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
October 30, 1998
(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
Niwot, Colorado 80503
(Address and zip code of principal executive offices)
(303) 652-2221
Registrant's telephone number, including area code
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On October 30, 1998, Multilayer Technology GmbH & Co KG ("Multek"), a
subsidiary of The DII Group, Inc. (the "Company"), completed the acquisition of
Hewlett-Packard Company's ("HP") Printed Circuit Organization's ("PRCO")
fabrication facility located in Boeblingen, Germany pursuant to a Master Asset
Purchase Agreement dated October 30, 1998. The purchase price was approximately
$89.9 million (excluding working capital, approximately $75 million), subject to
certain post-closing adjustments, and was based upon arms' length negotiations
between the respective parties. The transaction will be accounted for as a
purchase of assets.
PRCO has been in operation since 1963, primarily manufacturing
high-performance printed circuit boards for multiple Hewlett-Packard divisions
and more recently for the merchant market. The acquired assets include property,
plant and equipment, working capital and certain intellectual property. The
business site is approximately 465,000 square feet with a building of
approximately 315,000 square feet. In connection with the acquisition, HP and
Multek entered into a three-year Supply Agreement, pursuant to which Multek will
supply HP with printed circuit boards for use in its servers, workstations, test
and instrumentation, and medical products. Multek intends to utilize the
facility's production capacity to expand its relationship with HP as well as
pursue additional opportunities in the high-performance computing, networking
and telecommunications merchant markets.
HP is a major customer of the Company, accounting for significant portions
of its business. HP accounted for approximately 10% of net sales during the nine
months ended September 27, 1998.
The Company funded the purchase through a 5-year term loan with a syndicate
of twelve U.S. and foreign banks. The syndicate includes Chase Manhattan Bank;
Norwest Bank Colorado, First Chicago NBD, Harris Trust and Savings Bank, Fleet
Bank, ABN-AMRO, Bank of America, Bank of Boston, Bank of Nova Scotia, KeyBank,
National Bank of Canada, and U.S. Trust Bank.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number Description
+*2.1 Master Asset Purchase Agreement, dated as of October 30, 1998, by and
among Hewlett-Packard GmbH, a company registered and incorporated
under the laws of Germany ("Seller"), Multilayer Technology GmbH & Co
KG, a legal entity registered and organized under the laws of Germany
("Buyer") and The DII Group, Inc., a Delaware corporation
("Guarantor").
*2.2 Exhibit A to Master Asset Purchase Agreement - Real Estate Purchase
and Sale Agreement.
*2.3 Exhibit B to Master Asset Purchase Agreement - Lease
+2.4 Exhibit C to Master Asset Purchase Agreement - Division Purchase
Agreement.
*2.5 Exhibit D to Master Asset Purchase Agreement - Technology License
Agreement.
*2.6 Exhibit E to Master Asset Purchase Agreement - Transition Services
Agreement.
2.7 Exhibit F to Master Asset Purchase Agreement - New Confidential
Disclosure Agreement.
99.1 Text of Press release, dated as of October 30, 1998.
- ----------
* 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.
**** Indicates portions of text that have been redacted and filed separately
with the Securities and Exchange Commission.
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: November 16, 1998 /s/ Thomas J. Smach
--------------------------------
By: Thomas J. Smach
Title: Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description
+*2.1 Master Asset Purchase Agreement, dated as of October 30, 1998, by and
among Hewlett-Packard GmbH, a company registered and incorporated
under the laws of Germany ("Seller"), Multilayer Technology GmbH & Co
KG, a legal entity registered and organized under the laws of Germany
("Buyer") and The DII Group, Inc., a Delaware corporation
("Guarantor").
*2.2 Exhibit A to Master Asset Purchase Agreement - Real Estate Purchase
and Sale Agreement.
*2.3 Exhibit B to Master Asset Purchase Agreement - Lease
+2.4 Exhibit C to Master Asset Purchase Agreement - Division Purchase
Agreement.
*2.5 Exhibit D to Master Asset Purchase Agreement - Technology License
Agreement.
*2.6 Exhibit E to Master Asset Purchase Agreement - Transition Services
Agreement.
2.7 Exhibit F to Master Asset Purchase Agreement - New Confidential
Disclosure Agreement.
99.1 Text of Press release, dated as of October 30, 1998.
- ----------
* 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.
**** Indicates portions of text that have been redacted and filed separately
with the Securities and Exchange Commission.
Confidential treatment has been requested as to portions of this exhibit
**** Indicates portions of text that have been redacted and filed separately
with the Securities and Exchange Commission.
MASTER ASSET
PURCHASE AGREEMENT
by and among
H E W L E T T - P A C K A R D GmbH , MULTILAYER
TECHNOLOGY GmbH & Co KG
and
THE DII GROUP, INC.
dated October 30, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS....................................................1
1.1 Definitions.........................................................1
ARTICLE 2 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES..........9
2.1 Transferred Assets..................................................9
2.2 Intellectual Property; Real Estate....................................11
2.3 Excluded Assets....................................................11
2.4 Assumed Liabilities................................................12
2.5 Excluded Liabilities...............................................12
ARTICLE 3 PURCHASE PRICE.................................................12
3.1 Purchase Price.....................................................12
3.2 Post Closing Attestation...........................................13
3.3 Adjustment to the Purchase Price...................................14
3.4 Payment of Adjustment to Purchase Price............................14
3.5 ****REDACTED****...................................................14
3.6 Transaction Adjustment.............................................14
3.7 Payment and Reimbursement of Pension Plan Liabilities
and Closing Date Cash-Out Payment..................................15
3.8 Payment Instructions...............................................15
3.9 Communications.....................................................15
ARTICLE 4 CLOSING........................................................15
4.1 The Closing........................................................15
4.2 Payment on the Closing Date........................................15
ARTICLE 5 TAX MATTERS....................................................16
5.1 Filing of Returns and Payment of Taxes.............................16
5.2 Refunds and Credits................................................16
5.3 Transfer Taxes.....................................................16
5.4 Value-Added Taxes..................................................16
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER.......................17
6.1 Organization of Seller.............................................17
6.2 Authority..........................................................17
6.3 No Violation.......................................................17
6.4 Government Consents and Filings....................................18
6.5 No Broker..........................................................18
6.6 Taxes..............................................................18
6.7 Equipment..........................................................18
6.8 Governmental Permits...............................................18
6.9 Governmental Compliance............................................18
6.10 Title to Personal Property........................................18
6.11 Contracts.........................................................18
6.12 Environmental Matters.............................................19
6.13 Employee Benefits.................................................20
6.14 Litigation........................................................20
6.15 Transferred Employees.............................................20
6.16 Employee Relations and Labor Matters..............................20
6.17 Financial Statements and Reports..................................20
6.18 Disclosure........................................................21
6.19 Exclusive Warranties..............................................21
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF BUYER........................21
7.1 Organization of Buyer..............................................21
7.2 Authority..........................................................21
7.3 No Violation.......................................................22
7.4 Government Consents and Filings....................................22
7.5 No Broker.........................................................22
7.6 Licenses and Permits...............................................22
7.7 Environmental Matters..............................................22
7.8 Employees..........................................................23
7.9 Disclosure of Information..........................................23
ARTICLE 8 EMPLOYEE TRANSFER AND BENEFITS................................23
8.1 Transferred Employees..............................................23
8.2 Benefits and Protection............................................23
8.3 Treatment of Time-Off Accounts and Pension Plans...................25
8.4 Letter to Employees................................................26
8.5 Phased Retirement..................................................26
8.6 Transition Benefits; Cost Sharing.....................................26
ARTICLE 9 COVENANTS AND AGREEMENTS.......................................27
9.1 Consents to Assignment and Subcontracted Work......................27
9.2 Conduct of the Operation...........................................28
9.3 Access to Information..............................................28
9.4 Books and Records..................................................28
9.5 HSR Filings........................................................28
9.6 Removal of Trade Marks.............................................29
9.7 Buyer Permits......................................................29
9.8 Satisfaction of Closing Conditions and Further Assurances..........29
9.9 Regulatory Consents................................................29
9.10 Insurance.........................................................29
9.11 Update of Schedules...............................................29
ARTICLE 10 GUARANTEE OF THE GUARANTOR....................................30
10.1 Guarantee of the Guarantor........................................30
ARTICLE 11 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE...........30
11.1 Authorization, Execution and Delivery of Operative Agreements.....31
11.2 Delivery of Updated Schedules.....................................31
11.3 Performance.......................................................31
11.4 No Default........................................................31
11.5 Consents..........................................................31
11.6 Governmental Rules or Actions.....................................31
11.7 Standard Closing Documents........................................32
11.8 Representations and Warranties....................................33
11.9 Proceedings.......................................................33
11.10 Waiver of Conditions by Buyer....................................33
ARTICLE 12 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS TO CLOSE.........33
12.1 Authorization, Execution and Delivery of Operative Agreements.....33
12.2 Acceptance of Updated Schedules...................................34
12.3 Performance.......................................................34
12.4 No Default........................................................34
12.5 Consents..........................................................34
12.6 Governmental Rules or Actions.....................................34
12.7 Standard Closing Documents........................................34
12.8 Representations and Warranties....................................35
12.9 Proceedings.......................................................36
12.10 Waiver of Conditions by Seller...................................36
ARTICLE 13 INDEMNITY.....................................................36
13.1 Survival..........................................................36
13.2 Buyer Indemnification.............................................36
13.3 Seller Indemnification............................................36
13.4 Procedures........................................................37
13.5 Insurance.........................................................38
13.6 Indemnity is the Exclusive Remedy.................................38
13.7 Exclusion of Certain Damages......................................38
ARTICLE 14 ENVIRONMENTAL INDEMNITIES.....................................38
14.1 Seller's Indemnity................................................38
14.2 Buyer's Indemnity.................................................42
14.3 Exclusive Remedy..................................................43
ARTICLE 15 TERMINATION...................................................43
15.1 Term..............................................................43
15.2 Termination.......................................................43
15.3 Notice of Termination.............................................43
15.4 Effect of Termination.............................................43
ARTICLE 16 GENERAL PROVISIONS............................................44
16.1 Survival of Covenants, Representations and Warranties.............44
16.2 Dispute Resolution................................................44
16.3 Notices...........................................................44
16.4 Currency..........................................................45
16.5 Sections and Headings.............................................46
16.6 Rules of Construction.............................................46
16.7 Construction......................................................47
16.8 Entire Agreement..................................................47
16.9 Time of Essence...................................................47
16.10 Applicable Law; Consent to Jurisdiction..........................47
16.11 Waiver of Jury Trial.............................................47
16.12 Public Announcement..............................................47
16.13 Expenses.........................................................47
16.14 Confidentiality..................................................48
16.15 Severability.....................................................48
16.16 Successors and Assigns...........................................48
16.17 Accounting Treatment.............................................48
16.18 Amendment and Waivers............................................48
16.19 Counterparts.....................................................48
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
A Real Estate Purchase and Sale Agreement
B Lease
C Division Purchase Agreement
D Technology License Agreement
E Transition Services Agreement
F New Confidential Disclosure Agreement
INDEX TO SCHEDULES
Schedule Description
1.1(a) New Capital Equipment [Purchase Commitments]
1.1(b) Seller Incurred Transition Cost Activities [PRCO
Transition Cost Analysis]
2.1(a) Equipment [Network Assets, Cafeteria Assets, M&E Assets,]
2.1(b) Inventory [FGI, SRM, Operating Materials]
2.1(c) Contracts [Contracts Agreements Leases, Equipment Suppliers,
Material Supplier, Software]
2.1(e) Transferable Permits [List of Permits]
2.1 (k) PRCO Developed Workproducts
2.1 (l) Building Improvement Projects
2.4(c) Assumed Liabilities
6 Disclosure Schedule
6.8 Governmental Permits
6.13 HP Benefits
6.15 Contractors
7.7 Environmental Reports
8.1(a) Transferred Regular Employees [FTE's]
8.1(b) Transferred Fixed Term Employees [Transferred Temp. Employees]
8.2(a)(vi) Shift Bonuses [Overtime Payment and Times Input, HP Worktime
Scheme,]
8.2(a)(vii) Overtime Bonuses [Overtime at HP, Overtime Compensation
Monday-Friday, Saturdays, Sundays, Examples, Entering Overtime
into Times, Overtime]
8.3(a)(ii) Work Time Model Obligations
8.3(b)(2) Estimated Closing Date Pension Liabilities for Transferred
Employees
8.3(b)(1) New Pension Plan Benefits [Company Pension Scheme after
January 1, 1995, Company Pension Scheme]
8.5 Phased Retirement [List of Employees Phased Retirement]
8.6(a) Early Retirement [List of Employees Early Retirement]
<PAGE>
THIS MASTER ASSET PURCHASE AGREEMENT (the "Agreement"), is entered into
and is effective as of October 30, 1998, by and among Hewlett-Packard GmbH, a
company registered and incorporated under the laws of Germany ("Seller"),
Multilayer Technology GmbH & Co KG, a legal entity registered and organized
under the laws of Germany ("Buyer") and The DII Group, Inc., a Delaware
corporation ("DII" or "Guarantor") (herein "Agreement").
RECITALS
WHEREAS, Seller desires to sell certain assets used in the manufacturing of
certain printed circuit boards including the premises used for such
manufacturing at its facility located at Herrenberger Str. 110, D-71034
Boblingen, Germany;
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 foregoing premises and the mutual
covenants, representations, warranties, conditions and agreements herein
contained, Buyer and Seller (collectively, the "Parties") hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall have the
meanings specified or referred to in this Section 1.1.
"Accepting Employee" means all Transferred Regular Employees accepting the
offer of Buyer to change their contracts of employment after the Closing.
"Accountant" has the meaning set forth in Section 3.2(c).
"Accounts Receivable" means all amounts which are classified under GAAP as
current assets which are due or otherwise owed, however, for purposes of this
Agreement, shall not reflect any reserve or accrual for warranty expense.
"Actuary" has the meaning set forth in Section 3.2(b).
"Affiliate" means any entity which controls, is controlled by, or is under
common control with, Seller or Buyer, as the case may be. An entity shall be
deemed to be in control of another entity only if, and for so long as, it owns
or controls more than fifty percent (50%) of the shares of the subject entity
entitled to vote in the election of directors (or, in the case of an entity that
is not a corporation, for the election of the corresponding managing authority).
"Aggregate Value of First Year HP Business" means the aggregate value of
products delivered to or ordered (under a firm and non-cancellable purchase
order with a delivery date within thirty (30) days of the anniversary of the
Closing) by Seller or its Affiliates during the twelve month period after the
Closing for products which are either (i) ordered pursuant to the Division
Purchase Agreement or (ii) are prototypes.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement
"Assumed Liabilities" has the meaning set forth in Section 2.4.
"Attestation" has the meaning set forth in Section 3.2(a).
"Basic Pension Module" shall mean a defined amount of monthly pension
starting at the age of 62 under the New Pension Plan.
"Best Knowledge of Seller" means the knowledge acquired based upon
reasonable inquiry of the of the following members of the PRCO management:
Harald Auch, Oswald Baer, Karlheinz Binder, David Bland, Wolfgang Boehm, Joachim
Bronzcyk, Robert Edelmann, Rainer Graf, Thomas Harbach, Wolfgang Huesgen,
Michael Kissel, Helmut Kroener, Hubertus Kuehner, Uwe Kujadt, Ulrike Lorenz,
Karl-Heinz Maurer and Albert Ott.
"Buyer" has the meaning set forth in the first paragraph of this Agreement.
"Buyer New Pension Plan" has the meaning set forth in Section 8.3(b).
"Cash Payment under the Work Time Model" means the cash payment to which
the full-time employees are entitled under the Work Time Model provided they
opted that the extra two hours per week are paid out and not added to their
time-off accounts.
"CDA" means that certain Confidential Disclosure Agreement effective
February 3, 1998 between HP Company and Guarantor.
"Christmas Bonus" shall mean the Christmas bonus as set forth in Section
8.2.(a)(ii).
"Closing" has the meaning set forth in Section 4.1.
"Closing Date" has the meaning set forth in Section 4.1.
"Closing Date Attestation Items" means the Closing Date Current Assets, the
Closing Date Current Liabilities, the Pension Cash-Out Payment, the Closing Date
Pension Liability and the Closing Date Capital Equipment Adjustment.
"Closing Date Capital Equipment Adjustment" means the greater of (i) the
difference between $13,000,000 and the Closing Date Capital Equipment Value and
(ii) zero.
"Closing Date Capital Equipment Value" means, with respect to the New
Capital Equipment, the aggregate value, as defined in Schedule 1.1(a) of those
units of New Capital Equipment, but only for those units which Seller, as of the
Closing Date has (i) made actual payment, whether a partial payment or a
complete payment or (ii) accrued a liability to make payment.
"Closing Date Cash-Out Payment" means the actual cash payments made by
Buyer pursuant to Section 8.3(b)(2).
"Closing Date Current Assets" means, with respect to the Transferred
Assets, those assets which under GAAP are classified as current assets as of the
Closing Date. For purposes of clarity, following are not Transferred Assets and
thus are not to be considered Closing Date Current Assets: (i) receivables
arising out of inter-company "sales" between PRCO and Seller or its Affiliates
and (ii) Closing Date Pension Assets.
"Closing Date Current Liabilities" means, with respect to the Assumed
Liabilities, those liabilities which under GAAP are classified as current
liabilities as of the Closing Date, including the Closing Date Vacation
Liability and including the Transferred Transition Cost Liability (even though
it would not otherwise be treated as a current liability under GAAP), except
however that any amounts for the following liabilities shall not be included as
current liabilities for purposes of the definition "Closing Date Current
Liabilities": (i) the Closing Date Pension Liability, (ii) the Pension Cash-Out
Payment and (iii) any accruals for warranty expense. For purposes of clarity,
the following are not Assumed Liabilities and thus are not to be considered
Closing Date Current Liabilities: (i) those liabilities accrued by Seller for
periods during Seller's fiscal 1998 for benefits owed to Transferred Employees
for Profit Sharing, Christmas Bonus or Stock Purchase Plan and (ii) any
"inter-company " or "trade" payables for services or products purchased from
internal or external suppliers.
"Closing Date Pension Assets" means, with respect to the Transferred
Employees, those assets held by Seller as of the Closing Date for the benefit of
all Transferred Employees under the Old Pension Plan and the New Pension Plan.
"Closing Date Pension Liability" means, with respect to the Transferred
Employees, those liabilities accrued or otherwise owed by the Seller as of the
Closing Date to all Transferred Employees under the Old Pension Plan, the New
Pension Plan, the Supplementary Support Plan and the Work Time Model.
"Closing Date Vacation Liability" means, with respect to the Transferred
Employees, the aggregate value of all Transferred Employees accrued vacation
balances as of the Closing Date.
"Consensual Transfers" has the meaning set forth in Section 9.1(a).
"Contracts" has the meaning set forth in Section 2.1(c).
"Covenant Breach" has the meaning set forth in Section 13.2.
"Division Purchase Agreement" means the Division Purchase Agreement in the
form attached hereto as Exhibit C, to be entered into by and between Multek and
HP Company.
"Encumbrance" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title, covenant or other restrictions of any kind other than Permitted
Encumbrances.
"Environmental Laws" mean any applicable law, statute, ordinance, judgment,
governmental directive, regulations or other laws of the European Union, the
Federal Republic of Germany, the state of Badenwurttembert, the city of
Boblingen or of any other Governmental Authority with jurisdiction over the Real
Estate, and which pertain to the protection of the environment, all of the
foregoing as in effect on the Closing Date.
"Environmental Reports" mean any of the reports, data or correspondence
listed in Schedule 7.7.
"Equipment" has the meaning set forth in Section 2.1(a).
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.5.
"Expenses" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and statutory fees and disbursement of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).
"Facility" shall mean the property to be sold by HP Immobilien KG to Buyer
pursuant to the Real Estate Purchase and Sale Agreement.
"Fixed Term Employees" has the meaning set forth in Section 8.1.
"GAAP" means Generally Accepted Accounting Principles as established and
understood under accounting standards in the United States of America.
"German Antitrust Authority" means the Bundeskartellamt, Berlin.
"Governmental Actions" means any authorizations, consents, approvals, waivers,
exceptions, variances, franchises, permissions, permits, and licenses of, and
filings and declarations with Govern-mental Authorities.
"Governmental Authority" means any national, supranational, local or
foreign court, governmental or administrative agency or commission or other
governmental agency, authority, instrumentality or regulatory body having
appropriate jurisdiction.
"Governmental Permits" has the meaning set forth in Section 6.9.
"Government Rules" means any law, statute, ordinance, regulation or rules
of a Government Authority.
"Gross Base Salary" means the base salary in the respective month without
any other special benefits such as Vacation Bonus, Christmas Bonus, Profit
Sharing, Overtime payments, or other benefits such as meal allowances and
exclusive of Shift Bonuses.
"Gross Cash Compensation" means the sum of the Gross Base Salary, the
taxable Shift Bonus, the Cash Payment under the Work Time Model, and
Christmas
or Vacation bonus.
"Guarantor" has the meaning set forth in the first paragraph of this
Agreement.
"Hazardous Substance" means any substance whose spill, release or discharge
in or into the environment is regulated under Environmental Laws, and any
substance which is designated under Environmental Laws as radioactive, toxic,
hazardous or dangerous to the environment or as a hazardous pollutant or
contaminant, but not to include asbestos present in the Building.
"HP Company" means Hewlett-Packard Company, a corporation organized under
the laws of the state of Delaware and the ultimate parent entity of Seller.
"HP Kindergarten E.V." means Hewlett-Packard Kindergarten E.V.
"HP Immobilien KG" means Hewlett-Packard GmbH & Co Immobilien KG, a legal
entity organized under the laws of Germany and an Affiliate of Seller.
"HSR" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Individual Base Payroll" means the sum of the Gross Base Salaries, the
Cash Payments under the Work Time Model, the Shift Bonuses, the Stand-by
Premiums, and the Christmas and/or the Vacation Bonus in the respective
timeframe. Concerning part-time employees the payments for additional work time
(without Overtime Bonuses) in the respective timeframe shall be added to this
sum.
"Intellectual Property" means worldwide patents, patent applications,
patent rights, licenses, copyright registrations, copyrights (including those in
computer programs, software, including all source code and object code,
programming tools, drawings, specifications and data), designs, trade secrets,
technology, inventions, discoveries and improvements, know-how, proprietary
rights, formulae, processes, technical information, confidential and proprietary
information, whether tangible or intangible, and all other intellectual property
rights, whether or not subject to statutory registration or protection.
"Lease" means the Lease, in the form attached hereto as Exhibit B to be
entered into by and between Buyer and Seller on the Closing Date.
"Losses" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.
"Main Building" means the larger building (i.e., not the Kindergarten
building) described in Schedule 3 to the Lease.
"Memorandum of Understanding" means that certain Memorandum of
Understanding executed June 20, 1998 by and between HP Company and the
Guarantor.
"Monthly Gross Base Salary" means the monthly base salary at the time of
Closing, without any other special benefits such as Vacation Bonus, Christmas
Bonus, Profit Sharing, Overtime Payments, or other benefits such as meal
allowances and exclusive of Regular Shift Bonuses.
"Monthly Gross Salary" means the product of the Monthly Gross Base Salary
at the time of Closing, including Regular Shift Bonuses, and the fraction 13/12.
"Multek" means Multilayer Technology, Inc., a California corporation and an
Affiliate of Buyer.
"New Capital Equipment" means the Assets listed in Schedule 1.1(a), which
schedule shall contain the cost of each unit of such equipment, such cost to be
honored by the parties even if the actual cost shall differ.
"New Confidential Disclosure Agreement" means the New Confidential
Disclosure Agreement in the form attached hereto as Exhibit F to be entered into
by and between Buyer and Seller on the Closing Date.
"New Pension Plan" means Seller's "Basic Pension Plan" (BPP) and the
"Additional Pension Plan" (APP) valid 1/1/95.
"Notice of Disagreement" has the meaning set forth in Section 3.2(b).
"Old Pension Plan" means Seller's "HP Pension Plan".
"Operative Agreements" shall mean this Agreement, the Real Estate Purchase
and Sale Agreement, the Division Purchase Agreement, the Technology License
Agreement, the Transition Services Agreement, the Lease Agreement, and the New
Confidential Disclosure Agreement.
"Overtime Bonus" means the overtime bonus described in Schedule 8.2(a)(vi).
"Overtime Payment" means the respective base salary for overtime hours
increased by the applicable Overtime Bonus.
"Pension Cash-Out Payment" is the aggregate cash payment made by Seller
pursuant to Section 8.3(b)(ii)(2).
"Person" means 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.
"Permitted Encumbrances" means (a) liens for taxes and other governmental
charges and assessments which are not yet due and payable, (b) liens of
landlords and liens of carriers, warehousemen, mechanics and materialmen and
other like liens arising in the ordinary course of business for sums not yet due
and payable, (c) undetermined or inchoate liens, charges and privileges existing
as of the Closing Date 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 not at
the time been filed or registered against title to the Transferred Assets or
that related to obligations that are not due or delinquent, (d) security given
in the ordinary course of business as of the Closing Date to any public utility,
Government Authority or to any statutory or public authority in connection with
the Transferred Assets.
"Phased Retirement Employees" has the meaning set forth in Section 8.5
"PRCO" means Seller's printed circuit board manufacturing operation at the
Site in Boeblingen, Germany.
"Profit Sharing" has the meaning set forth in Section 8.2.(b)(i).
"Purchase Price" has the meaning specified in Article 3.
"PWC" has the meaning specified in Section 3.2(a).
"Real Estate" means the real estate described and defined as
"Vertragsgegenstand" in the Real Estate Purchase and Sale Agreement.
"Real Estate Purchase and Sale Agreement" means the Real Estate Purchase
and Sale Agreement in the form set out in Exhibit A and to be entered into
between HP Immobilien KG and Buyer on the Closing Date.
"Receivables" has the meaning set forth in Section 2.1(d).
"Regular Employee(s)" means all employees of the Seller with indefinite
employment contracts engaged in the PRCO on a full or part-time basis with the
exception of (i) employees who are currently on leave of absence without a job
guarantee, and (ii) employees who are on probation. Fixed Term Employees and
independent contractors engaged in the PRCO are not Regular Employees for the
purposes of this Agreement.
"Regular Shift Bonuses" shall mean the average of the shift bonuses paid to
the Accepting Employees from January 1 to June 30, 1998.
"Report" has the meaning set forth in Section 3.2(c) below.
"Schedules" means those schedules to this Agreement as up-dated by Seller
prior to the Closing.
"Section 8.6 Reimbursement" has the meaning set forth in Section 8.6.
"Seller" has the meaning specified in the first paragraph of this
Agreement.
"Shift Bonus" means the shift bonus laid down in Schedule 8.2.(a)(vii)
which increases the base salary of Regular Employees working shift.
"Site" means all space within the Main Building other than those locations
which will be leased by Buyer to Seller pursuant to the Lease and identified in
Schedules 1, 2 and 3 of the Lease.
"Stand-by Premium" means the premium paid for time in which the Regular
Employee is at Buyer's disposal but not working (e.g. during the night or at the
weekend).
"Successor" means any (i) direct or indirect successor (by purchase of any
asset(s), purchase of any stock, purchase of a partnership interest, merger,
acquisition, reorganization, or otherwise) of a principal, (ii) any partner of
the principal, (iii) any lender of the principal, (iv) any assignee, mortgagee,
transferee, purchaser, encumbrancer, lessee, sublessee, successor, or
foreclosure sale purchaser of any right, title or interest in the assets of the
principal, or any portion thereof, and (v) any direct or indirect Successor to
any of the foregoing.
"Supplementary Support Plan" means the supplementary support plan otherwise
known as "Zusatzversorgungsplan".
"Tax(es)" means any United States, German, federal, state, provincial,
regional, local or foreign net income, alternative or add-on minimum, gross
income, gross receipts, property, sales, use, transfer, gains, license, excise,
employment, payroll, services, withholding or minimum tax, or any other tax
custom, duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Body.
"Tax Return" means any return, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.
"Technology License Agreement" means the Technology License Agreement in
substantially the form set out in Exhibit D to be entered into by Seller and DII
on the Closing Date.
"Termination Protection Act" means the Termination Protection Act
(Kundigungsschutzgesetz) under German law.
"Three Year Period" means the period commencing on the Closing Date and
ending on the third anniversary of the Closing Date.
"Total Base Payroll" means the sum of the Individual Base Payrolls of
Buyer's regular employees (i.e., those employees with indefinite employment
contracts) working in the PRCO.
"Transferrable Permits" has the meaning set forth in Section 2.1(e).
"Transferrable Regular Employee" has the meaning set forth in Section 8.1(a).
"Transferred Assets" has the meaning set forth in Section 2.1(a).
"Transferred Employees" means each of the Transferred Regular Employees and
the Transferred Fixed Term Employees as defined in Article 8.
"Transferred Transition Cost Liability" means those costs for services
listed on Schedule 1.1(b), but only for those Services for which Seller, as of
the Closing Date either (i) has not made actual payment or (ii) has not accrued
a liability to make payment.
"Transition Services Agreement" means the Transition Services Agreement in
the form of Exhibit E to be entered into by Seller and Buyer on the Closing
Date. "Trust" has the meaning set forth in Section 8.3(c).
"Trustee" has the meaning set forth in Section 8.3(c).
"Vacation Bonus" has the meaning set forth in Section 8.2.(a)(iv).
"Years of Service" means, with respect to any Transferred Employee's prior
service as an employee of Seller or a Seller Affiliate, fully completed calendar
years plus the pro-rated time described in the following sentence. Not fully
completed calendar years shall be counted towards Years of Service on a
pro-rated basis per each full calendar month.
"Warranty Breach" has the meaning set forth in Section 13.2.
"Work Time Model" shall mean Seller's work time model prior to the closing.
ARTICLE 2
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 Transferred Assets. Upon the terms and subject to the conditions
hereof, as of the Closing Date and with respect to all Transferred Assets,
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. For purposes of this Agreement, "Transferred Assets" shall mean:
(a) all machinery, equipment, furniture, office equipment, communications
equipment, storage tanks, spare and replacement parts and other tangible
property (other than the Inventory and other than any leased automobiles) which
is (i) located at the Site or (ii) used by the PRCO for ongoing operations and
listed on Schedule 2.1(a), including (to the extent assignable) any warranty
rights and associated claims of Seller received from any manufacturer related
thereto (the "Equipment");
(b) all raw materials, work-in-process, and finished goods listed on
Schedule 2.1 (b) and located at the Site (the "Inventory"), as the same may be
depleted or augmented prior to the Closing Date while being managed in the
ordinary course of business;
(c) subject to Section 9.1 below, all contracts, agreements, options,
leases, licenses, commitments and other instruments of any kind to which Seller
is a party and (i)listed in Schedule 2.1(c) or(ii)supply agreements exclusively
relating to the PRCO (collectively, the "Contracts");
(d) all Accounts Receivables pursuant to the Contracts (the "Receivables"),
as the same may be depleted or augmented prior to the Closing Date;
(e) all Accounts Receivable pursuant to any purchase order made by a PRCO
external "trade" customer;
(f) except with respect to Taxes, subject to Section 9.1 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 warrants, representations and guarantees made by suppliers, manufacturers,
contractors and other third parties in connection with any of the Transferred
Assets;
(g) subject to Section 9.1 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 Schedule 2.1(e) (the "Transferable Permits");
(h) all open purchase orders from customers for PRCO products, whether
cancellable or not;
(i) (to the extent assignable) all warranty rights and associated claims of
Seller received from any manufacturer related to those units of New Capital
Equipment described in (i) and (ii) of the definition "Closing Date Capital
Equipment Value";
(j) subject to the provisions of Section 2.2, 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 the Transferred
Assets and which are required to continue the operations of the PRCO, either in
hard copy or computer format, including, invoices, sales and promotional
literature, sales and purchase correspondence (excluding any information related
to materials pricing), lists of suppliers, customers, personnel and employment
records of the Transferred Employees (with such Transferred Employee's prior
written consent where legally required), 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
other Tax related memoranda);
(k) the workproducts listed on Schedule 2.1(k);
(l) (to the extent assignable) all warranty rights and associated claims of
Seller received from any vendor or service provider related to those building
improvement projects listed in Schedule 2.1(l) ;
(m) all goodwill associated with the Transferred Assets.
2.2 Intellectual Property; Real Estate.
(a) All Intellectual Property matters relating to the licensing of
Intellectual Property are addressed exclusively in the Technology License
Agreement and are not a subject matter of this Agreement. Notwithstanding the
previous sentence, the workproducts listed on Schedule 2.1(k) are subject to the
rights, restrictions and obligations as described in such schedule.
(b) The legal transfer of the Real Estate is addressed in the Real Estate
Purchase and Sale Agreement and, except as provided in Articles 3, 6, 13 and 14,
is not a subject matter of this Agreement.
2.3 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 or any associated logo or any derivative
thereof;
(b) all assets existing as of the Closing Date as assets held in trust for
the Transferred Employees pursuant to obligations under the New Pension Plan and
the Old Pension Plan, the Supplementary Support Plan and the Work Time Model;
(c) all contracts of procurement, except that which relate exclusively to
PRCO procurement needs and otherwise listed in Schedule 2.1(c);
(d) all contracts of insurance;
(e) Seller's interest in and to all telephone, telex and telephone
facsimile numbers and other directory listing;
(f) assets used by the HP Kindergarten E.V.;
(g) all contracts of licenses pursuant to which Seller licenses software
from a third party, except that which is used exclusively by the PRCO pursuant
to such license and otherwise listed in Schedule 2.1(c);
(h) any accounts receivable arising out of inter-company "sales" between
PRCO and Affiliates of Seller;
(i) all other assets of Seller which do not comprise the Transferred
Assets.
2.4 Assumed Liabilities. Upon the terms and subject to the conditions
hereof, as of the Closing Date, 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 following liabilities and
obligations (collectively, the "Assumed Liabilities"):
(a) all liabilities and obligations of Seller arising out of or associated
with the Transferred Assets, other than "inter-company sales" or "trade
payables" for services or products purchased from internal or external
customers;
(b) all liabilities and obligations to be assumed by Buyer pursuant to
Article 8 of this Agreement with the exception of the following which are to be
paid by Seller directly to the Transferred Employees: profit sharing, stock
purchase plan and Christmas Bonus claims of the Transferred Employees for the
fiscal year ending October 31, 1998 (and due in November, 1998);
(c) all purchase orders for Transferred Transition Cost Liabilities;
(d) all purchase orders for New Capital Equipment other than for those
units described in (i) and (ii) of the definition "Closing Date Capital
Equipment Value"; and
(e) those liabilities listed on Schedule 2.4(c).
2.5 Excluded Liabilities. Buyer shall not assume any liabilities or
obligations of Seller under this Agreement other than the Assumed Liabilities.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price. At the Closing and on terms and subject to the
conditions set forth in this Agreement, Buyer agrees to cause to be paid to
Seller a total of US$89,900,000 (the "Purchase Price") and to assume the Assumed
Liabilities. The Purchase Price shall be payable at the Closing pursuant to
Section 4.2, and later shall be adjusted pursuant to Section 3.3. The Purchase
Price includes all payments for the Real Estate and Building to be purchased by
Buyer under the Real Estate Purchase and Sale Agreement. At the Closing, the
appropriate allocation of the Purchase Price with respect to the Real Estate and
Building shall be made as mutually agreed upon by Buyer and HP Immobilien KG,
including, if applicable and agreed to by Buyer and HP Immobilien KG,
converting, the purchase price of the Real Estate and Building into German
Marks.
3.2 Post Closing Attestation.
(a) As promptly as practicable, but no later than 90 days after the Closing
Date, Seller will cause Price Waterhouse Coopers Germany ("PWC") to attest to
each of the Closing Date Attestation Items and to deliver such attestations
together with a schedule setting forth PWC's findings in connection therewith
(collectively with the schedule, the "Attestation"). Buyer, at its own expense,
shall cause its employees, its Affiliates and its Affiliate's employees to
assist Seller, its Affiliates and PWC in the preparation of the Attestation and
shall provide Seller, its Affiliates and PWC access at all reasonable times to
the personnel, properties, books and records of Buyer for such purpose. The fees
and expenses of PWC's work shall be shared equally between Seller and Buyers.
The Attestation shall be accompanied by a report from PWC detailing procedures
applied and related findings.
(b) As promptly as practicable, but no later than 28 days after the Closing
Date, Buyer will cause Deloitte and Touche, Stuttgart (the "Actuary") to make a
determination (the "Determination") of the Closing Date Pension Liabilities and
to compare such Determination with the calculation provided under Schedule
8.3(b)(2). The Actuary shall make the Determination in conformance with
customary actuarial procedures as understood in Germany as of the Closing Date
and, to the extent practicable, consistent with the calculation methodology used
by Seller (in the appraisal dated September 23, 1998 by William M. Mercer GmbH)
for the amounts listed in Schedule 8.3(b)(2). The fees and expenses of the
Actuary's work shall be shared equally between Seller and Buyer. The
Determination shall be presented to PWC for incorporation into the Attestation.
To the extent of any difference between the amounts provided under Schedule
8.3(b)(2) and the amounts in the Determination accepted by both parties as part
of the Attestation, such difference shall be paid by the appropriate party in
accordance with Section 3.7.
(c) If Buyer or Seller disagrees with any of the Closing Date Attestation
Items contained in the Attestation, either party (the "Objecting Party") may,
within 20 days after delivery of the Attestation to it, deliver to the other
party a notice disagreeing with such calculation and setting forth the Objecting
Party's calculation of such amount ("Notice of Disagreement"). Any such Notice
of Disagreement shall specify those items or amounts as to which the Objecting
Party disagrees, and the Objecting Party shall be deemed to have agreed with all
other items and amounts contained in the Attestation.
(d) If a Notice of Disagreement shall be duly and timely delivered pursuant
to Section 3.2(c), the parties hereto shall, during the 15 days following such
delivery, use their diligent efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the amount of the Closing
Date Attestation Item in dispute. If, during such period, the parties are unable
to reach agreement, they shall promptly thereafter cause a mutually acceptable
internationally recognized independent accounting firm (the "Accountant") other
than the PWC to promptly review this Agreement, the appropriate books and
records and the disputed items or amounts for the purpose of calculating such
items. If Buyer and Seller cannot agree on an independent accounting firm, Buyer
and Seller shall each submit the name of one or two accounting firms that
satisfy the qualifications set forth in this clause (d) and the independent
accounting firm shall be selected by lot from those firms whose names were
submitted. In making such calculation, the Accountant shall consider only those
items or amounts in the Attestation as to which Buyer or Seller has disagreed.
The Accountant shall deliver to Seller and Buyer, as promptly as practicable, a
report (the "Report") setting forth its determination of the disputed items or
amounts. The Report shall be final and binding upon the parties hereto. The
Accountant's fees and expenses shall be borne by the Objecting Party, unless
both Buyer and Seller are Objecting Parties in which case such fees and expenses
shall be shared equally between Buyer and Seller.
3.3 Adjustment to the Purchase Price.
(a) If the difference between (i) the sum of the Closing Date Current
Assets and the Section 8.6 Reimbursement and (ii) the sum of the Closing Date
Current Liabilities and the Closing Date Capital Equipment Adjustment exceeds
$10,250,000, then the Buyer shall pay to Seller, as an adjustment to the
Purchase Price, in the manner and without interest as provided in Section 3.4,
the amount by which such difference exceeds $10,250,000.
(b) If the difference between (i) the sum of the Closing Date Current
Assets and the Section 8.6 Reimbursement and (ii) the sum of the Closing Date
Current Liabilities and the Closing Date Capital Equipment Adjustment is less
than $10,250,000, then the Seller shall pay to Buyer, as an adjustment to the
Purchase Price, in the manner and without interest as provided in Section 3.4,
the amount by which such difference is less than $10,250,000.
3.4 Payment of Adjustment to Purchase Price. Any payment pursuant to
Section 3.3 shall be made (a) within 20 days after Seller's delivery of the
Attestation if no Notice of Disagreement with respect thereto is timely
delivered to Seller pursuant to Section 3.2(b) or (b) if a Notice of
Disagreement with respect thereto is timely delivered pursuant to Section
3.3(b), then within 10 days after the earlier of (i) agreement between the
Parties pursuant to Section 3.2(c) with respect to the disputed items and
amounts in the Attestation or (ii) delivery of the Accountant's calculation of
such disputed items and amounts pursuant to Section 3.2(c).
3.5 ****REDACTED****
3.6 Transaction Adjustment. Seller shall pay Buyer $6,000,000 as a
transaction adjustment. Such transaction adjustment shall be paid by Seller in
two tranches of $4,000,000 and $2,000,000. The first $4,000,000 tranche shall be
payable on or before January 27, 1999 and the second $2,000,000 tranche shall be
payable on or before April 27, 1999.
3.7 Payment and Reimbursement of Pension Plan Liabilities and Closing Date
Cash-Out Payment.
(a) On terms and subject to the conditions set forth in this Agreement,
Seller agrees at the Closing to cause to be paid into the Trust for the benefit
of the Transferred Employees the aggregate value of the Closing Date Pension
Liability as estimated pursuant to Schedule 8.3(b)(2) (the "Estimate"). If,
after the Closing, it is determined that the Estimate is lower than the correct
amount as determined pursuant to Section 3.2, then Seller shall pay Buyer for
the benefit of the Trust (or Seller shall pay directly into the Trust) the
difference between the Estimate and such correct amount. If, after the Closing,
it is determined that the Estimate is greater than the correct amount as
determined pursuant to Section 3.2, then Buyer shall pay (or have the Trust pay)
Seller the difference between the Estimate and such correct amount. Any such
payment shall be due and payable on the date provided in Section 3.4
(b) On terms and subject to the conditions set forth in this Agreement,
Seller shall reimburse Buyer for the aggregate value of the Closing Date
Cash-Out Payment. Such reimbursement shall be due and payable on the date
provided in Section 3.4.
(c) All payments made pursuant to this Section 3.7 shall be in German
Marks.
3.8 Payment Instructions. Any payment made pursuant to this Article 3 shall
be made by wire transfer or by delivery to the payee of the required amount in
immediately available funds to such account as payee shall have designated for
such purpose.
3.9 Communications. Buyer shall insure that any confirmation letters or
similar request made by Buyer, its Affiliates or any of their accountants,
investment bankers, or advisors regarding Seller's or Seller's Affiliate's
characterization of the transactions described herein shall be directed to
Seller to the addresses described in Section 16.3(a)(ii) below.
ARTICLE 4
CLOSING
4.1 The Closing. The transactions contemplated by this Agreement shall be
consummated (the "Closing") at the Seller's corporate offices at Boblingen,
Germany at 1:00 p.m., local time, on October 30, 1998, or such other place, time
and date as the Parties shall agree in writing, provided that all conditions set
forth in Articles 11 and 12 shall have been satisfied or waived. The time and
date on which the Closing is actually held is sometimes referred to herein as
the "Closing Date."
4.2 Payment on the Closing Date. At the Closing, Buyer shall make the
payments provided for in Section 3.1 by wire transfer of immediately available
funds to Seller's bank account as directed by Seller. At the Closing, Seller
shall make the payments to the Trust as provided in Section 3.7 by wire transfer
of immediately available funds to the account of the Trust as directed by the
trustee of the Trust.
ARTICLE 5
TAX MATTERS
5.1 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 (except as otherwise provided in
the Real Estate Agreement) as well as all waste water and water supply fees
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 the 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.
5.2 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.
5.3 Transfer Taxes. Notwithstanding any other provision of this Agreement,
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.
5.4 Value-Added Taxes. Buyer and Seller assume that no VAT is applicable to
and in connection with this Agreement and each of the Operative Agreements
(other than the Division Purchase Agreement and the Lease, where VAT is treated
separately). If, contrary to that assumption, it is determined by the tax
authorities that VAT is payable, Buyer shall bear such VAT at the applicable
rate. In lieu of the actual payment of the VAT in connection with this Agreement
and each of the Operative Agreements (other than the Division Purchase Agreement
and the Lease), Seller waives its claim to receive VAT from Buyer and Buyer
herewith assigns its right to VAT reimbursement to Seller. Seller and Buyer
shall file a notice of assignment to the local tax authorities according to
Section 46 Fiscal Code (Abgabenordnung).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in Schedule 6 (the "Disclosure Schedule") Seller
represents and warrants to Buyer as follows:
6.1 Organization of Seller. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Germany, with all requisite
corporate power and authority to own its properties and conduct its business and
to own, lease and operate its assets. Seller is duly qualified to conduct
business and is in good standing in those jurisdictions in which Seller is
required to qualify in order to own the Transferred Assets or carry on its
business, except where the failure to qualify would not have a material adverse
effect on the Transferred Assets or Seller's ability to carry on its business.
6.2 Authority. Seller has the requisite corporate power and authority to
execute and deliver this Agreement and each of the Operative Agreements to which
it is or is specified to be a party and to perform its obligations hereunder and
thereunder. This Agreement has been and each of the Operative Agreements to
which Seller is or is specified to be a party will be, upon their execution and
delivery, duly and validly authorized, executed and delivered by Seller and this
Agreement constitutes, and each of the Operative Agreements to which Seller is
or is specified to be a party will constitute, the valid and binding agreement
of Seller enforceable against Seller in accordance with its respective terms,
except (a) as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of creditors
generally, and (b) as the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of a court of competent jurisdiction before which any proceeding may
be brought.
6.3 No Violation. The execution and delivery by Seller of this Agreement
and each of the Operative Agreements to which it is or is specified to be a
party 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 charter documents or by-laws; (b) breach, violate or
contravene any applicable law, statute, ordinance, regulation or rule of a
Governmental Authority; (c) create any right of termination or acceleration or
encumbrance that, in the aggregate would have a material adverse effect on the
Transferred Assets or the authority or ability of Seller to perform either its
obligations under this Agreement or any of the other Operative Agreements to
which it is or is specified to be a party; (d) conflict in any respect with, or
result in a breach of or default under, any contract, license, franchise, permit
or any other agreement or instruments (other than the assignment provisions of
any Consensual Transfer which shall be subject to Section 9.1, hereof) to which
it is a party or by which it or any of the Transferred Assets may be bound that
would have a material adverse effect on the Transferred Assets or the authority
or ability of Seller to perform either its obligations under this Agreement or
any of the other Operative Agreements to which it is or is specified to be a
party; or (e) result in the creation of any Encumbrances upon any of the
Transferred Assets.
6.4 Government Consents and Filings. No material 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 to which it is or is specified to be a party or the
consummation by Seller of the transactions contemplated hereby or thereby, other
than (i) the premerger notification required by HSR and expiration or early
termination of the HSR waiting period and (ii) post-merger notification to the
German Antitrust Authority and expiration or early termination of the applicable
time period.
6.5 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 any of the Operative Agreements to which it is or is specified to
be a party 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.
6.6 Taxes. There are (and as of the Closing there shall be) no Encumbrances
on the Transferred Assets relating to or attributable to Taxes.
6.7 Equipment. To the Best Knowledge of Seller, the Equipment listed on
Schedule 2.1(a) constitutes all material machinery and manufacturing equipment
required by Seller to conduct those printed circuit board manufacturing
operations conducted by Seller at the Site immediately prior to the Closing.
6.8 Governmental Permits. Seller or its Affiliates have the licenses and
permits and other governmental authorizations and approvals as set forth on
Schedule 6.8, and such licenses and permits constitute all material licenses and
permits required by Seller pursuant to Government Rules to conduct its printed
circuit board manufacturing operations at the Site 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.
6.9 Governmental Compliance. Seller has complied in all material aspects
with all Governmental Rules with respect to Seller's operation of PRCO as
conducted by Seller immediately prior to the Closing. Since November 1, 1997,
Seller has not received any written notification of any asserted failure on its
part to comply with Government Rules with regard to PRCO or the Transferred
Assets.
6.10 Title to Personal Property. Seller has good, valid and salable title
to all tangible Transferred Assets listed on Schedule 2.1(a) and Schedule 2.1(b)
hereto, free and clear of any Encumbrances, except those assets disposed of in
the ordinary course of business after the date hereof.
6.11 Contracts.
(a) Each Contract is a legal, valid, and binding obligation of Seller, and,
to the Best Knowledge of Seller, 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.
(b) Seller has performed or is performing all material obligations required
to be performed by it under the Contracts and is not in breach or default in any
material respect thereunder; and, to the Best Knowledge of Seller, no other
party to any of such contracts is in breach or default in any material respect
thereunder. Notwithstanding the above, Seller makes no representations with
respect to such Contracts regarding infringement or misappropriation of
Intellectual Property.
(c) Since November 1, 1997, Seller has neither received nor provided any
written notice of any default or alleged default under any Contracts which has
not heretofore been cured or which notice has not heretofore been withdrawn.
Seller, to its Best Knowledge, does not know of any material default under any
Contracts which are material to the operation of the PRCO by any other party
thereto or by any other person bound thereunder, or of any event or circumstance
which, with the giving of notice or the passage of time, or both would permit
any party thereto to terminate any such contract.
6.12 Environmental Matters.
(a) As of the Closing Date and except as set forth in the Disclosure
Schedule:
(i) Seller's operations at the Real Estate are and at all relevant times
have been in compliance in all material respects with all applicable
Environmental Laws
(ii) Neither Seller's operations of the PRCO at the Real Estate nor the
Real Estate is subject to any judgment, order, consent order or
consent decree issued under Environmental Laws by any court or by any
Governmental Authority with jurisdiction over the Real Estate or over
Seller's operations of the PRCO at the Real Estate.
(iii)There are no charges, complaints, lawsuits, or governmental
investigations pending or threatened in writing with respect to the
Real Estate or Seller's operations of the PRCO at the Real Estate
alleging any violation of Environmental Laws.
(iv) Seller has in full force and effect at the Closing Date any material
permits, licenses and other authorizations that are required under
Environmental Laws for the conduct of Seller's operations of the PRCO
at the Real Estate in the manner conducted by Seller at and
immediately prior to the Closing Date.
(v) There are no known underground storage tanks located on the Real
Estate.
(vi) Seller has not received 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 from its operations of the PRCO on the Real
Estate or which has migrated from the Real Estate to the property of
adjoining landowners. (vii) There is no friable asbestos present in
the Building.
(b) The representations and warranties set forth in this Section 6.12 are
the sole and exclusive representations and warranties made by Seller to Buyer
concerning environmental matters as regards the Real Estate, the Building and
the Transferred Assets.
6.13 Employee Benefits. Seller has previously delivered or made available
to Buyer the benefits manual for Seller's fiscal 1998 and 1997 which manuals
describe all material employee benefit plans and programs made available to
Regular Employees during such fiscal years. To the Best Knowledge of Seller,
with respect to each employee benefit plan, Seller has complied in all material
respects with, and each such employee benefit plan conforms in all material
respects in form and operation to, all applicable laws and regulations.
6.14 Litigation. Except as set forth in Schedule 6.14, there are no
actions, suits, proceedings or governmental investigations relating to or
involving Seller in respect of the PRCO or any Transferred Assets by or before
any Governmental Authority either pending or, to the Best Knowledge of Seller,
threatened or any outstanding order, injunction, judgment, writ, award or decree
against Seller, the PRCO or any Transferred Assets or the transactions
contemplated hereby.
6.15 Transferred Employees. Seller represents and warrants that (i) the
persons listed in Schedule 8.1(a) constitute the only Regular Employees working
in the PRCO, (ii) all Transferred Fixed Employees have duly limited contracts in
accordance with the principles governing the limitation of employment contracts
under German Law and (iii) that none of the independent contractors listed on
Schedule 6.15 is, as a result of activities solely occurring prior to the
Closing, entitled under German law to the status of a Regular Employee. The
exclusive remedy for a breach of the representation and warranty (iii) is as set
forth in Sections 13.3(d).
6.16 Employee Relations and Labor Matters. To the Best Knowledge of Seller:
(a) There is no labor strike, dispute, slowdown, work stoppage, or lockout
in effect nor has any such labor controversy occurred or been threatened in
writing within the past three years
(b) There is no grievance or arbitration proceeding pending or threatened
in writing which might have a material adverse effect on the PRCO; and
(c) There is no formal unfair labor practice charge or complaint pending or
threatened in writing relating to PRCO.
6.17 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 PRCO for the three year period ending October 31,
1997. To the Best Knowledge of Seller, this financial information is based on
Seller's ledger and cost system reports, consistently applied and accurate in
all material respects.
6.18 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.
6.19 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 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 EXPRESSLY 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.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and Guarantor each hereby jointly and severally represents and
warrants to Seller as follows:
7.1 Organization of Buyer. Buyer is a duly organized and validly existing
corporation in good standing under the laws of Germany 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, lease
and operate 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.
7.2 Authority. Each of Buyer and Guarantor 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,
upon their execution and delivery, 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 Buyer and Guarantor enforceable against each of Buyer and Guarantor
in accordance with its respective terms. No other corporate proceedings on the
part of Buyer or corporate proceedings on the party of Guarantor are necessary
to authorize Buyer's or Guarantor's execution or performance of this Agreement
or any of the Operative Agreements and the transactions contemplated hereby or
thereby.
7.3 No Violation. 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 by each of Buyer and Guarantor of its respective obligations
hereunder and thereunder will not: (a) conflict with, or result in a breach of,
any of the provisions of its [charter documents or by-laws]; (b) breach, violate
or contravene any applicable law, statute, ordinance, regulation or rule of a
Governmental Authority; (c) create any right of termination or acceleration or
encumbrance that in the aggregate would have a material adverse effect on the
authority of either to perform its obligations under this Agreement or the other
Operative Agreements; or (d) 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 Operative Agreements.
7.4 Government Consents and Filings. Other than as set forth in Schedule
7.4, 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 (i) premerger notification
required by HSR and expiration or early termination of the HSR waiting period
and (ii) post-merger notification to the German Antitrust Authority and
expiration or early termination of the applicable time period.
7.5 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.
7.6 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 9.1 below.
7.7 Environmental Matters. Each of Buyer and Guarantor represents that it
has received and read each of the Environmental Reports set forth on Schedule
7.7 hereto.
7.8 Employees. Except as specifically provided herein, Seller will not
have, as a consequence of the transactions contemplated hereby, any liability or
obligation with respect to any Transferred Employees or any other employees of
Buyer or any Affiliate of Buyer in connection with their performance of services
to Buyer or any of its Affiliates after the Effective Time.
7.9 Disclosure of Information. Buyer represents that it has had an
opportunity to ask questions and receive answers from Seller regarding the
Transferred Assets and Assumed Liabilities. ARTICLE 8
EMPLOYEE TRANSFER AND BENEFITS
8.1 Transferred Employees.
(a) Seller and Buyer agree that the employment relationship between Seller
and all Regular Employees working in the PRCO as of the Closing Date shall be,
as of the Effective Time, transferred and assumed by Buyer by and in accordance
with the applicable law (notably and in particular paragraph 613a of the German
Civil Code [BGB]) and become employees of Buyer with indefinite employment
contracts (the "Transferred Regular Employees") . At the Closing, Seller shall
provide to Buyer an updated list as set forth in Schedule 8.1 (a) hereto of all
Transferred Regular Employees to become Buyer Regular Employees as of the
Closing Date. Schedule 8.1 (a) shall include (i) the then current monthly
compensation provided by Seller to each Transferred Regular Employee, (ii) any
scheduled increase in the rate of compensation of any Transferred Regular
Employee and (iii) Years of Service.
(b) Seller and Buyer agree that the employment relationship between Seller
and all employees with fixed term employment contracts ("Fixed Term Employees")
working in the PRCO as of the Closing Date shall be, as of the Effective Time,
transferred and assumed by Buyer for the remainder of and until the expiration
of their fixed term employment (the "Transferred Fixed Term Employees"). At the
Closing, Seller shall provide to Buyer a list as set forth in Schedule 8.1 (b)
hereto of all Transferred Fixed Term Employees to become Buyer Fixed Term
Employees of Buyer as of the Closing Date. Schedule 8.1 (b) shall also include
with respect to each Transferred Fixed Term Employee, (i) the contracted
compensation provided by Seller to each Transferred Fixed Term Employee (ii) the
expiration date of the fixed term employment relationship with each Transferred
Fixed Term Employee and (iii) whether each of such Transferred Fixed Term
Employees is employed on a part-time or full-time basis. Upon expiration of
their fixed term employment contracts Buyer shall be free to assume such
Transferred Fixed Term Employees as Buyer's employees. Except as described in
this Section 8.1(b), the Transferred Fixed Term Employees shall not be subject
to the benefits and protection as stipulated in this Article 8.
8.2 Benefits and Protection.
(a) Buyer hereby covenants and agrees that no Accepting Employee may be
terminated by Buyer for "operational reasons" (as "operational reasons" is
defined and understood under the Termination Protection Act) during the Three
Year Period and all prior service with the Seller shall count as Years of
Service with Buyer in every respect. In addition, each of the Accepting
Employees shall receive during the Three Year Period the following benefits and
protections described below with no reduction or change which would be adverse
or otherwise detrimental to the Accepting Employees during such Three Year
Period:
(i) The Monthly Gross Base Salary;
(ii) A Christmas Bonus paid each November equal to fifty percent (50%)
of the Accepting Employee's then most recent October base salary
computed identical to Seller's Christmas Bonus prior to the
Closing;
(iii)Annual vacation equal to the greater of (i) thirty (30) days or
(ii) that number of days of annual leave that the Accepting
Employee is entitled to as of the Closing Date;
(iv) Observance of all standard local holidays (currently eleven
days);
(v) A Vacation Bonus paid each May equal to seventy-two percent
(72%); of the Accepting Employee's then most recent April base
salary computed identical to Seller's Vacation Bonus prior to the
Closing;
(vi) Shift Bonuses according to Schedule 8.2.(a)(vi); and
(vii) Overtime Bonuses according to Schedule 8.2.(a)(vii).
(b) Buyer hereby covenants and agrees that all Accepting Employees shall
receive the following benefits subject to Buyer's then current benefits plans in
this regard:
(i) Profit Sharing. Buyer will allocate 10% of the pre-tax
operational earnings of PRCO to the profit sharing pool. The
available pool will then be divided by the Total Base Payroll to
determine the equal percentage of the Individual Base Payroll
("Profit Sharing Percentage"). This plan will be initiated for
Guarantor's fiscal year 1999.
(ii) Employee Stock Ownership Plan. Buyer will provide PRCO employees
with an employee stock purchase plan. This plan will enable
employees to withhold up to 10% of their Gross Cash Compensation
(deducted from the net salary) for the purchase of shares of DII
common stock. These shares may be purchased once every six months
at a 15% discount to the lower of the price at the beginning of
the previous six month period or at its end.
(iii)Cash Performance Bonuses. A select group of key managers will
have an additional bonus plan based upon performance. This will
be implemented in the planning cycle in the first full
Guarantor's fiscal year, beginning January 1, 1999. The target
bonus amount for plan attainment will be 10% of base salary with
upside potential for exceeding the plan. The General Manager in
conjunction with Buyer's management will determine the
participants in this plan.
(iv) Stock Option Program. On an annual basis, based upon overall
company results, DII's Board of Directors shall approve a pool of
stock options which are then allocated to the divisions based
upon their performance and distributed at the business unit level
by the General Manager in conjunction with Buyer's management.
(v) Sickness Benefits for Extended Illness. Buyer will offer 100% of
6 weeks salary for extended illness.
(vi) Service Awards, Flexible Work Hours, Insurance and Other
Benefits. Buyer will offer benefits which are comparable or
better than provided by Seller immediately prior to the Closing,
including flexible work hours, insurance, and service awards.
Service providers may be used for counseling, insurance,
cafeteria, tea and coffee stations, etc. at Buyer's discretion
and expense.
8.3 Treatment of Time-Off Accounts and Pension Plans.
(a) Time-Off Accounts and Work Time Model.
(i) Buyer acknowledges and shall honor time-off accounts existing and
earned by each Transferred Employee with the Seller (vacation,
short- and long-term accounts). Rights to time-off accounts
hereby transferred shall have no expiration date. Statutory
expiration dates for time-off accounts or expiration dates under
any collective tariff agreement shall not apply.
(ii) At the closing, Buyer shall assume the existing obligations for
all Transferred Employees under the Work Time Model as set forth
in Schedule 8.3(a).
(iii) At the Closing, Buyer shall implement the Work Time Model.
(b) Pension Plans. At the Closing, Buyer shall assume the existing
obligations under the New Pension Plan, Supplementary Support Plan and the Old
Pension. Buyer and Seller are aware of the forthcoming release of new
Richttafeln 1998 von Prof. Dr. Klaus Heubeck (best translated as guidelines for
the actuarial valuation of pension rights, released by K. Heubeck), replacing
the existing Richttafeln of 1983, taking into account revised decrement rates.
Seller and Buyer agree that the calculated Basic Pension Modules shall remain
unchanged. Upon release of the new Richttafeln, should such release occur within
90 days after the Closing, Seller shall cause William M. Mercer GmbH to
recalculate the "Total Present Value of Old Pension Plan" calculated in the
William M. Mercer GmbH appraisal dated September 23, 1998 using the new
Richttafeln at an interest rate of 4 % p.a. The percentage increase of "Total
Present Value of Old Pension Plan" (ratio of recalculated "Total Present Value
of Old Pension Plan" to original "Total Present Value of Old Pension Plan" based
on the employees as set forth in the above mentioned appraisal) shall be applied
to the total pension liabilities as listed in Schedule 8.3(b)(2), but excluding
Supplementary Support Plan amounts (SPP). Seller shall pay to Buyer's Trust for
the benefit of the employees within 30 days upon receipt of such recalculation
the balance between pension liabilities already paid by HP per Schedule
8.3(b)(2) and the newly calculated amount.
(i) The assignment of the existing obligations under the Old Pension
Plan shall take place by conversion of the cash value into a
Basic Pension Module of the Basic Pension Plan of the Buyer's New
Pension Plan whereby the cash value shall be determined according
to the general accepted insurance mathematical rules. Buyer shall
pay out this cash value to Accepting Employees leaving Buyer if
the pension has not yet become irrevocable under mandatory law
(before age 35 or less than 10 Years of Service). The present
value estimate of the Closing Date Pension Liabilities is listed
in Schedule 8.3(b)(2).
(ii) For each of those Accepting Employees who are entitled to
benefits under the Old Pension Plan, Buyer shall offer, in
exchange for termination of future benefits under the Old Pension
Plan, (1) continuing benefits from the Closing Date under the
terms of a pension plan which is substantially identical to the
New Pension Plan and which shall include the benefits described
in Schedule 8.3(b)(1) ("Buyer's New Pension Plan") and (2) a
one-time cash payment to be made by Buyer within one (1) month of
the Closing in an amount as described in Schedule 8.1(a) under
the column "One Time Conversion Payment" (the "Closing Date
Cash-Out Payment").
(c) Trust. Buyer shall be obliged to establish and maintain a trust for the
benefit of the Transferred Employees in line with Seller's trust concept,
including that the assets placed in such trust shall be appropriately segregated
from the operating assets of Buyer (the Trust"). The trustee for the Trust shall
be an attorney admitted to practice law in Germany and otherwise qualified under
German law to act as a trustee for the Trust (the "Trustee"). At the Closing,
Buyer shall place into the Trust the aggregate cash value of the Closing Date
Pension Liability.
8.4 Letter to Employees. Seller and Buyer shall inform all Regular
Employees working in the PRCO in an information letter, the form of which shall
be mutually agreeable to the Parties.
8.5 Phased Retirement. The Regular Employees who are covered by phased
retirement and listed in Schedule 8.5 shall be hired out by Seller as temporary
workers, subject to the consent of such employees. Buyer shall pay Seller for
the services of such temporary workers in an amount equal to Seller's fully
loaded cost for such employees and pursuant to a separate agreement (which may
be entered into after the Closing) in a form proposed by Seller and reasonably
acceptable to Buyer.
8.6 Transition Benefits; Cost Sharing.
(a) Prior to the Closing, Seller shall offer to those Transferred Regular
Employees who are age 50 or above, the option to take early retirement and be
paid a one time early retirement benefit which for each of such Transferred
Regular Employee accepting early retirement (as set forth in Schedule 8.6(a))
will be equal to the sum of (i) 0.5 x such Transferred Regular Employee's Gross
Monthly Salary x Years of Service (not to exceed 24 years) and (ii) 20,000 DM
(for part-time employees pro rata).
(b) Within one (1) month of the Closing, Seller shall pay to each Accepting
Employee a one time bridging payment equal to the product of such Transferred
Regular Employee's Gross Monthly Salary and 0.75.
(c) Seller shall make the payments described in paragraph (a) and (b) above
within one month after the Closing.
(d) Buyer shall reimburse Seller, as per Section 3.3 above, for the
expenses described in this Section 8.6 (the "Section 8.6 Reimbursement") in an
amount equal to the sum of:
(i) $300,000 and
(ii) the product of (A) one half multiplied by (B) the difference
between (Y) the aggregate costs described in paragraph (a) and
(b) and (Z) $300,000.
ARTICLE 9
COVENANTS AND AGREEMENTS
9.1 Consents to Assignment 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 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 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 any attempted assignment thereof, without the consent of
a third party thereto, would (i) constitute a breach of or other contravention
thereof, (ii) be ineffective with respect to any party thereto, or (iii) except
as contemplated by this Agreement, in any way adversely affect the rights of
Buyer or Seller thereunder. If, with respect to any Consensual Transfers, there
is any economic or financial cost to obtaining such consent, waiver,
confirmation, novation or approval, then Buyer shall be responsible for the
payment of such economic or financial costs. 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 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 Consensual Transfers shall thereafter be Transferred
Assets and Assumed Liabilities for all purposes.
9.2 Conduct of the Operation. From the date hereof until the Closing Date,
Seller shall continue to operate the PRCO in the ordinary course as presently
operated and use good faith and commercially reasonable efforts to preserve
intact the Transferred Assets and relationships with third parties (including,
for example, other business units of Seller, vendors and customers). Except as
otherwise contemplated by this Agreement, from the date hereof until the Closing
Date, Seller shall not make or grant any increase in the compensation or fringe
benefits of the Regular Employees of the PRCO, other than normal merit and cost
of living increases which in each case is consistent with past practice or make
any increases or commitment to increase any employee benefits.
9.3 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 any antitrust regulations) and subject to any
confidentiality obligations or applicable privileges (including, without
limitation, privacy obligations under German employment law and the
attorney-client privilege), from the date of this Agreement until the Closing
Date, Seller (a) will give Buyer and its authorized representatives such
financial and operating data and other information 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.
9.4 Books and Records. For a period of six years from the Closing Date, or
for such longer period as is required by applicable law, Buyer agrees that it
will permit Seller or its authorized representatives reasonable access, at
Seller's expense, to information relating to the Transferred Assets to the
extent required by Seller to permit it 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 any claim asserted in
connection with an Assumed Liability.
9.5 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 the Assumed Liabilities pursuant to this
Agreement and the Operative Agreements, Seller and Buyer each shall agree to
furnish, and 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.
9.6 Removal of Trade Marks. To the extent that the Transferred Assets
include production, shipping or packaging materials or inventory bearing the
name "Hewlett-Packard", "HP", or any variations thereof, or any trade marks or
trade names incorporating such name or the "HP" logo, or any trade marks, logos
or designs confusing therewith, Buyer shall, upon the Closing or as soon
thereafter as is practicable, modify the appearance of such materials to ensure
that they indicate Buyer as the source of such materials.
9.7 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 Site on and after the Closing Date.
9.8 Satisfaction of Closing Conditions and Further Assurances. Subject to
the respective rights and obligations of Buyer and Seller under this Agreement,
each of the parties to this Agreement shall each use its reasonable good faith
efforts to cause all conditions to the Closing within the control of such party
to be timely satisfied and to consummate the Closing. Each party hereto, at the
reasonable request of the other party hereto, will execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.
9.9 Regulatory Consents. Buyer and Seller shall each use its reasonable
good faith efforts to obtain, at or prior to the Time of Closing, from all
appropriate European Community, federal, state, municipal or other governmental
or regulatory bodies the licenses, permits, consents, approvals, certificates,
registrations and authorizations described pursuant to Sections 6.4 and 7.4 that
are required to consummate the Closing.
9.10 Insurance. Seller warrants that it has reasonably self-insured (based
on standard industry practice) or reasonably insured with third party insurers
the Transferred Assets against loss or damage with all risk coverage on a
replacement cost basis. Seller will be responsible for loss, damage or other
casualty claims until the Closing. After the Closing, Buyer shall be responsible
for insuring its owned assets and is responsible for all loss thereto. Following
the Closing, Buyer and Seller agree to a mutual hold-harmless and waiver of
subrogation relating to all losses and claims to their respective owned
property.
9.11 Update of Schedules. Seller shall update the information contained in
the Schedules and provide such updated Schedules in final form to Buyer anytime
prior to the Closing; provided however, that (i) Schedule 2.1(b) (relating to
inventory) may be updated at or promptly after the Closing (provided the
adjustments described in Article 3 as they relate to inventory shall be as of
the Closing Date), (ii) Schedule 2.1(a) (relating to Equipment) may be updated
at or promptly after the Closing, and (iii) the Disclosure Schedule, as it
relates to environmental matters, may be updated within 10 business days after
Seller's receipt from Buyer of the final written report prepared by Shields
Environmental Associates regarding the Real Estate.
ARTICLE 10
GUARANTEE OF THE GUARANTOR
10.1 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 and Multek (and the permitted assigns of
Buyer and Multek) under this Agreement and the Operative Agreements to which
Buyer or Multek in accordance herewith and therewith is a party, independently
of the obligations of Buyer or Multek, and the Guarantor hereby agrees to
indemnify Seller against any Loss incurred by reason of any failure of Buyer or
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, Buyer or 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 Buyer or Multek under
this Agreement and the Operative Agreements to which Buyer or Multek is a party,
and Seller shall not be obligated to exhaust its recourse against Buyer or
Multek before being entitled to payment from 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 a valid
defense Buyer or Multek has against Seller) 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 Buyer shall have any knowledge or notice thereof), other than full
and strict compliance by the Guarantor of its obligations hereunder. It is
expressly understood and agreed that Guarantor's liability (including any
indemnification obligation) hereunder shall in no way exceed (whether in time,
quality, quantity or otherwise) the combined liability of Buyer and Multek under
this Agreement and the Operative Agreements.
ARTICLE 11
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
All obligations of Buyer to effect the Closing hereunder are, subject to
the satisfaction at Closing of the following conditions precedent:
11.1 Authorization, Execution and Delivery of Operative Agreements. Seller
or, as specified to be a party, an Affiliate of Seller, shall have duly
authorized, executed and delivered to Buyer the following:
(a) the Real Estate Purchase and Sale Agreement and shall have taken such
steps as necessary for Buyer to be able to take possession of the Real Estate
immediately after the Closing;
(b) the Lease;
(c) the Division Purchase Agreement;
(d) the Technology License Agreement;
(e) the Transition Services Agreement; and
(f) the New Confidential Disclosure Agreement.
11.2 Delivery of Updated Schedules. Seller shall have provided to Buyer the
final forms of each of the Schedules pursuant to Section 9.11.
11.3 Performance. Seller or one of its Affiliates shall have performed and
complied in all material respects with each agreement, covenant and condition in
each Operative Agreement to which Seller or its Affiliate, as the case may be,
is or is specified to be a party, which agreement, covenant or condition is
required to be performed or complied with by Seller or its Affiliate at time of
Closing.
11.4 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 then a default or breach on the part
of Buyer or any of its Affiliates) or would give any party thereto (other then
Seller or its Affiliate) the right to terminate or not to perform any obligation
thereunder.
11.5 Consents. (a) With the exception of the transfer of the Transferable
Permits all Governmental Actions required to be taken, given or obtained by
Seller either directly or through one of its Affiliates 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); and (b) the waiting
period under HSR shall have expired or been terminated.
11.6 Governmental Rules or Actions.
(a) No Governmental Rule or other action, suit, or proceeding by a
Governmental Authority 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 material 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 this Agreement.
11.7 Standard Closing Documents.
(a) Buyer shall have received, with respect to Seller:
(i) a certificate, dated the Closing Date, of the secretary,
assistant secretary or another appropriate authorized signatory
of Seller certifying:
(A) that the conditions set forth in Section 11.1, 11.2, 11.3, and 11.4
(with respect to Seller) have been satisfied; and
(B) that, with respect to Seller, the representations and warranties set
forth in Article 6 (with respect to Seller) are true and correct in all material
respects as of the Closing Date.
(b) Buyer shall have received, with respect to HP Immobilien KG:
(i) a certificate, dated the Closing Date, of the secretary,
assistant secretary or another appropriate authorized signatory
of HP Immobilien KG certifying:
(A) that all necessary corporate action of the appropriate authority within
HP Immobilien KG duly authorizing or ratifying its execution, delivery and
performance of the Real Estate Purchase and Sale Agreement, or any other
Operative Agreements to which it is or is specified to be a party and the
consummation of the transactions contemplated thereby has been obtained.
(c) Buyer shall have received, with respect to HP Company:
(i) a certificate, dated the Closing Date, of the secretary,
assistant secretary or another appropriate authorized signatory
of HP Company certifying:
(A) that all necessary corporate action of the appropriate authority within
HP Company duly authorizing or ratifying its execution, delivery and performance
of the Technology License Agreement or any other Operative Agreements to which
it is or is specified to be a party and the consummation of the transactions
contemplated thereby has been obtained.
11.8 Representations and Warranties. The representations and warranties set
forth in Article 6 shall be true and correct in all material respects at the
Closing, with the same effect as if such representations and warranties had been
made at and as of such time, except for changes therein specifically permitted
by the Agreement or resulting from any transaction expressly consented to in
writing by Buyer.
11.9 Proceedings. All corporate and legal proceedings taken by Seller or
any of its Affiliates 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.
11.10 Waiver of Conditions by Buyer. If any of the above conditions
contained in this Article 11 shall not be performed or fulfilled at or prior to
the Closing to the satisfaction of Buyer, Buyer by notice to Seller, may
terminate this Agreement and the obligations of Seller and Buyer under this
Agreement, other than the obligations contained in Section 16.12 and 16.13,
provided that Buyer may also bring an action pursuant to Article 13 against
Seller for damages (other than consequential damages) suffered by Buyer where
non-performance or non-fulfillment of the relevant condition is as a result of a
Warranty Breach or a Covenant Breach by Seller. Any such condition which is
waived in whole or in part by Buyer shall be with prejudice to any claims it may
have for a Warranty Breach or Covenant Breach.
ARTICLE 12
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS TO CLOSE
All obligations of Seller to effect the Closing hereunder are, at its
option, subject to the satisfaction at Closing of the following conditions
precedent:
12.1 Authorization, Execution and Delivery of Operative Agreements. Each of
Buyer or, as specified to be a party, an Affiliate of Buyer and Guarantor shall
have duly authorized, executed and delivered to Seller the following:
(a) the Real Estate Purchase and Sale Agreement;
(b) the Lease;
(c) the Division Purchase Agreement;
(d) the Technology License Agreement;
(e) the Transition Services Agreement; and
(f) the New Confidential Disclosure Agreement.
12.2 Acceptance of Updated Schedules. Buyer, acting reasonably, shall have
reviewed and approved in writing the final forms of the Schedules provided by
Seller pursuant to Section 9.11.
12.3 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 (including
the establishment of the Trust), which agreement, covenant or condition is
required to be performed or complied with by Buyer or Guarantor at or before the
Closing.
12.4 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 no to perform any obligation
thereunder.
12.5 Consents. (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.
12.6 Governmental Rules or Actions.
(a) No Governmental Rule or other action, suit or proceeding by a
Governmental Authority 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.
12.7 Standard Closing Documents.
(a) Seller shall have received, with respect to each of Buyer and
Guarantor:
(i) a certificate, dated the Closing Date, of the secretary,
assistant secretary or another appropriate authorized signatory
of each of Buyer and Guarantor certifying:
(A) that all necessary 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 has been
obtained;
(B) 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 Sections 12.1, 12.2, 12.3, and 12.4 (with respect to
each of Buyer and Guarantor) have been satisfied;
(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 representations and warranties set forth in Article 7 are true and correct
in all material respects as of the Closing Date; and
(D) a certificate signed by an appropriate officer or other authorized
signatory of Buyer dated the Closing Date certifying that Buyer has entered into
an appropriate and binding trust agreement with the Trust, a copy of which shall
be provided with such certificate.
(b) Seller shall have received, with respect to Multek:
(i) a certificate, dated the Closing Date, of the secretary,
assistant secretary or another appropriate authorized signatory
of Multek and Guarantor certifying:
(A) that all necessary corporate action of the appropriate authority within
each of Multek and Guarantor and, if applicable, the stockholders of each of
Multek and Guarantor duly authorizing or ratifying its execution, delivery and
performance of the Division Purchase Agreement, or any other Operative
Agreements to which each is or is specified to be a Party and the consummation
of the transactions contemplated thereby has been obtained.
(c) Seller shall have received, with respect to the Trust:
(i) a certificate, dated the Closing Date, of the Trustee certifying:
(A) that all necessary action to establish the Trust has been completed;
(B) that the Trust has entered into an appropriate and binding trust
agreement with Buyer, a copy of which shall be provided with such certificate;
and
(C) he or she is an attorney admitted to practice law in Germany and
otherwise qualified under German law to act as a trustee for the Trust.
12.8 Representations and Warranties. The representations and warranties set
forth in Article 7 shall be true and correct in all material respects at the
Closing, with the same effect as if such representations and warranties had been
made at and as of such time, except for changes therein specifically permitted
by the Agreement or resulting from any transaction expressly consented to in
writing by Seller.
12.9 Proceedings. All corporate 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.
12.10 Waiver of Conditions by Seller. If any of the above conditions
contained in this Article 12 shall not be performed or fulfilled at or prior to
the Closing to the satisfaction of Seller, Seller by notice to Buyer, may
terminate this Agreement and the obligations of Buyer and Seller under this
Agreement, other than the obligations contained in Section 16.12 and 16.13,
provided that Seller may also bring an action pursuant to Article 13 against
Buyer for damages (other than consequential damages) suffered by Seller where
non-performance or non-fulfillment of the relevant condition is as a result of a
Warranty Breach or a Covenant Breach by Buyer. Any such condition which is
waived in whole or in part by Seller shall be with prejudice to any claims it
may have for a Warranty Breach or a Covenant Breach.
ARTICLE 13
INDEMNITY
13.1 Survival. The representations and warranties of the Parties set forth
in this Agreement shall survive the Closing until the first anniversary of the
date of this Agreement.
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.
13.3 Seller Indemnification.
(a) Subject to the limitations in 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; (ii) any of the Excluded Liabilities; or
(iii) any third party action or claim (other than torts) relating to the
Excluded Assets; provided however, that Seller's indemnity under Article 13
shall be subject to the maximum aggregate liability of $10,000,000 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, Covenant Breach or Excluded Liability by Seller
where the Loss resulting therefrom is less than $100,000, and no such individual
Warranty Breach, Covenant Breach or Excluded Liability shall be aggregated for
purposes of Section 13.3.(c), below; and
(c) Seller shall not be liable under this Section 13.3 with respect to any
Warranty Breach, Covenant Breach and or Excluded Liability by Seller unless the
aggregate amount of Losses with respect to all Warranty Breaches, Covenant
Breaches and Excluded Liabilities by Seller exceeds $400,000 and then only to
the extent of such excess up to a maximum aggregate liability of $10,000,000.
(d) If any of the independent contractors brings a status action against
Buyer relating to such independent contractor's employment status prior to the
Closing, Seller shall indemnify Buyer for any liabilities relating to the impact
of such status change on such independent contractors compensation and benefits
which will be deemed to have accrued prior to the Closing. Notwithstanding the
foregoing, if after the Closing Buyer takes any action which changes the status
of an independent contractor to an employee, then Buyer shall assume any
liabilities relating to the impact of such status change on such independent
contractors compensation and benefits which will be deemed to have accrued prior
to the Closing.
13.4 Procedures.
(a) Each of Buyer pursuant to Sections 13.2 and Seller pursuant to Sections
13.3 (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 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. 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 to have accepted responsibility to make
payment and shall have no further right to contest the validity of such claim.
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.
13.6 Indemnity is the Exclusive Remedy. Except as provided in Article 14,
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.
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. THIS LIMITATION SHALL NOT APPLY IN THE CASE OF DAMAGES CAUSED
BY DELIBERATE INTENT.
ARTICLE 14
ENVIRONMENTAL INDEMNITIES
14.1 Seller's Indemnity.
(a) (i) Remediation Claims Asserted After Closing Date. Subject to Section
13.7 and the aggregate dollar cap limitation specified in Section 13.3(c) above
(but not the threshold dollar limitations specified in Sections 13.3(b) or
13.3(c) above), Seller shall bear the expenses of, and responsibility for, any
claims asserted by any Governmental Authority after the Closing Date but within
seven (7) years of the Closing Date that monitoring or remediation of soil or
groundwater at or emanating from the Real Estate is required under Environmental
Laws for any Hazardous Substance that is: (i) identified in the Environmental
Reports or (ii) that Buyer can otherwise demonstrate (A) was present in soil or
groundwater prior to the Closing Date or (B) is then present in the soil or
groundwater as a result of Seller's operation of the PRCO or otherwise as a
result of activities at the Real Estate prior to the Closing Date. All
monitoring and remediation activities required to be performed by Seller
pursuant to this Section 14.1(a) will be referred to collectively as "Seller's
Remediation."
(ii) Seller's Obligation To Continue Existing Remediation Activities.
Seller's remediation activities as conducted by Seller on the Closing Date shall
continue after the Closing Date as Seller's Remediation subject to all
requirements and limitations set forth in Section 14.1(a) above except the
aggregate dollar cap limitation of Section 13.3(c). If additional remediation or
monitoring activities are required by a Governmental Authority, such additional
activities shall be a new claim and shall be subject to the terms and provisions
of Section 14.1(a)(i) above.
(b) Seller's Remediation will be performed in accordance with the
requirements imposed by the applicable Governmental Authority. Seller will have
the sole right to negotiate with the Governmental Authority, and all Seller's
Remediation will be conducted under Seller's exclusive direction; provided,
however, that without the written consent of Buyer, which consent will not be
unreasonably withheld, Seller may not agree to any condition, clause or
settlement that: (i) creates any 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.
(c) Buyer agrees to use its reasonable and good faith efforts to cooperate
with Seller in all matters relating to Seller's Remediation. Except for actions
or activities that represent a de minimus cost for Buyer and subject to Section
13.7 above, such cooperation shall be at Seller's expense. For the duration of
any Seller's Remediation, Buyer hereby grants to Seller, its agents, employees,
contractors and consultants, all access reasonably necessary to perform Seller's
Remediation at reasonable times and in compliance with any health, safety
security, or business requirements of Buyer. Such access will include use of
utilities at the building as required to operate remediation devices, use of
sewer pipes for discharge of groundwater extracted as part of Seller's
Remediation), parking and storage space. Buyer also hereby agrees to allow
Seller to install and maintain any monitoring or remediation devices at, on or
under the Real Estate, including, but not limited to, monitoring wells, soil
vapor extraction systems or groundwater recovery and treatment systems, that are
required by any Governmental Authority or that Seller deems reasonably necessary
to perform Seller's Remediation, including the groundwater monitoring wells and
the groundwater extraction and treatment systems installed at the Real Estate by
Seller prior to the Closing Date; provided, however, that whenever possible, any
such monitoring or remediation devices installed after the Closing Date will be
located to minimize impact on Buyer's operations. Seller will use reasonable
good faith efforts to avoid or minimize interference with the ongoing business
of Buyer in its performance of Seller's Remediation.
(d) Buyer may, at its own expense, monitor Seller's Remediation. Upon
request, Seller will provide to Buyer, at no expense, copies of all data and
final reports, and correspondence from or to any Governmental Authority relating
to Seller's Remediation. Seller will inform Buyer of, and Buyer, at its own
expense, may participate in, any meetings with any Governmental Authority
concerning Seller's Remediation, including the scheduling of Seller's
Remediation.
(e) With respect to any individual claim made by a Governmental Authority,
Seller's obligation under Section 14.1(a) above will terminate upon the earlier
of: (i) receipt of notice from any Governmental Authority with jurisdiction that
Seller's Remediation is accepted or (ii) three (3) years after the last
groundwater monitoring event required by a Governmental Authority; provided,
however, that with respect to such individual claim, no other monitoring or
remediation of soil or groundwater at the Real Estate is then required of Seller
by any Governmental Authority under Section 14.1(a). If with respect to any
individual claim made by a Governmental Authority, the conditions of this
subparagraph (e) are satisfied but a Governmental Authority thereafter requires
further monitoring or remediation of Hazardous Substances in soil or
groundwater, such subsequent action shall be deemed to be a new and separate
claim for purposes of Section 14.1(a) above.
(f) Subject to the limitations specified in Section 13.3(c) above, Seller
will indemnify and hold Buyer harmless from all claims alleging injury to
persons, including death, or damage to real or personal property that are
asserted against Buyer by any third party (excluding any Affiliate or employee
of Buyer) within a period of seven (7) years from the Closing Date and that: (i)
arise from the presence in soil or groundwater at or emanating from the Real
Estate of any Hazardous Substance that is: (A) identified in the Environmental
Reports; or (B) that Buyer can otherwise demonstrate is then present in the soil
or groundwater at or emanating from the Real Estate as a result of Seller's
operations or activities at the Real Estate prior to the Closing Date; or (ii)
arise from the transportation or disposal prior to the Closing Date of any
Hazardous Substances generated from the operation of the Transferred Assets or
otherwise from Seller's operations at the Real Estate Subject to the limitations
specified in Section 13.3(c) above, Seller will also indemnify and hold Buyer
harmless from any claims by a Governmental Authority that (i) may hereafter
arise under applicable law, (ii) are asserted against Buyer within seven (7)
years from the Closing Date, and (iii) allege that Buyer is liable for
monitoring or remediation activities at any third party facility to which
Hazardous Substances generated from the operations of the Transferred Assets or
otherwise from Seller's operations at the Real Estate prior to the Closing Date
were transported or disposed.
(g) Notwithstanding any other provision of this Agreement, Seller's
obligations under this Section 14.1 will cease immediately upon the occurrence
of the following: Buyer stores or uses, or allows to be stored or used, at the
Real Estate any product or material that contains any PCE, TCE, TCA or any
breakdown product thereof that is a Hazardous Substance.
(h) If Buyer fails to provide access to Seller in the manner described in
Section 14.1 (c), above, or due to Buyer's business requirements Buyer is unable
to provide access reasonably required by Seller, and such failure or inability
prevents Seller from timely performing any activity required by a Governmental
Authority to be performed as part of Seller's Remediation and, in addition, the
Governmental Authority imposes a fine on Seller or Buyer as a result of such
failure, then Seller's obligations under this Section 14.1 shall cease as
regards that portion of any action or activity that Seller was unable to so
perform; provided, however, that before Seller may invoke this subparagraph (h),
Seller must first (A) have permitted Buyer to participate in meetings and the
scheduling therof as set forth in Section 14.1(d) above, (B) notify Buyer in
writing that Buyer's failure or inability to grant access as requested by Seller
has or may prevent Seller from performing as required; and (C) if Buyer asserts
health, safety, security or business requirements as a reason for denial of
access, then Seller must also make reasonable efforts, together with Buyer if
Buyer so requests, to obtain from the applicable Governmental Authority a delay
or modification, as applicable, that will enable Seller to perform the action or
activity required by the Governmental Authority while satisfying Buyer's
requirements. Notwithstanding the foregoing, if and when a Governmental
Authority threatens imposition of a fine or penalty for a failure of Seller to
timely perform any activity required by a Governmental Authority to be performed
as part of Seller's Remediation and such failure by Seller is due to Buyer's
failure or inability to provide access to Seller, Buyer will assume the defense
of the claim and, to the extent permitted by law, Buyer will also assume the
liability for any penalty imposed by the Governmental Authority for such
failure.
14.2 Buyer's Indemnity.
(a) Subject to Section 13.7 above, Buyer will bear the expenses of, and
responsibility for, any claims asserted by any Governmental Authority within
seven (7) years after the Closing Date that monitoring or remediation of soil or
groundwater at the Real Estate is required under Environmental Laws for any
Hazardous Substance that Seller can demonstrate is then present in the soil or
groundwater as a result of Buyer's operations or activities at the Real Estate
after the Closing Date. All monitoring and remediation activities required to be
performed by Buyer pursuant to this Section 14.2 will be referred to
collectively as Buyer's Remediation."
(b) With respect to any individual claim made by a Governmental Authority,
Buyer's obligation under Section 14.2(a) above will terminate upon the earlier
of: (i) receipt of notice from any Governmental Authority with jurisdiction that
Buyer's Remediation is accepted or (ii) three (3) years after the last
groundwater monitoring event required by a Governmental Authority; provided,
however, that with respect to such individual claim, no other monitoring or
remediation of soil or groundwater at the Real Estate is then required of Buyer
by any Governmental Authority under Section 14..2(a). If with respect to any
individual claim made by a Governmental Authority, the conditions of this
subparagraph (b) are satisfied but a Governmental Authority thereafter requires
further monitoring or remediation of Hazardous Substances in soil or
groundwater, such subsequent action shall be deemed to be a new and separate
claim for purposes of Section 14.2(a) above.
(c) Buyer will indemnify and hold Seller harmless from all claims alleging
injury to persons, including death, or damage to real or personal property that
are asserted against Seller by any third party (excluding any Affiliate or
employee of Seller) within a period of seven (7) years from the Closing Date and
that: (i) arise from the presence in soil or groundwater at the Real Estate of
any Hazardous Substance that is : (A) not identified in the Environmental
Reports or (B) that Seller can otherwise demonstrate is then present in the soil
or groundwater at the Real Estate as a result of Buyer's operations or
activities at the Real Estate after the Closing Date; or (ii) arise from the
transportation or disposal after the Closing Date of any Hazardous Substances
generated from the Transferred Assets or otherwise from the Buyer's operations
at the Real Estate.
(d) Buyer will also reimburse Seller for any damage caused by Buyer's
operations and activities to any soil or groundwater monitoring or remediation
devices present at the Real Estate on the Closing Date or installed by Seller
after the Closing Date as part of Seller's remediation.
14.3 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 arising out of or related to the presence of Hazardous Substances on or
under the Real Estate will be pursuant to the indemnification provisions set
forth in this Article 14. Nothing set forth in this Agreement will be deemed to
prohibit or limit either party's right at any time after the Closing Date to
seek injunctive or other equitable relief for the failure of the other party to
perform its obligations under the indemnification provisions contained in this
Article 14. Notwithstanding the foregoing, the procedures set forth in Section
13.4 above shall apply to any claim for which Buyer or Seller, as applicable,
seeks indemnification under this Section 14.
ARTICLE 15
TERMINATION
15.1 Term. Unless terminated pursuant to Section 15.2 below, this Agreement
shall continue in effect until full and final performance of all of the terms
herein.
15.2 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
(a) by the mutual consent of Buyer and Seller;
(b) by Buyer if the Closing shall not have occurred on or before November
30, 1998;
(c) by Seller if the Closing shall not have occurred on or before October
30, 1998;
(d) by Buyer in the event of any material Warranty Breach or material
Covenant Breach by Seller and the failure of Seller to cure such breach after
receipt of notice from Buyer requesting such breach to be cured; or
(e) by Seller in the event of any material Warranty Breach or material
Covenant Breach and the failure of Buyer to cure such breach after receipt of
notice from Seller requesting such breach to be cured.
15.3 Notice of Termination. Any party desiring to terminate this Agreement
pursuant to Section 15.2 above shall give notice of such termination to the
other party to this Agreement.
15.4 Effect of Termination. In the event that this Agreement shall be
terminated pursuant to this Article 15, this Agreement shall forthwith become
void; provided however, that nothing herein shall relieve any party from
liability for any willful breach by a party of its obligations in this
Agreement; and provided that the agreements contained or referred to in Sections
16.12 and 16.13 will remain in full force and effect and survive termination of
this Agreement.
ARTICLE 16
GENERAL PROVISIONS
16.1 Survival of Covenants, Representations and Warranties. Except as
otherwise provided in Section 13.1 above, the covenants, representations and
warranties contained in this Agreement and in all certificates and documents
delivered pursuant to or contemplated by this Agreement (in the case of
covenants, to the extent that they have not been fully performed at or prior to
the Closing) shall survive the closing of the transactions contemplated hereby
and shall continue in full force and effect for the benefit of the party
entitled to the benefit thereof.
16.2 Dispute Resolution. For any dispute or claim arising out of or
relating to this Agreement, or breach hereof, the parties, prior to filing any
claims in a court of law, shall in good faith first negotiate a written
resolution of such dispute or claim within a period not to exceed thirty (30)
days from the date of receipt of a party's request for such negotiation. Such
negotiations shall be conducted by managers of each party who have authorization
to resolve any such dispute or claim. In the event the parties cannot negotiate
a written resolution to such dispute or claim during this thirty (30) day
period, either party may seek to resolve the dispute or claim in a court of
competent jurisdiction or seek other legal or equitable resolution. The judgment
or decree of a court shall be deemed final when the time for appeal, if any,
shall have expired and no appeal shall have been taken or when all appeals taken
shall have been finally determined. Notwithstanding the foregoing, either party
at any time may apply to any court of competent jurisdiction for injunctive
relief in the event of an alleged breach of this Agreement or otherwise to
prevent irreparable harm.
16.3 Notices.
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person, transmitted by
telecopy or similar means of recorded electronic communication or sent by
registered mail, charges prepaid, addressed as follows:
(i) if to Seller:
Hewlett-Packard GmbH
Herrenberger Str. 110-140
71034 Boblingen
Germany
Attn: Managing Director, Finance and
Administration
Telecopier No.: +49 7031 14 1657
with a copy to:
Hewlett-Packard Company
3000 Hanover Street
MS:20-BQ
Palo Alto, California 94304
U.S.A.
Attention: General Counsel
Telecopier No.: (650) 857-4392
(ii) if to Buyer:
Multilayer Technology, Inc.
16 Hammond
Irvine, California 92618
U.S.A.
Attention: President
Telecopier No.: (949) 454-2022
with a copy to:
Cooley Godward LLP
2595 Canyon Boulevard
Suite 250
Boulder, Colorado 80302
Attention: Carrie L. Schiff, Esq.
Telecopier: (303) 546-4099
(b) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was personally delivered or
transmitted by telecopier, receipt confirmed (or, if such day is not a Business
Day, on the next following Business Day) or, if mailed, on the third Business
Day following the date of mailing or, if couriered overnight, on the next
following Business Day; provided, however, that, if at the time of mailing or
within three Business Days thereafter there is or occurs a Labor dispute or
other event which might reasonably be expected to disrupt the delivery of
documents by mail, any notice or other communication hereunder shall be
delivered or transmitted by means of telecopier as aforesaid.
(c) Either party may change its address for service at any time by giving
notice to the other party in accordance with this Section 16.3.
16.4 Currency. Unless otherwise indicated, all currency amounts referred to
in this Agreement are expressed in United States Dollars. For purposes of
converting German Marks to United States Dollars for purposes of any settlement
under Article 3 of this Agreement, the exchange rate shall be the Frankfurt
"Fixing," which is the rate fixed by the Federal Bank of Germany, for the
Closing Date and which is published in the Handelsblatt on the next business day
after the Closing Date.
16.5 Sections and Headings. The division of this Agreement into Articles,
Sections, paragraphs, Schedules and Exhibits and the insertion of headings and
an index are for convenience of reference only and shall not affect the
construction or the interpretation of this Agreement. Unless otherwise specified
herein, any reference in this Agreement to an Article, Section, paragraph,
Schedule or Exhibit refers to the specified Article, Section or paragraph of or
Schedule or Exhibit to this Agreement. In this Agreement, the terms "this
Agreement", "hereof", "herein", "hereunder" and similar expressions refer to
this Agreement and not to any particular part, Article, Section, paragraph or
other provision hereof.
16.6 Rules of Construction. Unless the context otherwise requires, in this
Agreement:
(a) words importing the singular number only shall include the plural and
vice versa and words importing the masculine gender shall include the feminine
and neuter genders and vice versa;
(b) the word "or" may be conjunctive or disjunctive, as the context may
require;
(c) the words "include", "includes" and "including" means "include",
"includes" or "including", in each case, "without limitation";
(d) reference to any agreement or other instrument referred to herein shall
mean such agreement or other instrument as amended, modified, replaced or
supplemented from time to time to the extent permitted by applicable provisions
thereof and by this Agreement;
(e) reference to any statute shall be deemed to be a reference to such
statute as amended, re-enacted or replaced from time to time;
(f) if there is any conflict or inconsistency between the provisions
contained in the body of this Agreement and those of any Schedule or Exhibit
(other than the Operative Agreements) hereto, the provisions contained in the
body of this Agreement shall prevail;
(g) time periods within which a payment is to be made or any other action
is to be taken hereunder shall be calculated excluding the day on which the
period commences and including the day on which the period ends; and
(h) whenever any payment to be made or action to be taken hereunder is
required to be made or taken on a day other than a Business Day, such payment
shall be made or action taken on the next following Business Day.
16.7 Construction. The parties hereto acknowledge that their respective
legal counsel have reviewed and participated in settling the terms of this
Agreement and that any rule of construction to the effect that any ambiguity is
to be resolved against the drafting party, shall not be applicable in the
interpretation of this Agreement.
16.8 Entire Agreement. This Agreement and the CDA, together with the
agreements specifically contemplated herein or entered into or delivered in
connection herewith (even if not specifically identified in Articles 11 and 12
to be delivered at the Closing), constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements (including all understandings, negotiations and discussions, whether
written or oral, including the Memorandum of Understanding. There are no
conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided or as provided in other
documents executed and delivered by the parties in connection herewith.
16.9 Time of Essence. Time shall be of the essence of this Agreement.
16.10 Applicable Law; Consent to Jurisdiction. This Agreement shall be
construed, interpreted and enforced in accordance with, and the respective
rights and obligations of the parties shall be governed by, the laws of Germany
without reference to the conflict of laws principles thereof. The place of
jurisdiction shall be Stuttgart.
16.11 Waiver of Jury Trial. Each party hereto hereby waives, to the fullest
extent permitted by applicable laws, any right it may have to a trial by jury
with respect to any litigation directly or indirectly arising out of, under or
in connection with this Agreement or any of the other operative Agreements. Each
party hereto (a) certifies that no representative, agent or counsel of the other
party has represented expressly or otherwise that the other party would not, in
the event of litigation, seek to enforce the foregoing waiver, and (b)
acknowledges that it and the other party hereto have been induced to enter into
this Agreement and the other Operative Agreements by, among other things, the
mutual waivers and certifications contained in this Section 16.11.
16.12 Public Announcement. The Parties shall consult with each other before
issuing any press release or making any other public announcement with respect
to this Agreement or the transactions contemplated hereby and, except as
required by any applicable law or regulatory requirement, neither of them shall
issue any such press release or make any such public announcement without the
prior written consent of the other, which consent shall not be unreasonably
withheld or delayed.
16.13 Expenses. Except as otherwise provided herein, each Party shall be
responsible for the expenses (including fees and expenses of legal advisors,
accountants and other professional advisors) incurred by it and its Affiliates,
respectively, in connection with the negotiation and settlement of this
Agreement and the Operative Agreements and the completion of the transactions
contemplated hereby and thereby.
16.14 Confidentiality. The parties shall keep the terms and conditions of
this Agreement confidential on the terms and subject to the conditions contained
in the CDA. After the Closing, Seller agrees to treat as "Buyer Confidential
Information" that information relating to the Transferred Assets which under the
terms of the CDA constituted "Seller Confidential Information" on the terms and
subject to the conditions contained in the CDA.
16.15 Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct. To the extent that any such
provision is found to be invalid, illegal or unenforceable, the parties hereto
shall act in good faith to substitute for such provision, to the extent
possible, a new provision with content and purpose as close as possible to the
provision so determined to be invalid, illegal or unenforceable.
16.16 Successors and Assigns. 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 Buyer nor Seller may assign its obligations
hereunder without the written consent of the other, which consent shall not be
unreasonably withheld or delayed; and further provided, that it shall not be
deemed unreasonable for Seller to withhold its consent to any such proposed
assignment of obligations by Buyer if such proposed assignment is during the
Three Year Period. Notwithstanding the above, the Guarantor may not assign its
obligations hereunder without the prior written consent of Seller, which consent
may be withheld in Seller's absolute discretion.
16.17 Accounting Treatment. Except as otherwise provide herein, all assets
and liabilities which are recorded on the Closing Date as part of an adjustment
under Article 3 or are otherwise calculated for purposes of settling payment
obligations in connection with the Closing, shall be calculated under GAAP. To
the extent the actuarial procedures as required in Germany in accordance with
Section 6a Einkommensteuergesetz [EStG] (the German Income Tax Act) with respect
to the calculation of pension liabilities are in conflict with GAAP, then such
procedures shall be used in lieu of GAAP. To the extent any specific definition
in this Agreement defines an accounting term which is not in conformance with
the GAAP definition, then the definition as stated in this Agreement shall be
used as specified in the Agreement and, in those instances, in lieu of the GAAP
definition.
16.18 Amendment and Waivers. No amendment or waiver of any provision of
this Agreement shall be binding on either party unless consented to in writing
by such party. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision, and no waiver shall constitute a continuing
waiver unless otherwise provided.
16.19 Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by their duly authorized representatives and become effective as of
the date and year first written above.
HEWLETT-PACKARD GmbH
/s/ Rudi Speier
------------------------------
By:Rudi Speier
Title:Managing Director,
Finance and Administration
MULTILAYER TECHNOLOGY GmbH & Co KG
/s/ Peter Koenig
------------------------------
By: Peter Koenig
THE DII GROUP, INC.
/s/ Steven C. Schlepp
-----------------------------
By: Steven C. Schlepp
Title:Senior Vice President,
Interconnect Technologies
[SIGNATURE PAGE TO MASTER ASSET PURCHASE AGREEMENT]
[ENGLISH TRANSLATION OF GERMAN DOCUMENT. GERMAN VERSION IS CONTROLING]
REAL ESTATE PURCHASE AND SALE AGREEMENT
Hewlett-Packard GmbH & Co. Immobilien KG
Herrenberger Strabe 130
71034 Boeblingen
(the Seller)
- referred to as "HP" in the following -
and
Multilayer Technology GmbH & Co. KG
Herrenberger Strabe 110
71034 Boeblingen
(the Purchaser)
- referred to in the following as "Multek Europe" -
- jointly referred to as "the Parties" in the following -
herewith conclude the following Property Purchase Agreement:
<PAGE>
1. Purchase Object
HP sells Multek Europe the property, Flst.-Nr. 3355, in the
municipality of Boeblingen, Boeblingen Land Register book no. 3639,
Section I No. 4, whose total area is 44.662m2, including the building
located thereon as shown on the Land Register Map N(degree) NW
1604/1605; VN-Nr. 1998/35 attached as Schedule 1, the correctness of
which the parties herewith confirm.
Accessories and inventory, including in particular the production
facility, are not being sold under this Agreement.
- referred to as "Property" in the following -
2. Content of the Land Register
In Section I of the Land Register, HP is registered as the sole owner;
in Section II the following encumbrances are laid down:
- Regarding 30,001 m squared (former Flst 3356): Easement in gross
for Stadt Boeblingen involving maintenance of supply-lines. Entry
made on January 13, 1964
- Regarding 10,138 m squared (former Flst 3362): Easement in gross
for Stadt Boeblingen involving maintenance of a waste water line
with drains and limits on use. Entry made on June 24, 1964
- Regarding 1,519 m squared: Easement in gross for Stadt Boeblingen
involving maintenance of a waste water line with drains and
limits on use. Entry made on June 8, 1972
- Regarding 4,523 m squared (former Flst 3357/104): Easement in
gross for Stadt Boeblingen involving maintenance of a urban
drainage water line and limits on use. Entry made on June 23,
1978
- Regarding 4,523 m squared (former Flst 3357/104): Easement in
gross for Federal Republic of Germany (Federal Railway Assets)
represented by the German Railway, Railway-Authority Stuttgart,
consisting of the right to use and access the real estate to
build, operate and maintain an electric power line. Entry made on
August 8, 1983)
Multek Europe assumes the encumbrances mentioned above.
According to the Land Register, Section III is free of encumbrances.
The parties acknowledge their awareness of the possible right of first
refusal of the city of Boeblingen in accordance with ss. 24 et seq. of
the German Construction Code. Regarding this right of first refusal
according to the German Construction Code the negative certification
has already been issued by the city of Boeblingen.
Multek Europe understands and agrees that a cold water line as well as
phone, IT and 10kV power line run under/in the Property. Both HP and
Multek Europe shall be obliged to allow the use of the 10kV power line
in an emergency case provided that the parties do not otherwise
dispose of the respective real estates (Flst. 3355 and Flst. 3357).
The parties understand and agree that in no case shall HP be liable or
responsible for removal of any of these lines.
HP shall grant Multek Europe an easement of access (to public
transport "S-Bahn" for pedestrians) concerning the real estate, Flst.
3357, whereas the exercise of this right is limited to the area as
marked in Schedule 2. Such easement of access shall be granted
provided that HP does not dispose of this real estate in any other
way.
3. Payment of Purchase Price
3.1 Purchase Price
The Purchase Price ammounts to:
28.000.000,- DM (twenty-eight million German Mark)
+ 16%VAT 4.480.000,- DM (four million four-hundred-eighty-thousand
German Mark)
-----------------
Gesamt 32.480.000,- DM (thirty-two million four-hundred-eighty-thousand
German Mark)
The Purchase Price will be due immediately after signature and payable according
to sec. 3.2. HP waives its claim to receive VAT from Multek Europe. In
consideration hereof Multek Europe assigns its right to VAT reimbursement to HP,
HP accepts the assignment. HP and Multek Europe shall file a notice of
assignment to the local tax authorities according to Section 46 Fiscal Code
(Abgabenordnung).
3.2 Payments
The purchase price shall be paid immediately after being due according to
subsection 3.1 and shall be paid per Telex order to HP, account number 512 6842
at the Commerzbank Stuttgart (BLZ 600 400 71). The Purchase Price shall be
deemed to be paid if the whole amount is credited as of today.
4. Development, Waste Water and Water-Supply Fees
The purchase price contains all development and adjacent property charges which
have thus far been charged by the municipality of Boeblingen in accordance with
local tax law and the Building Code in accordance with the current factual
position and on the basis of currently valid rates of the city of Boeblingen or
which are based on measures executed until today. Pursuant hereto, HP pledges
that all fees charged have been paid. Development and adjacent property charges
which are based on measures executed after the Transfer and which are accrue or
are filed for following the conclusion of this Property Purchase Agreement shall
be borne by Multek Europe.
5. Transfer
The transfer of the Property and all accompanying legal rights and obligations
(usage, encumbrances, liability and risk) to Multek Europe shall be effective
with the Signature of this Agreement. On that day at the latest all essential
documents regarding the Real Property currently known have to be handed over to
Multek Europe as far as existing.
6. Liability for Defects of Title
HP shall be liable for unimpeded transfer of possession and ownership and for
the Property being free from any public or private encumbrances or any other
rights held by third parties if such rights and encumbrances are not expressly
stated in Section 2 of this Agreement and it has been agreed that Multek Europe
shall assume such rights and encumbrances.
HP represents and agrees that the Property has not been rented or leased, either
in whole or in part.
Furthermore, HP represents and warrants that legal preemption rights other than
the statutory right of the city of Boeblignen do not exist or are not exercised;
and until the registration of the priority notice of conveyance, HP will not
permit registration of any charges or encumbrances in Section II and III of the
Land Register with regard to the Real Property.
7. Liability for Material Defects
Unless otherwise provided for herein, the Real Property will be sold without
liability for size, quality and condition as well as for non-material defects.
HP shall not and does not assume any warranty for the quality of the property
and the condition of the building at the point in time when it is transferred,
for the correctness of the dimensions listed for the space and freedom from
encumbrances which apply without entry of such having been made in the Land
Register. The ownership of the land shall be transferred as is. HP has not
pledged any features hereto. Nor shall HP be liable for any hidden defects with
the exception of those of which it is aware. HP represents and agrees that it is
not aware of any hidden defects. Multek Europe has been expressly made aware,
and agrees, that liability by HP for material defects is excluded.
Multek Europe has been informed as to contamination present on the property and
the measures which have been taken to clean up such as laid down in the reports
as far as known to HP. HP therefore shall not and does not assume any liability
for the Property being free from other contamination notwithstanding other
contractual provisions to the contrary.
8. Swap Option / Information Obligation
Multek Europe shall be granted the option to barter an area of the real estate,
Flst. 3357 (the road between the adjacent property of Property and the railroad
as set forth in Schedule 2) right for a compensation area accepted by HP. In the
case that HP sells the road between the adjacent property of Property and the
railroad to a third party, HP shall commit the third party respectively .
9. Costs, Taxes, Public Levies
The costs which arise in conjunction with this Agreement and its performance and
the real property acquisitions tax shall be borne by Multek Europe.
Taxes and other public levies shall be borne by Multek Europe beginning with the
signature of this Agreement.
10. Conveyance
The Parties jointly agree that the ownership of the Real Property mentioned in
Section 1 of this Agreement is transferred from HP to Multek Europe.
The acting notary is hereby instructed to apply for execution of the conveyance
only after the payment of the purchase price to the full amount and he received
a respective proof by HP. Prior to that the notary shall not furnish official
copies or transcriptions containing the conveyance.
To secure the claim of Multek Europe to transfer of the property, HP approves
and Multek Europe applies for an entry of a priority notice of conveyance
encumbering the Property in the Land Register.
The priority notice shall be deleted upon entry of Multek Europe as owner in the
Land Register. Such deletion shall already be applied for and approved here and
now on the present day.
11. Voidability, Nullity and Assignability
The voidability or nullity of particular stipulations in this Agreement shall
not affect the remaining stipulations of the Property Purchase Agreement. In
such case the Parties shall be obligated to replace the null and void
stipulation with a stipulation which comes as close as possible to the intended
economic purpose of the null and void stipulation.
The transfer of rights under this Agreement shall only be allowed with the prior
written consent of the other Party.
12. Schedules
Schedule 1: Land Register Map
Schedule 2: Easement of Access / Drawing of the Road
13. Notarial Instruction
The content of this today's Agreement was negotiated among the attorneys of the
parties. The parties expressly wish no changes to the content or the language of
this Agreement and insist on the notarization of the Agreement with this given
content taking into account the advice regarding other language.
The notary or its representative has given the necessary advices and
instructions.
This document was read loud by the notary or its representative, the schedules
have been presented, the document and the schedules have been approved and
signed as follows.
[ENGLISH TRANSLATION OF GERMAN DOCUMENT. GERMAN VERSION IS CONTROLING]
Tenancy Agreement for Office Space
between
Multilayer Technology GmbH & Co. KG
Herrenberger Strabe 110
71034 Boeblingen
- referred to in the following as the "Multek Europe" -
and
Hewlett-Packard GmbH
Herrenberger Strabe 130
7030 Boeblingen
- referred to in the following as "HP" -
Preamble
The Parties have concluded a MASTER ASSET PURCHASE AGREEMENT, under which
Hewlett-Packard GmbH intends to transfer its subdivision Printed Circuit
Organization ("PRCO"), which is located in Building 1, Herrenberger Strabe 110,
71034 Boeblingen, to Multek Europe.
In the course of this transfer, Building 1 and the property of which it is part
are to be sold to Multek Europe by HP. HP would, however, like to continue to
use office space, warehouse space, kindergarden space and production facilities
on the property.
HP will use commercially reasonable endeveaours to find other suitable space for
the HP-Kindergarden.
In view of the foregoing, the Parties herewith agree:
1. Leasing object
Multek Europe shall lease HP a space of approximately 7,000 m squared n the
main floor/in the second story/basement of the leasing object it owns and
which is located at Herrenberger Strabe 110, 71034 Boeblingen. The
situation, furnishing and design of the leased space and the collectively
used space (including treatment room) are shown on the Drawings attached in
Appendices 1, 2, and 3.
Multek Europe shall be obliged to provide the facility management services
including minor repairs, exchange of lights, cleaning, caretaker and
gardener services etc as laid down in Appendix 4. In addition Multek Europe
shall provide reception services (e.g. reception of HP-visitors in the
common used lobby) to HP. In exchange the lump sum laid down in number 2
shall be paid. This lump sum shall mutually be modified if the respective
utilization of the common used lobby by the parties changes (for the time
being HP and Multek Europe each use half of the reception services based on
the number of visitors).
Employees of HP working at the space leased to HP as well as their visitors
("HP-Employees" in the following) may use the marked automobile parking lot
on the real estate of Multek Europe.
The usage of the collectively used space and the parking lot for
automobiles shall be deemed to be paid for upon the payment of the rent
(number 2).
In addition HP is granted a right of access and use regarding the loading
gates for incoming and outgoing goods as well as the goods-exchange-space
of Multek Europe. In exchange the lump sum laid down in number 2 shall be
paid. This lump sum shall mutually be modified if the ratio of use changes
which is based on the respective use of the goods-exchange-space by HP and
Multek Europe (for the time being HP uses 2/3, Multek Europe 1/3 of the
loading gates). The operation of the loading gates will be done by a
mutually agreed upon third party (for the time being Panalpina AG), which
is separately engaged by Multek Europe and HP.
Multek Europe guarantees that it will permit admission of HP-Employees to
the on-premises cafeteria. The parties shall enter into a specific,
separate agreement concerning the use of this cafeteria.
As far as applicable the House Rules of Multek Europe shall be observed by
the HP-Employees.
The ratio of the use of the loading gates / goods-exchange-space as well as
the ratio of utilization of the common used lobby will be subject to a
quaterly review.
The waste management regarding the HP-waste resulting out of production
activities will be HP's responsibility. Regarding the waste management of
the other waste the parties shall enter into a specific, separate
agreement.
2. Rent
2.1 The monthly rent shall be:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- --------------------------- ------------------ ----------------------------- --------------------------
Production- and Warehouse 2,936 m squared DM 24.- / m squared 70,464.- DM
space
Office space 4,031 m squared DM 29.- / m squared 116,899.- DM
Kindergarden 4,000.- DM
Loading gates 3,600.- DM
Reception services 5,000.- DM
- --------------------------- ------------------ ----------------------------- --------------------------
Sum: 199,963.- DM
</TABLE>
The Value-Added Tax has to be added to the rent.
All additional expenses including facility management services described in
Appendix 4 shall be deemed to have been paid upon payment of the rent. If the
consumption costs deviate more than 10% from the costs laid down in Appendix 4
the parties shall agree on an adjustment of the rent.
2.2 The entire monthly rent shall be remitted in advance to the account of
Multek Europe at the name of the Commerzbank Stuttgart, account no. 662
0404 (bank code (BLZ): 600 400 71) by the 3rd working day of each month.
3. Commencement of tenancy / term of tenancy / termination
3.1 The tenancy relationship shall commence on November 1, 1998, but no earlier
than effectiveness of the transfer of the subdivision PRCO from HP to
Multek Europe ("Closing").
3.2 With respect to the rooms referred to in Appendix 1 as long as these rooms
are used by HP-EMRO, the tenancy relationship shall be unlimited in time.
Insofar it may be terminated in whole or in part by 18 months' prior notice
to the end of each calendar quarter. Multek Europe is entitled to terminate
the lease regarding the rooms referred to in Appendix 1 as long as these
rooms are used by HP-EMRO in whole or in part by three months prior notice
to the end of each month provided that Multek Europe offered replacement
rooms located in the leasing object to HP which were accepted as a suitable
replacement by HP in advance of the notification. HP will not unreasonably
withheld such acceptance. Multek Europe shall bear all removal expenses.
3.3 With respect to the rooms referred to in Appendix 3, the tenancy
relationship is limited to 07/31/1999. Upon HP's request and with Multek
Europe's approval the tenancy relationship shall be extended insofar for
one month respectively up to 10/31/1999 at the latest. Multek Europe shall
not unreasonable withhold such approval. HP is entitled to terminate by
three months' prior notice to the end of each month.
3.4 In all other cases the tenancy relationship is unlimited in time. Insofar
it may be terminated by six months prior written notice to the end of each
calendar quarter.
3.5 The termination notice has to be transmitted with registered mail.
4. Option to lease additional space
4.1 Multek Europe shall grant HP the option to lease additional space as soon
as the office space allows for an extension of the leased space provided
that Multek Europe does not need the space for itself or an affiliated
company.
4.2 Should HP make use of the above-stated rights in accordance with 4.1, the
stipulations of this Agreement (e.g. regarding rent, fixed term of lease,
periods of notice to terminate the Agreement, etc.) shall apply to the
additional space and/or the parking lot accordingly.
5. Transfer
The transfer of the leasing object shall take place on the closing date.
The agreed-upon rent shall be paid beginning with such date regardless of
any assignment of the space in the buildings or other work which HP may
undertake in the leasing object which may not yet have been completed.
6. Maintenance of the leasing object
6.1 HP shall be obligated to treat the leasing object with care and only use it
for the contractually stipulated purpose.
6.2 Upon termination of the Lease Agreement HP shall return the leased space in
an impeccably clean condition. The leasing object must be in a condition
which is commensurate with normal wear and tear upon its return.
All keys shall be returned.
7. Advertising and notices
HP shall be entitled to place illuminated notice signs in the leasing
object along with easily visible signs of company names of HP at the
entryway in mutual agreement with Multek Europe. HP may place a sign in the
entryway indicating the new address of HP after HP moves out of the object.
8. Competitors provision
8.1 Multek Europe may not lease any parts of the leasing object to any
enterprise which is a competitor of HP Boeblingen nor allow it to be used
in any other way by a competitor of HP Boeblingen.
8.2 Multek Europe shall ensure that other tenants of the leasing object do not
sub-let the object to any enterprise which is a competitor of HP Boeblingen
nor make such object available in any other way to a competitor of HP
Boeblingen.
8.3 This section shall not apply to Multek Europe's affiliated companies.
9. Facilities and equipment
9.1 HP may provide the leasing object or parts of the leasing object with its
own facilities and equipment.
9.2 HP shall remove the facilities and equipment created by it upon the
termination of the Lease Agreement if there is no other agreement concluded
with Multek Europe on this subject prior to installation.
9.3 Upon termination of the Lease Agreement Multek Europe is entitled to
purchase the active components of the Low Area network (as laid down in
Appendix 5) as used by HP prior to termination at book value. Multek Europe
shall take over the pasive components of the network upon termination of
the Lease Agreement.
10. Alterations and changes to the leasing object
10.1 HP has the right to build or otherwise make improvements upon the leased
space, including the addition of its own furnishings and installations such
as, for example, easily removable dividing walls, to the extent such
improvements or additions do not involve structural or visible changes in
the leased space and do not materially alter the use of the leased space as
office space, warehouse space, and production facility.
HP must insofar restore the building to its original condition upon the
termination of the Leasing Agreement.
10.2 Other alterations or changes in the building may only be undertaken with
the consent of Multek Europe. Multek Europe may only refuse to provide
consent for alterations to the building desired by HP if it is to be
expected that these would endanger the leasing object or constitute a
impingement on Multek Europe's operating interests.
HP need insofar not restore the building to its original condition upon the
termination of the Leasing Agreement.
10.3 Multek Europe may only undertake to alter or change the leasing object with
the consent of HP. HP may only refuse to provide consent for alterations to
the building desired by Multek Europe if it is to be expected that these
would endanger the use of the leasing object by HP or constitute a
impingement on HP's operating interests.
11. Liability, insurance
11.1 Multek Europe shall conclude at a minimum a fire and water-pipe insurance
and a building owner's liability insurance at conditions common in the
Federal Republic of Germany for the leasing object in Multek Europe's
capacity as owner of the building and at Multek Europe's own expense.
Multek Europe shall maintain the insurance protection throughout the entire
leasing period. Multek Europe shall waive any possible rights of recourse
for damage which is covered by the above-stated insurance and which is
caused through the negligence of HP or third parties who hold an exemption
right from HP. This shall not apply if the damage incident has been caused
by HP through willful or gross negligence. Multek Europe shall submit this
contractual Agreement to its insurance companies as a precautionary
measure.
11.2 The liability of Multek Europe shall be limited in scope and amount to the
coverage of its liability insurance. This shall not apply in the case of
deliberate intent.
11.3 The insurance of objects introduced to the building shall be the
responsibility of HP.
11.4 HP shall not be liable for damage from the breakage of glass in or on the
leasing object unless such damage has been caused by negligence of HP,
persons employed by HP to fulfill its obligations, craftsmen, visitors,
etc..
11.5 The Parties agree that the premiums for the insurance to be paid by Multek
Europe shall be deemed to have been paid for upon the payment of the rent.
11.6 HP shall be liable for any chemical contaminations provided that these
contaminations are caused by HP's activities in the leased space.
HP shall indemnify and hold Multek Europe harmless from and against any
claim arsing from or in connection with Multek Europe's operations which
cause harm to the children or their nurses of the HP Kindergarten, whether
in contract, in tort or otherwise. HP shall also reimburse Multek Europe
for its additional insurance cost concerning the Kindergarten as long as HP
uses the Kindergarten.
11.8 HP shall provide Multek Europe with a certificate of insurance also
covering HP's operation of the HP Kindergarten on the leased premises.
12. Subleasing
Subject to Multek Europe's prior consent HP is entitled to sublease the
leasing object as a whole or in parts or permit the use of it to third
parties. This shall not apply in the case of a sublease to HP's affiliated
companies.
Multek Europe agrees to the subleasing to HP Kindergarten e.V.
13. Miscellaneous
13.1 No subsidiary verbal agreements have been made pursuant to this Agreement.
Any changes or amendments to this Agreement shall be subject to written
confirmation by HP and Multek Europe and shall expressly refer to the fact
that they are changes or amendments to the Agreement. These requirements
pertaining to form may only be waived in writing.
13.2 The Parties shall be obligated to replace any stipulation of this Agreement
which is invalid or ambiguous with a valid or unambiguous stipulation which
comes as close to the economic purpose of such invalid or ambiguous
stipulation as possible. This shall not affect the validity of the
remaining stipulations.
13.3 The place of performance for all obligations arising under this Agreement
shall be the location of the leasing object. The exclusive legal venue for
all disputes arising in conjunction with the Agreement shall be Stuttgart.
13.4 The following are incorporated by reference in this Agreement:
Appendix 1: Drawing of the offices, warehouse spaces, and production
facilities of the EMRO department
Appendix 2: Drawing of the remaining departments
Appendix 3: Drawing of the Kindergarden
Appendix 4: Facility Mangement Services
Appendix 5: Active Components of LAN
Place, date ................... Place, date ........................
On behalf of Multek Europe: On behalf of HP:
Confidential treatment has been requested as to portions of this exhibit
**** Indicates portions of text that have been redacted and filed separately
with the Securities and Exchange Commission.
DIVISION PURCHASE AGREEMENT
THIS DIVISION PURCHASE AGREEMENT (the "DPA") is made as of the 30TH day
of October, 1998 (the "Effective Date") by and between Hewlett-Packard Company,
a Delaware Corporation ("HP") and Multilayer Technology, Inc., a California
corporation ("Multek").
RECITALS:
HP and Multek wish to provide for the purchase by HP's Enterprise
Server Group HP-UX Server Manufacturing Business (ESG), an HP division that
manufactures high performance server products, of Printed Circuit Boards (PCBs)
from Multek's manufacturing facility in Boeblingen, Germany, Multilayer
Technology GmbH & Co. KG ("Multek/Europe").
The parties hereto hereby agree as follows:
1.0 DEFINITIONS OF TERMS USED:
The following terms shall have the meanings given for the purposes of
the DPA and any Schedule:
1.1 "DPA" shall have the meaning set forth in the introductory
paragraph of this agreement and includes all Schedules.
1.2 "PPM" shall mean parts per million and is used in the
calculation of Multek/Europe's quality performance to indicate
the amount of projected PCB failures based on one million PCB
units shipped.
1.3 "Engineering Changes" shall mean any electrical or mechanical
changes to the PCBs proposed by HP which would affect, among
other things, the performance, reliability, safety,
serviceability, appearance, dimensions, tolerances or
composition of the PCBs.
1.4 "NRE Costs" shall mean those non-recurring engineering project
development costs identified by Multek/Europe and agreed upon
by HP, whose agreement shall not be unreasonably withheld,
including, but not limited to, test development, manufacturing
process development and all tooling and fixture development
requirements.
1.5 "Specifications" shall mean HP's product drawings, parts list,
bills of materials, and other documentation relating to the
PCBs. The intent of the Specifications is to include all data
necessary for the proper manufacture, packaging and delivery
of the PCBs. HP agrees to provide Multek/Europe with its most
current Specifications and any updates thereto; provided,
however that any changes to the Specifications may only be
made subject to the terms and conditions of the DPA.
1.6 "Schedules" shall mean the schedules and addenda attached
hereto and incorporated herein by reference.
1.7 "Term" shall have the meaning set forth in Section 4.0 of this
DPA.
1.8 "TAM" shall mean ESG's total available market for PCBs,
excluding any prototype PCBs, calculated as ESG's
expenditures, in dollars, to procure PCBs over a one-year
period.
1.9 "CAPEX" shall mean capital equipment expenditures.
1.10 "Review Period" shall mean each of the following three
twelve-month periods: November 1, 1998 - October 31, 1999,
November 1, 1999 - October 31, 2000 and November 1, 2000 -
October 31, 2001.
1.11 "Contract Manufacturer" shall mean any third party company
contracted by HP to perform contract manufacturing services
for HP.
1.12 "TQRDC-E" shall mean technology, quality, responsiveness,
delivery, cost and environmental objectives.
1.13 "Panel" shall mean a production panel of PCBs.
1.14 "Acknowledge", "Acknowledged" or "Acknowledgment" shall refer
to the process by which Multek/Europe will notify ESG that it
is accepting ESGs purchase order for PCBs without any changes
or changes which comply with the terms and conditions of this
DPA.
2.0) ADMINISTRATION AND NOTICES:
This DPA is administered on behalf of HP by HP's ESG. Any notice sent by Multek
or Multek/Europe pursuant to this DPA is to be sent to the HP address specified
in the General Provisions Addendum of this DPA and to the attention of the
appropriate HP designee. Other HP entities may be added with mutual agreement of
both HP and Multek/Europe. This DPA is administered on behalf of Multek by
Multek/Europe. Any notice sent by HP or ESG is to be sent to the Multek address
specified in the General Provisions Addendum of this DPA and to the attention of
the appropriate Multek designee. Other Multek entities may be added with mutual
agreement of both HP and Multek.
3.0) PRODUCT SCOPE:
This Agreement covers the purchase of blank PCBs. A complete list
of these components and their price(s) are provided in the
attached Addendum IV. Additional components may be added to this
Agreement by an amendment, upon the mutual written agreement of
both HP and Multek/Europe.
4.0) TERM:
Unless earlier terminated pursuant to Section 20, this DPA will
be a (TERM) Agreement with an initial term of three years
commencing November 1, 1998 and ending October 31, 2001 the
"Initial Term"). This DPA may be renewed for additional one year
extensions (each a "Renewal Term") upon written agreement of the
parties. The parties agree to meet no less than sixty days prior
to the expiration of the Initial Term to consider the first
Renewal Term. Subsequently, both parties shall meet at least
sixty days prior to the expiration of any Renewal Term to
consider additional Renewal Terms. If the parties have not agreed
in writing to renew the DPA prior to the expiration of the
Initial Term or any subsequent Renewal Term then the DPA shall
terminate.
5.0) ****REDACTED****
5.1)****REDACTED****
5.2)****REDACTED****
6.0) LOCATION OF OPERATIONS:
6.1) Multek/Europe commits to continuing to supply HP during the duration
of this DPA from Boeblingen unless mutually agreed upon in writing by
HP and Multek/Europe. If Multek or Multek/Europe initiates a request
to qualify an additional Multek location to supply ESG with PCBs
pursuant to this DPA then Multek shall pay any associated
qualification costs unless otherwise mutually agreed to by
Multek/Europe and HP.
6.2) A minimum of twelve (12) months advance notice will be provided by
Multek/Europe to HP if any production is to be discontinued from
Multek/Europe, or any other Multek Facility which is supplying PCBs to
ESG pursuant to this DPA, unless mutually agreed to by Multek/Europe
and HP.
7.0 ) LEAD-TIME AND FLEXIBILITY:
7.1) Multek/Europe's lead-time between Acknowledgment of a purchase order
for PCBs and the shipment date for the PCBs (the "Lead-time") will be
five weeks with a long-term goal of reducing the Lead-time to four
weeks. Lead-times are subject to the Performance Measures as outlined
in Addendum V.
7.2) ****REDACTED****
7.3) Multek/Europe will allocate **** to ESG (the "Allocation"). Subject to
Section 7.4 below, Multek/Europe shall not be obligated to satisfy the
five-week Lead-time requirement for any portion of a purchase order
that is in excess of the Allocation and such failure to satisfy the
Lead-time requirement will not be included in the calculation of
Multek/Europe's performance pursuant to Addendum V.
7.4) ESG may submit increases to existing purchase orders which would be in
excess of the Allocation as follows:
i) 3 weeks prior to the requested delivery date - no flexibility
ii) weeks prior to the requested delivery date - increase by ****
iii) or more weeks prior to the requested delivery date - increase by ****
7.5) ESG's forecast for PCBs and the Allocation will be reviewed on a
monthly basis or at any other time that Multek/Europe or ESG is aware
that ESG's demand will not meet or will exceed the Allocation. ESG
acknowledges and agrees that any Allocation that it does not use in a
Lead-time period will be lost. If ESG consistently fails to use the
Allocation and the order forecast supports the order trend, then the
parties will agree to meet to adjust the Allocation to reflect the
business trend. If ESG's ongoing demand for a current PCB exceeds the
Allocation and if Multek/Europe cannot meet ESG's demand,
Multek/Europe will pay for all costs to qualify another Multek
manufacturing facility. Qualification costs will be limited to NRE,
tooling costs and any unrecoverable material as outlined in Addendum
VI.
8.0) DELIVERY:
8.1) General Orders. Multek/Europe will use their best efforts to satisfy
all delivery dates as identified in ESG's purchase order as
Acknowledged and as further set forth in the On Time Delivery
provisions of Addendum V. Multek/Europe will notify HP if any order
will be greater than five days late and HP may elect to reschedule
such purchase order as further set forth in Section 19 of this DPA.
8.2) ****REDACTED****
8.3) Prototype Orders. Multek/Europe agrees to pay HP's direct costs
arising from its inability to use the prototype assembly services
which it schedules with its Contract Manufacturers due to
Multek/Europe's shipment of prototype PCBs more than two days after
the originally Acknowledged delivery date. These costs will be the
actual amount billed HP by the Contract Manufacturer up to ****. HP
will provide Multek/Europe copies of invoices or charges from its
Contract Manufacturers upon Multek/Europe's request.
9.0) PRICING:
9.1) ****REDACTED****
9.2) ****REDACTED****
9.3) ****REDACTED****
9.4) All PCB prices will be in U.S. Dollars.
10.0) PAYMENT TERMS:
10.1) All payments will be made in U.S. Dollars
10.2)Payment terms are net 35 from date of invoice provided that the PCBs
reflected on the invoice have been received by HP or HP's Contract
Manufacturer.
11.0) TECHNOLOGY:
11.1)Multek/Europe and HP will collaborate on the preparation of, and
updates to, a technology roadmap for the continued technical
development of the PCBs (the "Technology Roadmap"). The Technology
Roadmap shall be similar to the Technology Roadmap format being used
by HP prior to the sale of the PRCO to Multek. **** The measure of
Multek/Europe's commitment will be based on an evaluation of staffed
engineering projects and timely CAPEX commitments. HP will have the
right to audit Multek/Europe's performance under the Technology
Roadmap.
11.2)If HP requests a unique CAPEX investment in a technology that may not
be useful for Multek/Europe's non-ESG customers, then Multek/Europe
may request a financial commitment from HP for the required CAPEX
investments. Multek/Europe understands and agrees that HP must agree
in writing to these requests prior to initiating resources or
financial commitments. HP acknowledges and agrees that Multek/Europe
will not be required to make any CAPEX investments pursuant to this
Section 11.2 if HP requests such investments and does not agree to pay
for all or a portion of those commitments.
12.0) QUALITY:
12.1)Multek/Europe's manufacturing output quality will be based evaluated
based upon the PPM levels and other performance measures set forth in
Addendum V.
12.2)Quality Program. Multek/Europe shall institute and maintain a quality
program substantially in accordance with the quality program
requirements outlined in Addendum III.
13.0) TQRDC REVIEWS:
13.1)HP and Multek/Europe agree to work together to achieve the
technology, quality, responsiveness, delivery, and cost (TQRDC-E)
targets. Both parties shall meet every six months to review the
progress made on the stated TQRDC-E objectives.
Technology:
Quality:
Responsiveness:
Delivery:
Cost:
Environment:
13.2)Multek/Europe and HP will establish performance goals and review
dates for continuous improvement. Existing performance and goals are
outlined in Addendum V.
14.0) SHIPMENT AND DELIVERY:
14.1)Shipments should be Delivered Duty Unpaid (DDU). Multek/Europe will
fulfill their obligation of shipments when the goods have been made
available at the named place in the country of importation. HP shall
retain Country of Origin Duty Drawback rights.
14.2)Multek/Europe agrees to pay for any premium freight charges if
Multek/Europe cannot meet HP's shipment date.
14.3)HP agrees to pay for any premium freight charges resulting from HP's
expedite or HP's request to deviate from Multek/Europe standard
carriers
14.4)Responsibility For Loss. Multek/Europe shall be liable for any loss
or damage due to its failure to properly preserve, package, handle, or
pack Multek/Europe's PCBs. HP shall not be required to assert any
claims for such loss or damage against the common carrier involved.
Further, HP shall not be liable for any loss or damage due to a
release of chemicals or other hazardous materials to the environment
prior to Multek/Europe's delivery of the PCBs at the named place in
the country of importation.
15.0 ) WARRANTY:
15.1)Warranty. Subject to the limitations set forth in Section 15.2 below,
Multek/Europe shall warrant to HP that all PCBs manufactured by
Multek/Europe will conform to the Specifications and be free from
defects in workmanship under normal use and service for a period of
one year from the date of manufacture by Multek/Europe.
Multek/Europe's obligation under this warranty shall be exclusive to
HP and HP's Contract Manufacturers and shall survive any inspection,
delivery, acceptance, or payment by HP or HP's Contract Manufacturer.
15.2)****REDACTED****
15.3)Epidemic Failure Warranty and Product Recall. In addition to the
warranties specified in Sections 15.1 and 15.2, Multek/Europe shall
warrant all Multek/Europe supplied PCBs sold to HP or HP's Contract
Manufacturer, against epidemic failure for a period of **** after date
of manufacture by Multek/Europe. ****
15.4)This warranty shall not apply to any PCBs which shall have been
repaired except by Multek/Europe or which shall have been subject to
misuse, negligence or accident. A prior written authorization must be
obtained from Multek/Europe as further set forth in Section 17.2 below
before any items can be returned to Multek/Europe pursuant to a
warranty claim.
15.5)****REDACTED****
15.5)1.****REDACTED****
15.5)2.****REDACTED****
15.5)3.****REDACTED****
15.5)4. HP represents and warrants to Multek/Europe that to the Best of its
Knowledge the amount of defective PCBs for which Multek/Europe is
assuming the warranty obligations set forth in this Section 15.5 is
not material in scope or amount.
15.6)THE WARRANTIES SET FORTH IN THIS SECTION 15 ARE IN LIEU OF ALL OTHER
WARRANTIES WHETHER STATUTORY, EXPRESS OR IMPLIED, INCLUDING IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PARTICULAR PURPOSE AND
FOR ALL OTHER OBLIGATIONS OR LIABILITIES ON MULTEK/EUROPE'S PART.
16.0) THIS SECTION DELIBERATELY OMITTED
17.0) REMEDY:
17.1)****REDACTED****
17.2)****REDACTED****
18.0) PROCESS AND DESIGN CHANGES:
18.1)Multek/Europe shall not effect the process or material changes
specified in Addendum X.
18.2)HP may make Engineering Changes to the PCBs as required during the
Term of the DPA by giving Multek/Europe prior written notification.
Any changes requested with respect to a PCB design within the
Lead-time for delivery of PCBs by Multek/Europe pursuant to an
Acknowledged purchase order will require Multek/Europe's prior written
approval. The parties will negotiate a new delivery date for any
purchase orders which have been accepted and for which the
manufacturing time will be delayed due to an Engineering Change.
18.3)****REDACTED****
18.4)If an Engineering Change is initiated by Multek/Europe, Multek/Europe
will provide qualification PCBs to HP at no cost to HP.
18.5)****REDACTED****
19.0) PURCHASE ORDER CHANGES:
19.1)Any purchase orders that are within two weeks of the delivery date
are firm and cannot be rescheduled by HP or ESG without the prior
written consent of Multek/Europe. HP may without charge, reschedule
the delivery date of all other purchase orders for a period of up to
30 calendar days.
19.2)****REDACTED****
20.0) DEFAULT:
20.1)Notice of Breach. If either party materially breaches any provision
of this Agreement, the other party may, by notice to the breaching
party, and except as otherwise prohibited by the United Sates
bankruptcy laws, terminate the whole or any part of this DPA or any
purchase order, unless the breaching party cures the breach within
fifteen business days after receipt of the notice of breach.
20.2)Causes of Breach. For purpose of Section 20.1 above, the term
"breach" shall include without limitation any:
(a) Proceeding, whether voluntary or involuntary, in bankruptcy or
insolvency by or against the party;
(b) Appointment, with or without the party's consent, of a receiver or an
assignee for the benefit of creditors;
(c) In the case of Multek/Europe, Multek/Europe's material failure to
deliver PCBs in accordance with the requirements of this DPA or any
purchase order;
(d) In the case of Multek/Europe, Multek/Europe's material failure to
replace, rework, or credit non-complying PCBs in a timely manner as
required in Section 17.0 above; and/or
(e) In the case of either party, the failure to comply with any material
provision of this Agreement and with the additional failure to provide
the non-breaching party, upon request, with reasonable assurances of
future performance.
20.3)HP's Rights Upon Breach. In the event HP terminates this Agreement in
whole or in part as provided in Section 20.2 above, HP may procure
upon such terms and in such manner as HP reasonable deems appropriate,
PCBs from another source as to which this Agreement is terminated.
Multek/Europe shall reimburse HP upon request for all additional costs
incurred by HP in purchasing from a second source. Multek/Europe shall
continue the performance of this Agreement to the extent not
terminated under the provisions of this Article 23.
20.4)Notwithstanding anything to the contrary set forth in this DPA,
Multek/Europe's obligations to perform under this DPA shall be
suspended at any time that it is unable to perform due to HP's failure
to adequately perform its obligations under the Transition Services
Agreement between Multek/Europe and HP, dated of even date herewith.
21.0) INDEMNITY:
21.1)Each party (the "indemnifying party") shall indemnify and hold
harmless the other party (the "indemnified party") against all
expenses, losses, reasonable attorney's fees, costs, damages or
liabilities arising out of or in connection with any claims or actions
for defects of PCBs where the alleged defect relates to (i) design,
labeling or manufacture in accordance with the specification supplied
by the indemnifying party, or (ii) any alteration, or modification, of
PCBs made by the indemnifying party without the prior approval of the
indemnified party. At the request of the indemnified party, the
indemnifying party shall defend at its own expense all such claims or
actions, provided that the indemnified party shall party shall be
entitled, at its election to participate in such defense.
Notwithstanding anything to the contrary herein, Multek/Europe shall
not be obligated to indemnify HP with respect to any design, labeling
or manufacture in accordance with any specification which
Multek/Europe acquired from HP pursuant to the Master Asset Purchase
Agreement between the parties of even date herewith.
21.2)Duty to Notify. Each party shall give the other party prompt notice of
any infringement action, and shall give the indemnifying party the
authority, information, and assistance (at the indemnifying party's
expense) to handle the defense of the infringement action. The
indemnifying party shall pay all damages and costs awarded in any
infringement action against the indemnified party or its its
customers. If the use of any products or Specifications provided
hereunder is enjoined (the "Infringing Product or Specifications"),
the indemnifying party shall, at its sole expense and option, and the
indemnified party's sole remedy shall be that the indemnifying party
shall:
(a) Procure for the indemnified party and its customers the
right to continue using the Infringing Products or
Specifications;
(b) Replace the Infringing Product or Specifications with a
non-infringing product of equivalent function and
performance; or
(c) Modify the Infringing Product or Specifications to be
non-infringing, without detracting from function or
performance.
22.0) SCHEDULES ATTACHED:
The following Schedules are hereby made a part of this DPA:
Addendum I General Provisions Exhibit
Addendum II Confidentiality Agreement
Addendum III Multek/Europe Quality Systems Requirements
Addendum IV Part Description, Quantities, and Price
Addendum V ****
Addendum VI ****
Addendum VII ****
Addendum VIII ****
Addendum IX ****
Addendum X ****
Addendum XI ****
By signing and dating this document, the parties below indicate their agreement
with and acceptance of this Division Purchase Agreement, including all
Schedules.
Multilayer Technology, Inc. Hewlett-Packard Company
/s/ Steve Schlepp /s/ Bob Pearse
- -------------------------------- ------------------------------
By: Steve Schlepp By: Bob Pearse
Title: President, Multek Manager, Corporate Development
Date: October 30, 1998 Date: October 30, 1998
<PAGE>
ADDENDUM I
General Provisions Addendum
A. Order of Precedence. In the event of any conflict between the terms and
conditions of any other document or agreement, the terms and conditions
of this DPA shall take precedence over the terms and conditions. In the
event of any conflict between the provisions of the DPA and any PO or
Schedule, the order of precedence shall be:
1. Addendum's to this DPA
2. this DPA
3. any instructions in a written or electronic purchase order
B. Entire Agreement and Modifications. This DPA comprises the entire
understanding between the parties with respect to the subject matter
hereof and supersedes any previous communications, representations, or
agreements, whether oral or written. General terms and conditions of
either Party which conflict with this DPA are expressly excluded hereby
and shall not apply. No modification of this DPA and/or any Addendum
hereof shall be binding on either Party unless executed in writing and
signed by an authorized representative of each Party.
C) Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or five (5) days after being sent, when sent
by registered or certified mail, or one (1) day after being sent, when
sent by overnight private courier, addressed as follows:
If to Multek/Europe:
TO:
President of Multek
16 Hammond
Irvine, California 92618
COPY TO:
Executive Vice President DII Group
And
Managing Director, Multek/Europe
IF to HP:
TO:
Materials Manager
8000 Foothills Blvd.
Roseville, California 95747
COPY TO:
Purchasing Manager
Hewlett-Packard
8000 Foothills Blvd.
Roseville, California 95747
Or to such other address as such party may indicate by a notice delivered to the
other party hereto. Either party may change its address for purposes of notice
by notice given to the other party.
D) Assignment. Neither party may delegate, assign or transfer its right or
obligations under this DPA, in whole or in part, to any third party, unless
the other Party has given its prior written approval. Any such attempted
delegations or assignment shall be void. ****
E) Statutory Requirements. Multek/Europe agrees to comply with all local and
foreign laws, rules and regulations applicable to its obligations under
this DPA and in relation to its manufacture or its use of the PCBs and to
its delivery of the PCBs to HP at the named place in the country of
importation and agrees to indemnify HP against all loss or damage arising
from any breach of this condition.
F) Force Majeure. Except for payments due hereunder, neither party will be
liable for any failure or delay in its performance under this DPA due to
causes including, but not limited to, an act of God, an act of civil or
military authority, fire, epidemic, flood, earthquake, riot, war, sabotage,
labor dispute, and governmental action, which are beyond its reasonable
control; provided, that, the delayed party: (i) promptly gives the other
party written notice of such cause and, in any event, within fifteen (15)
calendar days of discovery thereof; and (ii) uses diligent efforts to
correct such failure or delay in its performance.
G) Governing Law. This DPA shall be governed by and construed in accordance
with the laws of the United States of America and the State of California.
H) Survival of Provisions. Upon the expiration or termination of this DPA, the
terms and condition contained herein shall apply to all purchase orders
previously transmitted to Multek/Europe and to all PCBs shipped by
Multek/Europe thereunder. Notwithstanding the expiration or early
termination of this DPA, the provisions regarding Warranties and Product
Recall in Section 15, Remedy in Section 17 and Infringement Indemnity in
Section 21 shall each survive in accordance with their terms.
I) LIMITATION OF LIABILITY.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE
FOR ANY INDIRECT, SPECIAL INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT
LIMITED TO LOSS OF PROFITS) ARISING OUT OF ANY PERFORMANCE OF THIS AGREEMENT OR
IN FURTHERANCE OF THE PROVISIONS OR OBJECTIVES OF THIS AGREEMENT, REGARDLESS OF
WHETHER SUCH DAMAGES ARE BASED ON TORT, WARRANTY, CONTRACT OR ANY OTHER LEGAL
THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
J) Confidentiality. For the purposes of this DPA, all Confidential Information
shall be enforced as specified in Addendum II.
K) Dispute Resolution.
(a) Each party agrees to negotiate in good faith to promptly resolve any
dispute regarding the terms and conditions specified in the DPA.
(b) If the negotiations do not produce prompt or mutually satisfactory results,
the matter will be deferred to the Officers of Multek/Europe and the ESG
Materials Manager, who will then attempt in good faith to promptly resolve
the dispute.
(c) If the Multek/Europe Officers and the HP Materials Manager are unable to
resolve the dispute, each party agrees to the ruling of a third party
arbitrator. The arbitrator will be mutually agreed upon by Multek/Europe
and HP.
<PAGE>
ADDENDUM II
NEW CONFIDENTIAL DISCLOSURE AGREEMENT
[DPA]
This New Confidential Disclosure Agreement is entered into and
effective as of the 30th day of October, 1998 by and among Hewlett-Packard
Company, a Delaware corporation ("HP") and Multilayer Technology, Inc., a
California corporation ("Multek").
RECITALS
WHEREAS, HP and Multek, of the date hereof, have entered into a
Division Purchase Agreement pursuant to which HP shall purchase from Multek
certain printed circuit boards (the "DPA").
WHEREAS, in order to effect the transactions contemplated by the DPA,
HP and Multek may provide one another with certain confidential information.
WHEREAS, HP and Multek desire to keep confidential, as provided herein,
the terms and conditions of the DPA and certain information disclosed by or to
each of them pursuant to the DPA.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, HP and Multek agree as follows:
1. General Obligation. Each party which receives Confidential
Information (as defined herein) (the "Recipient") agrees that it shall treat
such information in strict confidence and, except as permitted or required in
carrying out the terms of the DPA or as required by law, it shall not use or
disclose such information, either during the term of the DPA or thereafter,
without the prior written approval of the party who originally disclosed such
Confidential Information (the "Disclosing Party"). Without limiting the
foregoing, the Recipient shall use at least the same procedures and degree of
care which it uses to prevent the disclosure of its own confidential information
of like importance to prevent the disclosure of Confidential Information
disclosed to it by the Disclosing Party, but in no event less than reasonable
care.
2. Confidential Information. For purposes of this Agreement,
"Confidential Information" shall mean any information disclosed by one party to
the other in connection with activities under the DPA, including but not limited
to technical, engineering, product and financial information; provided, that
information will be "Confidential Information" only if it is marked as
confidential at the time of disclosure or, if the material is not in written
form (e.g., orally disclosed), it is treated as confidential at the time of
disclosure and is designated as confidential in a written memorandum sent to the
recipient within thirty days of disclosure, summarizing the confidential
information sufficiently for identification.
3. Exceptions. The above obligations of non-disclosure and non-use
shall not apply to information which (i) was in the public domain at the time it
was communicated to the Recipient by the Disclosing Party, (ii) entered the
public domain subsequent to the time it was communicated to the Recipient by the
Disclosing Party through no fault of the Recipient, (iii) was rightfully
communicated to the Recipient free of any obligation of confidence subsequent to
the time it was communicated to the Recipient by the Disclosing Party, (iv) was
independently developed by employees or agents of the Recipient who had no
knowledge of any Confidential Information communicated to the Recipient by the
Disclosing Party, or (v) was communicated in response to a the order or
requirement of a court, administrative agency or other governmental body;
provided, that the Recipient shall provide prompt, advanced notice thereof to
enable the Disclosing Party to seek a protective order or otherwise prevent such
disclosure.
4. Authorization: No Representation of Accuracy. Each Disclosing Party
warrants that it has the right to provide to the Recipient any Confidential
Information so disclosed to the Recipient under this Agreement. Each party
understands and acknowledges that, neither party nor any of its representatives
or affiliates makes herein any representation or warranty, express or implied,
as to the accuracy or completeness of the Confidential Information made
available by it or to it. Each party agrees that neither party nor any of its
representatives or affiliates shall have any liability hereunder to the other
party or to any of its representatives or affiliates relating to or resulting
from the use of such other party's Confidential Information (other than for a
use of such Confidential Information in violation of this Agreement) or any
errors therein or omissions therefrom. UNLESS SPECIFICALLY PROVIDED OTHERWISE
HEREIN,NO OTHER WARRANTIES ARE MADE BY ANY PARTY UNDER THIS AGREEMENT.
ANY INFORMATION EXCHANGED UNDER THIS AGREEMENT IS PROVIDED "AS IS."
5. Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO
THE OTHER FOR ANY CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS) WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE, FOR BREACH OF OR FAILURE TO PERFORM ITS OBLIGATIONS
UNDER THIS AGREEMENT AND EVEN IF ANY LIMITED REMEDY PROVIDED HEREIN FAILS TO
ACHIEVE ITS ESSENTIAL PURPOSE.
6. Government Regulations. Subject to applicable law, Recipient shall
adhere to the U.S. Export Administration Laws and Regulations and shall not
export or reexport any technical data to any proscribed country listed in the
U.S. Export Administration Regulations unless properly authorized by the U.S.
Government.
7. Waiver. No failure or delay by either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise thereof shall preclude any other or future exercise thereof or
the exercise of any other right, power or privilege hereunder.
8. Miscellaneous
(a) Each party shall be responsible for any breach of this Agreement by
any of its representatives or affiliates.
(b) This Agreement contains the entire understanding of the parties hereto
with regard to the subject matter contained herein and supersedes all
prior agreements and understandings or memoranda of understanding
between or among any of the parties hereto.
(c) In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions of the Agreement shall not in any way be affected
or impaired thereby.
(d) This Agreement shall enure to the benefit of and shall be binding on
and enforceable by the parties and their respective successors and
permitted assigns. Neither party may assign any of its rights or
obligations hereunder without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed .
(e) No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, and no single
or partial exercise thereof shall preclude any other or future
exercise thereof or the exercise of any other right, power or
privilege hereunder.
(f) This Agreement shall be governed by and construed in accordance with
the laws of California without giving effect to choice of law
doctrines.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this New Confidential
Disclosure Agreement as of the date first written above.
HEWLETT-PACKARD COMPANY
/s/ Bob Pearse
--------------------------
By: Bob Pearse
Title:Manager, Corporate Development
MULTILAYER TECHNOLOGY, INC.
/s/ Steven C. Schlepp
October 30, 1998 --------------------------
By: Steven C. Schlepp
Title: President
<PAGE>
ADDENDUM III
Multek/Europe Quality Systems Requirements
HEWLETT-PACKARD MULTEK/EUROPE QUALITY SYSTEMS REQUIREMENTS
5951-1665-1 Rev C. October 1, 1994
ARTICLE 1.
PURPOSE
This exhibit defines the requirements for a quality system that must be
maintained by a Multek/Europe of Products to Hewlett-Packard Company (HP)
ARTICLE 2.
REFERENCES
2.1 ****REDACTED****
2.2 ****REDACTED****
2.3 ****REDACTED****
2.4 ****REDACTED****
ARTICLE 3.
DEFINITIONS
For the purposes of this exhibit, the definitions given in **** apply.
ARTICLE 4.
SCOPE
This exhibit is applicable to all products supplied to HP including the
processes and procedures necessary to produce and support those products. These
requirements are in addition to those included in the applicable drawings,
specifications and other contractual documents.
QUALITY SYSTEM REQUIREMENTS
5.1 Multek/Europe shall meet or exceed the requirements for Management
responsibility, Quality system, Contract review, Design control, Document
control, Purchasing, Purchaser supplied product, Product identification and
traceability, Process control, Inspection and testing, Inspection measuring
and test equipment, Inspection and test status, Control of non-conforming
product, Corrective Action, Handling storage packing and delivery, Quality
records, Internal quality audits, Training, Servicing, and Statistical
Techniques, as stated by ****.
Additionally, Multek/Europe shall:
5.2 Develop a documented quality plan establishing product and process goals
and action plans for continuous quality improvement.
5.3 Identify the critical processes and parameters, and monitor each for
conditions of "statistical control" and process capability.
5.4 Implement a company-wide continuous improvement program focusing on
customer satisfaction, teamwork, universal participation and driven by
data.
5.5 ****REDACTED****
5.6 ****REDACTED****
5.7 ****REDACTED****
<PAGE>
ADDENDUM IV
****REDACTED**** (2 pages)
ADDENDUM V
****REDACTED**** (7 pages)
ADDENDUM VI
****REDACTED**** (29 pages)
<PAGE>
ADDENDUM V II
****TABLE REDACTED****
[GRAPHIC OMITTED]
ADDENDUM VIII
****REDACTED****
Year 2000:
Multek/Europe agrees to work in good faith to assure all internal systems will
be year 2000 compliant so as not to affect assurance of supply to TMO HP.
Progress toward compliance will be reviewed during the quarterly business review
meetings, lead by the ESG team as agreed to in the ESG DPA. These reviews will
cease once both HP and Multek/Europe agree that compliance has been met.
APPROVED, AGREED TO AND EFFECTIVE AS OF THE 30th DAY OF October, 1998.
MULTILAYER TECHNOLOGY, INC HEWLETT-PACKARD COMPANY
/s/ Steve Schlepp /s/ Bob Pearse
- ------------------------------- -------------------------------
BY:Steve Schlepp BY:Bob Pearse
TITLE: President, Multek Manager, Corporate Development
DATE: October 30, 1998 DATE: October 30, 1998
<PAGE>
****TABLE REDACTED****
ADDENDUM IX
****REDACTED**** (3 pages)
ADDENDUM X
****REDACTED****
ADDENDUM XI
PROTOTYPE PRICING
Technology License Agreement
between Hewlett-Packard GmbH
and The DII Group, Inc.
TABLE OF CONTENTS
PAGE
RECITALS.......................................... 2
DEFINITIONS.......................................2
OWNERSHIP.........................................3
LICENSE GRANT.....................................4
DELIVERY..........................................6
PAYMENT...........................................6
WARRANTY AND INDEMNIFICATION......................7
TERMINATION.......................................8
GENERAL PROVISIONS................................8
TECHNOLOGY LICENSE AGREEMENT
This Technology License Agreement is entered into by Hewlett-Packard GmbH, a
company registered and incorporated under the laws of Germany ("HP"), and The
DII Group, Inc., a Delaware corporation ("DII GROUP"). This Technology License
Agreement is effective as of Closing.
RECITALS:
The parties have entered into the MAPA, and it is a condition to closing of the
transactions contemplated by the MAPA that the parties enter into this
Agreement.
The parties agree as follows:
1. DEFINITIONS
1.1 The following definitions have the same meaning as in the MAPA:
1.1.1 Affiliate"
1.1.2 "CDA"
1.1.3"Closing"
1.1.4 "Closing Date"
1.1.5 "Effective Time"
1.1.6 "Memorandum of Understanding"
1.1.7 "New CDA"
1.1.8 PRCO"
1.1.9 "Site"
1.1.10 Transition Services Agreement
1.2 "Laser Patent" means the improvements disclosed in the invention
entitled "Apparatus for Laser Machining with a Plurality of Beams"
having Siegfried Dippon, et al, as named inventors and which is found
in European Patent No. 0683007 and any legal equivalent in a foreign
country (including U.S. Patent No. 5,676,866), including the right to
claim priority, and in all patents obtained for the invention by this
application or its continuation, division, renewal, or substitute, and
any reissue or re-examination of the patents.
1.3 "LicensedTechnology" means the technology licenses described in
Schedule 1.6 to this Agreement to be licensed by HP pursuant to this
Agreement.
1.4 "MAPA" means the Master Asset Purchase Agreement, made and effective
as of Closing between HP, Multilayer Technology and Co KG and DII
GROUP.
1.5 "PRCO Trade Secrets" means trade secrets owned by HP in use within
PRCO at the Effective Time including, but not limited to, any
processes, data, designs, know-how or other technical or commercial
information.
1.6 "Schedule 1.6" (Licensed Technology) consists of Subset A and Subset
B.
1.7 "Software" means software program(s), associated files and utilities
provided with or used by the software programs(s), databases, and all
associated documentation, associated instruction manuals and
supporting material.
1.8 "Subset A" lists HP standard commercial software and is a subset of
Schedule 1.6.
1.9 "Subset B" lists HP patents and patent applications identified with
the PRCO manufacturing operation and is a subset of Schedule 1.6.
2. OWNERSHIP
2.1 HP will assign to DII GROUP all right, title and interest in the Laser
Patent except the assignment is subject to the following:
2.1.1 HP will have no obligation to assign until DII GROUP obtains the
consent of each of the Carl Zeiss firm, Lambda Physik GmbH and
Microlas GmbH. HP will use reasonable efforts to complete a
consent agreement with the co-owners of the Laser Patent and DII
GROUP ("Consent Agreement") by Closing with materially the same
terms and conditions as the current draft of the Consent
Agreement under negotiation attached as Exhibit B. HP will
complete the assignment within a reasonable time after all
necessary consents are received. HP will have no obligation for
any fees, payments or royalties, if any, necessary to obtain the
Consent Agreement except for HP's obligations with respect to
paying its share of patent prosecution costs stated in the
current draft of the Consent Agreement.
2.1.2 HP retains a worldwide, non-transferable, irrevocable fully
paid-up license without the right to grant sublicenses to make,
have made, use, sell, offer for sale and import any technology or
product within the scope of the Laser Patent claims, except that
HP's license remains subject to the current agreements, as
currently amended, with the Carl Zeiss firm, Lambda Physik GmbH
and Microlas GmbH and this Section 2.1.2. will take precedence
over the Consent Agreement listed in Section 2.1.1. with respect
to transferability of the license granted under this Section
2.1.2.
2.1.3 DII GROUP agrees to be subject to the limitations of HP's
agreements with the Carl Zeiss firm, Lambda Physik GmbH and
Microlas GmbH related to the Laser Patent.
2.1.4 DII GROUP receives no right, title or interest to any
modifications or additions made by HP after Closing to any
Licensed Technology. HP receives no right, title or interest to
any modifications or additions made by DII GROUP after Closing to
any Licensed Technology.
2.1.5 HP will instruct its agent to pay any maintenance fees that
become due within three years after Closing for any issued patent
listed in Subset B or any patents that issue after Closing based
on a patent application listed in Subset B. HP will continue to
prosecute any patent applications listed in Subset B at HP's own
cost for a period of three years after Closing, except that HP
may choose to discontinue prosecution of such a patent
application based on HP's commercially reasonable judgment. HP
will have no obligation with respect to any patents or patent
applications listed in Subset B after three years after Closing.
3. LICENSE GRANT
3.1 HP grants DII GROUP and DII GROUP accepts a license under the terms
and conditions of the HP standard product license attached as Exhibit
A for the HP products listed in Subset A. The terms and conditions of
the HP standard product license will control in the event of conflicts
with the terms and conditions of this Agreement or the MAPA, except
this Agreement will control with respect to the following sections of
the HP standard product license: Prices, Orders, Delivery, Shipment
and Risk of Loss, Installation and Acceptance and Payment.
3.2 HP grants to DII GROUP and its Affiliates a non-exclusive,
non-transferable, worldwide, perpetual license to use the PRCO Trade
Secrets for the purpose of building, manufacturing, designing, selling
or marketing goods, services, or products with respect to any
technical or commercial applications DII GROUP deems appropriate
within facilities controlled or operated by DII GROUP or its
Affiliates, without a right of sublicense and subject to the
confidentiality restrictions contained in the New CDA.
3.2 HP grants to DII GROUP and its Affiliates a non-exclusive,
non-transferable, worldwide, perpetual license to make, use, sell,
offer for sale, and import the inventions within the scope of the
patents, patent applications, utility models and utility model
applications listed in Subset B for the purpose of building,
manufacturing, designing, selling or marketing goods, services, or
products with respect to any technical or commercial applications DII
GROUP deems appropriate within facilities controlled or operated by
DII GROUP or its Affiliates, without a right of sublicense and subject
to the confidentiality restrictions contained in the New CDA, except
that this license grant will not be effective prior to DII GROUP
obtaining any necessary consents related to the inventions. HP will
have no obligation for any fees, payments or royalties, if any,
necessary to obtain the consents.
3.3 Upon HP's request at any time after the Closing Date, DII GROUP will
grant HP a sublicense to the Dycostrate technology under the terms of
the Technical Cooperation and License Agreement between
Hewlett-Packard GmbH (Boeblingen, Germany) and Dyconex AG (Zurich,
Switzerland), Dyconex Patente AG (Zug, Switzerland) signed April 30,
1993 and the Amendment of the Technical Cooperation and License
Agreement signed June 3, 1996 (together known as the "Dyconex
Agreement"). DII GROUP will make reasonable efforts to make the
essential terms of the sublicense reflect DII GROUP's intention to
grant HP the broadest available sublicense and to grant HP the lowest
available cost sublicense. DII GROUP will not amend the Dyconex
Agreement to make the essential terms of such a sublicense unavailable
to HP without HP's prior written approval, which may not be
unreasonably withheld. If such a sublicense is unavailable due to the
limitations of the Dyconex Agreement in place at Closing, then DII
GROUP will have no obligation to grant HP such a sublicense and HP's
option to request such a sublicense will terminate.
3.4 HP grants to DII GROUP and its Affiliates a non-exclusive,
non-transferable, worldwide, perpetual license to make, produce,
modify, copy, execute, assemble, disassemble, compile, decompile,
reproduce, translate, synchronize and use the IPDA software in any
location owned or controlled by DII GROUP or its Affiliates and the
Sspice software (which is dependent on the HP Spice software licensed
in Section 3.6) within the Site only in source code and object code
format without a right of sublicense, except that the Sspice software
may be remotely accessed from other sites. This license does not
extend the license granted in Section 3.6.
3.5 HP grants to DII GROUP and its Affiliates a non-exclusive,
non-transferable, worldwide, perpetual license to make, produce,
modify, copy, execute, assemble, disassemble, compile, decompile,
reproduce, translate, synchronize and use the HP Spice software in
source code and object code format within the Site without a right of
sublicense for a period ending one year after Closing. DII GROUP and
its Affiliates agree to remove and destroy all copies of the HP Spice
software from all its computer systems at the end of the one-year
period.
4. DELIVERY
4.1 HP will provide DII GROUP and its Affiliates any requested or required
assistance related to the prosecution of the Laser Patent, or any
activity associated with any interference, litigation or proceeding
related to the Laser Patent. DII GROUP will reimburse HP reasonable
costs for such requests or assistance.
4.2 HP will provide DII GROUP copies of available documentation for the
Licensed Technology and all available elements of the Software for the
Licensed Technology as specified in Schedule 1.6 on or before the
Effective Time so as to enable DII GROUP and its Affiliates to comply
with its obligations towards third parties relating thereto. DII GROUP
may take delivery of the provided copies of the Licensed Technology at
the Effective Time, or at the time of availability if HP makes
additional elements available after the Effective Time. DII GROUP
acknowledges that the provision of access by HP defined above is
sufficient to meet all HP obligations with respect to delivery of the
Licensed Technology.
4.3 HP has no other delivery obligations other than as expressly set forth
in this Section 4, and as expressly set forth in the MAPA and its
related operational agreements.
5. PAYMENT
5.1 All licenses granted under this Agreement are non-royalty-bearing,
fully paid-up licenses with respect to HP, with the exception of
inventor compensation described in Section 5.2, any ongoing support
obligations and any sublicense granted under Section 3.4.
Consideration for the licenses granted and authorizations provided
under this Agreement is found within the MAPA.
5.2 HP and DII GROUP will determine initial compensation offers under the
German Employee Invention Act to be made to inventors for patents and
patent applications owned by either HP or Multek and licensed under
this Agreement, using HP's current process to determine amounts,
timing and mode of payments. The patent owner will present the initial
offer to the inventor, negotiate, if necessary, with the inventor to
determine the final amount and pay the final amount to the inventor,
while communicating the status of the negotiation to the other party.
The other party will pay the patent owner the portion of the final
amount based on its use of the technology covered in the patent or
patent application. Either party may request that this process be
initiated at any time. Any employee invention compensation arising
from the use of any Licensed Technology or the patent or patent
applications in Subset B prior to the Closing Date shall, for the
avoidance of doubt, be borne by HP.
6. WARRANTY AND INDEMNIFICATION
6.1 HP warrants that it has the necessary authority from its parent
company, Hewlett-Packard Company and any Affiliates, to license or
assign rights under this Agreement on behalf of Hewlett-Packard
Company or its Affiliates.
6.2 Any Licensed Technology provided to DII GROUP from HP under this
Agreement is provided "AS IS" and without warranty of any kind,
except with respect to the following:
6.2.1 HP will provide any services and fulfill any obligations under
this Agreement with reasonable care; and
6.2.2 Except as otherwise disclosed, HP, to the best knowledge of only
the following named list of HP representatives: Thomas Harbach,
Siegfried Dippon, Peter Kurz, Karl Bring, and Rudi Speier, is not
aware of any third party claims relating to the Laser Patent or
the Licensed Technology.
6.3 EXCEPT AS SET FORTH IN SECTION 2.3, 6.1 AND 6.2 ABOVE, IN NO EVENT
SHALL HP HAVE ANY LIABILITY FOR ANY BREACH OF ANY EXPRESS OR IMPLIED
WARRANTY UNDER THIS AGREEMENT.
6.4 HP provides NO WARRANTY that the Licensed Technology referred to
herein will operate in accordance with or substantially conform to the
Documentation, manuals, any specifications provided or agreed to, and
any relevant data sheet or promotional literature distributed by HP.
6.5 HP provides NO WARRANTY that the Licensed Technology referred to
herein are "Year 2000 Compliant." Year 2000 Compliant means that the
Licensed Technology will perform without error, loss of data or loss
of functionality arising from any failure to process, calculate,
compare or sequence date data accurately.
6.6 HP provides NO WARRANTY that the Licensed Technology, accompanying
documentation, trademarks, copyrights and trade names referred to in
this Agreement do not violate or infringe any patent, copyright,
trademark, trade secret or other proprietary right of any third party,
except where expressly provided under Section 6.2.
6.7 THIS SECTION 6 STATES THE COMPLETE AND ENTIRE TERMS, LIABILITY AND
REMEDIES OF THE PARTIES WITH RESPECT TO ANY EXPRESS OR IMPLIED
WARRANTIES OR FOR ANY CLAIM OF INFRINGEMENT OF INTELLECTUAL PROPERTY
RIGHTS BY THE LICENSED TECHNOLOGY OR DOCUMENTATION.
6.8 HP MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, REGARDING THE
LICENSED TECHNOLOGY AND THE DOCUMENTATION. HP SPECIFICALLY DISCLAIMS
ANY IMPLIED WARRANTIES OF HP OF NON-INFRINGEMENT, MERCHANTABILITY, AND
FITNESS OF THE LICENSED TECHNOLOGY FOR ANY PARTICULAR PURPOSE.
7. TERMINATION
7.1 This Agreement may be terminated with the mutual consent of DII GROUP
and HP.
7.2 If terminated, all rights, obligations, representations and any other
aspects of this Agreement are ended, except that the following shall
survive: warranty and indemnity.
8. GENERAL PROVISIONS
8.1 The provisions of MAPA Sections 16.2 through 16.8 and 16.10 through
16.19 apply to this Agreement and are hereby incorporated by
reference, except that references to Multek Europe in the incorporated
sections will be deemed references to DII GROUP for the purposes of
this Agreement.
8.2 The parties will comply with all applicable export laws.
8.3 This Agreement is not transferable, except in connection with the sale
of substantially all the assets provided to Multek Europe in the MAPA.
However, in the event of a transfer under this Section, DII GROUP must
obtain HP's consent with respect to the license granted in Section
3.6, which HP may reasonably withhold.
The parties indicate their agreement to this Technology License
Agreement by their signatures below:
Hewlett-Packard GmbH
/s/ Rudi Speier
-------------------------
By: Rudi Speier
Title: Managing Director,
Finance and Administration
The DII Group
/s/ Steven C. Schlepp
--------------------------
By:Steven C. Schlepp
Printed name: Steven C. Schlepp
Title: Senior Vice President,
Interconnect Technologies
TRANSITION SERVICES
AGREEMENT
by and between
H E W L E T T - P A C K A R D G m b H
Herrenberger Strabe 130
71034 Boeblingen
(hereinafter referred to as "HP")
and
Multilayer Technology GmbH & Co. KG
Herrenberger Strabe 110
71034 Boeblingen
(hereinafter referred to as "Multek Europe ")
dated October 31, 1998
This TRANSITION SERVICES AGREEMENT (the "Services Agreement") is entered
into on October 31, 1998, by and between Multilayer Technology GmbH & Co. KG, a
German company registered and incorporated under the laws of Germany ("Multek
Europe"), and Hewlett-Packard GmbH, a German company registered and incorporated
under the laws of Germany ("HP"), (Multek Europe and HP are collectively
referred to as the "Parties").
RECITALS
A. HP and Multek Europe have entered into that certain Master Asset
Purchase Agreement pursuant to which all assets of the PRCO have been purchased
by Multek Europe.
B. HP and Multek Europe, have entered into certain ancillary agreements,
among others that certain Division Purchase Agreement for the purchasing of
printed circuit boards.
NOW, THEREFORE, the Parties hereto hereby agree as follows:
Section 1. Definitions. Each term used in this Services Agreement which is
defined in the Master Asset Purchase Agreement referred to above and its
ancillary agreements shall, unless otherwise defined herein, have the meaning
ascribed to it therein.
Section 2. Services Provided. Subject to the terms and conditions of this
Services Agreement, HP agrees to provide the following services as provided and
described in the respective Schedules attached hereto (the "Services") to Multek
Europe at the Premises of Multek Europe as required by Multek Europe in writing
if not already ordered by virtue of this Agreement, starting on the day
following the Closing Date on the same or substantially the same terms and
conditions to those applicable to the provision of the Services by HP to the
PRCO prior to the Closing Date. Schedules attached hereto may be amended by
mutual written agreement upon request of either Party:
(a) IS/IT Transition Services shall be provided as set forth in Schedule
2(a) attached hereto; for the provision of such Transition Services
the response times according to HP's internal Service Level Agreements
shall apply; the current response times are attached as Schedule 2(c).
Any change of the response times by HP is subject to Multek Europe's
consent which shall not unreasonably be withheld.
(b) All other Services shall be provided as set forth in Schedule 2(b)
attached hereto.
Section 3. Transitional Licenses for Use. In order to provide for a smooth
transition of IS/IT from HP proprietary systems and applications to Multek
Europe systems and applications HP shall
(a) grant to Multek Europe a non-exclusive, royalty-free license to use
the applications defined and listed in Schedule 3(a) attached hereto
at the Operations Site for the respective periods and under the terms
set forth in said Schedule; this license does not include the right to
grant sub-licenses.
(b) deliver to Multek Europe all documents related to the applications,
that exist at HP's establishment at HP's Boeblingen Site as of the
Closing Date. Upon termination of the license granted in Section 3(a)
above, Multek Europe shall promptly return to HP all the materials
delivered to it under this Section 3(b).
(c) The applications laid down in Schedule 3(b) are not yet
Year-2000-compliant as set forth in Schedule 3(c). The support
necessary to make the applications Year-2000-compliant will be
provided by HP to the terms and conditions described in Schedule 2(a).
(d) HP shall have no obligation to provide any support or services or any
environment element for the applications listed in Schedule 3(a)
except as set forth in Schedule 2(a).
(e) All systems (hardware and software) have been set up in conformance
with HP's internal security policy. Multek Europe shall define it's
own security policies and procedures to be implemented by HP.
Section 4. Requested Migration Services and Project Management. Upon
request and subject to the availability of HP resources, HP shall provide to
Multek Europe migration services and project management for services and
applications listed in Section 7 of Schedule 2(a).
Section 5. Term. The Services as listed in Schedule 2(a) and 2(b) hereto
shall be provided for the period starting on the day following the Closing Date
and terminating on the date(s) or with the notice periods described in Schedule
2(a) and 2(b).
Section 6. Payments. All and any payments shall be calculated in accordance
with the terms set out under Schedule 2(a) and 2(b). The services under this
Agreement will be invoiced at the end of each month. The payments shall be due
30 days after receipt of the monthly invoice.
Section 7. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or five (5) days after being sent, when sent by
registered or certified mail, or one (1) day after being sent, when sent by
overnight private courier, addressed as follows:
If to Multek Europe, to:
Multilayer Technology GmbH & Co. KG
Herrenberger Str. 110
D-71034 Boeblingen
Attention: General Manager
If to HP, to:
Hewlett-Packard GmbH
Herrenberger Str. 130
D-71034 Boeblingen
Attention: Rudi Speier,
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
Section 8. Schedules. Schedules referred to herein and delivered pursuant
hereto shall be delivered with the understanding of the Parties to be
preliminary Schedules. Based upon mutual consent between Multek Europe and HP,
they shall be subject to changes, modifications or other alterations prior to
and until the Closing Date. Schedules referred to herein and delivered pursuant
hereto shall be delivered in their mutually agreed upon final and definite form
on the Closing Date.
Section 9. Warranty/Liability.
(a) HP shall use commercially reasonable endeavors to prevent and remedy any
failures occurring during the provision of the services at no cost to
Multek Europe unless the parties agree otherwise in writing. Regarding the
services as set forth in Schedule 2(a) a technical escalation process is
established at HP (described in the TIS Escalation Guide in the then
current version which is attached as Schedule 9(a)) which Multek Europe may
trigger. Any change of the technical escalation process by HP is subject to
Multek Europe's consent which shall not unreasonably be withheld. If this
technical escalation process does not result in the rectification of the
failure, a business escalation to Wolfgang Boehm (Tel. ++49 7031 141561)
or, in his absence, to Robert Edelmann (Tel. ++49 7031 141515) is possible.
Besides that HP shall provide the Services on an "as is" basis without any
warranty whatsoever. HP shall not be liable for any damages caused by the
provision of the Services. This shall not apply in the case of deliberate
intent or gross negligence.
(b) HP shall not be requested to provide any particular service set forth
herein to the extent that Multek Europe fails to provide access to or
changes, modifies or otherwise disturbs the infrastructure equipment which
is necessary to enable HP to perform the service. HP shall grant reasonable
access to any third party Multek Europe chooses to engage for rectification
of any failure in the chilled water supply.
(c) The right of both HP and Multek Europe to refuse performance of its
respective obligations until the counter-performance is affected shall in
no way be limited.
Section 10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Germany. The Courts of Stuttgart shall
have exclusive jurisdiction in all matters pertaining to this Services
Agreement.
IN WITNESS WHEREOF, this Services Agreement is hereby executed by a duly
authorized representative of each party as of the date first written above.
Multek Europe
/s/ Steve Schlepp
- --------------------------------
By: Steve Schlepp
Title: President, Multek
HP acknowledged HPCO
/s/ Rudi Speier /s/ Robert Pearse
- --------------------------------- -------------------------------------
By: Rudi Speier By: Robert Pearse
Title: Geschaftsfuhrer Title: Business Development Manager,
Hewlett-Packard GmbH Corporate Development Department
NEW CONFIDENTIAL DISCLOSURE AGREEMENT
This New Confidential Disclosure Agreement is entered into and effective as
of the 30 day of October, 1998 by and among Hewlett-Packard GmbH, a company
registered and incorporated under the laws of Germany ("Seller"), Multilayer
Technology GmbH & Co KG, a legal entity registered and organized under the laws
of Germany ("Buyer"), and The DII Group, a corporation organized under the laws
of the state of Delaware ("Guarantor").
RECITALS
WHEREAS, Seller and Buyer have entered into that certain Master Asset
Purchase Agreement, dated as of October 30, 1998 (the "MAPA"), providing for the
sale by Seller to Buyer of certain printed circuit board manufacturing assets
located at Seller's facility in Boblingen, Germany (the "PRCO") and the
assignment by Seller to Buyer of related liabilities.
WHEREAS, pursuant to the MAPA and in order to effect the transactions
contemplated thereby, Seller and Buyer, of the date hereof, have entered into, a
Technology License Agreement pursuant to which Seller shall license to Buyer
certain technology related to the PRCO and a Transition Services Agreement
pursuant to which Seller shall provide certain transition services to Buyer.
WHEREAS, Seller and Buyer desire to keep confidential, as provided herein,
the terms and conditions of the Technology License Agreement and the Transition
Services Agreement (collectively, the "Agreements") and certain information
disclosed by or to each of them pursuant to such Agreements.
WHEREAS, under Article 10 of the MAPA, the Guarantor has agreed to
guarantee the obligations of the Buyer.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, Seller, Buyer and Guarantor agree as follows:
1. General Obligation. Each party which receives Confidential Information
(as defined herein) (the "Recipient") agrees that it shall treat such
information in strict confidence and, except as permitted or required in
carrying out the terms of the Agreements or as required by law, it shall not use
or disclose such information, either during the term of the Agreements or
thereafter, without the prior written approval of the party who originally
disclosed such Confidential Information (the "Disclosing Party"). Without
limiting the foregoing, the Recipient shall use at least the same procedures and
degree of care which it uses to prevent the disclosure of its own confidential
information of like importance to prevent the disclosure of Confidential
Information disclosed to it by the Disclosing Party, but in no event less than
reasonable care.
2. Confidential Information. For purposes of this Agreement, "Confidential
Information" shall mean any information disclosed by one party to the other in
connection with activities under the Agreements, including but not limited to
technical, engineering, product and financial information; provided, that
information will be "Confidential Information" only if it is marked as
confidential at the time of disclosure or, if the material is not in written
form (e.g., it is orally disclosed), it is treated as confidential at the time
of disclosure and is designated as confidential in a written memorandum sent to
the recipient within thirty days of disclosure, summarizing the confidential
information sufficiently for identification.
3. Exceptions. The above obligations of non-disclosure and non-use shall
not apply to information which (i) was in the public domain at the time it was
communicated to the Recipient by the Disclosing Party, (ii) entered the public
domain subsequent to the time it was communicated to the Recipient by the
Disclosing Party through no fault of the Recipient, (iii) was rightfully
communicated to the Recipient by a third party free of any confidentiality
obligation, (iv) was independently developed by employees or agents of the
Recipient who had no knowledge of any Confidential Information communicated to
the Recipient by the Disclosing Party, or (v) was communicated in response to
the order or requirement of a court, administrative agency or other governmental
body; provided, that the Recipient shall provide prompt, advanced notice thereof
to enable the Disclosing Party to seek a protective order or otherwise prevent
such disclosure. Notwithstanding the foregoing, Confidential Information which
Seller transferred to Buyer pursuant to the MAPA (so that with respect to such
Confidential Information, Seller, after the Closing Date (as defined in the
MAPA) is treated as the Recipient) shall not be subject to exception (iv) above
unless Seller can demonstrate with competent written proof that it has met each
of the requirements described in exception (iv) for activities which occurred
after the Closing Date.
4. Authorization: No Representation of Accuracy. Each Disclosing Party
warrants that it has the right to provide to the Recipient any Confidential
Information so disclosed to the Recipient under this Agreement. Each party
understands and acknowledges that, neither party nor any of its representatives
or affiliates makes herein any representation or warranty, express or implied,
as to the accuracy or completeness of the Confidential Information made
available by it or to it. Each party agrees that neither party nor any of its
representatives or affiliates shall have any liability hereunder to the other
party or to any of its representatives or affiliates relating to or resulting
from the use of such other party's Confidential Information (other than for a
use of such Confidential Information in violation of this Agreement) or any
errors therein or omissions therefrom. NO OTHER WARRANTIES ARE MADE BY ANY PARTY
UNDER THIS AGREEMENT. ANY INFORMATION EXCHANGED UNDER THIS AGREEMENT IS PROVIDED
"AS IS."
5. Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER FOR ANY CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS) WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE, FOR BREACH OF OR FAILURE TO PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT AND EVEN IF ANY LIMITED REMEDY PROVIDED HEREIN FAILS TO ACHIEVE ITS
ESSENTIAL PURPOSE. THIS LIMITATION SHALL NOT APPLY IN THE CASE OF DAMAGES CAUSED
BY DELIBERATE INTENT.
6. Government Regulations. Subject to applicable law, Recipient shall
adhere to the U.S., European and German export administration laws and
regulations and shall not export or reexport any technical data to any
proscribed country listed in the U.S., European and German export administration
regulations unless properly authorized by the U.S. or German government.
7. Remedy. Each party hereby acknowledges and agrees that in the event of
any breach of this Agreement by the other party, including, without limitation,
the actual or threatened unauthorized disclosure or unauthorized use of a
Disclosing Party's Confidential Information, the Disclosing Party may suffer an
irreparable injury, such that no remedy at law will afford it adequate
protection against, or appropriate compensation for, such injury. Accordingly,
each party hereby agrees that the other party shall be entitled to specific
performance of the receiving party's obligations under this Agreement, as well
as such further relief as may be granted by a court of competent jurisdiction.
8. Miscellaneous
(a) Each party shall be responsible for any breach of this Agreement by
any of its representatives or affiliates.
(b) This Agreement contains the entire understanding of the parties hereto
with regard to the subject matter contained herein and supersedes all
prior agreements and understandings or memoranda of understanding
between or among any of the parties hereto.
(c) In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions of the Agreement shall not in any way be affected
or impaired thereby.
(d) This Agreement shall enure to the benefit of and shall be binding on
and enforceable by the parties and their respective successors and
permitted assigns. Neither party may assign any of its rights or
obligations hereunder without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed .
(e) No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, and no single
or partial exercise thereof shall preclude any other or future
exercise thereof or the exercise of any other right, power or
privilege hereunder.
(e) This Agreement shall be governed by and construed in accordance with
the laws of the Germany without giving effect to choice of law
doctrines.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this New Confidential Disclosure
Agreement as of the date first written above.
HEWLETT-PACKARD GmbH
/s/ Rudi Speier
----------------------------
By: Rudi Speier
Title: Managing Director
MULTILAYER TECHNOLOGY GmbH & CO KG
/s/ Peter Koenig
-----------------------------
By: Peter Koenig
THE DII GROUP, INC.
/s/ Steven C. Schlepp
-----------------------------
By: Steven C. Schlepp
Title: Senior Vice President
FOR IMMEDIATE RELEASE
Contact:
Sharon L. Sweet
Vice President, Investor Relations
The Dii Group
(303) 652-2221
Dii GROUP FINALIZES PURCHASE OF
HP'S GERMAN PRINTED CIRCUIT ORGANIZATION
NIWOT, Colo., October 30, 1998 - The Dii Group, Inc. (NASDAQ:DIIG), a leading
value-added electronics design and manufacturing service provider, today
announced that it has completed the acquisition of Hewlett-Packard Company's
(HP) Printed Circuit Organization's operations in Boeblingen, Germany. The
operation, now called Multek Europe, manufactures high-performance printed
circuit boards for multiple Hewlett-Packard divisions and outside customers. The
purchase price was approximately $75 million, excluding working capital, and the
transaction includes a three-year supply agreement in which Multek will provide
boards to HP for use in its servers, workstations, test and instrumentation, and
medical products. The acquisition was funded with a 5-year term loan.
Steven C. Schlepp, president of Multek, commented: "Multek Europe is a
world-class operation with superior management, technology, and process
automation that we intend to share with other Multek locations around the globe.
This transaction is consistent with our strategy of being the technological
leader in each area of the world we serve, and it further diversifies our global
customer base. In addition to expanding our relationship with HP, Multek Europe
has tremendous potential in the high-performance computing, networking and
telecommunications merchant markets, which we plan to aggressively pursue."
Ronald R. Budacz, chairman and chief executive officer of the Dii Group, added:
"This financially attractive acquisition establishes Multek's presence in Europe
to complement existing locations in the United States and the People's Republic
of China. We now have technology leadership in each location, and we intend to
use our volume production capabilities, which have been added over the last year
and a half, to support Multek customers from prototype through volume production
worldwide."
Budacz continued, "We anticipate good growth and profitability from this
operation from the outset - over half of the expected volume for the first three
years is covered by our supply agreement with HP, development of the merchant
market is well under way with nearly 40 percent of revenues coming from other
customers, and the facility has ample growth capacity."
<PAGE>
The acquisition includes property, plant and equipment, working capital, and
certain intellectual property rights. The Boeblingen site is approximately
465,000 square feet with a building of approximately 315,000 square feet. No
goodwill resulted from this transaction.
William V. Russell, HP vice president and general manager of the Enterprise
Systems Group, whose high-performance server products incorporate Multek Europe
circuit boards, said, "We're delighted to consummate this relationship with
Multek. They are a high-tech producer with the ability to support our
increasingly sophisticated needs with each ensuing generation of product."
This press release contains historical information and forward-looking
statements. Statements looking forward in time involve risks and uncertainties,
including risks associated with customer concentration, dependence on the
electronics industry, especially the semiconductor business sector, economic
conditions, the successful integration of newly acquired businesses and other
risks associated with acquisitions, changes in product mix, competition, and
international operations. For further information, reference should be made to
the Dii Group's filings with the Securities and Exchange Commission, including
the Company's "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in the Company's most recent Annual Report on
Form 10-K.
Hewlett-Packard Company is a leading global provider of computing, Internet and
intranet solutions, services, communications products and measurement solutions,
all of which are recognized for excellence in quality and support. HP has
127,200 employees and had revenue of $42.9 billion in its 1997 fiscal year.
Information about HP and its products can be found on the World Wide Web at
http://www.hp.com.
Multek, a subsidiary of the Dii Group, is a technological leader in the
manufacture of complex printed circuit boards, with manufacturing locations in
Irvine, Calif.; Roseville, Minn; Austin, Texas; Zhuhai, Guangdong Province,
China; and Boeblingen, Germany.
The Dii Group, Inc. (NASDAQ:DIIG) is a leading, value-added electronics design
and manufacturing outsource service provider, which operates through a global
network of companies in North America, Europe, and Asia. The Company serves the
electronics industry through its four core competencies: semiconductors; printed
circuit boards; circuit board and finished product assembly and distribution;
and process control technologies. The Dii Group employs approximately 7,000
people and had revenues of $663 million in the first nine months of fiscal 1998.
Its Internet (Web) Site can be reached by accessing "www.diigroup.com" to view
recent press releases, company information, and financial data relating to the
Dii Group.
