and Multek, and
for police, fire and medical personnel and equipment. A more
detailed description of these easements are set forth in
ATTACHMENT E, some or all of which
<PAGE> 80
easements shall be recorded in the Travis County real estate
records as determined by the parties, their respective counsel
and the title company.
22.2 IBM shall maintain, replace and repair the Access Roads in
accordance with and subject to the provisions of SCHEDULE 10.
Any damage to the Access Roads by Multek or its employees,
contractors, suppliers or other invitees shall be repaired by
IBM at Multek's sole cost and expense. IBM shall not make any
material change to the access roads, including any material
change to the configuration of the entrances and exits as they
are now configured, if such change will adversely affect the
operations of Multek on the Multek Site, IBM shall provide
notice to Multek of all such material changes before making
them and IBM will not make such change without the consent of
Multek which it shall not unreasonably withhold or delay. If
there is a dispute, the parties shall submit the matter to
Mediation.
23. Other Services
23.1 Multek shall offer IBM the additional Services described on
ATTACHMENT F.
23.2 IBM shall offer Multek the additional Services described on
ATTACHMENT G.
23.3 Without limitation, Multek agrees to perform for itself those
Services described on ATTACHMENT H. The parties agree that IBM
shall not be required to perform any Services for or deliver
any Services to Multek except as specifically agreed upon in
the Project Operations Agreement.
23.4 Multek's employees who are located at the Multek Site may use the
softball fields, tennis courts and other recreational
improvements shown on ATTACHMENT I for three (3) years from the
Closing Date, for a fee of Ten Thousand Dollars ($10,000.00)
for each twelve (12) month period, and subject to coordination
of such use with uses by IBM as determined by IBM in
consultation with Multek.
<PAGE> 81
24. Cafeteria
Multek agrees to provide independent cafeteria, vending and other food
services and recognizes that IBM shall not provide any of these amenities to
Multek. Multek agrees to advise its employees, contractors, suppliers and other
invitees accordingly and to instruct them not to enter the cafeteria.
25. Failure to Provide Services
Neither Multek nor IBM shall be liable or responsible to the other for any
failure, interruption, inadequacy, defect or change in the character or supply
of any Service, including electricity, Domestic Water, Waste Water service,
compressed air, chilled water, cooling tower water, telephone, and any and all
other Services to be furnished by one to the other hereunder unless directly
caused by the gross negligence or wilful misconduct of the Service provider. In
no event, even if either Multek or IBM is grossly negligent, or even if its
employees, tenants, suppliers, agents, licensees, subcontractors, contractors or
other invitees engage in negligent or wilful misconduct, shall Multek or IBM or
its respective employees, tenants, suppliers, agents, licensees, contractors,
subcontractors or other invitees be liable for any consequential, indirect,
punitive or special damages which may be sustained by the other, for whatever
reason under any circumstance. Multek and IBM agree that its exclusive remedy is
set forth in Article 6 of the Project Operations Agreement.
26. Right to Terminate Certain Services
26.1 Nonterminable Services. Subject to Section 6.5 of this Project
Operations Agreement, titled "Remedies," certain Services
furnished pursuant to specific provisions hereof shall not,
except as herein provided, be terminated (the "Nonterminable
Services"). The Services to be provided to IBM by Multek that
Multek may not terminate for any reason or cause without the
consent of IBM, which it may withhold in its sole discretion,
are for the term of this Agreement, Industrial Waste Water and
Chemical Storage and Handling. The Services to be provided to
Multek by IBM that Multek may not terminate for any reason or
cause without the consent of IBM, which it may withhold in its
sole discretion, are landscaping and grounds maintenance
service and the repair and replacement of the access roads,
each as
<PAGE> 82
described in the applicable SCHEDULES hereto. The Services to
be provided to Multek by IBM that IBM may not terminate for any
reason or cause without the consent of Multek, which it may
withhold in its sole discretion, are (a) for the term of this
Agreement, Chilled Water, Cooling Tower Water, Compressed Air
and Steam and, (b) until the date they are made
Services/Utilities Independent, Electricity, Domestic Water,
the Fire Protection Water System and the Sanitary Waste System,
and (c) until nine (9) months after the Closing Date, or when
Multek has completed it installation, whichever is sooner, the
Information Technology and Material Logistics Transitions
Services as described in ATTACHMENT G-3 hereto; except that, in
the case of Chilled Water, Cooling Tower Water, Compressed Air
and Steam, IBM may unilaterally elect in its sole discretion to
transfer to Multek the obligation to furnish these Services
provided that IBM establishes the necessary easements and
rights-of-way to allow Multek access to and operation of the
Central Utility System. Or, IBM and Multek may agree that IBM
will sell the Central Utility System to Multek. Notwithstanding
any provision in this Agreement to the contrary, the party
receiving a nonterminable Service may, in its sole discretion,
upon not less that one hundred eighty (180) days notice to the
party providing such Service, terminate such Service.
26.2 Terminable Services. With respect to all Services other than the
Nonterminable Services (the "Terminable Services"), Multek and
IBM, at any time and from time to time may elect, on not less
than one hundred eighty (180) days prior written notice to the
other (the "Service Termination Notice"), to terminate any one
or more of the Terminable Services effective as of a date (the
"Service Termination Date") specified in the Service
Termination Notice, subject to the following provisions hereof.
The Service Termination Date for a particular Terminable
Service shall be specified in the Service Termination Notice
and shall, if applicable, correspond with the earliest possible
expiration date of the particular Service contract pursuant to
which the particular Service to be terminated is rendered to
the terminating party. The Service provider shall advise the
terminating party within thirty (30) days of receipt of the
terminating party's written inquiry of the Service provider as
to whether or not there is an
<PAGE> 83
applicable Service contract and if so the expiration date or
any permitted earlier cancellation date thereof. If a
cancellation fee shall be payable for such earlier
cancellation, the terminating party shall notify the Service
provider whether to so cancel and the terminating party in such
event shall pay such cancellation fee. If there is no Service
contract, the Service Termination Date shall be not earlier
than six (6) months after the giving of the Service Termination
Notice unless an earlier date is agreed upon by the parties
hereto. If the Service Termination Notice is given, then
automatically on the Service Termination Date, the particular
Service specified in the Service Termination Notice shall be
terminated and the Service provider shall have no
responsibility to, and shall not, furnish any such terminated
Service to the terminating party. If the terminating party
thereafter contracts for any of the terminated Service, whether
furnished by the terminating party directly or through a third
party contractor, the terminating party shall be subject to the
applicable provisions of the Project Operations Agreement.
27. Sales Taxes
Notwithstanding anything to the contrary contained herein, if and to the
extent that sales, use or other taxes are required to be paid to any
Governmental Authority on account of any Services furnished by IBM to Multek, or
by Multek to IBM, pursuant to the terms of this Agreement, the Service provider
may bill the receiver of Services for all such taxes due and owing and the
receiver of Services shall pay the amount to the Serviced provider within
forty-five (45) days after receipt therefor.
<PAGE> 84
ATTACHMENT A
PERMITS
- - EPA Stormwater General Permit
- - TNRCC RCRA (Part B) Hazardous Waste Permit
- - TNRCC RCRA Compliance Plan
- - TNRCC Air Permits R-7382 and R-18126
- - City of Austin Waste Water Discharge Permit
- - City of Austin Hazardous Materials Ordinance Permit (HMO)
- - City of Austin Registered Industrial Plant Certification
<PAGE> 85
ATTACHMENT B*
IBM'S CHEMICALS
As listed and described in that certain binder entitled _____________________,
dated ________________, prepared by IBM. In addition to IBM's obligation to
notify Multek of any new unused chemicals which shall be delivered to and stored
on the IBM Property, once each year IBM shall update the binder and deliver an
updated copy to Multek.
* Attachment B is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 86
ATTACHMENT C*
MULTEK'S CHEMICALS
As listed and described in that certain binder entitled _____________________,
dated ________________, prepared by IBM and approved by Multek. In addition to
Multek's obligation to notify IBM of any new unused chemicals which shall be
delivered to and stored on the Multek Site, once each year Multek shall update
the binder and deliver an updated copy to IBM.
* Attachment C is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 87
ATTACHMENT D*
COMMON CHEMICALS
As listed and described in that certain binder entitled _______________, and
dated ________________, prepared by IBM. Once each year IBM shall compare the
most recent updates to the binder described in ATTACHMENTS B and C, make any
modifications necessary to document changes to the then most recent ATTACHMENT
D, and deliver an updated copy of ATTACHMENT D to Multek.
* Attachment D is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 88
ATTACHMENT E
EASEMENTS
<TABLE>
<CAPTION>
NO IBM TO Multek Multek TO IBM
- -- ------------- -------------
<S> <C> <C>
1. Access around north end
Bldg. 060.
2. Access through entrance #2
off of Burnet Rd.
3. Access through entrance #1
off of Braker Lane.
4. Electrical service from City
of Austin substation to
Bldg. 060. Access to piping &
electrical in Bldg. 060 to 045.
5. Railroad spur to Tank Farm.
6. Chemical trench to WCF.
7. Conveyance of drainage into
IBM's stormwater collection
facility.
8. Access to piping &
electrical service
into & through Bldg.
060, 045 service.
9. Railroad spur.
10. Cross tie access
from C.U.P. to main
site.
11. Access to monitoring
wells for monitoring
/sampling (see
Section 15.5(b)).
</TABLE>
The following easements which will be defined during the time IBM is making the
Utilities/Services Independent:
Sanitary sewer lines, fuel oil lines, deionized water lines and natural
gas lines.
<PAGE> 89
ATTACHMENT F
ADDITIONAL SERVICES TO IBM
The following Services shall be offered by Multek to IBM, subject to Multek's
right to terminate these Services pursuant to Section 26:
<TABLE>
<CAPTION>
ESTIMATED
ADDITIONAL SERVICE DURATION/MONTHS 1997 CHARGE
- ------------------ --------------- -----------
<S> <C> <C>
D.I. WATER 6* $3,700 + $10.26
(ATTACHMENT F1) per 1000 gallons
- estimate is
$11,672/mo.
AIR ABATEMENT 3 $4,000/mo.
MAINTENANCE
(ATTACHMENT F2)
CHEMICAL SPILL 3 Each spill priced
RESPONSE based on cost of
(ATTACHMENT F3) labor, materials and
disposal.
CALIBRATION/INST. 3* Based on request/
SUPPORT actuals - estimate
(ATTACHMENT F4) $15,500 per month.
TOOL ROOM SUPPORT 3* Each request priced.
(ATTACHMENT F5) Estimate is $54,000
per month.
ANALYTICAL LAB 6* Each request priced.
SUPPORT Estimate is $20,000
(ATTACHMENT F6) per month.
RO WATER
(ATTACHMENT F7) 6* $1,000 maintenance
plus $8.00/1000
gallons. Estimate
is $7,000/mo.
</TABLE>
IBM reserves the right to require Multek to continue furnishing these
Services at charges to be negotiated between the parties, based on
the cost formula used to determine the costs set forth above; except
that the charges for the Services described in ATTACHMENTS F4, F5
AND F6 shall be furnished at competitive market prices to be
negotiated by the parties.
* Attachments F-1 through F-7 are not included and will be furnished
supplementally to the Commission upon request.
<PAGE> 90
ATTACHMENT G*
ADDITIONAL SERVICES TO MULTEK
The following Services shall be offered by IBM to Multek, subject to IBM's right
to terminate these Services pursuant to Section 26:
<TABLE>
<CAPTION>
ESTIMATED
ADDITIONAL SERVICE DURATION/MONTHS 1997 CHARGE
- ------------------ --------------- -----------
<S> <C> <C>
MAILROOM 6 $500 + postage
(ATTACHMENT G-1)
ENGINEERING DATE BASE 3 $5,000
(ATTACHMENT G-2)
INFORMATION TECHNOLOGY 9* Per ATTACHMENT
(ATTACHMENT G-3)
ATTACHMENT G-4 9* Per ATTACHMENT
INTENTIONALLY OMITTED
TRANSITION SERVICES 1* Per ATTACHMENT
(ATTACHMENT G-5)
</TABLE>
* Attachments G-1 through G-5 are not included and will be furnished
supplementally to the Commission upon request.
<PAGE> 91
ATTACHMENT H*
SERVICES MULTEK TO SELF-PERFORM
* Attachment H is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 92
ATTACHMENT I*
RECREATIONAL IMPROVEMENTS
* Attachment I is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 93
SCHEDULE 1*
ELECTRICAL SWITH GEAR AND METERS
* SCHEDULE 1 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 94
SCHEDULE 2*
STEAM
* SCHEDULE 2 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 95
SCHEDULE 3*
COMPRESSED AIR
* SCHEDULE 3 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 96
SCHEDULE 4*
CHILLED WATER
* SCHEDULE 4 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 97
SCHEDULE 5*
COOLING TOWER WATER
* SCHEDULE 5 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 98
SCHEDULE 6*
DOMESTIC WATER/WASTE WATER
* SCHEDULE 6 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 99
SCHEDULE 7*
ENVIRONMENTAL WCF
* SCHEDULE 7 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 100
SCHEDULE 8*
SECURITY
CAS (CONTROL ACCESS SYSTEM)
* SCHEDULE 8 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 101
SCHEDULE 9*
RETENTION/DETENTION/
STORM WATER RUN-OFF
* SCHEDULE 9 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 102
SCHEDULE 10*
LANDSCAPING, GROUNDSKEEPING, &
ACCESS ROADWAYS
* SCHEDULE 10 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 103
SCHEDULE 11*
ENVIRONMENTAL CDC
* SCHEDULE 11 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 104
SCHEDULE 12*
SERVICES IBM TO PROVIDE TO MULTEK
(ON-GOING)
* SCHEDULE 12 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 105
SCHEDULE 13*
BUILDING 064
INDIRECT SPACE LEASE
* SCHEDULE 13 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 106
SCHEDULE 14*
CENTRAL UTILITY PLANT OPERATION
* SCHEDULE 14 is not included and will be furnished supplementally to the
Commission upon request.
<PAGE> 107
EXHIBIT C
PAGE 1 of 3
SIGN CRITERIA
The objective of these sign criteria is to provide and maintain a consistent
design integrity for the Complex. The sign criteria are intended to provide
adequate information to personnel and visitors of the Complex with a minimum of
signs. All occupants of the Complex will be expected to conform to the Complex
sign criteria. The sign criteria are applicable only to the exterior of
buildings and the open areas of the Complex. Sign criteria for interior occupant
space will be the responsibility of each occupant/owner of that space, including
IBM and Multek (whether as a tenant or an owner).
In order to maintain Complex sign uniformity and provide each occupant with
adequate signage, the following are rules for installation and maintenance of
signs:
- - IBM shall be responsible for a design standard for exterior building and
entry signs and for administering, coordinating, maintaining and enforcing
the Complex sign program. Multek agrees that the existing design standard
at the Complex is acceptable and shall be the design standard for
directional, parking, entrance and building exterior signs and the like.
Multek agrees to pay IBM its proportional share of the cost to maintain
all Complex signs.
- - Multek and IBM shall each be responsible at its sole cost for design,
fabrication, installation, maintenance, modification, and/or removal of
all signs on its property, in each case in compliance with Laws. IBM shall
be responsible for signs on the road system up to the boundary line of the
Multek Site. Multek shall be responsible for signs for the road system,
parking area and Buildings on the Multek Site.
<PAGE> 108
- - Multek and IBM may remove, at the other's expense, any sign on the Complex
which is not authorized hereunder.
- - IBM and Multek shall each be entitled to install the following signs:
- - A sign on each of their respective buildings with the appropriate
identification of their choice. Each sign throughout the Complex shall be
of standard and equal size.
- - Directional roadway signs to the main lobby/receptionist areas from
Complex entrances. Multek will designate one location and the sign will
direct traffic to that location only.
- - Directional roadway signs to the shipping/receiving areas from all Complex
entrances.
- - Signs identifying the parking areas from the Complex roadway.
SIGN CRITERIA
PAGE 2 of 3
- - No signs shall have moving parts or contain or be subject to any flashing
or internal illumination. No part of the sign shall extend above the roof
line. Signs indicating a company's name will be allowed on no more than
two facades and must be appropriately scaled and designated for the
structure. A front yard sign near the street will also be allowed when
appropriate. No private signs other than directional signs shall be
allowed along the road signs.
<PAGE> 1
EXHIBIT 2.5
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT IS MADE AS OF THE 18TH DAY OF AUGUST, 1997
B E T W E E N:
INTERNATIONAL BUSINESS MACHINES CORPORATION,
A CORPORATION INCORPORATED UNDER THE LAWS
OF THE STATE OF NEW YORK,
(HEREINAFTER CALLED "IBM")
- AND -
MULTILAYER TEK L.P.
A LIMITED PARTNERSHIP UNDER
THE LAWS OF TEXAS
(HEREINAFTER CALLED "SELLER")
<PAGE> 2
TABLE OF CONTENTS
- -----------------
1.0 DEFINITIONS............................................................3
2.0 STATEMENT OF WORK......................................................6
3.0 PURCHASE OF PRODUCTS...................................................7
3.1 Orders.................................................................7
4.0 PRICE.................................................................14
5.0 DELIVERY..............................................................18
6.0 TERM AND TERMINATION..................................................19
7.0 PRODUCT QUALITY.......................................................21
8.0 CERTIFICATION, AUDIT, INSPECTION and ACCEPTANCE.......................22
9.0 WARRANTY..............................................................23
10.0 INDEMNITY............................................................25
11.0 LIABILITY............................................................26
12.0 PREFERRED SUPPLIER...................................................27
13.0 CAPACITY RESERVATION FEE.............................................31
14.0 INTELLECTUAL PROPERTY................................................32
15.0 INTELLECTUAL PROPERTY AND SYSTEMS ACCESS.............................32
16.0 GENERAL..............................................................32
17.0 ORDER OF PRECEDENCE..................................................36
18.0 COMPLETE AGREEMENT...................................................37
EXHIBIT 1...................................................................38
APPROVED SUBCONTRACTORS...................................................38
EXHIBIT 2...................................................................39
ELECTRONIC DATA INTERCHANGE/ELECTRONIC FUNDS TRANSFER.....................39
TRADING PARTNER AGREEMENT.................................................39
EXHIBIT 3...................................................................41
IBM PRODUCT INFORMATION AND IBM COMPUTER PROGRAMS.........................41
APPENDIX A.................................................................42
**** DIVISION.............................................................42
1.0 PART NUMBER AND PRICE LIST............................................42
APPENDIX B.................................................................45
**** DIVISION............................................................45
1.0 PART NUMBER AND PRICE LIST............................................45
<PAGE> 3
1.0 DEFINITIONS
For purposes of this Agreement, the following capitalized terms shall have
the following meanings:
1.1 "ACCELERATED DELIVERY" means a delivery which is rescheduled to arrive on
IBM's dock sooner than the Delivery Date previously specified in an Order.
1.2 ****REDACTED INFORMATION****
1.3 ****REDACTED INFORMATION****
1.4 ****REDACTED INFORMATION****
1.5 ****REDACTED INFORMATION****
1.6 "AFFILIATE" means as to a party hereto any corporation, company or other
entity which controls, is controlled by, or is under common control with,
a party hereto.
1.7 "AGREEMENT" means the Base Agreement, Exhibits, Division Appendices,
Specifications, CHARPNS.FILE and IBM Orders.
1.8 "ARRAY" refers to Products delivered to IBM as two or more contiguous
Products on a single panel.
1.9 "BASE AGREEMENT" means this Supply Agreement, less Exhibits, Division
Appendices, Specifications, CHARPNS.FILE and IBM Orders.
1.10 ****REDACTED INFORMATION****
1.11 "BUSINESS DAYS" means consecutive calendar days, less all Saturdays,
Sundays and holidays generally observed in the U.S. by IBM. IBM will
notify Seller, within a reasonable time after IBM establishes the holidays
it will observe, of the specific holidays and their dates.
1.12 **** means **** a in a document titled "CHARPNS.FILE," dated April 18,
1997, (a complete copy of which has been received by Seller).
1.13 "CHANGED PRODUCT" means a modified printed wire board that results from
changes to the Specifications, technology, materials or processes for a
which was being purchased by IBM from Seller pursuant to this Agreement
prior to the implementation of the change to such Product. IBM may, at its
discretion, assign a different part number or product name to a Changed
Product.
1.14 **** means a printed wire board identified by part number or product name
and which is specified in Appendix A as of the Commencement Date.
<PAGE> 4
1.15 **** means a printed wire board identified by part number or product name
and which is specified in the **** Appendix as of the Commencement Date.
1.16 "DAYS" refers to consecutive calendar days.
1.17 "DELIVERY DATE" refers to the date of arrival of Products on IBM's dock.
1.18 "DIVISION APPENDICES" mean the appendices attached to the Base Agreement,
identifying part numbers and initial unit prices, Product specific
information, and terms and conditions specific to certain operating
divisions within IBM.
1.19 "ENTERPRISE CAPABILITY ASSESSMENT" is a process that allows IBM and Seller
to perform detailed supply assessments and establish best-can-do Product
supply delivery schedules.
1.20 "EXHIBIT" shall mean an attachment to the Base Agreement, other than
Division Appendices.
1.21 "LEAD-TIME" means the number of Business Days between the date Seller
receives an IBM Order until the date specified for each delivery requested
in such Order. Lead-Times are specific to each individually scheduled
delivery of Products. Normal Lead-Times are set forth in Section 3.5.2 and
referenced in Sections 3.6.1 and 3.6.4.1.
1.22 **** means a printed wire board **** by IBM in the applicable Division
Appendix or Specifications.
1.23 "NET ORDERS" means the aggregate dollar amount of Orders issued to Seller
by IBM during an annual period which Orders specify Scheduled Delivery
Dates not later than six months after the last Day of such annual period,
less the aggregate dollar amount of any cancellations by IBM of such
Orders or portions thereof.
1.24 "NEW PRODUCT" means a Product manufactured with unused materials, and
which has not been used or reconditioned prior to shipment to IBM's
delivery destination, unless authorized in writing by IBM prior to such
shipment.
1.25 ****REDACTED INFORMATION****
1.26 ****REDACTED INFORMATION****
1.27 "NON-VENDOR OPERATIONS" means all manufacturing operations other than
Vendor Operations.
1.28 "ORDER" means a purchase order placed by IBM for Products as
contemplated by this Agreement. Order may also be referred to as "IBM
Order". Individual Orders may specify multiple Delivery Dates.
1.29 "ORDERING LOCATION" shall mean IBM division, location or organization,
including, but not limited to, Austin ECAT, Greenock ECAT and Rochester
ECAT, that may order Products under this Agreement. References in this
Agreement to "IBM" shall also be construed to include "IBM Ordering
Locations".
1.30 "OTHER ADDITIONAL PRODUCT" means a printed wire board other than ****
Product that IBM agrees to purchase from Seller pursuant to the terms of
this Agreement.
1.31 "PANEL" shall mean a 19 1/2" X 24" fiberglass and copper composite.
<PAGE> 5
1.32 "PRODUCTS" shall mean the following printed wire boards, which unless
otherwise agreed by the parties in writing are fully manufactured for IBM
by Seller at the Austin, TX panel plant facility pursuant to IBM Orders
and according to IBM Specifications: ****
Products are manufactured using only Non-vendor Operations, except to the
extent they may be manufactured using Vendor Operations pursuant to
Section 2.3, ****
1.33 ****REDACTED INFORMATION****
1.34 **** refers to any printed wire board specified by IBM as **** which may
be purchased by IBM under this Agreement.
1.35 "SECTIONS" shall mean numbered sections of this Agreement unless otherwise
specified.
1.36 "SCHEDULED DELIVERY DATE" refers to the agreed date of arrival of Products
on IBM's dock as specified in IBM Orders.
1.37 **** means a printed wire board manufactured by Seller ****, and
identified by IBM in the applicable Division Appendix or Specifications.
1.38 "SPECIFICATIONS" shall mean designs, drawings, prints and written
descriptions and requirements for Products that have been provided to
Seller as of the date of this Agreement by IBM, or which may be provided
to Seller during the term of this Agreement by IBM prior to the
manufacture of Products to which the Specifications apply.
1.39 "SUBSIDIARY" shall mean a corporation, company, or other entity (a) more
than fifty percent (50%) of whose outstanding shares or securities
(representing the right to vote for the election of directors or other
managing authority) are; or (b) which does not have outstanding shares or
securities, as may be the case in a partnership, joint venture or
unincorporated association, but more than fifty percent (50%) of the
ownership interest representing the right to make the decisions for such
corporation, company or other entity, is now or hereafter, owned or
controlled, directly or indirectly, by a party hereto, but such
corporation, company or other entity shall be deemed to be a Subsidiary
only so long as such ownership or control exists.
1.40 "TRANSIT TIME" means the duration of time during which Products are in
transit from Seller's location to IBM's specified delivery destination,
measured by the number of Business Days beginning with the date Products
are delivered by Seller to IBM's designated carrier until the date of
arrival of such Products on IBM's dock.
1.41 "TRY-FOR-FIT" is a means of analyzing the potential quantity and Delivery
Dates of Products which may be purchased under this Agreement as
referenced in Section 3.4.
1.42 "UNIQUE MATERIALS" means materials used in the manufacture of Products by
Seller which cannot be used by Seller in the manufacture of any other IBM
Product or third party product in the event IBM cancels an Order,
decreases the quantity of Products specified in an Order or delays
delivery of Products specified in an Order for more than ninety (90) days.
1.43 "VENDOR OPERATIONS" means those manufacturing operations which Seller
subcontracts, or may subcontract, to third party suppliers pursuant to
Section 2.3.
<PAGE> 6
2.0 STATEMENT OF WORK
During the term of this Agreement, Seller shall perform each and all of
the following responsibilities:
2.1 Upon receipt of an IBM Order, Seller shall manufacture and sell to IBM New
Products meeting all the Specifications made applicable to each Product
pursuant to this Agreement, and in accordance with the terms and
conditions of this Agreement. Seller will deliver to IBM only that
quantity of Products authorized by IBM's Orders at the prices specified in
the Orders. All Products delivered to IBM by Seller must be New Products
unless otherwise previously authorized by IBM in writing prior to actual
delivery of the Products.
2.2 Seller shall provide all labor and materials necessary to perform Seller's
obligations under this Agreement.
2.3 Except with respect to the approved subcontractors and approved Vendor
Operations set forth in Exhibit 1, Seller's right to subcontract
manufacturing operations to a third party, including any Subsidiary or
Affiliate company, is subject to the prior written approval of the
chairperson of the IBM Printed Circuit Commodity Council, or from the
chairperson's successor or designee. Seller agrees that Seller shall
remain responsible for all of its obligations as specified in this
Agreement even if Seller is permitted to subcontract any manufacturing
operations required by an IBM Order to any third party. Seller agrees to
enter into a binding agreement with its subcontractors sufficient to
impose the same obligations and requirements upon the subcontractor as are
accepted by Seller under this Agreement. Further, Seller agrees that any
agreements it may reach with its subcontractors will not contain terms or
conditions which may conflict with Seller's ability to perform its
obligations under this Agreement.
IBM agrees that it will consider Multilayer Technology, Inc. (Multek)
locations in Irvine, CA and Roseville, MN as potential subcontractors to
perform the Vendor Operations set forth in Exhibit 1. If Multek's Irvine,
CA or Roseville, MN locations are qualified by IBM for any of the Vendor
Operations specified in Exhibit 1, the qualified location(s) will be
included as an approved subcontractor to perform only the Vendor
Operation(s) approved by IBM for that location. IBM will make a reasonable
effort to complete its qualification process within ninety (90) Days
following the first effective date of this Agreement. Qualification of
said Multek locations to perform the specified Vendor Operations will not
be unreasonably withheld.
2.4 If requested by IBM and at no additional cost to IBM, Seller shall comply
with IBM's reasonable requests to make available to IBM, or to others IBM
may designate, such data necessary to inspect, maintain or operate any
Products delivered hereunder, including data similar to the type provided
to IBM prior to the execution of this Agreement by suppliers of similar
products.
3.0 PURCHASE OF PRODUCTS
3.1 ORDERS
Seller agrees to make a good faith effort to provide all quantities of
Products ordered or rescheduled by IBM on the Delivery Dates requested by
IBM, whether or not such quantities and/or Delivery Dates were forecasted
by IBM. Seller shall supply Products to IBM in accordance with and only in
response to Orders which may be issued by IBM from time to time during the
term of this Agreement. This Agreement does not authorize Seller to
produce or deliver any Product other than pursuant to IBM's Orders. IBM
may issue electronic (via Electronic Data Interchange, "EDI") or written
Orders. Seller must provide written or electronic notice of acceptance or
rejection of Orders to IBM within **** for Normal Lead-Time Orders and
within **** for Orders requesting deliveries in less than Normal
Lead-Times from the date Seller
<PAGE> 7
receives IBM's Order. If IBM does not receive Seller's response within
this period, Orders shall be deemed accepted by Seller. Subject to the
other terms of this Agreement, if Seller rejects IBM's Order, then as to
the quantity of Products contained in IBM's Order, IBM may at its sole
discretion fulfill its Product requirements pursuant to Section 12.6
3.2 CONTENTS OF ORDERS
Unless otherwise stated below, all Orders for Products submitted by IBM
will contain the following:
(a) price
(b) quantities ordered,
(c) Scheduled Delivery Dates,
(d) engineering change level (optional),
(e) destination,
(f) required method of shipment (optional), and
(g) part number
3.3 FORECASTS
This Section 3.3 does not apply to **** or **** which are covered by the
provisions contained in Section 3.9.
3.3.1 On the Commencement Date of this Agreement, the chairperson of the IBM
Printed Circuit Commodity Council, or his/her successor or designee, will
provide a current written forecast of demand for Products, ****REDACTED
INFORMATION****
3.3.2 The forecasts provided to Seller are for planning purposes only.
Notwithstanding anything in this Agreement to the contrary, IBM makes
no representations or guarantees concerning the forecasts, including
the Products or quantities specified in a forecast. ****
3.4 TRY-FOR-FIT
At IBM's option and pursuant to IBM's Enterprise Capability Assessment
(ECA) process, on approximately one-month intervals, IBM may provide
Seller with a list of Products and estimated quantities and Delivery Dates
for the Products, known as a "Try-For-Fit Volume Set". With respect to the
Products contained in the list, on the second Business Day following its
receipt, Seller agrees to provide to IBM a written best-can-do delivery
schedule, indicating the quantity of Products Seller can supply to IBM and
associated Lead-Times. Notwithstanding anything contained herein to the
contrary, Seller's best-can-do response shall be considered a commitment
on Seller's part with regard to quantities and Lead-Times, provided IBM
submits an Order associated with all or part of the Try-For-Fit Volume Set
within ten (10) Days after IBM's receipt of Seller's best-can-do response.
IBM shall have no obligation to issue Orders pursuant to the ECA process
set forth above. **** The provisions set forth elsewhere in this Agreement
with regard to Lead-Times and price will apply to Orders placed pursuant
to the foregoing ECA process. Seller agrees to participate with IBM in
implementation of other aspects of the ECA process as requested by IBM.
3.5 DELIVERY LEAD-TIMES
This Section 3.5 does not apply to **** or **** which are covered by the
provisions contained in Section 3.9.
3.5.1 Lead-Times and resulting Scheduled Delivery Dates specified in Orders will
be determined by mutual agreement of the parties prior to issuing Orders.
<PAGE> 8
3.5.2 "Normal Lead-Times" for deliveries of Products shall be deemed to be the
applicable number of Business Days set out in the table below, plus the
applicable Transit Time for the Ordering Location as specified below.
Deliveries having Normal Lead-Times shall be deemed to be "Normal
Lead-Time Deliveries". Seller may not request price premium charges for
Normal Lead-Time Deliveries. IBM may issue Orders requesting Product
deliveries with Lead-Times less than Normal Lead-Time. Seller agrees, ****
after receipt of IBM's requested Order, to notify IBM in writing of its
acceptance of the Order or rejection of the Order or to initiate
negotiations for Delivery Dates, delivery quantities and price premium
charges subject to Section 3.6.4. If IBM does not receive Seller's written
response **** of Seller's receipt of IBM's Order, the Order will be deemed
accepted by Seller with no liability on IBM's part for price premium
charges. Subject to the other terms of this Agreement and except as set
forth in Section 12.1.3, as to the quantity of Products contained in IBM's
Order, if Seller rejects IBM's Order, IBM may at its sole discretion
fulfill its Product requirements pursuant to Section 12.6.
NORMAL LEAD-TIMES EXPRESSED IN BUSINESS DAYS ##
*** All Other Products
First Product ** **
Order
Follow-On Orders ** **
## **** Transit Times for IBM's delivery destinations in Austin, Texas
shall be deemed to be zero (0) Days. Transit times for all other IBM
delivery destinations within the continental United States shall be deemed
to be three (3) Business Days. Transit times for IBM delivery destinations
outside of the continental United States shall be deemed to be five (5)
Business Days.
For Products delivered to non-U.S. locations as requested by IBM Orders,
unless otherwise agreed by the parties in writing, IBM will provide
Seller, at IBM's expense, instructions and all necessary declarations and
certificates in properly executed form required for Seller to ship
Products to non-U.S. locations on IBM's behalf pursuant to IBM's export
licenses.
3.6 RESCHEDULES DURING THE FROZEN ZONE
This Section 3.6 does not apply to **** or **** which are covered by the
provisions contained in Section 3.9.
3.6.1 THE FROZEN ZONE
The "Frozen Zone" shall mean, for each Product identified in an Order, a
period of time immediately preceding the Delivery Date specified for such
Product in the Order equal to the number of Normal Lead-Time Business Days
set forth in Section 3.5.2 for such Product.
<PAGE> 9
3.6.2 DELIVERY DELAY OR QUANTITY DECREASE
IBM may during the Frozen Zone request Seller to delay delivery of
Products or to decrease the quantity of Products that were specified
in an Order. IBM will notify Seller of its request by issuing an
electronic or written notice to Seller. Seller agrees, **** after
receipt of IBM's request, to either notify IBM in writing of its
acceptance or rejection of the request, or to initiate negotiations
for Delivery Dates, delivery quantities and/or prices (as the case
may be). Any such negotiations shall be subject to Section 3.8.2. If
IBM does not receive Seller's written or electronic response ****
after Seller's receipt of IBM's request or Seller and IBM are unable
to agree on delivery dates, delivery schedules and/or prices, then
IBM's request shall be deemed to be rejected by Seller. Rejection of
a request by Seller shall constitute a cancellation by IBM as to the
quantity of Product requested by IBM to be delayed or decreased from
the affected delivery, and the provisions of Section 3.8,
Cancellation of Orders, will apply to such quantities. ****
3.6.3 ACCELERATED DELIVERY OR QUANTITY INCREASES
IBM may submit a request during the Frozen Zone for an Accelerated
Delivery, or a request to increase the quantity of Products that
were specified in an Order. IBM will notify Seller of its request by
issuing an electronic or written notice to Seller. Seller agrees,
**** after receipt of IBM's request, to notify IBM in writing of
either its acceptance or rejection of the request, or to initiate
negotiations for Delivery Dates, delivery quantities and/or price
premium charges (as the case may be), subject to Section 3.6.4. If
IBM does not receive Seller's written or electronic response ****
after Seller's receipt of IBM's request, the request will be deemed
accepted by Seller with no liability on IBM's part for price premium
charges. Except as set forth in Section 12.1.3, if Seller rejects
IBM's request, then as to the quantity of Products contained in
IBM's Accelerated Delivery or quantity increase request, IBM may at
its sole discretion fulfill its Product requirements pursuant to
Section 12.6.
3.6.4 PREMIUM CHARGES
3.6.4.1 If IBM issues Orders for Products containing delivery Lead-Times
less than the applicable Normal Lead-Times set out in Section 3.5.2,
or IBM requests Accelerated Deliveries, or an increase in the
quantity of Products that are specified in an Order pursuant to
Section 3.6.3, then prior to accepting any such Order or Accelerated
Delivery request, or increased delivery quantity request, Seller
agrees to notify IBM of any price premium charges anticipated by
Seller. IBM and Seller will negotiate Delivery Dates, delivery
quantities and price premium charges, if any, in good faith, and IBM
will be liable for any price premium charges which are agreed upon
by IBM and Seller.
If the parties can not agree on Delivery Dates, delivery quantities,
or price premium charges, then as to the quantity of Product upon
which no agreement is reached, IBM may at its sole discretion
fulfill its Product requirements pursuant to Section 12.6. ****
3.6.4.2 The following table indicates the maximum price premium charges
(expressed as a percent of the agreed purchase price for Normal
Lead-Time Orders that the Seller may charge for Products, except
first Product Orders, meaning the first occurrence of an Order
issued for a particular Product which will be negotiated in good
faith by the parties. IBM will not be liable for any price premium
charges except under the conditions and for the amounts specifically
provided for in this Agreement.
MAXIMUM PRICE PREMIUMS*
<PAGE> 10
**** REDACTED TABLE****
3.7 RESCHEDULES OUTSIDE THE FROZEN ZONE
Seller agrees to accept IBM's requests for Seller to either delay Product
deliveries or to decrease the quantity of Product(s) contained in a
scheduled delivery , provided any such request is received by Seller prior
to the commencement of the Frozen Zone and except with respect to Unique
Materials to the extent specified in the following paragraph, IBM shall
incur no price premium charges, cancellation charges or other liability.
If prior to the commencement of the Frozen Zone IBM requests Seller to
delay Product deliveries containing Unique Materials or to decrease a
scheduled delivery quantity for Product(s) containing Unique Materials,
then IBM will be liable for cancellation charges for such Unique
Materials, provided such Unique Materials were purchased or ordered by
Seller in no greater quantities or Lead Times as are necessary to support
the manufacture of IBM Products requested by IBM Orders. Seller shall
dispose of such unused Unique Materials according to IBM's instructions
and at IBM's sole discretion. IBM's sole and exclusive liability for
Unique Materials shall be for any reasonably incurred and documented
costs, including reasonable disposal costs.
With respect to IBM's notice to delay of Product deliveries, or decrease
the quantity of Product on order, Seller agrees to give written
confirmation of receipt of IBM's notice within a reasonable time.
IBM may request Seller, prior to the commencement of the Frozen Zone, to
make Accelerated Deliveries or to increase the quantity of Products on
order. IBM will notify Seller of its request by issuing an electronic or
written notice to Seller. If IBM does not receive Seller's written or
electronic acceptance or rejection **** after receipt of IBM's request,
then IBM's request shall be deemed accepted by Seller with no liability on
IBM's part for price premiums. If Seller rejects IBM's request, then as to
the quantity of Products contained in IBM's Accelerated Delivery or
Quantity Increase request, IBM may at its sole discretion fulfill its
Product requirements pursuant to Section 12.6.
3.8 CANCELLATION OF ORDERS
This Section does not apply to **** or **** which are covered by the
provisions contained in Section 3.9.
3.8.1 Subject to the express provisions of this Agreement, IBM may cancel any or
all Orders, or parts thereof, issued pursuant to this Agreement at any
time by giving written or electronic notice of such cancellation to
Seller. In the event such cancellation shall be due to a condition which
would be a basis for termination for cause by IBM as set forth in Section
6.2, or if IBM cancels deliveries for cause pursuant to Section 3.8.4, IBM
shall have no liability and shall not be subject to any charges for such
cancellation.
3.8.2 IBM may cancel Orders or portions thereof for convenience during the
Frozen Zone and IBM shall have no liability and no obligation to make any
payments to Seller other than for Products delivered prior to such
cancellation, for completed and partially completed Products, and for
Unique Materials not incorporated in delivered Products or in completed or
partially completed Products, provided such Unique Materials were
purchased or ordered by Seller in no greater quantities or lead times as
are necessary to support the manufacture of IBM Products requested by IBM
Orders . IBM's payment for completed and partially completed Products
shall be for any reasonably incurred and documented costs negotiated by
the two parties up to a maximum
<PAGE> 11
amount indicated by the table below. Seller shall dispose of Unique
Materials according to IBM's instructions and at IBM's sole discretion.
IBM's sole and exclusive liability for Unique Materials shall be for any
reasonably incurred and documented costs, including reasonable disposal
costs.
MAXIMUM CANCELLATION CHARGES
STATE OF COMPLETION PERCENT OF SELLING PRICE
*** **
*** **
*** **
*** **
*** **
*** **
3.8.3 If IBM cancels Orders or portions thereof outside the Frozen Zone, IBM
shall have no liability and shall not be subject to charges for such
cancellation, except for Unique Materials under the conditions and for the
amounts set forth in Section 3.7. IBM will not be liable for any charges
as a result of cancellation by IBM of Orders or portions thereof other
than those set forth above in Section 3.7 and 3.8.2. Cancellation charges
represent IBM's entire liability related to the cancellation of
deliveries, Orders or any portion thereof. Seller agrees to dispose of any
completed or partially completed Products in Seller's possession, for
which IBM becomes liable for cancellation charges, according to IBM's
instructions and at IBM's sole discretion.
3.8.4 Except as set forth in Section 16.6, Force Majeure, if Seller does not
comply with the terms of an Order, (including, but not limited to, failure
to meet a Scheduled Delivery Date, delivery of less than the ordered
quantity of Products, or Delivery to the wrong location), then IBM may
notify Seller of its intent to cancel the Order(s), or portions thereof.
****
3.9 **** REDACTED INFORMATION****
The following provisions apply only to **** and to ****
Normal Lead-Times do not apply to **** or to **** Lead-Times for such
Products shall be negotiated to mutual agreement by IBM and Seller. IBM
will not be liable for price premium charges for **** or for ****
irrespective of Lead-Times specified in IBM Orders, and irrespective of
IBM requests for Accelerated Deliveries or requests for increased
quantities of Products that are specified in an Order for such Products
IBM may cancel Orders for convenience and may request changes in Scheduled
Delivery Dates and delivery quantities. Changes in Scheduled Delivery
Dates and in delivery quantity associated with **** and will be negotiated
in good faith by Seller and IBM. IBM's sole and exclusive liability for
cancellation of **** and **** for convenience shall be for any of Seller's
reasonably incurred and documented costs .
IBM shall have no requirement to provide forecasts for **** or for ****
Products.
3.10 PULL LOGISTICS
"Pull Logistics" means a process whereby Product is manufactured and
delivered by Seller based upon IBM's actual consumption of the Product.
The overall objective is to minimize IBM inventories while providing
greater flexibility and faster response in fulfilling IBM's variable
customer demand. Seller agrees to participate with IBM in the
implementation of Pull Logistics business processes on terms which will be
negotiated to mutual agreement of the parties.
<PAGE> 12
3.11 ELECTRONIC DATA INTERCHANGE (EDI)
The parties agree to make a good faith effort to execute within
forty-five (45) Days after the Commencement Date of this Agreement a
separate Electronic Data Interchange/Electronic Funds Transfer
Trading Partner Agreement, substantially upon the same terms and
conditions set forth in Exhibit 2 to this Agreement.
3.12 PACKAGING
Seller will package all Products according to Specifications
provided by IBM. Any packaging costs will be identified by Seller,
but will be included as a part of the per unit price IBM pays for
Products.
3.13 **** REDACTED INFORMATION****
4.0 PRICE
4.1 **** REDACTED INFORMATION****
4.2 PRICE FOR PRODUCTS
4.2.1 INITIAL PRICES
The per unit purchase price for **** that IBM may purchase under
this Agreement, will **** each, irrespective of quantity ordered,
Lead-Times or manufacturing complexity. The price IBM will pay for
**** will be determined by mutual agreement of the parties prior to
issuing Orders. The initial per unit purchase price for **** and
**** that IBM may purchase under the terms of this Agreement are set
forth in Division Appendices A and B, attached hereto. ****
**** REDACTED INFORMATION****
4.2.2 PRICE MODEL
4.2.2.1 Except with respect to the conditions set forth in Section 4.2.2.3
below, a price model agreed to by IBM and Seller will be used to
establish prices and price changes (as the case may be) to the
following Products:
**** REDACTED INFORMATION****
4.2.2.2 The price model agreed upon by the parties as of the Commencement
Date shall be in effect for **** the Commencement Date. From time to
time thereafter, but not more than two times annually by IBM and
**** by Seller, either party may initiate good faith negotiations to
amend or modify the price model that is used to establish the prices
for Products purchased under this Agreement.
4.2.2.3 ****REDACTED INFORMATION****
4.2.2.4 ****REDACTED INFORMATION****
<PAGE> 13
4.2.2.5 ****REDACTED INFORMATION****
4.2.2.6 ****REDACTED INFORMATION****
4.2.3 **** REDACTED INFORMATION****
4.2.3.1 ****REDACTED INFORMATION****
4.2.3.2 ****REDACTED INFORMATION****
4.2.3.3 ****REDACTED INFORMATION****
4.4 NONRECURRING CHARGES
Any nonrecurring engineering (NRE) and test charges which Seller
anticipates may be incurred in connection with IBM Orders must be
quoted by Seller at the time Seller's unit price quote is received
for the Products giving rise to the NRE and test expense. Seller
will not commit funds for NRE and test without an IBM Order for
same. Any NRE and test charges are subject to mutual agreement by
the parties.
4.5 PAYMENT TERMS
All prices for Products purchased under this Agreement will be
invoiced and paid in U.S. Dollars. IBM will pay for Products within
the applicable number of Days as is set out in the following table
from the date IBM Accounts Payable receives an acceptable invoice
from Seller, or from the same number of Days from the Delivery Date
of Products for which an acceptable invoice has been received,
whichever is later. Nevertheless, in no case shall the payment
period for delivered Products commence **** to the Delivery Date set
out in the affected Order. Subject to Section 3.1, IBM and Seller
will make a good faith effort within forty-five Days after execution
of this Agreement to establish the necessary systems to provide for
payment of Seller's invoices by means of electronic funds transfers
and to agree to the specific terms for such transfers.
PERIOD INVOICE IS RECEIVED BY IBM PAYMENT TERMS
Period Beginning Period Ending
Agreement execution date 60 Days after execution
61 Days after execution Termination or expiration ***
of this Agreement ***
<PAGE> 14
5.0 DELIVERY
5.1 SHIPMENT OF PRODUCTS
All shipments of Products shall be FOB Seller's manufacturing
location in Austin, Texas. Seller agrees to ship Products using
IBM's designated commercial carriers, and that it will deal directly
with the carriers for scheduling the shipment of Products to IBM's
designated delivery destination(s) on the Delivery Date specified in
IBM's Orders. Seller will ship Products to IBM freight collect,
meaning IBM's designated carrier will invoice IBM directly for
transportation of Products from Seller's dock to IBM's delivery
destination. IBM may, without additional cost or other liability to
IBM, change the destination for any delivery or the designated
carrier specified in IBM Orders by giving Seller written notice at
any time prior to shipment of the Product affected by IBM's change
request. Any deviation from IBM's shipping instructions must be
approved by IBM in advance of the shipment .
5.2 ON-TIME DELIVERY
With regard to on-time delivery of Product, TIME IS OF THE ESSENCE.
Seller agrees to make its best effort to achieve and maintain one
hundred percent (100%) on-time delivery. On-time delivery is defined
for purposes of this Agreement as the arrival of the requested
quantity of Products at IBM's requested destination on the Scheduled
Delivery Date specified in IBM's Order(s), subject to Section 5.3
below. Seller agrees to ship Product to arrive at IBM's delivery
destination on the Delivery Date specified in IBM's Order, based
upon the transit time quoted by IBM's designated carrier. Seller
shall not be responsible for failure to make on-time delivery, for
the sole reason that IBM's specified carrier failed to perform.
5.3 EARLY DELIVERY
Seller shall not deliver Products more than three (3) Business Days
in advance of the Scheduled Delivery Date as stated in IBM's Order
without IBM's prior written approval. If earlier deliveries are made
without IBM's written prior approval, IBM may elect to delay receipt
or passage of title until the Scheduled Delivery Date or to return
or store the Products at Seller's expense. Seller will not deliver
Products in quantities in excess of those set forth in the Order
without IBM's prior approval.
5.4 DELAYS IN DELIVERY
Seller shall notify IBM immediately if for any reason Seller
anticipates that it may fail to comply, or fails to comply, with the
terms of this Agreement or of an Order, (including, but not limited
to, failure to meet a Scheduled Delivery Date, delivery of less than
the ordered quantity of Products, or Delivery to the wrong
location). If Seller so notifies IBM, Seller will deliver to IBM the
quantity of Products specified by IBM Orders in the most expeditious
manner possible, except to the extent IBM cancels. If Seller's
failure to comply with the terms of an Order are for any reason
other than Force Majeure as defined in Section 16.6 below, then
Seller shall be responsible for any additional or incremental
premium transportation costs associated with delivery of Product(s).
Further, if Seller fails to take corrective action acceptable to IBM
or to negotiate a resolution satisfactory to IBM within the required
period specified in Section 3.8.4, then, Seller shall be responsible
for IBM's reasonable and actual costs incurred as a result of such
delay. These costs, as determined by IBM, may include by way of
example but not limitation, overtime, premium transportation, and
the cost of cover related to procurement of alternate sources of
supply, which will be counted toward satisfaction of IBM's Business
Commitment and, if applicable, Purchase Commitment.
5.5 Notwithstanding anything contained in this Agreement to the
contrary, except for payment by Seller of any required premium
transportation costs in the event Seller does not meet its on time
<PAGE> 15
delivery obligations ****, If Seller is not in compliance with its
on-time delivery obligations under this Agreement, Seller agrees
within one hundred and twenty Days after execution of this Agreement
to provide a written delivery improvement plan as a part of its good
faith efforts to satisfy all Product delivery requirements under
this Agreement. Such plan shall not be deemed to supersede or to
lessen any of Seller's Product delivery obligations under this
Agreement. IBM's agreement not to exercise its remedies pursuant to
this section does not constitute a waiver by IBM of its rights to
exercise its remedies in the event of a breach by Seller of its
obligations in this section.
6.0 TERM AND TERMINATION
6.1 TERM
This Agreement shall commence as of the date of the last signature
below ("Commencement Date") and shall expire three years later
subject to Section 12, unless earlier terminated according to the
provisions of Section 6.2 below.
6.2 TERMINATION
Notwithstanding anything in this Agreement to the contrary, this
Agreement or individual Appendices to this Agreement may be
terminated by either party for cause in the event one or more of the
following conditions exist during any term of this Agreement:
6.2.1 (a) in the event of a breach or default by the other party of a
material obligation of such party under this Agreement, except for a
breach or default by Seller under Section 3.8.4, which is not
remedied within a reasonable time, **** after a written notice is
given by the other party of such default or breach, or
(b) subject to Section 5.5, in the event of a repeated breach or
default by Seller during any calendar quarter under Section 3.8.4
which is not remedied by Seller within the period required in
Section 3.8.4, even if IBM has elected to obtain the Product from
alternative sources;
6.2.2 upon the entry of a request for any kind of insolvency proceeding,
or the commencement of any action taken against the other party
relating to a liquidation, dissolution or similar action, including
an assignment for the benefit of creditors, or upon admission by it
in writing of its inability to pay its debts generally as they
become due; or
6.2.3 notice of the inability of the other party to perform due to the
existence of a Force Majeure event as defined in Section 16.6.
6.3 IBM RIGHTS UPON TERMINATION
6.3.1 Upon receipt of notice of termination from IBM of this Agreement for
a material or repeated breach by the Seller, Seller agrees that it
will not start any new production of Products previously ordered,
continue production of work in process, or issue Seller purchase
orders for Product components and materials, including labeling and
packaging materials, unless requested by IBM subsequent to its
termination notice. IBM may, at its sole option (a) cancel all or
any portion of the outstanding Orders without liability; (b) require
completion and delivery of all or part of any remaining Product(s)
on order as of the date of termination, and buy them; and/or (c)
require delivery of all or part of the inventory of Product
components and materials, including labeling and packaging material
purchased by the Seller for use in Products, and buy them. IBM shall
have no liability for Products, or for Product components and
materials, including labeling and packaging materials, or for
partially completed Products which are not accepted by IBM
subsequent to termination.
<PAGE> 16
6.3.2 Within ten (10) Business Days after receipt of termination notice
from IBM, Seller agrees to prepare and submit to IBM a written
inventory in reasonable detail of each of the following items in
Seller's possession as of the date of termination: (a) all fully
manufactured Products, (b) Product documentation, (c) Product
components and materials, including labeling and packaging
materials, (d) partially completed Products, (e) a detailed listing
of its open material purchase orders issued to support IBM's Orders
and related Seller liabilities.
6.3.3 The terms IBM Product Information and IBM Computer Programs, as used
herein, shall have the same meaning as defined in the concurrently
executed Intellectual Property Agreement. Upon termination by IBM,
Seller agrees to return all IBM Product Information and IBM Computer
Programs within thirty (30) Days after receipt of a termination
notice from IBM; or, if IBM exercises its option to require
completion and delivery of all or part of any remaining Product(s)
on order as of the date of termination, within ten (10) Days
following completion of open Orders necessitating the use thereof,
whichever is later.
6.3.4 If IBM exercises its options to purchase Products or materials
pursuant to Section 6.3.1(b) or (c), IBM will pay for such Products
or materials within forty-five (45) Days after receipt by IBM
Accounts Payable of an acceptable invoice from Seller.
6.4 SELLER'S RIGHTS UPON TERMINATION
Upon termination by Seller due to a breach by IBM, Seller may, at
its option, either:
6.4.1 complete Product(s) on order as of the date of termination and sell
them to IBM at prices set out in Section 6.5 or,
6.4.2 sell to IBM, at prices set out in Section 6.5, all of its Product
components and materials, including labeling and packaging materials
in Seller's inventory which were previously ordered by Seller to
support the manufacture of the quantity of Products and Delivery
Dates requested by IBM Orders, and which cannot be canceled or
otherwise disposed of at no cost to Seller. Seller agrees that IBM
shall have first right of refusal to purchase any such Product
components and materials, including labeling and packaging.
6.5 PRICES UPON TERMINATION
The price for completed Products shall be the mutually agreed price
in effect for such completed Products immediately prior to
termination or cancellation of Orders. The price for partially
completed Products shall be calculated according to Section 3.8.2
above. The price for Product components and materials, including
labeling and packaging materials purchased by Seller, shall be
agreed upon by the parties, but shall be no higher than the costs
used to establish the price set out in the most recent Order for
Products composed of those components and materials, including
labeling and packaging materials, plus a reasonable mark-up.
7.0 PRODUCT QUALITY
7.1 QUALITY OBJECTIVE
Seller agrees that it will take all necessary actions to ensure that
the Products purchased by IBM do not exceed the failure rates that
are agreed to by the parties pursuant to Section 7.4, and that the
Products conform to their Specifications. Seller also agrees to the
objective of continuous quality improvement during the term of this
Agreement.
7.2 SUPPLIER QUALITY PROCEDURES
<PAGE> 17
Seller agrees that it will manufacture Products pursuant to written
quality procedures which emphasize defect prevention and early
detection of defects in its manufacturing processes. The procedures
shall also identify a method for isolating defective Parts and/or
components, for implementing corrective actions, and for conducting
adequate manufacturing and test measurements using statistical
process controls (SPC). Such procedures shall be made available for
inspection by IBM upon reasonable notice from IBM.
7.3 FINAL TEST AND INSPECTION
Final testing of the Products shall be performed by Seller to verify
prior to delivery to IBM that the Products conform to their
Specifications. Seller agrees to screen and remove all defective
Product from each lot prior to delivery, except as may be allowed by
applicable Specifications when Products are delivered as an Array.
7.4 SPQL PERFORMANCE
Shipped Product Quality Level (SPQL) is defined as the quality level
of the Product(s), expressed as a percentage of defective Products
delivered. The SPQL will be calculated for each of the three product
categories indicated in the table below, and will be measured
monthly by IBM at IBM's electronic card assembly manufacturing
locations or other locations as may be designated by IBM. Seller
agrees that the defect rate for Products ordered by Austin ECAT,
Rochester ECAT and Greenock ECAT and delivered to IBM or to IBM's
designee will not exceed the SPQL limits specified in the table
below. For Other Additional Products ordered by any Ordering
Locations Seller agrees that the defect rate for Products delivered
to IBM or to IBM's designee will not exceed the lower of a) the SPQL
limits specified in the table below, b) the SPQL limits set out in
IBM Product Specifications, or c) as otherwise provided to Seller by
IBM prior to Seller's acceptance of Orders. At IBM's discretion,
confirmed no-defect-found Products returned to Seller may be
excluded for purposes of calculating SPQL measurements.
The SPQL targets represent IBM's desired SPQL for years other ****
Notwithstanding the SPQL targets specified in the table, IBM and
Seller agree that the actual SPQL requirement for Products delivered
subsequent to the first year of this Agreement, will be negotiated
in good faith within sixty (60) Days after execution of this
Agreement.
MAXIMUM SPQL LIMITS AND TARGETS
PRODUCT CATEGORY SPQL LIMITS *** SPQL TARGET ***
*** ** **
*** ** **
*** ** **
BY WAY OF EXAMPLE, The SPQL is calculated as follows:
Example: 10 defective Products / 1,000 Products delivered = 1 percent (1.0%)
SPQL The SPQL in this example is stated in parts per million (PPM) as: 1
percent (1.0%) X 1,000,000 = 10,000 PPM.
7.5 FAILURE ANALYSIS
<PAGE> 18
If IBM returns defective Products to Seller, Seller agrees to implement
(within forty-eight (48) hours of IBM's notification of the defect) all
actions which are necessary to ensure that no additional defective
Products are delivered to IBM, and further agrees as soon as reasonably
possible to implement all corrective actions that are necessary to prevent
reoccurrence of the defect. Seller further agrees to conduct a detailed
failure analysis and to report the failure analysis data to IBM within
twenty (20) Business Days of receipt of the defective Product at Seller's
location. Such failure analysis shall be sufficient to accurately identify
the specific defect(s) causing the failure, and shall include the
following Items 1 through 8 (below).
1. Part number,
2. Quantity returned, quantity analyzed,
3. Serial number of returned Products,
4. The reported failure mode,
5. The preliminary verification of failure mode,
6. The final verified failure mode,
7. Root cause of failure, and
8. Corrective actions taken to prevent reoccurrence.
Seller agrees to preserve and maintain all data associated with Product
failure analysis and corrective actions and to make that data available to
IBM upon request.
8.0 CERTIFICATION, AUDIT, INSPECTION AND ACCEPTANCE
8.1 CERTIFICATION
Seller will conform to the requirements of ISO 9002 at all times. Seller
represents and warrants that it currently is, or within 180 Days after the
effective date of this Agreement shall become ISO 9002 certified, and
shall retain such certification thereafter at all times during the term of
this Agreement. If at any time hereafter certification under ISO 9002 is
no longer generally appropriate, Seller will ensure that it is certified
under another comparable standard which is acceptable to both parties.
8.2 IBM'S AUDIT
IBM may perform at reasonable intervals source audits and process audits
of reasonable scope at the Seller's manufacturing facilities, including
Seller's manufacturing, test, quality and failure analysis processes and
operations, sufficient to determine, in IBM's sole judgment, whether
Product quality and technical Specifications are being met by the Seller.
IBM shall advise Seller in advance of the scope and method by which such
audits are to be conducted. **** This provision does not relieve Seller of
its obligation to deliver Products conforming to agreed Product
Specifications and SPQL limits, or waive IBM's rights of inspection and
acceptance at destination.
8.3 ACCEPTANCE TESTS
IBM may conduct, at its own expense, incoming inspection, source
inspection and/or acceptance tests to determine whether Products furnished
by Seller conform to Specifications, as set forth in this Agreement. IBM
may reject any Product(s) which it finds do not meet Specifications or
other requirements of this Agreement, and IBM may return the rejected
Product to Seller without liability for transportation, duty, brokerage
fees, or other related expenses. IBM may reject an entire delivered lot if
a single sample fails to meet the required Specifications. If requested by
Seller, an IBM Ordering Location performing incoming inspections, will
communicate to Seller its lot rejection criteria. Such criteria shall not
be deemed to supersede or to lessen any of Seller's obligations under this
Agreement.
<PAGE> 19
If IBM has not notified Seller of any defects in delivered Products within
thirty (30) Days after delivery, said Products shall be deemed accepted.
Acceptance by IBM of Products shall not relieve Seller of any
responsibility under Product warranties or other warranties under this
Agreement, including without limitation responsibility for latent defects,
fraud, gross negligence, title defects, or infringement or warranty.
Failure by IBM to perform testing shall not be construed as a waiver to
later asserting claims based on these above-mentioned defects.
8.4 NONCONFORMING ACCEPTANCE
Seller agrees to notify IBM of any known nonconformance to Specifications
of any completed Products or work in process if and when such
nonconformance is first suspected or observed by Seller. IBM may choose to
accept Products delivered to IBM by Seller which fail to conform in some
minor aspect to Specifications without prejudice to its right to reject
nonconforming items in the future. If IBM so chooses, IBM will notify
Seller of its intent to accept nonconforming Products. Seller agrees to
negotiate in good faith a price reduction for such Products based upon
IBM's reasonable and actual added expenses or costs incurred by IBM to
correct and otherwise deal with such deficiencies. After the parties agree
on a price, IBM will notify Seller that IBM has accepted the nonconforming
Products. If the Parties cannot agree on a price for these nonconforming
Products, IBM may return the nonconforming Product(s) to Seller pursuant
to Section 9.3, below. No Products for which IBM has issued a notice of
nonconformance shall be deemed accepted.
9.0 WARRANTY
9.1 SELLER REPRESENTATIONS AND WARRANTIES
Seller represents and warrants it has the right to enter into this
Agreement. Seller further represents and warrants that at all times during
the term of this Agreement (a) Seller's performance of this Agreement will
not violate the terms of any license, contract, note or other obligation
to which Seller is a party or any statute, law, regulation or ordinance to
which Seller is subject, including, without limitation, all health, safety
and environmental statutes, laws, regulations and ordinances; (b) no
claim, lien or action is pending or to the best of Seller's knowledge
threatened against Seller or its suppliers (except claims against
suppliers that exist as of the execution date of this Agreement),
Subsidiaries, Affiliates or parent company which would interfere with
IBM's, its Subsidiaries', distributor's or customers' receipt and use of
the Products; (c) to the best of Seller's knowledge, **** (d) none of the
Products contain nor are any of the Products manufactured using any known
ozone depleting substances including, without limitation
chloroflourocarbons, halons, methylchloroforms, and carbon tetrachlorides,
(e) all Products provided to IBM under this Agreement are New Products and
do not contain anything used or reconditioned.
9.2 PRODUCT WARRANTY
Seller expressly warrants that for a period **** from the Delivery Date to
IBM, all Products will conform to the Specifications, including without
limitation, quality requirements, drawings, or other descriptions
furnished by IBM, and will be free from defects in materials and
workmanship. It is specifically agreed that the above warranties shall
survive acceptance and IBM's Product test procedure. Seller's warranty
also covers latent defects resulting from Seller's workmanship, process,
and/or raw material used. Seller shall have no warranty obligation for
products manufactured and shipped by IBM prior to the Commencement Date of
this Agreement.
9.3 WARRANTY PERFORMANCE
IBM may return any defective Product to Seller at Seller's expense. Prior
to return of a defective Product, IBM agrees to obtained a "Returned
Material Authorization" (RMA) number from Seller
<PAGE> 20
and to reference said RMA number in the shipping documents contained with
the returned defective Products. Seller agrees that RMA numbers for
defective Products will not be unreasonably withheld. For Products other
than Quick Turn Products, Seller agrees, at IBM's option, to either repair
or replace a defective Product or to reimburse IBM the purchase price for
such defective Product at Seller's own expense **** after receipt of such
Product from IBM. ****
If a rejected Product returned by IBM to the Seller passes all of Seller's
inspection and test criteria, the Product shall be classified as
"no-defect-found" and shall be returned to IBM at IBM's expense **** after
receipt of such Product from IBM.
The purchase price to be reimbursed to IBM for a defective Product
returned by IBM to Seller for reimbursement, shall be the original
purchase price of the Product if said price can be determined with
reasonable certainty - or if the original purchase price cannot be
determined with reasonable certainty, then the highest unit price IBM
shall have paid for the returned Product in the most recent quarter prior
to rejection during which IBM purchased the Product.
Notwithstanding the foregoing, if repair or replacement is not possible
due to unavailability of needed materials within the time required by IBM,
Seller will reimburse IBM the purchase price associated with the Product,
and pay IBM the cost of cover and other damages associated with Seller's
inability to repair or replace the defective Products.
9.4 PRODUCT WARRANTY EXCEPTIONS
****REDACTED INFORMATION****
**** ***
***
9.5 TITLE TO PRODUCTS
Seller warrants title to all Products purchased by and delivered to IBM
under this Agreement to be free and clear of all liens, encumbrances,
security interests or other adverse interests or claims. Title and risk of
loss shall pass from Seller to IBM upon Seller's delivery of Products to
IBM's designated carrier.
9.6 IMPLIED WARRANTIES
THESE WARRANTIES REPLACES ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR CONDITIONS OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
10.0 INDEMNITY
10.1 INTELLECTUAL PROPERTY INDEMNITY
****REDACTED INFORMATION****
10.2 PRODUCT LIABILITY INDEMNITY
<PAGE> 21
IBM shall, at its own expense, protect, defend, indemnify, save and hold
harmless Seller from and against any claim of product liability or
negligence based solely on the defective design of a Product, provided
that the Product manufactured by Seller conforms in all respects to the
Product Specifications provided by IBM to Seller and/or, ****
Seller shall, at its own expense, protect, defend, indemnify, save and
hold harmless IBM and its Subsidiaries, Affiliates, distributors and
customers from and against any claim or product liability or negligence
based solely on the defective manufacture of the Product or that the
Product contains defective materials or workmanship.
10.3 GOVERNMENT REGULATION
Seller shall, at its own expense, protect, defend, indemnify, save and
hold harmless IBM, and its Subsidiaries, Affiliates, distributors and
customers from and against any claim of any failure of Seller to comply
with any governmental law, statute, ordinance, administrative rule or
regulation.
IBM shall, at its own expense, protect, defend, indemnify, save and hold
harmless Seller from and against any claim of any failure of IBM to comply
with any governmental law, statute, ordinance, administrative rule or
regulation.
10.4 NOTIFICATION
Each party shall promptly notify the other one if it is or becomes aware
of any right of, or protection accorded to, a third party that might
affect Seller's ability to provide Products under this Agreement or limit
IBM's freedom to buy such Products.
Regarding any IBM defense and indemnification of Seller under Sections
10.1, 10.2 and 10.3, IBM shall pay any settlement and the resulting costs,
damages, expenses and attorney's fees finally awarded by a court for such
claims provided that Seller (a) promptly notifies IBM in writing of the
claim: and (b) allows IBM to control, and cooperates with IBM in the
defense and any related settlement negotiation.
Regarding any Seller defense and indemnification of IBM under Sections
10.1, 10.2 and 10.3, Seller shall pay any settlement and the resulting
costs, damages, expenses and attorney's fees finally awarded by a court
for such a claim provided that IBM: (a) promptly notifies Seller in
writing of the claim: and (b) allows Seller to control, and cooperates
with Seller in the defense and any related settlement negotiation.
11.0 LIABILITY
11.1 Neither Seller nor IBM will be liable to the other for lost profits,
consequential, punitive, or incidental damages, even if informed of their
possibility. This limitation does not apply to Seller's or IBM's
liabilities in Section 10.0 (Indemnity), Section 14.0 (Intellectual
Property) and Section 16.2 (Confidential Information and Advertising).
11.2 Except with respect to Sections 3.8.4, 5.4, and 10.0 and IBM's shortfall
payment obligations under Section 12.3, the total liability of IBM and
Seller to each other, regardless of the form of action, whether contract
or tort, is limited to payments due and owing to Seller under the Order(s)
at issue and amounts paid under this Agreement.
12.0 PREFERRED SUPPLIER
Seller will be considered a preferred supplier to IBM during the term of
this Agreement, subject to the terms of this Section 12.0 and to other
relevant terms and conditions as may be set out
<PAGE> 22
elsewhere in this Agreement. As a preferred supplier, Seller will be
granted the benefits specified in the following Sections 12.1, 12.2
and 12.5 and subject to the conditions and limitations expressly set
forth in this Agreement.
12.1 ****REDACTED INFORMATION****
It is IBM's intent to issue Orders to Seller for a quantity of
Products and/or services, which if subsequently delivered by Seller
meeting all required Specifications at the prices and upon the
Scheduled Delivery Dates specified in such Orders and pursuant to
all other terms of this Agreement, ****REDACTED INFORMATION****
****REDACTED TABLE****
12.1.1 ****REDACTED INFORMATION****
****REDACTED TABLE****
****REDACTED INFORMATION****
12.1.2 ****REDACTED INFORMATION****
12.1.3 ****REDACTED INFORMATION****
12.2 ****REDACTED INFORMATION****
12.2.1 ****REDACTED INFORMATION****
12.2.2 ****REDACTED INFORMATION****
12.2.3 ****REDACTED INFORMATION****
<PAGE> 23
12.2.4 ****REDACTED INFORMATION****
12.3 ****REDACTED INFORMATION****
12.4 ****REDACTED INFORMATION****
12.5 ****REDACTED INFORMATION****
12.6 IBM is under no obligation to purchase any Products from Seller,
except as expressly stated in this Agreement. Subject to the terms
of this Agreement, if Seller rejects or is unable to or fails to
accept any IBM's Order(s) or Order modification(s), IBM may at its
sole discretion, award the relevant business to an internal IBM
supplier, to an IBM Subsidiary, or to a third party supplier. If
after accepting IBM's Order, Seller fails to perform pursuant to
such Order in breach of its obligations under this Agreement for any
reason, then in addition to any other remedies available to IBM, IBM
may at its sole discretion, award the relevant business to an
internal IBM supplier, to an IBM Subsidiary, or to a third party
supplier.
****REDACTED INFORMATION****
12.7 Notwithstanding anything contained herein to the contrary, nothing
in this Agreement shall be construed to limit or preclude IBM's
right to procure (at its sole discretion) printed wire boards as a
component of a higher level assembly from any non-IBM source and
upon any terms, including assemblies used as components in IBM
Products. This Agreement shall not apply to any such purchases.
12.8 Seller and IBM agree to meet once per calendar quarter to review
forecasts, prices and other contract-related issues at a time and
place mutually agreeable to both parties.
13.0 ****REDACTED INFORMATION****
13.1 **** Payments owed by IBM will be paid thirty (30) Days after
receipt by IBM Accounts Payable of an acceptable invoice from
Seller. ****
13.2 ****REDACTED INFORMATION****
<PAGE> 24
14.0 INTELLECTUAL PROPERTY
IBM agrees to provide to Seller, subject to the terms of the
Intellectual Property Agreement between IBM and Seller, the IBM
Product Information and IBM Computer Programs specified in Exhibit
3.
15.0 INTELLECTUAL PROPERTY AND SYSTEMS ACCESS
15.1 ACCESS TO SYSTEMS AND COMPUTER PROGRAMS
The parties agree that they will make a reasonable effort to
mutually agree within sixty (60) Days after the Commencement Date on
the software and systems to which Seller will require continued
access for performance of work under this Agreement, and to
establish a migration plan to revoke Seller's access to systems and
terminate Seller's license to the systems and computer programs not
necessary for Seller's performance under this Agreement (unless IBM
grants or has granted such license or access to Seller in another
agreement). Seller's access to unnecessary systems and software will
be revoked as quickly as reasonably possible, but in no event later
than nine (9) months after the execution of this Agreement. When
deemed necessary by IBM and to the extent it has the right to do so,
IBM will grant Seller additional licenses and provide access to
additional systems at no charge to Seller for the purpose of Seller
performing work for IBM, including upgrades as and when released by
IBM.
15.2 If IBM grants access to IBM systems, as described in Section 15.1,
such access will be granted to Seller substantially under the same
terms as IBM's other current agreements and processes for allowing
suppliers access to IBM systems. However, IBM is under no obligation
to disclose the specific terms of any agreements it may have with
third parties. If the software contemplated in Section 15.1 is an
IBM software program that IBM licenses externally to its customers,
IBM will supply the software to Seller under the terms of IBM's
applicable standard license agreement.
16.0 GENERAL
16.1 TECHNOLOGY, PROCESS AND ENGINEERING CHANGES
16.1.1 Seller shall provide the affected IBM Ordering Site(s) with a
written notice of any reportable change within sixty (60) Days prior
to the implementation of such change. A reportable change is defined
as: 1) a raw material supplier source change for Fiberglass Cloth,
Copper Foil, Epoxy Resin, Copper Surface Finish Chemistry, Copper
Plate Chemistry, and Solder Mask Material; 2) a source change for a
subcontract surface finishing operation affecting the copper
solderable surface or connector plugable surface; or 3) introduction
of new process technologies. IBM shall have the right to accept or
reject the change at any time within thirty (30) Days after notice.
16.1.2 IBM will make a reasonable effort to accommodate Seller's request
for change; however, IBM is not obligated to accept any changes
proposed by Seller, and IBM's rejection of Seller's proposed change
shall not obligate IBM to pay a different price for Products or to
agree to different delivery terms for Products during the term of
this Agreement.
16.1.3 IBM may, at any time and from time to time, by notice to Seller,
request changes to the Product Specifications. Within 15 Business
Days of IBM's request, or within a different time period as may be
mutually agreed, Seller shall submit a written report to IBM setting
forth the probable effect, if any, of the requested change on
prices, payments, Scheduled Delivery Dates or other material
factors. Seller shall not proceed with any change unless authorized
in writing by IBM. The parties shall promptly amend this Agreement
and/or any affected Order issued under this
<PAGE> 25
Agreement, whichever is appropriate, to incorporate any mutually
agreed changes. Any such amendment shall itemize all specific
changes to Specifications, prices, payments, Scheduled Delivery
Dates, Lead-Times and all other applicable changes to this Agreement
or to Orders issued hereunder. If the parties cannot agree to a
proposed change, or cannot agree on a mutually satisfactory basis
for implementation of a proposed change, then IBM shall have the
option to procure the affected Product from another supplier and
remove such Product from this Agreement. If the Parties fail to
agree to the proposed change, and IBM elects to purchase such
Changed Product from another supplier, then such purchases will
count toward satisfaction of IBM's Business Commitment and, if
applicable, Purchase Commitments provided Seller is qualified by IBM
to manufacture such Changed Product .
If IBM notifies Seller of safety or emergency changes to the Product
Specifications, Seller shall make its best efforts to give IBM the
same information described in this Section 16.1.3 within five (5)
Business Days of such request.
16.2 CONFIDENTIAL INFORMATION AND ADVERTISING
16.2.1 Unless specifically requested by IBM and unless a mutually agreed to
written confidentiality agreement is first executed by Seller and
IBM, Seller shall not disclose to IBM any information deemed by
Seller or by third parties to be confidential. Otherwise, it is
understood that any information received by IBM, including but not
limited to manuals, drawings, and documents, will not be of a
confidential nature, nor restrict in any manner the use or
disclosure of such information, irrespective of labeling or
notification to the contrary. Any confidential information disclosed
to Seller by IBM will be treated in accordance with the terms of
Seller's confidentiality obligations as specified in the
concurrently executed Intellectual Property Agreement between IBM
and Seller.
16.2.2 Seller shall not in any manner disclose to third parties the terms
and conditions of this Agreement or the terms and conditions of
Orders issued under this Agreement, without first obtaining the
prior written consent of IBM, except as may be required by law or
government rule or regulation.
16.3 ASSIGNMENT
Except with respect to the rights expressly granted in Section 2.3,
Seller may not assign or transfer any rights or duties under this
Agreement without prior written approval by IBM. Any attempt to do
so is void. IBM may at its discretion assign or transfer any its
duties under this Agreement without Seller's consent. The foregoing
shall not constitute a novation of any of IBM's obligations without
Seller's written consent.
16.4 GRATUITIES
Seller warrants that neither it nor any of its employees, agents, or
representatives has or will offer any gratuity to IBM's employees,
agents, or representatives for any reason, including a view towards
securing favorable treatment from IBM.
16.5 COMPLIANCE WITH LAW
In the performance of this Agreement and related Orders Seller and
IBM shall comply with all applicable federal, state, municipal, and
local laws, orders and regulations, including without limitation,
those affecting environmental and labor laws, price, production,
purchase, sale, use and export of Products(s), and environmental and
labor laws. Seller agrees to comply with all applicable export
control laws and regulations and Seller hereby gives its written
assurance that Products, in whole or in part, are not intended to be
shipped directly or indirectly to prohibited countries.
<PAGE> 26
16.6 FORCE MAJEURE
Neither Seller nor IBM shall be liable to the other for failure to
perform any of its obligations hereunder during any period in which
such performance is delayed by circumstances beyond its reasonable
control including, but not limited to, fire, flood, war, embargo,
strike, riot, prolonged scarcity of necessary raw materials,
inability to secure transportation or the intervention of any
governmental authority, provided that the party suffering such delay
immediately notifies the other of the delay. If such delaying cause
shall continue for more than ten (10) Business Days, the party
injured by the inability of the other to perform shall have the
right upon written notice to treat this Agreement as suspended
during the delay and reduce any commitment in proportion to the
duration of the delay, and if such delaying cause shall continue for
more than one hundred twenty (120) Days, the party injured by the
inability of the other to perform shall have the right upon written
notice to terminate this Agreement as set forth in Section 6.2.3. In
instances of Force Majeure then IBM will give Multilayer Technology,
Inc. manufacturing locations in Roseville, MN and Irvine, CA first
right of refusal to sell Products to IBM under the same terms agreed
upon by Seller provided that such locations are qualified by IBM to
supply the Products requested, which qualification shall not be
unreasonably withheld.
16.7 TRADEMARK
Nothing in this Agreement gives either party the right to use the
other party's name, trademark, or logo except where authorized in
writing by the trademark owner in conjunction with this Agreement.
16.8 MODIFICATION AND WAIVER
No modification or waiver of any provision of this Agreement and no
consent by either party to any departure therefrom shall be
effective unless in a writing referencing the particular Section
thereof to be modified and signed by a duly authorized officer or
representative of each party, and the same will only then by
effective for the period and on the conditions and for the specific
instances and purposes specified in such writing.
16.9 GOVERNING LAW
(a)This Agreement has been delivered at and shall be deemed to have
been made at Armonk, New York, and shall be interpreted, and the
rights and liabilities of the parties hereto determined, in
accordance with the laws of the State of New York applicable to
agreements executed, delivered and performed within such State,
without regard to the principles of conflicts of laws thereof.
(b)Each of the parties hereby consents to the exclusive jurisdiction
of any state or federal court located within the county of New York
in the State of New York. Each of the parties hereby: (i) waives
trial by jury, (ii) waives any objection to venue of any action
instituted under this Agreement, and (iii) consents to the granting
of such legal or equitable relief as is deemed appropriate by any
aforementioned court.
16.10 SEVERABILITY
If any one or more provisions contained in this Agreement, or the
application of such provision to any person or circumstance, shall,
for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall
not affect any other provision thereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
16.11 SURVIVAL
<PAGE> 27
The provisions set forth in Sections 1, 6.3, 6.4, 6.5, 9, 10, 11, 16
(except 16.1), 17 and 18 shall survive and continue after any
expiration, termination or cancellation of this Agreement and shall
remain in effect until fulfilled and shall apply to the respective
party's successors and assigns.
16.12 NOTICES
Any notice which Seller and IBM desire or are obligated to give to
the other shall be given in writing or by EDI and sent to the
appropriate address shown below or to such other address as the one
to receive the notice may have last designated in writing in the
manner herein provided. A notice shall be deemed to have been
received on the earlier of: (a) the date when actually received; or
(b) seven (7) Days after being transmitted by facsimile with the
original deposited in the mail, postage prepaid, registered or
certified mail, or (c) if by EDI, promptly confirmed in writing,
properly addressed as follows:
IBM PCCo Ordering IBM Ordering Site in SELLER
Sites in Austin, Texas Charlotte, North
and Greenock, Scotland Carolina Multilayer Tek L.P.
11400 Burnet Road
IBM Corporation IBM Corporation Austin, Texas 78758
P.O. Box 30 6800 IBM Drive Attn: General Manager
Spango Valley Charlotte, NC 28262
Greenock, Scotland Attn: Michael K. Copy to:
Attn: John Thompson Robinson Multilayer Technology,
Inc.
IBM Ordering Site in 16 Hammond
Rochester, Minnesota Irvine, CA 92718
Attn: President
IBM Corporation
3605 Hwy. 52 North The DII Group, Inc.
Rochester, MN 55901 6273 Monarch Park
Attn: David Dutelle Place, Suite 200
Bldg. 107-2 Niwot, CO 80503
Attn: Chief Financial
Officer
If the parties are unable to agree on any items related to this
Agreement, they will promptly refer such items to the coordinators
named above. If the dispute or disagreement cannot be resolved at
this level, then the parties will involve the appropriate executive
managers of Seller and IBM for resolution. For Seller this shall be
the president of Seller and for IBM this shall be the IBM Corporate
Director of Manufacturing. The parties agree if necessary to
escalate any issue related to this Agreement in the manner set forth
above prior to pursuing any action for breach of this Agreement.
16.13 AGENCY
This Agreement does not create, and is not intended to create, a
principal to agent, employer to employee, partnership, joint
venture, or any other relationship except that of independent
contractors between Seller and IBM.
16.14 HEADINGS
<PAGE> 28
The headings contained in this Agreement are for reference purposes
only and shall not limit or otherwise affect the meaning or
interpretation of this Agreement.
16.15 RIGHTS OF SUBSIDIARIES
IBM and IBM's Subsidiaries may exercise any of their rights under
this Agreement.
16.16 CONSTRUCTION
This Agreement has been negotiated by the parties and their
respective counsel and will be fairly interpreted in accordance with
its terms and without any strict construction in favor of or against
either party.
16.17 COUNTERPARTS
This Agreement may be executed by the parties in one or more
counterparts, each of which shall be an original and all of which
shall constitute one and the same instrument.
17.0 ORDER OF PRECEDENCE
The business relationship between the parties shall be governed by
the terms and conditions set forth in Orders, Division Appendices,
Exhibits, and the Base Agreement. Standard, preprinted terms and
conditions (boiler plate) contained in any Order, invoice or
acknowledgment are hereby deemed to be deleted from any Orders,
invoice or acknowledgment issued by a party under this Agreement.
Orders issued by IBM hereunder will include Order specific terms and
conditions which, if accepted by Seller, shall form part of this
Agreement between the parties. Notwithstanding anything contained
herein to the contrary, wherever in conflict the order of precedence
of this Agreement shall be (i) Order(s), (ii) Division Appendice(s),
(iii) Exhibits, and (iv) the Base Agreement.
<PAGE> 29
18.0 COMPLETE AGREEMENT
This Base Agreement and its Exhibits, Division Appendices, Specifications,
CHARPNS.FILE and Orders issued thereunder, set forth the complete
Agreement between the parties on this subject and replace all prior or
contemporaneous communications or agreements, written or oral, about this
subject. Any modifications to this Agreement must be in writing and signed
by an authorized representatives of Seller and IBM.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE EXECUTED
BY THEIR RESPECTIVE DULY AUTHORIZED REPRESENTATIVES.
INTERNATIONAL BUSINESS MACHINES
CORPORATION Multilayer Tek L.P.
BY: TYPE NAME BY: TYPE NAME
/s/ Mark S. Payton /s/ Carl R. Vertuca, Jr.
- ------------------------------- -----------------------------------
(Signature) (Signature)
Senior Vice President, Chief
Financial Officer and Secretary of
Multek Texas, Inc., in its capacity
TITLE: Business Development Consultant TITLE: as General Partner
DATE: August 18, 1997 DATE: August 18, 1997
Multlayer.Doc - August 2, 1997 11:44 PM
Page 29 of 40
<PAGE> 30
EXHIBIT 1
APPROVED SUBCONTRACTORS
This Exhibit is attached to and made a part of a certain Supply Agreement dated
____________ between International Business Machines Corporation and
____________________, herein after called Seller.
The following subcontractors are considered approved for the Seller to use for
the manufacture of Products ordered by IBM, but only as to the specific
subcontractor location and manufacturing operations set out in the table below
for each respective subcontractor.
****REDACTED TABLE****
<PAGE> 31
EXHIBIT 2
ELECTRONIC DATA INTERCHANGE / ELECTRONIC FUNDS TRANSFER
TRADING PARTNER AGREEMENT
You and International Business Machines Corporation (IBM) intend to create
legally binding purchase and sale obligations by the electronic transmission of
business documents (Documents) and agree that the following terms and conditions
apply to such transmissions:
1. TRANSMISSION - Each party may electronically transmit and receive Documents
through the assistance of a network in accordance with mutually agreed upon
standards. Each party, at its own expense, shall provide and maintain the
equipment, software, services, including network changes, and testing necessary
to effectively and reliably transmit and receive documents.
2. RECEIPT - A Document is received when it arrives at the receiving party's
mailbox. Upon receipt of any Document, the receiving party shall promptly send
an acknowledgment which will conclusively establish receipt of a Document. If
any Document is received in an unintelligible or garbled form, the receiving
party shall promptly notify the originating party (if identifiable from the
received Document) in a reasonable manner. In the absence of such a notice, the
originating party's records of the contents of such Document shall prevail.
3. SIGNATURE AND ENFORCEABILITY - Each party shall adopt as its signature an
electronic identification consisting of symbol(s) or code(s) (User ID) that
shall be affixed to or contained in each Document. Each party will maintain
security procedures to prevent unauthorized use or disclosure of either party's
User ID.
Any Document containing, or to which there is affixed, a User ID shall be
considered: (a) a "writing" or "in writing"; (b) to have been "signed"; (c) an
"original" when printed form electronic files or records established and
maintained in the normal course of business; and (d) admissible to the same
extent and under the same conditions as other business records originated and
maintained in documentary form.
4. THIRD PARTY SERVICE PROVIDERS - Documents will be transmitted electronically
to each party either directly or through any third party service provider
(Provider) with which either party may contact. Either party may modify its
election to use, not use or change a Provider upon 60 days' prior written
notice. Each party shall be responsible for the costs of any Provider with which
it contracts. Neither party shall be liable for the acts or omissions of its
Provider while transmitting, receiving, storing or handling Documents, or
performing related activities for such party.
5. TRANSACTION TERMS - Unless specifically superseded in other
<PAGE> 32
written agreements between the parties, the terms and conditions of the attached
form(s) will be incorporated and will apply to all Documents.
6. CONFIDENTIAL INFORMATION - The parties agree that all information transmitted
under this Agreement shall be subject to Section 15.2 of the Supply Agreement.
7. ELECTRONIC FUNDS TRANSFER - By completing this Section 7, you hereby
authorize IBM to initiate electronic credit entries to the account listed below.
You agree that such transactions will be governed by the National Automated
Clearing House Association rules. This authority is to remain in effect until
IBM has received written notification of termination in such time and such
manner as to afford IBM a reasonable opportunity to act on it.
Account Party (if different)
Address
City , State, Zip
Financial Institution
Contact Name/Title
Contact Phone Number
Address
City, State, Zip
Account Number (max 17)
Bank Routing Transit Code (max 9)
8. LIMITATION OF REMEDIES - Neither party shall be liable to the other for any
special, incidental, exemplary, or consequential damages arising from or as a
result of: (1) any delay, omission, or error in the electronic transmission or
receipt of any Documents; or (2) any delay, omission, or error of an electronic
credit entry by IBM, even if the other party has been advised of the
possibilities of such damages. In addition, neither party shall be liable for
any damages claimed by the other party based on any third party claim. In no
event will either party be liable for any damages caused by the other party's
failure to maintain security procedures to prevent the unauthorized use or
disclosure of its User ID.
9. TERMINATION - Either party may terminate this Agreement at any time by giving
the other party thirty (30) days prior written notice.
10. GENERAL - This agreement does not imply any commitment to purchase products
or services by either party. This agreement will be governed by the laws of the
State of New York. This agreement and the Supply Agreement shall be the complete
and exclusive statement of the agreement between the parties relating to the
matters specified in this Agreement.
11. In event of conflict between this Agreement and the Supply
<PAGE> 33
Agreement, the Supply Agreement controls.
The parties acknowledge that they have read this Agreement, understand it and
agree to be bound by its terms.
By: International Business Machines Corporation By
___________________________________________
(Trading Partner Name)
_______________________________________________________________________________
Authorized Signature Authorized Signature
Name __________________________ Name _______________________________
Title __________________________ Title _______________________________
Date __________________________ Date _______________________________
<PAGE> 34
EXHIBIT 3
IBM PRODUCT INFORMATION AND IBM COMPUTER PROGRAMS
This Exhibit is attached to and made a part of a certain Supply Agreement, dated
____________, 1997 between International Business Machines Corporation (IBM) and
_______________________,hereinafter
referred to as the "Seller".
IBM PRODUCT INFORMATION
Part Number EC Number Document Name Origin
- ---------- --------- ------------- ------
1665493 896641 Eric Rochester
99F2281 C47037 MBG Engineering Specification Endicott
99F2291 C47037 MGD I & II Raw Carrier Specification Endicott
19G2848 C48745 CDAM Raw Card Carrier Endicott
87G5228 896648 Fred Raw Card Specification Endicott
88F6573 C47842 Bronco and Palomino Carrier Endicott
80F7263 C47852 MGE Raw Carrier Endicott
28F1815 C47115 MGLC Raw Carrier Endicott
5892823 A23255 Rochester Special PCB Specification Raleigh
89X3355 C45551 MGA Raw Carrier Endicott
89X3356 C17416 MGA/MGLC Carrier Modification Endicott
62X5165 C47146 Max Raw Carrier Endicott
IBM COMPUTER PROGRAMS
I.D. Number Program Name Description Media Type
- ----------- ------------ ----------- ----------
None None None None
<PAGE> 35
APPENDIX A
****REDACTED INFORMATION****
This Appendix is attached to and made a part of a certain Supply Agreement,
dated ____________, 1997 between International Business Machines Corporation
(IBM) and ________________________,hereinafter referred to as the "Seller". This
Division Appendix is an arrangement between IBM's **** manufacturing locations
in Austin, Texas and Greenock, UK, and the Seller.
1.0 PART NUMBER AND PRICE LIST
The following is a list of the individual Product part numbers, Product
names and initial per unit purchase prices for Products which may be
purchased by **** locations in Austin, Texas and Greenock, UK under the
terms of the Supply Agreement.
Part ** ** ** **
Number Product Name Price
------ ------------ ----- -- -- -- --
00M0027 Michigan 2 CPU E ** N N N Y
00M0028 Cardinal CPU Ent ** N N N Y
00M0030 Mich 3 CPU Entek ** N N N Y
00M0031 Kite Planar/DCEC ** N N N Y
00M8002 Thunderbird CPU ** N N N Y
01K2092 3x3 riser card ** Y N N Y
01K2098 5x5 riser card ** Y N N Y
03M1022 Butterfly INV ** N N N Y
03M1039 B-FLY TOP EC ** N N N Y
03M1040 B-FLY BOT EC ** N N N Y
03M1080 B-FLY BOT ** N N N Y
05M1036 BTFYTP P2 ** N N N Y
06G6870 Shortstop (PS/2) ** Y N N Y
06H3639 Chickenhawk ** Y N N Y
06H3857 Rockets P3 ** N N N Y
06H6039 Diamond Back ** N N N Y
06H6383 TRAXX-2 ** N N N Y
06H6391 TRAXX-T ** Y N N Y
06H7089 Caverun Memory ** Y N N Y
06H7309 Rockets P6 ** N N N Y
06H7739 Bigcat/Fatcat ** N N N Y
06H8600 PORKY ** N N N Y
06H9241 Caverun Proc EC ** Y N N Y
07H0449 Panther ** Y N N Y
07H1188 Porky P2 ** N N N Y
11H5595 JOKER ** N N N Y
11H6187 SIZZLER ** N N N Y
11H6216 Sizzler P5 ** N N N Y
11J8901 Kinzie 4 ** N N N Y
11J9069 Michigan mmx EVD ** N N N Y
<PAGE> 36
Part ** ** ** **
Number Product Name Price
------ ------------ ----- -- -- -- --
11J9076 Michigan mmx svg ** N N N Y
12H0842 Blitzen 3x3 ** Y N N Y
12H0844 Blitzen 5x5 ** Y N N Y
12H0864 Flash Point ** N N N Y
12J0233 Michigan 13 slf ** N Y N N
12J4438 5X5 Riser Card ** Y N N Y
30E1047 Thunderbird CPU ** N N N Y
36H1507 Michigan 2 SLC ** N Y N N
36H2797 Monroe ** N N N Y
36H3143 Monroe ec ** N N N Y
36H3234 MI13 XGA VIDEO ** N N N Y
36H3327 Mich 13 xga vide ** N N N Y
39H8241 Joker P7 ** N N N Y
40H4331 Goober ** N N N Y
40H6035 Cross Fire ** N N N Y
40H6430 Cardinal SLC EC ** N Y N N
40H6435 Cardinal SLC P3 ** N Y N N
40H6446 Cardinal CPU ** N N N Y
40H6451 Cardinal SLC P4 ** N Y N N
40H6464 Cardinal SLC ** N Y N N
41G9384 MVT Homerun Base ** N N N Y
60H6986 Meteorite EC ** N N N Y
62H5871 Michigan 2 SLC ** N Y N N
71G6478 VIZCAYA Planar ** N N N Y
75H7479 Cavern PCI Bridg ** Y N N Y
75H9692 Reynard ** Y N N Y
76H0604 Reynard 1 ** Y N N Y
82G2465 Elmer P5 ** N N N Y
84F8316 National ** N N N Y
88G1023 Robin Yasu ** N N N Y
88G4143 Robin ** N N N Y
88G4225 Seawolf ** N N N Y
90G9557 T-Bird CPU ** N N N Y
90G9573 T-Bird DRAM ** N N N Y
90X8029 Shotgun IV ** N N N Y
91G0345 T-Bird Planar SLC ** N Y N N
91G0397 T-Bird E Dram ** N N N Y
91G1043 Firebird CPU ** N N N Y
91G1051 F-Bird PlanarSLC ** N Y N N
91G1087 F-Bird Enh Vid ** N N N Y
91G1094 F-Bird Std Video ** N N N Y
91G1419 F-Bird Lite Vide ** N N N Y
91G1484 Michigan 2 CPU ** N N N Y
91G1512 Michigan 2 Slim ** N N N Y
91G1515 Michigan 2 CD Vi ** N N N Y
91G1567 Michigan 2 Enh V ** N N N Y
91G1685 Kite Planar & DC ** N N N Y
91G1800 Mich 3 SVGA ** N N N Y
91G1813 Mich CPU ** N N N Y
91G2014 Mich 3 XGA ** N N N Y
91G2046 Kite dc ec ** N N N Y
91G2070 Kite planar/dc ** N N N Y
93H1975 Crossfire ** N N N Y
<PAGE> 37
Part ** ** ** **
Number Product Name Price
------ ------------ ----- -- -- -- --
93H4790 Avenger ** N N N Y
93H7022 Avenger ** N N N Y
96G3660 Meteorite P4 ** N N N Y
96G3710 Meteorite P5 ** N N N Y
<PAGE> 38
APPENDIX B
****REDACTED INFORMATION****
This Appendix is attached to and made a part of a certain Supply Agreement,
dated ____________, 1997 between International Business Machines Corporation
(IBM) and ________________________,hereinafter referred to as the "Seller". This
Division Appendix is an arrangement between **** manufacturing location in
Austin, Texas and Rochester,
Minnesota, and Seller.
1.0 PART NUMBER AND PRICE LIST
The following is a list of the individual Product part numbers, Product
names and initial per unit purchase prices for Products which may be
purchased by IBM's Austin, Texas and Rochester, Minnesota **** under the
terms of the Supply Agreement.
Part ** ** ** **
Number Product Name Price
------ ------------ ----- -- -- -- --
00G1221 Graph EC-Pedena ** N N N Y
06H3733 Cubrun ** N N Y N
06H6386 Corvette SE ** Y N N Y
07H0506 Copperhead CPU ** Y N N Y
10G8748 Salmon EC (AWD ** N N N Y
11H4410 Ruby RSS 12 ** N N N Y
11H5654 Sunbase ** Y N N Y
11H5655 Sunspot ** N N N Y
11H6073 Sandalfoot ** N N N Y
11H8086 Night Bloomer ** Y N N Y
11H8576 Ruby RSS Fullup ** N N N Y
11H8935 Huron ** N N Y N
11H9771 doral i/o ** N N N Y
12H0707 Carolina 7.0 ** N N N Y
12H1223 Rainbow 4P ** N N N Y
12H2045 Ruby GPSS ** N N Y N
12H2050 RSS12 C/R ** N N N Y
12H2054 Ruby RSS ** N N N Y
12H2188 Early Bloomer ** N N N Y
12H2208 Thunderbolt I/O ** N N N Y
39H8122 Ruby SPAN ** Y N N Y
39H8142 Rainb4 CPU ** N N N Y
39H8617 Sky Blue ** Y N N Y
39H9169 Durandoak ** Y N N Y
39H9243 Durandoak EC ** Y N N Y
39H9980 Thunderbolt CPU ** Y N N Y
40H0330 Magenta ** N N N Y
40H0417 Panola SIB ** N N N Y
40H2175 Lightning I/O ** N N N Y
40H3408 Ruby Span PCI ** Y N N Y
40H3593 Magenta ** N N N Y
<PAGE> 39
Part ** ** ** **
Number Product Name Price
------ ------------ ----- -- -- -- --
40H3649 Durandoak B ** Y N N Y
40H5061 Tiger ** N N N Y
40H5396 T-Bolt 2 CPU ** Y N N Y
40H6215 Lightning I/O EC ** N N N Y
40H6590 Night Bloomer UL ** Y N N Y
40H7746 Mint ** Y N N Y
43G0119 Flathead ** Y N N Y
43G0678 Lega 2 (AWD) ** Y N N Y
43G1952 Bonnie ** Y N N Y
43G2024 Clyde ** Y N N Y
43G2201 Eagle/Packmule ** N N Y N
43G2254 Lace DE ** Y N N Y
51G8027 Lega 4 (AWD) ** Y N N Y
51G8641 Lace - SE (AWD ** Y N N Y
51G8969 Shoshone ** N N Y N
51G9505 Sandburr I/O ** N N N Y
51G9583 Hawthorne ** N N Y N
52G0469 Ruby RSS 54 ** N N N Y
52G0586 Ruby SPAN ** Y N N Y
52G0639 Ruby VOO ** Y N N Y
52G0717 604 L2 Cache ** Y N N Y
52G3240 Rainbow 3P ** N N N Y
52G4085 Ped 4 -- Proc ** N N N Y
52G4095 Ped 4 -- Graph ** Y N N Y
52G5835 Silverbell ** N N Y N
52G9706 Corvette DE ** Y N N Y
65G4253 Stealth X-150 EC ** N N N Y
65G4418 Patriot TR ** N N N Y
65G4427 Patriot ET ** N N N Y
65G4662 Sidewinder E ** N N N Y
65G4672 Sidewinder TR ** N N N Y
65G7445 Baby Blue ** N N N Y
65G7906 Rainbow 5 I/O ** N N N Y
65G7918 Rainbow 5 CPU ** N N N Y
65G7931 RB5 L2 Cache ** N N N Y
65G8133 Rainbow 6A ** N N N Y
71G0226 Cleansweep ** N N Y N
73H0446 supermint base d ** Y N N Y
73H0727 Thdrbt IO ** N N N Y
73H3266 Lightining IO EC ** N N N Y
73H3558 Early Bloomer ** Y N N Y
73H3564 Night Bloomer ** Y N N Y
73H3600 Thunderbolt 2CPU ** Y N N Y
73H4292 Edmonton ** N N Y N
73H4310 Vancouver ** N N Y N
76H2668 Copperhead ** Y N N Y
8184187 Baby Blue PCI ** Y N N Y
8184301 RAINBOW 3 ** N N N Y
8184340 Rainbow 3 ** N N N Y
8184596 Navajo ** N N Y N
81F8378 llano io ** N N N Y
88G1088 Corvette Turbo ** Y N N Y
88G2449 Ruby GPSS ** N N Y N
<PAGE> 40
Part ** ** ** **
Number Product Name Price
------ ------------ ----- -- -- -- --
88G2829 Baby Blue RB4 ** N N N Y
88G2942 Rainbow 4 CPU ** N N N Y
88G3661 Regal ** N N N Y
88G3720 Yakima ** N N Y N
93H1702 Tiger Mint ** Y N N Y
93H1884 Supermint base t ** Y N N Y
93H2039 Halifax ** N N N Y
93H2420 TBolt CPU BGA ** Y N N Y
93H2788 Mint ec ** Y N N Y
93H2790 Supermint base ** Y N N Y
93H3160 Doral cpu ** Y N N Y
93H3312 Supermint base ** Y N N Y
93H3322 Supermint tiger ** Y N N Y
93H3438 Orca ** N N Y N
93H3637 San Remo ** Y N N Y
93H3738 Wildcat io ** N N N Y
93H3793 Corvette de ec ** Y N N Y
93H3971 P-sidewinder ** N N N Y
93H4479 Keywest I/O ** N N N Y
93H4969 Supermint dimms ** Y N N Y
93H5039 Early Bloomer UL ** Y N N Y
93H5168 Doral CPU ** Y N N Y
93H5281 T-Bolt CPU BGA ** Y N N Y
93H5295 T-bolt cpu ** Y N N Y
93H5426 Victory CPU ** Y N N Y
93H5867 Pegassus x4d ** N N Y N
93H6197 T-bolt 233 ** Y N N Y
93H6393 Orca E/C ** Y N N Y
93H7890 San Remo ** Y N N Y
93H8342 Owttawa ** N N N Y
<PAGE> 1
EXHIBIT 2.6
BILL OF SALE
Bill of Sale and Assignment (this "Bill of Sale")
dated as August 18, 1997 between
International Business Machines Corporation, a New York
corporation ("Seller"), and Multilayer Tek L.P. ("Buyer").
Buyer and Seller have entered into a Purchase Agreement dated as of
August 5, 1997 (the "Purchase Agreement), for the sale by Seller to Buyer of
certain Transferred Assets as described in the Purchase Agreement. All
capitalized terms not otherwise defined herein shall have the respective
meanings provided in the Purchase Agreement.
NOW THEREFORE, for good and valuable consideration (including the
payment by Buyer of the Purchase Price for the Transferred Assets), the adequacy
and receipt of which is hereby acknowledged:
1. Pursuant to the terms and conditions of the Purchase Agreement,
Seller does hereby sell, assign, transfer, convey and deliver (collectively,
"sell") to Buyer the Transferred Assets (as defined in the Purchase Agreement,
but excluding the leasehold interest in the Real Estate), free and clear of all
Encumberances.
2. This Bill of Sale shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
3. In the event any one or more of the provisions contained in this
Bill of Sale should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
-1-
<PAGE> 2
4. This Bill of Sale is executed pursuant to the Purchase Agreement
and is entitled to the benefits and subject to the provisions thereof and shall
bind and inure to the benefit of the parties and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties have caused this Bill of Sale to be
duly executed as of the day and year first above written.
MULTILAYER TEK L.P. INTERNATIONAL BUSINESS
MACHINES CORPORATION
- --------------------------------------- -----------------------------------
By: /s/ Carl R. Ventuca, Jr. By: /s/ Mark S. Payton
Senior Vice President, Chief
Financial Officer and Secretary of
Multek Texas, Inc., in its capacity Title: Corporate Development
Consultant
Title: as General Partner
--------------------------
-2-
<PAGE> 1
EXHIBIT 2.7
SPECIAL WARRANTY DEED
STATE OF TEXAS )
)
COUNTY OF )
Date: , 1997
-----------
Grantor:
Grantor's Mailing Address (including county):
---------------------------
---------------------------
---------------------------
Grantee:
Grantee's Mailing Address (including county):
---------------------------
---------------------------
---------------------------
Reservations from and Exceptions to Conveyance and Warranty:
[To Be Added]
Grantor, for the consideration and subject to the reservations from and
exceptions to the conveyance and warranty set forth above, has GRANTED, SOLD
and CONVEYED and does hereby GRANT, SELL and CONVEY to Grantee the Property,
together with all and singular the improvements located thereon and all rights
and appurtenances pertaining thereto, including all right, title and interest
of Grantor in and to adjacent streets, alleys, rights-of-way, roadways, strips
and gores, easements and in-the-ground utilities. TO HAVE AND TO HOLD the
Property to Grantee, Grantee's heirs, executors, administrators, legal
representatives, successors and assigns forever. Grantor binds Grantor and
Grantor's heirs, executors, administrators, legal representatives, successors
and assigns to warrant and forever defend all and singular the Property to
Grantee and Grantee's heirs, executors, administrators, legal representatives,
successors and assigns against every person whomsoever lawfully claiming or to
claim the same or any part thereof, by, through or under Grantor, but not
otherwise, except as to the reservations from and exceptions to conveyance and
warranty set forth above.
<PAGE> 2
Wherever the context of this Deed so requires, the singular shall
include the plural, the plural shall include the singular and any gender shall
include all other genders.
BY:___________________________________
Name:_________________________________
Title:________________________________
STATE OF TEXAS )
)
COUNTY OF__________ )
This instrument was acknowledged before me on this _____ day of
______________, 1997, by _________________________________(title) of _________,
a ___________________ corporation, on behalf of said corporation.
_______________________________________
Notary Public, State of ___________
________________________________________
(Printed or Stamped Name of Notary)
My Commission Expires: __________
After recording,
please return to:
Richard L. Whitley, Esq.
McGinnis, Lochridge & Kilgore, L.L.P.
1300 Capital Center
919 Congress Avenue
Austin, Texas 78701
-2-
