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EXHIBIT 10.37
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is entered into effective as
of November 17, 1995 by and between StorMedia Incorporated, a Delaware
corporation, and StorMedia International Limited, a Cayman Islands corporation
(collectively, "StorMedia") on the one hand, and Maxtor Corporation, a Delaware
corporation ("Maxtor"), and Hyundai Electronics Industries Co., Ltd. ("HEI"), a
Korean corporation (HEI and Maxtor are hereinafter collectively referred to as
"Maxtor"), on the other hand.
BACKGROUND
Maxtor and StorMedia desire to enter into an agreement to provide for
the establishment by StorMedia of a manufacturing operation in Singapore to
produce thin film disks for use in Maxtor's hard disk drives.
Maxtor desires to purchase the output of such operation from StorMedia
in accordance with the terms and conditions of this Agreement.
FOR VALUABLE CONSIDERATION, the parties agree as follows:
1. Definitions.
1.1 Facility. The StorMedia owned and operated manufacturing
plant in Singapore that will produce the Product for Maxtor.
1.2 Product. Thin film aluminum, glass, or ceramic substrate
disks and such other disk products as the parties shall hereafter agree in
writing to be manufactured by StorMedia in StorMedia's facilities.
1.3 Schedule. The timeline for preparing and constructing the
Facility for the production of the Product and Facility Ramp Plans to be
mutually defined by the parties.
2. Facility.
2.1 Construction of Facility. StorMedia shall use reasonable
efforts to secure, prepare, and/or construct the Facility and to qualify the
first Sputtering Line in accordance with the Schedule. It is understood that
time is of the essence of this Agreement.
2.2 Efficient Facility. StorMedia covenants to run the
Facility at least as efficiently as compared to other StorMedia disk
manufacturing facilities taking into account differences in product mix and the
complexity of products manufactured at such facilities. Maxtor covenants to
cooperate with and assist StorMedia in so operating the Facility efficiently.
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2.3 Quarterly Operational Review. The parties shall meet
quarterly to review the operations of the Facility with the goal of improving
the efficiency of the Facility.
3. Supply Agreement.
3.1 Purchase Commitment. Maxtor shall purchase and StorMedia
shall supply 4.5 million units of the Product per quarter during the duration of
this Agreement fro ma combination of some or all of StorMedia's facilities in
accordance with Exhibit A attached hereto. Maxtor's obligation to purchase
Products from StorMedia is contingent upon StorMedia's Products meeting Maxtor's
specifications and functional requirements.
3.2 Price of Disks. The purchase price of the disks shall be
negotiated at a minimum of at least once per quarter by the parties and shall be
set forth on purchase orders. Disk pricing will be competitive.
3.3 Payment Terms. Payment shall be made in U.S. dollars net
forty-five (45) days from the date of an acceptable StorMedia invoice. Upon
completion of the tender offer to purchase all of the outstanding shares of
common stock of Maxtor by Hyundai Acquisition, Inc. ("HAI") and the subsequent
merger between HAI and Maxtor, Maxtor and StorMedia will renegotiate the payment
terms in good faith with the intent of reducing the payment terms to less than
forty-five (45) days.
3.4 Terms and Conditions. The terms and conditions of the sale
of the Product shall be Maxtor's standard purchase order terms and conditions (a
copy of which is attached hereto) upon which the parties have been doing
business modified to reflect the terms hereof. In the event such terms and
conditions conflict with the terms and conditions of this Agreement, the terms
of this Agreement shall govern.
4. Forecasts and Purchase Orders.
4.1 Forecasts. The parties shall periodically agree to a
reasonable forecasting procedure.
4.2 Purchase Orders. Maxtor shall order Products by issuing
purchase orders ("Purchase Orders"). StorMedia shall ship Products in accordance
with such Purchase Orders. Purchase Orders must be placed thirty (30) days in
advance of the requested shipment date set forth in the applicable Purchase
Order. Maxtor may request a shipment date with a shorter lead time and StorMedia
shall use its best efforts to meet such date.
4.3 Shipment. StorMedia shall deliver the Products to Maxtor
F.O.B. StorMedia's facility. Maxtor shall bear all freight, insurance, duty and
associated shipping and delivery charges from StorMedia's facilities.
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5. Term and Termination.
5.1 Term. This Agreement shall terminate on November 30, 1999.
If Maxtor wishes to renew this Agreement, it shall so notify StorMedia in
writing on or before December 31, 1998. The parties shall promptly discuss in
good faith the proposed terms of such renewal.
5.2 Termination. This Agreement may be terminated prior to the
end of its term by either party if the other party is in material default of
this Agreement and such default is not corrected within 30 days of receipt of
written notice setting forth this default. Such termination shall be effected by
delivery to the defaulting party written notice of termination.
6. Confidential Information.
All confidential information disclosed by either party to the other in
connection with this Agreement shall be subject to the provisions of the
Confidentiality Agreement dated effective November 15, 1995 between StorMedia
and Maxtor.
7. Non-Competition.
7.1 Non-Competition. Maxtor and each assignee or successor of
Maxtor, including HEI, agree not to engage directly or indirectly, as an owner,
partner, shareholder, joint venturer or in any other capacity in the business of
manufacturing and selling disks for hard drives anywhere in the world for a
period of two (2) years from the effective date of this Agreement, subject to
Section 7.2 below.
7.2 Exceptions. It understood that HEI, its affiliates and/or
subsidiaries (collectively hereinafter referred to as "HEI") intend to enter
into the components manufacturing business. Therefore, nothing in this Agreement
shall prevent HEI from acquiring and operating a disk manufacturing business,
provided that HEI in operating such business shall only manufacture disks for
internal use or to fulfill existing external contractual obligations to existing
customers at the time of such acquisition and shall not seek to expand such
business during the term specified in Section 7.1 above.
8. Notices.
All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by registered or by certified mail,
postage prepaid or otherwise delivered by hand, by telecopy (with receipt
confirmed), or by commercial express courier service, addressed as follows:
To StorMedia: StorMedia Incorporated
000 Xxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
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With a copy to: Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. X'Xxxxx, Esq.
To Maxtor: Maxtor Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Vice President of Commodities
With a copy to: Maxtor Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Vice President and General Counsel
9. Definitions.
9.1 HEI's Obligation. HEI shall cause Maxtor to faithfully
perform its obligations under this Agreement and pay when due all amounts
hereunder.
9.2 Governing Law. The substantive laws of the State of
California govern this Agreement.
9.3 Severability. If any section or subsection of this
Agreement is found by competent judicial authority to be invalid, illegal, or
unenforceable in any respect, the validity, legality and enforceability of any
such section or subsection in every other respect and the remainder of this
Agreement shall continue in effect.
9.4 Amendment. This written Agreement may be modified only by
a written amendment signed by persons authorized to so bind Maxtor and
StorMedia.
9.5 Survival. The provisions of Sections 6 and 7 and all other
obligations and duties which by their nature survive the expiration or
termination of this Agreement shall remain in effect beyond any expiration or
termination, except that Maxtor's obligations under Section 7 shall not survive
termination if this Agreement was terminated by Maxtor for cause.
9.6 Force Majeure. Neither party shall be responsible for
failure to fulfill its obligations under this Agreement due to fire, flood, war
or other such cause beyond its control and without its fault or negligence
provided it promptly notifies the other party.
9.7 Assignment. Neither party shall assign this Agreement or
any rights hereunder without the prior written consent of the other party,
except that either may assign the Agreement to
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wholly-owned subsidiary without the other's consent if the original party
remains liable for such assignee's performance hereunder.
9.8 Waiver. The waiver by either party of any instance of the
other party's noncompliance with any obligation or responsibility herein shall
not be deemed a waiver of subsequent instances or of either party's remedies for
such noncompliance.
9.9 Compliance with Laws. Each party will comply with all
applicable federal, state and local laws, regulations and ordinances including,
but not limited to, the regulations of the U.S. Government relating to the
export or re-export of machines, commodities, software and technical data
insofar as they relate to the activities under this Agreement. Maxtor agrees
that Products provided under this Agreement are subject to restrictions under
the export control laws and regulations of the United States of America,
including but not limited to the U.S. Export Administration Act and the U.S.
Export Administration Regulations and Maxtor agrees to comply with all
applicable laws and regulations.
9.10 Arbitration. The parties agree that any material dispute
between the parties relating to this Agreement will be submitted to a panel of
two senior executives of Maxtor and StorMedia. In the event the executives are
unable to resolve such dispute within twenty (20) days after submission to them,
such dispute shall be settled by arbitration in Santa Xxxxx County, California
in accordance with the Commercial Rules of the American Arbitration Association.
the prevailing party in such dispute shall be entitled to collect reasonable
attorneys fees and costs from the other party.
9.11 Publicity. Neither party shall disclose, advertise or
publish the existence or terms and conditions of this Agreement, without prior
written consent of the other party, except as may be required by law (including
SEC regulations). The time and contents of any press release shall be jointly
decided by the parties.
9.12 Entire Agreement. This Agreement constitutes the entire
and exclusive Agreement between the parties hereto with respect to the subject
matter hereof and supersedes and cancels all previous agreements, commitments
and writings in respect hereof.
9.13 Joint Work Product. This Agreement is the joint work
product of representatives of the parties. For convenience it has been drafted
in final form by one of the parties. Accordingly, in the event of ambiguities,
no inferences will be drawn against either party solely on the basis of
authorship of this Agreement.
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IN WITNESS WHEREOF, the parties have set their hands hereto intending
it to create a binding contract between the parties effective this 17th day of
November, 1995.
MAXTOR CORPORATION STORMEDIA INCORPORATED
By: /s/ C.S. Park By: /s/ Xxxxxxx X. Xxxxx
C.S. Park, President and CEO Xxxxxxx X. Xxxxx, Chairman and CEO
STORMEDIA INTERNATIONAL LIMITED
By: /s/ Xxxxxxx X. Xxxxx
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
By: /s/ K.S. Yoo
K. S. Yoo, Director, Corporate
Planning and Coordination Office
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EXHIBIT A
PURCHASE COMMITMENT
Time (1) Volume
(Millions/units)
CQ1 '96 2.0
CQ2 2.0
CQ3 2.7
CQ4 3.5
CQ1 '97 4.5
Duration 4.5
(1) Above volumes assume 100% 95mm. Total Volume (TV) is dependent on
product mix of 95mm and 65mm according to formula shown below:
TV = 1.6 x + x
where x is 95mm volume
Example: CQ1 '96 x = 2.0M 95mm
replace 1M 95mm w/ 65mm
Total = 1.6 (1.0M) + 1.0M
Total = 2.6M units
