1
EXHIBIT 10.52
MAXTOR STANDARD VOLUME PURCHASE AGREEMENT
PREAMBLE
This Maxtor Standard Volume Purchase Agreement ("Agreement"),
effective as of January 1, 1998 ("Effective Date") is made by and between Maxtor
Corporation, a Delaware corporation, having principal places of business at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.▇. and ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ U.S.A.("Maxtor"), and Lucent Technologies Inc., a
Delaware company, having a place of business at ▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ("Lucent USA") and Lucent Technologies Singapore Pte. Ltd., a
Singapore corporation, having a place of business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
#▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Lucent Singapore"), ( both Lucent
entities are referred to herein as "Seller").
RECITALS
Whereas, Seller is in the business of designing, manufacturing and
selling integrated circuits, both custom and standard, _ ("Product") for hard
disk drives and wishes to sell such Product to manufacturers of disk drives such
as Maxtor;
Whereas, "Maxtor" shall include Maxtor Peripherals (S) Pte Ltd.,
having a place of business at ▇▇ ▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
Whereas, Maxtor wishes to secure a supply of Product and to purchase
quantities of such Product from Seller meeting the Specifications furnished by
Lucent in the case of standard products and meeting the specifications agreed to
in writing in the case of custom products (the "Specifications") and operating
in Maxtor's application ("Application");
Whereas, Maxtor may place orders for Product either on Lucent USA or
Lucent Singapore;
Whereas, Seller shall manufacture and deliver to Maxtor, its agents,
and/or its subsidiaries, Product as set forth in this Agreement, including its
Terms and Conditions;
Whereas, the parties recognize that the disk drive market is very
demanding of quality, timeliness, and price, and that the essence of the
relationship between Maxtor and Seller is flexibility; timely delivery of
necessary quantities of qualified, high-yield Products; and low costs;
Whereas, if problems should be encountered with respect to any aspect
of this Agreement or if the parties should encounter any problems not covered by
this Agreement, Maxtor and Seller shall discuss them in a cooperative and
sincere spirit and attempt to arrive at a mutually acceptable solution; and
Whereas, this Agreement commences on the Effective Date and
terminates on December
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
2
31, 2001, ("Termination Date") unless terminated earlier;
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED, AND IN CONSIDERATION OF THE ABOVE
PREMISES AND THE MUTUAL PROMISES CONTAINED IN THIS AGREEMENT, THE PARTIES AGREE
AS FOLLOWS:
TERMS AND CONDITIONS
ARTICLE I - PRODUCTS
1.1 Product.
1.1.1 Purchase and Supply. Maxtor wishes to secure a supply of
Product and to purchase quantities of such Product from Seller meeting the
Specifications. Products shall be manufactured by Lucent according to the
functional, technical and other specifications in the data sheet furnished by
Lucent, in the case of standard products and those agreed upon by the parties in
writing for each custom integrated circuit ("ASIC Product"). As used herein
"Product" refers to both standard Products and ASIC Products unless the context
suggests otherwise. Seller wishes to supply such Product to Maxtor on such
conditions and on the terms and conditions of this Agreement. Therefore, subject
to the terms and conditions of this Agreement, Maxtor will purchase and Seller
will supply Product as provided herein for the term of this Agreement. Maxtor's
obligation to purchase Product from Seller is contingent upon Seller's Product
meeting Maxtor's Application requirements, time to market requirements, Product
Specifications and functional requirements, price requirements, and the other
terms and conditions of this Agreement. Nothing in this "Agreement shall be
construed as an obligation for Maxtor to purchase any Products, except as
expressly provided in any Order (as defined below) issued by Maxtor or as
expressly set forth in quotations accepted by Maxtor covering ASIC Products (See
Section 1.1.6). This agreement is not a requirements contract. Any Product
purchased from Seller is covered under this Agreement whether or not the Order
expressly references this Agreement.
1.1.2 Specification. Specifications for Products being purchased
by Maxtor as of the date of execution of this Agreement are identified in
Exhibit A. Specifications for other standard Products that will be purchased by
Maxtor will be deemed to be included as part of Exhibit A and incorporated into
this Agreement upon furnishing of same to Maxtor. Specifications for custom
integrated circuits or ASIC Products must be mutually agreed to in writing, and
upon such agreement the ASIC Specifications shall become part of Exhibit A and
incorporated into this Agreement.
1.1.3 Packing. Unless otherwise specified in this Agreement or
an Order, all Products are to be packed and identified in accordance with
customary industry practice. Packages shall be constructed for handling with a
mechanical device. A complete packing list specifying Maxtor's applicable
purchase order number, quantity of Products shipped, and part
-2-
3
number shall be enclosed with all shipments under this Agreement. Seller shall
▇▇▇▇ each container with necessary lifting, loading and shipping information,
including the applicable purchase order number, date of shipment, and name and
address of Seller and Maxtor.
1.1.4 Freedom of Action. Nothing in this Agreement shall prevent
either party from engaging in similar business with other persons, including,
without limit, competitors of the other party, provided that the confidentiality
terms of this Agreement are not breached. Nothing in this Agreement shall
prevent Seller from selling Products or the same or substantially similar goods
or materials to other customers, provided that the confidentiality and
intellectual property rights terms of this Agreement are not breached.
1.1.5 Sole Source. Nothing in this Agreement will prevent Maxtor
from procuring Products or the same or substantially similar goods or materials
from other sources than Seller or from providing the same itself, provided that
the confidentiality and intellectual property rights terms of this Agreement are
not breached.
1.1.6 Design and Development Terms for ASIC Product. From time
to time Maxtor may enter into design and development agreements with Seller for
ASIC Products. Any such development effort will be the subject of quotations
provided by Seller covering the specific terms of such design and development
("Quotation"). The Quotation and the terms contained in Exhibit B apply with
respect to any such design and development, in addition to the general terms and
conditions contained herein. In the event of any conflict between the general
terms of this Agreement and Exhibit B, concerning ASIC Products, Exhibit B
prevails (but for all standard Products the general terms and Conditions of this
Agreement prevails). In the event of any such conflict with the Quotation and
this Agreement or Exhibit B, the Quotation prevails.
1.2 Warranty. Each of Seller's warranties made hereunder is
materially relied upon by Maxtor in entering into this Agreement or any Order.
1.2.1 Authority Warranty. Each party represents and warrants
that all corporate action necessary for the authorization, execution and
delivery of this Agreement by such party and the performance of its obligations
under this Agreement has been taken. Further, each party represents and warrants
that neither the execution of this Agreement nor any performance of this
Agreement shall conflict with or be prohibited by any interest, agreement,
obligation, contract, order, law, regulation, or duty, oral or written, to which
it is a party or by which it is bound.
1.2.2 Product Warranty. Seller warrants the product as a
production item ("Item"), but not related services or prototypes of any such
Items, to be free from defects in material and workmanship and to be in
conformance with the written specification, if any, and referenced in an order
accepted by Seller. If any defect in material or workmanship or failure to
conform to such specification ("Defect) is suspected in any such Items, Maxtor,
after obtaining a Returned Material Authorization number from Seller, shall ship
suspected defective samples of the items to Seller, following Seller's
instructions regarding the return. No product will be accepted for replacement,
credit or refund without the written authorization of and in accordance with
Seller's instructions. Seller shall analyze the failures, making use, when
appropriate, of technical information provided by Maxtor relating to the
circumstances surrounding the failures.
-3-
4
Seller will verify whether any Defect appears in the Items. If Seller determines
that the returned products are not defective, Maxtor shall pay Seller all costs
of handling, inspection, repairs and transportation at Seller's then prevailing
rates. Seller shall, at Seller's s option, taking Maxtor's request into
reasonable account, either credit or refund the purchase price, or replace the
defective product without charge with the same or equivalent product provided:
(i) Maxtor notifies Seller in writing of the claimed Defect within thirty (30)
days after Maxtor knows or reasonably should know of the claimed Defect, (ii)
Seller's examination of the Items discloses that the claimed Defect actually
exists and (iii) in the case of any product other than packaged monolithic
integrated circuits, the defect appears within twelve (12) months from the date
of shipment of the product. In the event of a replacement, Seller shall ship the
replacing Items FOB point of origin, freight prepaid to Maxtor's destination.
Any replaced Item shall become Seller's property. The method of disposition of
any replaced Items will be as mutually agreed by both parties in writing. In no
event shall Seller be responsible for deinstallation or reinstallation of any
Item or for the expenses thereof. Replacements covered by the above warranty are
warranted to be free from defects as set forth above. Inspection and acceptance
of Items by Maxtor and/or payment therefor shall not relieve Seller of
responsibilities hereunder.
The above warranty does not apply to, and Seller makes no warranties
with respect to products that: are software programs, experimental products or
prototypes (all of which are provided "AS IS") or to Items which have been
subjected to misuse, neglect, accident or abuse or operating or environmental
conditions that deviate from the parameters established in applicable
specifications; or have been improperly installed, stored, maintained, repaired
or altered by anyone other than Seller; or have had their serial numbers or
month and year of manufacture or shipment removed, defected or altered. This
warranty does not extend to any system into which a product is incorporated. NO
OTHER WARRANTY, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE IS GIVEN WITH RESPECT TO SUCH SERVICE OR ANY OTHER SERVICE
PROVIDED BY SELLER UNDER THIS AGREEMENT. This warranty applies only to Maxtor
and may not be assigned or extended by Maxtor to any of its customers or other
users of the Items. Seller will not accept any returns from Maxtor's customers
or users of Maxtor's products.
EXCEPT AS STATED IN THE SECTION ENTITLED WARRANTY, SELLER, ITS
SUBSIDIARIES AND AFFILIATES, SUBCONTRACTORS AND SUPPLIERS MAKE NO WARRANTIES,
EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIM ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. MAXTOR'S SOLE AND EXCLUSIVE REMEDY SHALL BE
SELLER'S OBLIGATION TO REPLACE OR CREDIT OR REFUND AS SET FORTH ABOVE.
1.3 Remedies.
A. For purposes of the exclusive remedies and limitations of
liability set forth in this section, Seller shall be deemed to include Lucent
Technologies Inc., its subsidiaries and affiliates and the directors, officers,
employees, agents, representatives, subcontractors and suppliers of each of
them; and "damages" shall be deemed to refer collectively to all injury, damage,
loss or expense incurred.
-4-
5
B. Seller's entire liability and Maxtor's exclusive remedies against
Seller for any damages caused by any product defect or failure, or arising from
the performance or non-performance of any work, regardless of the form of
action, whether in contract, tort including negligence, strict liability or
otherwise shall be:
1. For infringement, the remedies set forth in the section
entitled intellectual property indemnity;
2. For failure of product or work performed, the remedies stated
in the section entitled Product Warranty;
3. For failure to deliver or for delays in delivery of
production quantities, Seller shall have no liability unless the delivery is
delayed by more than fifteen(15) days by causes not attributable either to
Maxtor or to conditions beyond Seller's reasonable control, in which case Maxtor
shall have the right, as its sole remedy, to cancel the order without incurring
cancellation charges;
4. For bodily injury or death to any person proximately caused
by Seller, Maxtor's right to proven direct damages; and
5. For claims other than set forth above, seller's liability
shall be limited to direct damages that are proven, in an amount not to exceed
[*]
C. Notwithstanding any other. provision of this agreement, Seller
shall not be liable for incidental, indirect, special, exemplary or
consequential damages or for lost profits, savings or revenues of any kind,
whether or not seller has been advised of the possibility of such damages;
provided, however, this limitation shall not apply to a breach of the
confidentiality obligations of this Agreement if such breach is the result of
intentional misconduct or gross negligence. This provision shall survive failure
of an exclusive remedy.
1.4 Prices, Delivery; Taxes.
[*]
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
-5-
6
[*]
ARTICLE II - PROCEDURES
2.1 Qualification.
2.1.1 Qualification. The respective obligations of the parties
pursuant to this Agreement shall be subject to the successful qualification of
Seller's Product and its manufacturing process in Maxtor's Application ,
provided, however, that this will not relieve Maxtor of its obligations
respecting any firm orders placed by Maxtor prior to such qualification provided
the Product meets the Specifications. Maxtor and Seller shall cooperate to set
up the necessary processes and procedures to accomplish and facilitate such
qualification. Except for firm orders placed by Maxtor prior to qualification,
Seller's Product must complete qualification by Maxtor in order to be tendered
under this Agreement, and must consistently perform according to the qualified
standard. After Maxtor's approval or acceptance of the initial qualification
prototypes of the Products, any changes in the Product design, material or any
processes used in producing the Product shall be subject to change notification
in accordance with Exhibit D. Maxtor will use its reasonable commercial efforts
to qualify and utilize Seller's Product in new or additional Applications.
2.1.2 Changes. Seller shall promptly notify Maxtor in writing of
any change in Product design, material, production process or in plant location
in accordance with Seller's change notification policy outlined on Exhibit D in
order to allow Maxtor to requalify the Product, before any Product is
manufactured by the new design, material, process or in the new location and
sold to Maxtor. Any Product delivered to Maxtor after such change and without
change notification in accordance with Exhibit D may be rejected by Maxtor for a
full refund. Notwithstanding the foregoing, in no event will Seller make any
circuit design changes to an ASIC Product without Maxtor's written consent.
2.2 Number Not Used.
2.3 Forecasts. Maxtor shall forecast its requirements for Products to
Seller, as provided below, on a non-binding basis, and Seller shall use its
reasonable commercial efforts to maintain the ability to supply Maxtor's
requirements from Seller. Notwithstanding the above, nothing in this Agreement
shall be construed as an obligation for Maxtor to purchase any Products, except
as expressly provided in any Order issued by Maxtor.
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
-6-
7
2.3.1 Forecasts. During the term of this Agreement, Maxtor shall
provide Seller, on a monthly basis, with a nine (9) month rolling forecast
setting forth its estimated requirements and shall provide Orders based on its
requirements for the first three (3) months of the forecast. Orders will be
placed ninety (90) days in advance of the date as of which the Products are to
be delivered. Seller shall be required to accept any Order consistent with the
forecast and the terms contained herein. Maxtor may request a shorter lead time
and Seller shall use its reasonable commercial efforts to meet such date.
Maxtor's forecast is provided solely for Seller's convenience and for its
planning purposes; no forecast shall be construed as an authorization by Maxtor
to order any materials for, or to allocate any labor or equipment for the
manufacture of the Product nor impose on Seller any obligation to supply
additional Product. Maxtor will not be responsible for any of Seller's cost or
expense for materials, Product, labor, or other commitments or expenses, other
than as authorized in Orders or as otherwise expressly provided herein.
2.3.2 Upside Capability. Seller agrees to accept Orders outside
the forecast and ordering cycle ("Upside Quantities") as follows:
The Upside Quantities will depend upon the requested delivery time of
Maxtor from time the order for Upside Quantities is placed (RDT) and the
applicable percentage applied to the quantity of Product ordered by Maxtor for
the then current quarter ("CQ").
RDT Upside Quantity
1 to 4 weeks 10% of CQ
4 to 8 weeks 20% of CQ
8 to 12 weeks 30% of CQ
2.4 Orders.
2.4.1 Orders. All purchases and sales shall be initiated by
Maxtor's issuance of written purchase orders sent via airmail, facsimile or
courier ("Order"). Such Orders shall reference this Agreement and state the unit
quantities, unit descriptions, price, requested delivery dates and shipment
instructions. Such stated items included in an Order shall be consistent with
the terms and conditions contained herein. The acceptance or rejection by Seller
of an Order shall be indicated by written acknowledgment within five (5) work
days. By shipping the Products, or by confirming or accepting an Order, or by
performing the work described in an Order Seller agrees to the Order and to the
terms and conditions of this Agreement. All Orders meeting the terms and
conditions of this Agreement shall be accepted by Seller. Nothing in this
Agreement shall be construed as an obligation for Maxtor to purchase any
Products, except as expressly provided in any Order issued by Maxtor.
2.4.2 Objections. Each Order is placed subject to the terms and
conditions of this Agreement. Accordingly, if Seller objects to any of the terms
of an Order, Seller must notify Maxtor in writing stating the specific terms
objected to, the reasons for the objection and the wording proposed to be
substituted before Seller's acceptance of such Order. Under no circumstances
will Seller's objection notice itself constitute a modification of the terms of
an
-7-
8
Order. No modification of this Agreement will be effective unless made in
writing signed by both parties, which expressly intends to modify this
Agreement. The preprinted terms and conditions of purchase orders, acceptances,
confirmations and similar business documents shall have no effect as amendments
of, objections to, or modifications of this Agreement. Any different or
additional terms in Orders or Seller's acceptance of this Agreement will be
construed as proposals for additions to this Agreement and will not be binding
unless agreed to in writing by both parties.
2.4.3 Precedences. Any terms and conditions added or referenced
by either party in any purchase order, confirmation, acceptance or any similar
document purporting to modify the terms and conditions contained in this
Agreement, shall be disregarded unless expressly agreed upon in writing signed
by the parties, which expressly amends this Agreement. The preprinted terms and
conditions of purchase orders, acceptances, confirmations and similar business
documents shall have no effect as amendments of, objections to, or modifications
of this Agreement.
2.4.4 End of Life. In the event that Seller determines that a
Product is at end of life, Seller shall give Maxtor at least three (3) months
advanced notice of such projected end of life. Such notice shall include the
planned last purchase order date and the planned last shipment date for the end
of life Product. Notwithstanding the foregoing, during the term of this
Agreement, Lucent agrees that, for Maxtor sole sourced Product, Lucent will
supply such Products through the life of the Maxtor HDD program or programs that
use this Product or either provide a mutually agreeable alternative part that is
compatible with the part that is being phased out or give Maxtor at least twelve
months advanced notice of such projected end of life.
2.4.5 End of Term. In the event of the expiration or termination
of this Agreement, any Orders placed before such expiration or termination shall
be completed according to the terms of this Agreement.
2.5 Inspection. Maxtor and Seller shall cooperate to inspect
Products, and nothing in this section shall limit Maxtor's other rights and
remedies.
2.5.1 Inspection by Maxtor. Maxtor may test each lot or Order of
Product to ensure that the Products meet the Specifications and acceptance
criteria as may be established by mutual agreement, and Seller shall not ship
any Products that do not Conform. Any inspection and testing by Maxtor will be
performed at Maxtor's facility. However, Seller will permit Maxtor the right to
audit its facilities and inspect Product (including raw materials, components,
subassemblies and end products) before, during and after manufacture, once a
year or more frequently in writing if agreed to by Seller or in the event that
there has been a lot rejection under Section 2.5.3. Where applicable, Maxtor
may, at its option, inspect all Products or inspect a statistical sample
selected from each lot, and Product, lots or Orders may be inspected more than
once.
2.5.2 Inspection by Seller. Seller will ensure that all Product
are tested to assure that Products meet the applicable Specifications. Seller
will provide only those Product conforming to the Specifications, unless Seller
has obtained prior written approval from Maxtor
-8-
9
for any deviation from such Specifications. Seller further agrees to maintain
adequate authenticated inspection test documents that relate to work performed
under this Agreement. Such records shall be retained by Seller for a period of
three (3) years after completion of this Agreement and made available to Maxtor
upon request. Seller agrees to supply Maxtor with inspection and test reports,
certifications or any other inspection and test documents as may be reasonably
requested.
2.5.3 In Case of Failure of Inspection. If the above inspection
or testing detects Products which nonconform to the Specifications or the
requirements of this Agreement, Maxtor and Seller will closely cooperate to
identify and find a way to correct the causes of the problem(s). Maxtor may
refuse to accept Product which do not conform. Maxtor may reject entire lots or
Orders if lot acceptance criteria mutually agreed to by the parties are not
fulfilled; provided that any canceled portion of an Order shall nevertheless be
counted as purchased for purposes of determining Maxtor's right to any quantity
discounts. The rejected Product may, at Maxtor's discretion, be returned to
Seller at Seller's expense. Maxtor may immediately stop future shipments of
Product until the cause(s) for non-conformity, as mutually determined by
parties, has been corrected. Maxtor will use its reasonable commercial efforts
to assist Seller in identifying the cause(s) for rejection.
2.6 Shipping.
2.6.1 Timeliness. Seller shall use its diligent efforts to meet
a one hundred percent (100%) on-time delivery commitment. If Seller's
performance falls below one hundred percent (100%) on-time deliveries, then
Seller shall implement a corrective action plan acceptable to Maxtor which
brings the deliveries back to one hundred percent (100%) on-time. If Seller is
unable to deliver any Product on schedule, Seller shall promptly notify Maxtor
giving a new delivery date, and Maxtor may:
(i) accept the new delivery date; or
(ii) reschedule the delivery by means of a Change
Order; or
(iii) if the delay is in excess of fifteen days,
cancel the delayed portion of the Order without liability; provided that any
canceled portion of an Order shall nevertheless be counted as purchased for
purposes of determining Maxtor's right to any quantity discounts.
At Maxtor's request, Seller will provide Maxtor with daily
notification of shipping delays or of the progress of delayed Products in
transit. Such notification will include action plans to for recovery or
expediting of the affected Product. Seller shall provide Maxtor notice of the
departure of any shipment of Product from Seller's site.
2.7 Delivery.
2.7.1 Delivery Document. Either invoice or delivery order may be
used when making deliveries. Each set must contain three (3) copies. Each copy
must show this Agreement number, item number and description of Products,
purchase order number, and quantity of
-9-
10
Products shipped. Bills of Lading shall be mailed in triplicate to the
destination address shown on the face of the Order, or to the consignee of the
Order on the day shipment is made. All documents accompanying the Products shall
reference the purchase order number and, if not, Maxtor shall have the right to
reject delivery and return the Products at Seller's expense.
2.7.2 Delivery Early or Late. If Seller's deliveries fail to
meet schedule, Maxtor, without limiting its other rights and remedies, may:
(i) In the case of late Products:
(a) direct expedited routing, and any
excess costs for such expedited routing shall be paid by Seller; or
(b) cancel the delayed portion as
permitted under Section 2.6.2;
(ii) In the case of early Products
(a) return the Products at Seller's
expense for proper delivery; or
(b) accept the Products, but Maxtor may
charge Seller with storage expenses incurred because of the advance delivery.
2.8 Acceptance. If, after [*] from the date of receipt by Maxtor,
Maxtor has not rejected the Product, it will be deemed to have been accepted by
Maxtor. Maxtor also may accept the Product by written notice. The act of
inspection or payment by Maxtor for the Product will not be construed as
Maxtor's acceptance of any Product. Acceptance of any Product shall not affect
the Product warranty or any related remedy.
2.9 Returns. Permitted returns of product to Seller are at Seller's
expense for packing and shipping. Return shipments are F.O.B. Maxtor, and title
and risk of loss pass to Seller upon delivery to the return F.O.B. Point. If
Seller requests, Maxtor will apply Seller's Return Materials Authorization (RMA)
or similar number to the returned Products and/or related documentation,
provided, however, that Seller must supply such RMA number to Maxtor on a timely
basis.
2.10 Epidemic Failure. In the event that the Products supplied by
Seller to Maxtor should develop any Epidemic Failure, the parties will meet in
order to work out technical methods to remedy the problem. Product will undergo
failure mode analysis (FMA) by Seller pursuant to the terms of the Warranty
provisions to determine whether the Product in fact defective and the cause of
the Epidemic Failure. In such event, shipment of undelivered Orders of Products
which are the subject of the Epidemic Failure and FMA will be postponed, at
Maxtor's request until FNM has been Performed and the cause of the epidemic has
been corrected if the Product is found to be defective. In case upon the
expiration of forty-five (45) days from the date of Maxtor's notice regarding
the Epidemic Failure and FMA has determined that the Product is defective and
Seller has not yet remedied the same, then Maxtor shall be
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
-10-
11
entitled to cancel Pending Orders without any liability for such cancellation
and return any defective Products under the Warranty Provision. As used herein,
"Epidemic Failure" means over one half of one percent (.5%) of the Product shall
be non-conforming to Specifications over a period of thirty (30) days.
2.11 Invoicing. Seller will issue the invoices for the Products and
will date them with a date equal or subsequent to shipment date. Invoices shall
reference purchase order number, item number and description of Products, unit
price of Products, and total amounts due.
2.12 Payment.
2.12.1 Terms. Invoices shall be due and payable within [*] after
the date of invoice, with a [*] grace period for actual receipt of payment.
Maxtor's payment advice shall reference Seller's invoice number(s) and date(s).
2.12.2 Currency. Unless expressly provided to the contrary, all
amounts stated in this Agreement and all sums payable under this Agreement shall
be denominated in United States Dollars and all payments made under this
Agreement shall be made by wire transfer, cashier's check, or other ready funds
in United States Dollars to payee's account at payee's designated United States
bank.
2.12.3 Disputes. Maxtor shall have [*] after the invoice date to
contest in good faith the amounts and items charged. Amounts subject to good
faith contest are not due and payable until [*] after the dispute is resolved.
2.12.4 Bills. Seller's bills shall list all open invoices,
invoice dates, and amounts unpaid; payments received, and credits issued.
2.12.5 Payment Applications. Payments shall be applied to open
invoices according to Maxtor's payment advice, but, in the event the payment
advice does not specify invoices, then payments shall be applied to oldest items
first.
2.12.6 Credits. Credits or credit memos shall be paid
immediately to Maxtor, unless Maxtor directs in writing that the amounts are to
be applied as offsets to any open invoices.
2.13 Order Changes.
2.13.1 Rescheduling Of Orders. Maxtor may reschedule an Order
pursuant to the following schedule:
[*]
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
-11-
12
2.13.2 Cancellation of Orders. Should Maxtor cancel any Order
which has been acknowledged and a shipping date assigned, either in whole or in
part, such cancellation shall be upon terms and conditions that will compensate
Seller for any loss or damage resulting from such cancellation. No cancellation
will be permitted if a reschedule has been previously negotiated at Maxtor's
request, unless the delivery date that was rescheduled was outside lead-time.
Compensation by Maxtor for production quantities of the Product shall
be according to the following schedule:
[*]
Standard Products:
DAYS PERCENT OF LIABILITY
---- --------------------
[*]
ASIC Product:
DAYS PERCENT OF LIABILITY
---- --------------------
[*]
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
-12-
13
[*]
2.14 Number not Used
2.15 Shortages. In the event of a shortage of capacity or material
that will affect the supply of the Product, Seller may allocate in a fair and
reasonable manner, taking into account Seller's contractual commitments, its
available production output among itself and its other customers under contract.
Seller shall provide Maxtor with as much notice as possible if it anticipates or
has reason to believe that Seller's output of the Product will not be sufficient
to meet all of Maxtor's requirements for any period based on the forecast
furnished by Maxtor.
ARTICLE III - INTELLECTUAL PROPERTY
3.1 Confidentiality.
3.1.1 Confidential Information. "Confidential Information" shall
mean any information disclosed by one party to the other pursuant to this
Agreement which is in written, graphic, machine readable or other tangible form
and is marked "Confidential", "Proprietary" or in some other manner to indicate
its confidential nature. Confidential Information may also include oral
information disclosed by one party to the other pursuant to this Agreement
provided that such information is designated as confidential at the time of
disclosure and reduce to a written summary by the disclosing party, within
thirty (30) days after its oral disclosure, which is marked in a manner to
indicate its confidential nature and delivered to the receiving party. In
addition, all technical and confidential information marked in a manner to
indicate its confidential nature exchanged prior to the date of this Agreement
shall be Confidential Information. Each party shall treat as confidential all
Confidential Information of the other party, shall not use such Confidential
Information except as expressly set forth in this Agreement or otherwise
authorized in writing, shall implement reasonable procedures to prohibit the
disclosure, unauthorized duplication, misuse or removal of the other party's
Confidential Information and shall not disclose such Confidential Information to
any third person except as may be necessary and required in connection with the
rights and obligations of such party under this Agreement, and subject to
confidentiality obligations at least as protective as those set forth in this
Agreement. Without limiting the above, each of the parties shall use at least
the same procedures and degree of care which it uses to prevent the disclosure
of its own confidential information of like importance to prevent the disclosure
of Confidential Information disclosed to it by the other party under this
Agreement, but in no event less than due care. The party disclosing an item of
Confidential Information shall be the Discloser ("Discloser"), and the party
receiving an item of Confidential Information shall be the Receiver
("Receiver"). Notwithstanding the above, neither party shall have liability to
the other with regard to any Confidential Information of the other which:
(i) was generally known and available in the public domain
at the time it was disclosed or becomes generally known and available in the
public domain through no fault of Receiver;
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
-13-
14
(ii) was known to Receiver at the time of disclosure;
(iii) is disclosed with the prior written approval of
Discloser;
(iv) was independently developed by Receiver without any
use of the Confidential Information and by employees or other agents of Receiver
who have not been exposed to the Confidential Information;
(v) becomes known to Receiver from a source other than the
Discloser without breach of this Agreement by Receiver and otherwise not in
violation of the Discloser's rights; or
(vi) is disclosed pursuant to the order or requirement of
a court, administrative agency, or other governmental body; provided that
Receiver shall provide prompt, advanced notice to Discloser.
3.1.2 Employee Agreements. Each party shall obtain the execution
of non-disclosure agreements with its employees, agents and consultants having
access to Confidential Information of the other party, and shall diligently
enforce such agreements, or shall be responsible for the actions of such
employees, agents, and consultants in this respect.
3.1.3 Use of Confidential Information. At all times, and
notwithstanding any termination, expiration, or cancellation under this
Agreement, Receiver will use the Confidential Information for no purpose other
than pursuing the transactions and relationship contemplated by this Agreement.
3.1.4 Return of Materials. Upon termination, cancellation or
expiration of this Agreement, or upon written request of the other party, each
party shall promptly return to the other all documents or other tangible
materials representing the other's Confidential Information, including all whole
or partial copies.
3.1.5 Term of Nondisclosure Obligation. Notwithstanding the term
of this Agreement, the obligations of Seller and Maxtor under this Agreement.
with respect to any Confidential Information shall continue for a period of
three (3) years after the Termination Date.
3.1.6 Injunctive Relief. If either party breaches any of its
obligations with respect to confidentiality and unauthorized use of Confidential
information under this Agreement, it being recognized that the damages flowing
from such breach are difficult to ascertain and liquidate, the other party shall
be entitled to seek equitable relief to protect its interest in such
Confidential Information, including but not limited to injunctive relief, as
well as all other rights and remedies.
3.1.7 Export Controls. Recipient agrees that it will not
knowingly
(i) export or re-export, directly or indirectly, any
technical data (as defined by the U.S. Export Administration regulations)
received under this Agreement to,
-14-
15
(ii) disclose such technical data for use in, or
(iii) export or re-export, directly or indirectly, as any
direct product of such technical data to, any destination to which such export
or re-export is restricted or prohibited by U.S. law, without obtaining prior
authorization from the U.S. Department of Commerce.
3.1.8 Items Declared Confidential. This Agreement, its terms and
conditions, Maxtor's specifications, and all Orders are Confidential
Information.
3.2 Publicity. Neither party shall publicly announce or disclose the
existence of this Agreement or its terms and conditions, or advertise or release
any publicity or press release regarding this Agreement, without the prior
written consent of the other party. Nothing in this Agreement shall limit a
party from making such disclosures as are required by law or court order,
provided notice of such disclosures is given to the other party.
3.3 Intellectual Property Rights. Seller exclusively shall own all
right, title and interest in and to any inventions, discoveries, improvements,
methods, ideas, computer and other apparatus programs and related documentation,
other works of authorship fixed in any tangible medium of expression, mask works
or other forms of intellectual property, whether or not patentable,
copyrightable or subject to mask work rights or other forms of protection, which
are made, created, developed, written, conceived or first reduced to practice by
Seller solely, jointly or on its behalf, in the course of, arising out of or as
a result of work done under this Agreement. Seller hereby grants to Maxtor a
nonexclusive, worldwide license to Seller intellectual property to use, sell and
distribute the Product purchased from Seller, provided, however, that such
license shall not include any license with respect to the combination of the
Product with any other product, even if such other product has been purchased
from Seller, nor any license to any method or process, even if such method or
process is the inherent use of the Product.
No title or other ownership rights in any licensed products or any
copies thereof shall pass to Maxtor under this Agreement or any performance
hereunder.
Maxtor agrees that it will not alter any notices on, prepare
derivative works based on, or reproduce, reverse engineer, disassemble or
decompile any software embodied in licensed products or recorded in the
purchased products furnished under this Agreement.
Except as expressly set forth in this Agreement, nothing contained in
this Agreement shall be deemed to grant, either directly or by implication,
estoppel or otherwise, any license on the patents, patent applications,
copyrights or proprietary information arising out of any other inventions of
either party.
3.4 Property. Title to all property not otherwise specifically
addressed in this Agreement owned by one party ("Furnisher") and furnished to
the other party ("Recipient"), shall remain with the Furnisher. Any such
property owned by Furnisher and in Recipient's possession or control shall be
used only in the performance of this Agreement unless otherwise authorized in
writing by the Furnisher. Recipient shall keep adequate records of such property
-15-
16
and such records shall be made available to Furnisher upon request, and shall
store, protect, preserve, repair, and maintain such property in accordance with
sound commercial practice, all at Recipient's expense. Unless otherwise agreed
to by Furnisher, Recipient shall insure Furnisher's interest in such material
against loss or damage by reason of fire (including extended coverage), flood,
accident, theft, riot or civil commotion. In the event that Furnisher's property
becomes lost or damaged to any extent while in Recipient's possession, Recipient
agrees to indemnify Furnisher or replace such property at Recipient's expense,
in accordance with Furnisher's request. At the expiration or termination of this
Agreement, Recipient shall request disposition instructions for all such
property, whether in original form or otherwise. Recipient agrees to make such
property available as directed by Furnisher, including preparation, packaging,
and shipping. Preparation for shipment shall be at Furnisher's expense and
shipment shall be FOB Recipient.
ARTICLE IV - LIABILITIES
4.1 General Indemnity. Seller shall in the performance of work or services under
this Agreement, fully comply with all applicable national, state, and local
laws, rules, regulations, and ordinances and shall indemnify and hold harmless
Maxtor from and against any loss, claim, damage, liability, expense, or cost
(including without limitation attorney's fees and court costs) resulting from
failure of such compliance.
4.2 Intellectual Property Indemnity. Seller will: (i) defend or
settle, at its option and expense, any claim against Maxtor alleging that any
Product furnished under this Agreement directly infringes any patent, copyright
or trademark; (ii) reimburse Maxtor for any costs incurred at Seller's written
request relating to such claim; and (iii) pay damages and costs assessed by
final judgment against Maxtor and attributable to such claim.
In addition, Seller will have the right, at any time and at its
option and expense to: (i) procure for Maxtor the right to continue using such
Product; (ii) replace or modify any such Product provided or to be provided to
be free of the infringement; or (iii) require return of such Product and refund
the purchase price.
Seller's obligations hereunder are conditioned upon: (i) Maxtor
giving Seller written notice within thirty (30) days of any such claim; (ii)
Seller having complete control of the defense and settlement thereof, (iii)
Maxtor cooperating fully with Seller to facilitate the defense or settlement of
such claim; and (iv) Maxtor's full compliance with this Agreement.
Notwithstanding the foregoing, Seller shall have no obligation to
defend or settle any claim, and Maxtor shall indemnify and save harmless Seller
and its suppliers and affiliated companies from all costs, expenses, liabilities
and claims, for any such claim: (i) arising from Seller's compliance with
Maxtor's specifications, designs or instructions; or (ii) relating to any
Product furnished hereunder in combination with item(s), whether or not
furnished by Seller, even if such combination results from the Product's
necessary or inherent use or the use for which the Product is purchased.
-16-
17
The sale of any Product by Seller shall not in any way confer upon
Maxtor, or upon anyone claiming under Maxtor, any license (expressly, by
implication, by estoppel or otherwise) under any patent claim of Seller or
others covering or relating to any combination, machine or process in which such
product is or might be used, or to any process or method of making such product.
THE FOREGOING STATES THE SOLE AND EXCLUSIVE REMEDY AND OBLIGATION OF
THE PARTIES HERETO FOR INFRINGE OR OTHER VIOLATION OF ANY INTELLECTUAL PROPERTY
RIGHTS ARISING OUT OF THIS AGREEMENT AND IS IN LIEU OF ALL WARRANTIES, EXPRESS,
IMPLIED OR STATUTORY, IN REGARD THERETO.
4.3 Strict Liability. Each party will indemnify the other against and
hold it harmless from any loss, cost, liability or expense (including court
costs and reasonable fees of attorneys and other professionals) to the extent it
arises out of or in connection with, in whole or in part, any negligence or
willful act or omission of it of its employees or agents including but not
limited to any such act or omission that contributes to:
(i) any bodily injury, sickness, disease or death; or
(ii) any injury or destruction to tangible or intangible
property of the other or any related loss of use.
4.4 Limitation Of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE
FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, OR INCIDENTAL DAMAGES, HOWEVER CAUSED,
ON ANY THEORY OF LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY
AGREEMENT, UNDERTAKING, OR PERFORMANCE THAT MAY BE PROMISED, PERFORMED, OR
EXECUTED TO IMPLEMENT THIS AGREEMENT, PROVIDED, HOWEVER, THIS LIMITATION SHALL
NOT APPLY TO A BREACH OF THE CONFIDENTIALITY OBLIGATIONS OF THIS AGREEMENT IF
SUCH BREACH IS THE RESULT OF INTENTIONAL MISCONDUCT OR GROSS NEGLIGENCE.
ARTICLE V - DISPUTE RESOLUTION
5.1 Escalation. The parties agree that any material dispute between the parties
relating to this Agreement and unresolved for a period exceeding thirty days may
be submitted to a panel of two senior executives of Maxtor and Lucent USA,
Microelectronics Group. Either party may initiate this proceeding by notifying
the other party pursuant to the notice provisions of this Agreement. Within
fifteen days (15) days from the date of receipt of the notice, the parties'
executives shall confer (via telephone or in person) in an effort to resolve
such dispute. The decision of the executives will be final and binding on the
parties. In the event the executives are unable to resolve such dispute within
twenty (20) days after submission to them, the parties agree to submit the
dispute to a sole mediator selected by the parties or, at any time at the option
of a
-17-
18
party, to mediation by a mediator selected by the American Arbitration
Association ("AAA"). The parties agree to make good faith efforts to resolve
disputes by mediation within thirty (30) days. If not thus resolved such dispute
shall be settled by means of arbitration as provided below. Each party's
executives shall be identified by notice to the other party, and may be changed
at any time by notice.
5.2 Arbitration.
5.2.1 Binding Arbitration. Any controversy, claim, or action,
whether in law or at equity, whether in tort, contract, warranty, or otherwise,
arising out of, relating to, or involving this Agreement and any agreement,
undertaking, or performance that may be promised, performed, or executed to
implement this Agreement will be settled by arbitration, subject to Section 5.1,
as follows:
(i) Any arbitration proceeding shall be conducted under
the laws of the state of New York and the Federal Arbitration Act, and pursuant
to the Commercial Arbitration Rules of the American Arbitration Association
insofar as such Commercial Arbitration Rules do not conflict with the provisions
of this Section.
(ii) Either party may initiate arbitration by giving
notice to the other stating an intention to arbitrate, the issue to be
arbitrated, and the relief sought. The site for any arbitration proceeding shall
be San Jose, California. Within twenty (20) days from the date of the notice
("Notice Date"), the parties shall agree on one (1) neutral arbitrator. If the
parties cannot agree on one (1) neutral arbitrator within such twenty (20) day
period, then each shall select one (1) party-appointed arbitrator within thirty
five (35) days from the Notice Date. The two (2) party-appointed arbitrators so
selected by the parties shall designate the third (3rd) arbitrator within fifty
(50) days from the Notice Date. Each arbitrator shall be knowledgeable in the
law and technology at issue. No arbitrator shall have been employed or retained
in any capacity or affiliated with either party during the prior two (2) years.
(iii) The arbitrators shall promptly, by majority vote,
make such award and determination as is appropriate and in accordance with the
terms of this Agreement. The arbitrator shall not have authority to award
punitive, exemplary or other damages in excess of compensatory damages and each
party irrevocably waives any claim thereto. The parties will faithfully abide by
and perform any award rendered by the arbitrators. Further, any such award and
determination shall be final and binding upon the parties and enforceable in any
court of competent jurisdiction.
5.2.2 Injunctive Relief. Notwithstanding the above, the parties
may apply to any court of competent jurisdiction for injunctive relief without
breach of this arbitration provision.
5.2.3 Governing Language. The arbitration proceedings and all
pleadings and written evidence shall be in the English language. Any written
evidence originally in a language other than English shall be submitted in
English translation accompanied by the original or a true copy.
-18-
19
5.2.4 Costs and Fees. Each Party shall bear its own expenses and
those of the arbitrator shall be borne equally. The arbitrator, parties, their
representatives and other participants shall hold the existence, content and
result of the mediation and arbitration in confidence.
5.3 Choice of Law.
5.3.1 Choice of Law. This Agreement and any agreement,
undertaking, or performance that may be promised, performed, or executed to
implement this Agreement shall be governed by and construed under the
substantive laws, but not the conflicts of law, of the State of New York. The
parties expressly agree that this Agreement and any agreement, undertaking, or
performance that may be promised, performed, or executed to implement this
Agreement shall not be subject to and shall not be interpreted by the United
Nations Convention on Contracts for the International Sale of Goods.
5.3.2 Compliance with Laws. Seller shall be responsible for
obtaining, at Seller's cost, all necessary administrative and governmental
licenses, approvals, and permits and shall generally comply with all laws and
regulations for the performance of this Agreement ("Governing Law").
5.3.3 Foreign Corrupt Practices Act. Maxtor is subject to the
laws and regulations of the United States including the Foreign Corrupt
Practices Act ("FCPA"). Seller shall not use any payment or other benefit
derived from Maxtor to offer, promise or pay any money, gift or any other thing
of value to any person for the purpose of influencing official actions or
decisions affecting this Agreement or with the intention of obtaining or
maintaining any business related to Maxtor, while knowing or having reason to
know that any portion of this money, gift or thing will directly or indirectly,
be given, offered or promised to:
(i) An employee, officer or other person acting in an
official capacity for any government or its instrumentalities; or
(ii) Any political party, party official or candidate for
political office. Further, Seller shall maintain books, records, and systems of
accounting and control adequate to insure that Seller's assets and operations
are accounted for and that Seller's business is carried out according to the
directions of Seller's managers.
5.3.4 Assurances and Compliance. Seller shall provide Maxtor
with the assurances and official documents that Maxtor periodically may request
to verify Seller's compliance with the Governing Laws or FCPA. Actions violating
the Governing Laws or FCPA are material breaches of this Agreement and may
result in civil or criminal penalties.
5.3.5 Government Flowdown Provisions. In no event will this
Agreement be placed under a U.S. Government Contract which would subject Seller
to any additional terms and conditions or liability.
-19-
20
5.3.6 Export Controls. Maxtor agrees that it will not knowingly
export or re-export, directly or indirectly, any Product to any destination to
which such export or re-export is restricted or prohibited by U.S. law, without
obtaining prior authorization from the U.S. Department of Commerce.
5.4 Limit of Time to Bring Action. No actions or arbitrations,
regardless of form, arising out of this Agreement, may be brought by either
party more than eighteen (18) months after such actions or arbitrations arose,
or in the case of nonpayment, more than eighteen (18) months from the date the
last payment was due.
ARTICLE VI - GENERAL
6.1 Term And Termination.
6.1.1 Term. This Agreement shall become effective on the
Effective Date and shall remain in force until the Termination Date, and on and
effective the Termination Date this Agreement shall terminate.
6.1.2 Renewal. The parties may agree in writing to extend this
Agreement for one or more terms of one (1) year.
6.1.3 Termination for Convenience. This Agreement or any Order
placed under this Agreement may be terminated in whole or in part at any time by
Maxtor for its own convenience. Any such termination will not be construed as a
breach. Maxtor's exclusive liability and Seller's exclusive remedy for such
termination will be compensation owed to Seller (i) as set forth in Section
2.13, (ii) under the terms of any ASIC Quotation, (iii) resulting from volume
pricing adjustments (true-ups) and (iv) as may otherwise be set forth in a
writing signed by both parties.
In no event will Maxtor's liability in the aggregate exceed the total
price which would have been paid under this Agreement for the work had it not
been terminated. Seller's termination claim must be submitted in writing no late
than 90 days from the date of receipt of termination notice.
6.1.4 Termination For Cause. This Agreement shall be terminated
for cause:
(i) If either party materially defaults in the performance
of any provision of this Agreement, then the non-defaulting party may give
written notice to the defaulting party that if the default is not cured within
thirty (30) calendar days, the Agreement will be terminated at the end of that
period and such termination shall not prejudice or limit either party's
remedies; or
(ii) If either party violates any intellectual property,
confidentiality, or license provision of this Agreement, then the non-defaulting
party may give written notice to the defaulting party of such violation and of
immediate termination and the Agreement will be
-20-
21
terminated when such notice is given and such termination shall not prejudice or
limit either party's remedies; or
(iii) Upon:
(a) the institution by or against either party
of insolvency, receivership or bankruptcy proceedings or any other proceedings
for the settlement of its debts; or
(b) either party's making an assignment for the
benefit of creditors; or
(c) (c) either party's dissolution,
this Agreement shall terminate immediately without notice and shall be deemed to
have been terminated by the party not so affected and such termination shall not
prejudice or limit either party's remedies.
6.1.5 Duties upon Termination. Upon any termination or
expiration of this Agreement:
(i) all licenses made to Seller under this Agreement shall
be terminated according to their terms effective the date of the termination or
expiration;
(ii) the parties will return or destroy all Confidential
Information received from the other party; and
(iii) neither party shall be liable to the other because
of such termination for compensation, reimbursement or damages on account of the
loss of prospective profits or anticipated sales or on account of expenditures,
investments, leases or commitments in connection with the business or good win
of Maxtor or Seller, or for any other reason growing out of such termination.
6.1.6 Survival. The terms of this Agreement which by their
nature may survive the termination or expiration of this Agreement shall survive
the termination or expiration of this Agreement.
6.2 General.
6.2.1 Except for either party's right to assign this Agreement
to any successor-in interest to the business of which this Agreement relates,
neither party shall assign this Agreement nor any rights or obligations
hereunder without the prior written consent of the other party. Any attempted
assignment without the. other party's consent shall be void and ineffective.
6.2.2 Consents. No consent required to be given under this
Agreement shall be unreasonably withheld.
-21-
22
6.2.3 Counterparts. This Agreement shall be prepared two
identical and original counterparts and both of which together shall be one and
the same instrument and either of which may be used for purposes of proof.
6.2.4 All remedies available to either party under this
Agreement are cumulative and may be exercised concurrently or separately, and
the exercise of any one remedy shall not be deemed an election of such remedy to
the exclusion of other remedies.
6.2.5 Independent Parties. Persons furnished by shall be solely
the employees or agent of such each party and shall be under the sole and
exclusive direction and control of the furnishing party. They shall not be
considered employees of the other party for any purpose. Each party shall remain
an independent contractor and shall be responsible for compliance with all laws,
rules and regulations involving, but not limited to, employment of labor, hours
of labor, health and safety, working conditions and payment of wages. Each party
shall also be solely responsible for payment of taxes, including federal, state
and municipal taxes, chargeable or assessed with respect to its employees, such
as social security, unemployment, worker's compensation, liability insurance and
federal and state withholding. Each party shall indemnify the other for any
loss, damage, liability, claim, demand or penalty including costs, expenses, and
reasonable attorneys' fees assessed against one party that may be sustained by
reasons of the other party's failure to comply with the provisions of this
Section. Neither party nor its employees, officers, directors, or agents shall
hold itself out as the agent, employee, partner, or joint venturer of the other
party, and shall make no commitment or engagement on the account of or on behalf
of the other party.
6.2.6 Force Majeure. Nonperformance of either party shall be
excused to the extent that performance is rendered impossible by strike, fire,
flood, governmental acts, orders or restrictions, civil or military authority,
explosion, war, strike, embargo, act of God, nature or the public enemy, or any
other reason where failure to perform is beyond the control and not caused by
the negligence of the nonperforming party. In the event of any delay caused by
such contingency, the delayed party may defer any performance or delivery
prevented by the force majeure condition for a period equal to the time lost by
reason of such delay, provided, however, that the delayed party promptly
commences and reasonably and diligently pursues actions to cure or circumvent
such cause. Whenever any cause delays or threatens to delay the timely
performance of this Agreement, Seller shall immediately notify Maxtor of all
relevant information with respect to such cause. If Seller is delayed in any
performance or delivery by more than thirty (30) days, Maxtor may terminate the
delayed performance or delivery or this Agreement and such termination shall not
be a breach of this Agreement and shall be without penalty.
6.2.7 Governing Language. English shall be the language of this
Agreement and the English language shall govern all disputes, performance and
interpretations.
6.2.8 Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement and shall not affect the interpretation of
this Agreement.
-22-
23
6.2.9 Joint Work Product. The parties further acknowledge that
they have thoroughly reviewed this Agreement and bargained over its terms and
that for convenience, Maxtor has written down the terms of this Agreement
Accordingly, this Agreement shall be construed without regard to the party or
parties responsible for its preparation and shall be deemed to have been
prepared jointly by the parties.
6.2.10 Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed to be sufficiently
given if delivered by hand or if sent by courier with a receipt requested or by
registered air mail postage prepaid, addressed to Maxtor or to Seller, as the
case may be, at the addresses first set forth above or to such other address as
may be furnished for such purpose by notice duly given under this Agreement.
Such notice shall be deemed to have been given when delivered by hand or two (2)
days after deposit with the courier or mail service. Any party may change its
address for such communications by giving such notice to the other party in
conformance with this section.
6.2.11 Severance. If any provision of this Agreement is held to
be invalid by a court of competent jurisdiction, then the remaining provisions
shall nevertheless remain in full force and effect. The parties agree to
renegotiate any term held invalid and to be bound by the mutually agreed
substitute provisions.
6.2.12 Time. Time is of the essence in all performances
hereunder. The words day, month, quarter, year, and the like shall mean calendar
day, month, quarter, year, and the like, unless expressly provided to the
contrary.
6.2.13 Waiver. The failure of any party to this Agreement at any
time or times to require performance of any provision of this Agreement shall in
no manner affect such party's available remedies or right at a later time to
enforce the same. No waiver by any party of any condition, or of the breach of
any term, covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise (in any one or more instances) shall be deemed
to be or construed as a waiver or continuing waiver of any such condition or
breach or of any remedy or as a waiver of any other condition or as a breach of
any other term, covenant, representation or warranty of this Agreement.
ARTICLE VII EXECUTION
7.1 Entire Agreement. The terms and conditions of this Agreement are the entire
agreement between the parties and supersede all previous agreements, proposals,
and understandings, whether oral or written, between the parties with respect to
the subject matter of this Agreement (except for confidentiality agreements
governing the exchange of information prior to the Effective Date which shall
continue to govern periods prior to the Effective Date) and no agreement or
understanding varying or extending the same shall be binding upon either party
unless in a written document signed by both parties. This Agreement shall
supersede all inconsistent or additional terms contained in any purchase orders,
sale acknowledgments or other similar documents delivered by the parties.
-23-
24
7.2 Execution. This Agreement shall not be effective until it has
been executed by Seller and accepted by an authorized representative of Maxtor
at a principal place of business.
7.3 Electronic Execution. To expedite the process of entering into
this Agreement, the parties acknowledge that Transmitted Copies of this
Agreement shall be equivalent to original documents until such time as original
documents are completely executed, produced, and delivered, and in the event of
the use of Transmitted Copies, each party shall use its best efforts, at its own
expense, to execute, produce, and deliver original copies. "Transmitted Copies"
shall mean copies which are reproduced or transmitted via photocopy, facsimile,
or other process of complete and accurate reproduction and transmission.
7.4 Capacity. By it's signature below, Seller represents and warrants
as follows, acknowledging that each and every such representation and warranty
has been materially relied upon by Maxtor in entering into this Agreement:
(i) SELLER CERTIFIES BY EXECUTION THAT THE SIGNER IS
AUTHORIZED TO EXECUTE THIS AGREEMENT AND THAT ALL NECESSARY CONSENTS HAVE BEEN
OBTAINED.
(ii) SELLER IS, AND HAS HELD ITSELF OUT TO BE, EXPERIENCED
IN DUTIES AND UNDERTAKINGS SIMILAR TO THOSE CONTEMPLATED IN THE AGREEMENT.
(iii) THE AGREEMENT IS IN THE ENGLISH LANGUAGE, AND SELLER
(ITSELF OR THROUGH ITS TRANSLATORS) UNDERSTANDS AND IS CAPABLE OF FLUENTLY
READING, SPEAKING, AND COMMUNICATING IN THE ENGLISH LANGUAGE.
(iv) SELLER HAS READ AND UNDERSTOOD ALL OF THE PROVISIONS
Of THE AGREEMENT.
(v) MAXTOR HAS EXPLAINED EACH AND EVERY TERM OF THE
AGREEMENT TO THE SATISFACTION OF SELLER.
(vi) SELLER HAS HAD THE OPPORTUNITY TO SEEK INDEPENDENT
ADVICE AND COUNSEL RELATED TO THE AGREEMENT.
(vii) A COMPLETE AND TRUE COPY OF THE AGREEMENT, EXECUTED
BY BOTH PARTIES, HAS BEEN DELIVERED TO SELLER AND RECEIPT OF SUCH COPY IS HEREBY
ACKNOWLEDGED.
THIS AGREEMENT REQUIRES THAT DISPUTES BE SETTLED BY BINDING
ARBITRATION.
In witness whereof, the parties have executed this Agreement as of
the Effective Date.
MAXTOR CORPORATION LUCENT TECHNOLOGIES INC.
-24-
25
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------- ----------------------------------
(signature) (signature)
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- --------------------------------------
(print name) (print name)
V.P. Materials V.P. Integrated Systems
-------------------------------- --------------------------------------
(title) (title)
-25-
26
VOLUME PURCHASE AGREEMENT
EXHIBIT A
SPECIFICATIONS
PRODUCT Part # Specification #
[*]
-26-
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
27
EXHIBIT B
ADDITIONAL TERMS AND CONDITIONS FOR ASIC PRODUCTS
1. QUOTATIONS FOR ASIC PRODUCTS. Seller will issue quotations
("Quotations") covering the development of application specific integrated
circuits ("ASIC"). The Quotation and the Agreement, including this Exhibit B,
shall be the entire agreement with respect to the design, development and
production of the ASIC on behalf of Maxtor.
2. CHANGE OF QUOTATION TERMS. Quoted prices, fees and charges are
valid only for the parameters or other particulars relating to the ASIC as
stated in the Quotation. If any changes in such parameters or particulars become
necessary, including but not limited to revision or redefinition of the
specification or variations in quantities, functional description, package type,
or testing requirements, Seller may revise such prices by amendment to the
Quotation. Other quoted fees and charges are valid only for the respective
particulars stated in the Quotation. Seller may also amend the Quotation with
respect to any of such quoted fees and charges to make adjustments for changes
in Maxtor's requirements. Any such amendments to the Quotations shall reference
the Quotations and shall be further identified by their respective dates and
shall be accepted by Maxtor in writing.
3. PROTOTYPE APPROVAL. Within ninety (90) days after receipt of
prototypes for any ASIC covered by this Agreement, Maxtor may return any claimed
non-conforming prototypes to Seller with a written rejection statement
specifying the alleged failure or failures of the prototypes to meet the
acceptance criteria as provided in the mask order sign off sheet or mutually
agreed modifications thereof (the "Acceptance Criteria"). If Maxtor does not
return the prototypes with a written rejection statement within such ninety (90)
day period, then the design and prototypes shall be deemed to have been approved
by Maxtor and development work shall be deemed to have been completed by Seller.
If any prototype does not meet the Acceptance Criteria and is
rejected by Maxtor, Seller shall use commercially reasonable efforts to replace
it with one which does comply with the Acceptance Criteria. Seller shall not,
however, be obligated to replace any non-complying prototypes of which it has
not been notified within ninety (90) days of shipment of same to Maxtor. If
Seller, within ninety (90) days after receipt of Maxtor's timely written
rejection report, is unable to supply Maxtor with conforming prototypes, then
either party may by written notice to the other terminate this Agreement as to
such ASIC. Provided Maxtor has fulfilled all "Design hand-off Requirements" as
defined in the Quotation, if so terminated, unless otherwise provided in the
Quotation, all monies paid by Maxtor to Seller with respect to such ASIC will be
refunded in full within thirty (30) days. Such refund of monies shall be
Maxtor's sole and exclusive remedy and Seller's entire liability with respect to
nonconforming prototypes.
In the event that delivered prototypes comply with the Acceptance
Criteria, but do not function in Maxtor's application (e.g., logic design error,
change in required function, etc.), Maxtor shall pay all agreed upon NRE charges
incurred for the development of the ASIC and
28
then Maxtor and Seller may negotiate a mutually agreeable redesign schedule and
price.
4. ORDERS. No orders for production units will be accepted by Seller
until after Maxtor has given written sign-off of prototype acceptance, except to
the extent that the parties have agreed in writing on responsibility for risk
and associated liability with respect to orders placed prior to prototype
acceptance. All orders for the design of the ASIC, for changes, for technical
assistance, for production quantities of the ASIC or for any other service by
Seller relating to this Agreement shall be in writing, shall reference the
Quotation by its number and date and any current amendments thereto by their
respective dates, and shall be signed by Maxtor. Seller shall acknowledge all
accepted orders in writing, or shall notify Maxtor if, for any reason, an order
cannot be accepted by Seller.
5. PROPRIETARY RIGHTS IN TECHNICAL INFORMATION. Unless otherwise
agreed in writing, Maxtor-supplied design information relating to the ASIC, as
incorporated in circuit design information, test vectors, test tapes, special
requirements specifications, and/or netlists, shall remain the property of
Maxtor. Seller shall use such information and results exclusively for the
design, manufacture and sale of the ASIC to Maxtor and in providing related
production services. Seller retains all rights in Seller's processing
information, mask works, mask sets, macro cells, and the like used in design,
production or in filling orders placed by Maxtor hereunder. Maxtor has no rights
in or to such processing information, mask works, mask sets, macro cells, and
the like.
-28-
29
EXHIBIT C
PRICING QUOTATIONS
Quote #s
[*]
-29-
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
30
EXHIBIT D
CHANGE NOTIFICATION POLICY
A) Product Change Notification - The changes outlined below which affect the
form, fit, or functionality of the Product require at least ninety (90)
calendar days prior written notice to Maxtor before any shipment of
Product affected by the change. Maxtor agrees to make every effort to
approve or disapprove the proposed changes within five (5) working days
after receipt of Product Change Notification.
(i) Wafer Fabrication
Changes in the appropriate starting material characteristics
including resistivity, thickness, and backside surface finish.
Changes in doping material source, concentration or process
technique.
Changes in passivation or glassivation material, dielectric doping
concentration, thickness, or technique.
Changes in metallization including composition, thickness, or
deposition technique.
Changes in oxidabon or diffusion process including oxide-composition
or thickness.
Changes in the gate formation process, material or technique.
Changes in the final backside process including wafer thinning or
backside metallization.
Technology changes that affect die structure topography (e.g.
double-diffused, epitaxial, isolation).
Mask changes or redesigns which alter die size, bond pad geometry,
active element dimensions, spacing or isolation, or which include
the addition of active elements or modification to connections to
active elements.
Changes in scribing and die separation methods.
(ii) Assembly
Changes in die attach material, method, or process temperature.
Changes in wire material composition.
-30-
31
Changes to package dimensions and structure.
Changes to seal techniques (materials or sealing process), including
lid, lid seals, frame attach, and frame cleaning.
Changes in molding compound, molding processes, or chip overcoats.
Changes in lead frame design, geometry, material or coating, or lead
attach method.
Changes in device pin assignment.
Change in wire bond method (ultrasonic versus thermal compression).
Change in code marking method or pattern.
(iii) Silicon Materials
Change in the crystal grower furnace type (manufacturer or model).
Change in the use of reclaimed silicon as charge material in the
growth of crystals which have not previously used reclaim.
Change to less stringent chemical requirements for virgin
polycrystalline silicon or elemental dopants.
Changes that, in the opinion of the crystal growing engineer, could
alter an incompletely specified or unspecified material
characteristic.
Change in epitaxial reactor type (manufacturer).
Changes in process temperatures for epitaxial layer depositions.
Change in the material composition of susceptors for epitaxial
reactors.
Change in primary or secondary fiducial orientation or length.
Change in the type of lapping abrasive or polishing slurry used.
Changes in the mechanical dimensions or surface characteristics of
polished substrates.
Change in the process temperature for back seal layer deposition.
-31-