Exhibit 10.13
WORLD-WIDE
SERVICES AGREEMENT
Effective for the period July 1, 1993 through June 30, 1994, and subsequent
fiscal years, Seagate Technology, Inc., a U.S. Corporation with principal
offices in Scotts Valley, California, hereinafter referred to as STUS, and
Seagate Technology International, and subsidiaries, a Cayman Island corporation
with principal offices in Georgetown, Grand Cayman B.W.I., hereinafter referred
to as STIC, agree as follows:
WHEREAS:
A. An existing Service Agreement between STUS and STIC terminates on
June 30, 1993;
X. XXXX and STIC manufacture and sell disc drives and disc drive
components in a highly competitive and technological industry
where increases in productivity and the control of costs are
crucial;
X. XXXX and STIC have separate and independent management teams
including marketing, technical and support staffs, but each
requires similar types of marketing, technical and support
expertise; and
X. XXXX and STIC desire to maintain the independent management of
their respective businesses; however, they also desire to
maximize efficiency and productivity and to minimize the
duplication and overlap of various services and the use of third
party contractors.
THEREFORE, IT IS HEREBY AGREED:
1. That although STUS and STIC will continue to develop their
management teams; each may call upon the expertise and staffs of
the other upon request.
2. That each party will strive to maximize efficiency and avoid
duplication of effort by developing programs and hiring practices
to attract and retain talented personnel with a view of
increasing the expertise necessary to run their respective
businesses, but maintaining strict control of personnel levels.
3. That the relationship of STUS and STIC established by this
Agreement is that of independent contractors, and nothing
contained in the Agreement shall be construed to (i) give either
party the power to direct and control the day-to-day activities
of the other, (ii) constitute the parties as partners, joint
venturers, principal and agent, employer and employee, co-owners
or otherwise as participants in a joint undertaking, or (iii)
allow one party to create or assume any obligation on behalf of
the other party for any
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purpose whatsoever. All financial and other obligations
associated with each party's business are the sole responsibility
of that party. Each party shall be solely responsible for, and
shall indemnify and hold the other party free and harmless from,
any and all claims, damages or lawsuits (including attorneys'
fees) arising out of the provision of services by the other
party, its employees or its agents.
4. The services performed and charges therefore shall be determined
under Sections I and II below.
SECTION I - DEFINITION OF SERVICES
Each party may perform a variety of services for the other party in accord
with the objectives stated above. In general, the nature of such services
will be (1) services that require a charge under Section 1.482-2T(b)(3) of
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the regulations under the Internal Revenue Code in the U.S. and (2)
services that require no charge under Sections 1.482-2T(b)(2)(ii),
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1.861-8(e)(4) and 1.482-2T(b)(5) of the regulations under the Internal
Revenue Code in the U.S.
SECTION II - SERVICES - CHARGE
2.1 A charge shall be made for any service undertaken for the joint
benefit of either party or for any service performed by one party
exclusively for the benefit of the other. Such services may
include engineering, quality assurance and other technical
services, purchasing services, marketing and sales services,
treasury and cash management services.
2.2 The parties shall determine the methodology to identify the
charges, i.e., interviewing personnel, reviewing department
documentation and monitoring specific service requests of one of
the parties, that are to be made pursuant to paragraph 2.1 above.
2.3 STIC may share any portion of its charges with any of its
subsidiaries.
SECTION III - SERVICES - NO CHARGE
3.1 A charge shall not be made for services that are merely a
duplication of a service that one of the parties already is
performing. Duplication shall be determined under Sections
1.482-2T(b)(2)(ii) and 1.861-8(e)(4) of the regulations under the
Internal Revenue Code in the U.S. Such services may include a
variety of financial services, stewardship services, personnel
services, administrative services, marketing and sales services,
technical services and other support services.
3.2 A charge shall not be made for services where the benefit to a
party is indirect, remote or de minimis as determined under
Section 1.482-2T(b)(2) of the regulations under the Internal
Revenue Code in the U.S.
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3.3 A charge shall not be made for services for certain interest
expense, expenses associated with issuance of stock and
maintenance of shareholder relations, and expenses of compliance
with regulations or policies imposed upon one of the parties
rendering the service by its government if not related to the
service in question under Section 1.482-2T(b)(5) of the
regulations under the Internal Revenue Code in the U.S.
SECTION IV - AMOUNT OF CHARGE FOR SERVICES
4.1 An Arms Length charge for services described in Section II above
performed by STUS shall be made in accord with Section
1.482-2T(b)(3) of the regulations under the Internal Revenue Code
in the U.S. as set forth below.
A. The Arms Length charge for all services performed by STUS
shall be deemed to be equal to the costs incurred.
B. The Arms Length charge for services performed by STIC shall
be made in accord with the applicable law of the Republic of
Singapore.
C. The costs set forth in (A) above shall include direct and
indirect costs as described in Section 1.482-2T(b)(4) of the
regulations under the Internal Revenue Code in the U.S.
D. The methods used in determining the costs described in (C)
above shall be the method described in Section
1.482-2T(b)(6) permits the use of methods that are
consistent, reasonable and in keeping with sound accounting
practices, including the use of estimates and department
overhead rates. However, the method of determining
apportionable costs must be on the basis of full costs as
opposed to incremental costs, and the ordinary prudent man
rule shall be utilized in determining estimates and
department overhead rates.
E. No charge shall be made for services described in Section
III above.
F. If an individual, a team of individuals or a department
performs single or integrated services as defined both in
Sections II and III above, an apportionment shall be made in
accord with the methods and principles described in
paragraphs 4.1 (C) and (D) above.
G. The parties shall periodically review the conclusion that
the services performed under this Agreement are not an
integral part of the business activity of either the
provider or recipient of the services under Section
1.482-2T(b)(3) of the regulations under the Internal Revenue
Code in the U.S. If the parties determine that any
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services being performed under this Agreement are integral,
this Agreement may be modified pursuant to paragraph 7.2
below.
SECTION V - SERVICE CHARGES
5.1 All service charges made in accord with Section IV above shall be
determined and charged on a timely basis with best efforts to
finalize such charges no later than on a quarterly basis. Charges
in question or dispute should be submitted for review to the
other party on a timely basis.
SECTION VI - PAYMENT
6.1 IN GENERAL
Payment in cash, debt instrument, property, or other valuable
consideration shall be made on a timely basis for service charges
incurred by either party, but subject to the terms of paragraphs
6.2 through 6.6 below.
6.2 Prior to any payment by STUS or STIC, service charges shall be
netted to determine the final debtor.
6.3 If not prohibited under local law or the business practices of
either party, the debtor party (STUS or STIC) may net any amount
described in paragraph 6.2 above against other amounts owed by
the creditor party to the debtor party.
6.4 If STIC is the debtor party described in paragraph 6.2 above,
STIC must make payment in fact or in kind during the time frame
described in Section 1.482-2T(a)(1)(iii) of the regulations under
the Internal Revenue Code of the U.S. to avoid imputed interest
income to STUS. STIC agrees to hold STUS harmless in the event of
noncompliance with this provision.
6.5 If STIC is the debtor party described in paragraph 6.2 above and
if it is deemed appropriate under the circumstances, payment for
service charges can be in the form of a dividend. For U.S. tax
purposes, such a designation is consistent with payment concepts
contained in closing agreements under Revenue Procedure 65-17 and
Section 482 of the Internal Revenue Code of the U.S.
6.6 If pursuant to paragraph 2.3 above, STIC shares any portion of
its charges with any subsidiary, either STIC or such subsidiary
may pay the portion of the charges related to such subsidiary to
STUS.
6.7 Any amount in dispute shall be resolved by agreement of the
parties or, if necessary, submitted to arbitration.
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SECTION VII - MODIFICATION
7.1 This contract may be modified in writing as a result of any
change in the tax law or of principles contained in the opinion
of the Tax Court, when issued, in the tax case between STUS and
the IRS.
7.2 This contract may be modified in the event that either STUS or
STIC provides the other with services that are integral under
Section 1.4822T(b)(3) of the regulations under the Internal
Revenue Code in the U.S.
7.3 Any oral modification of this contract shall have no effect.
SECTION VIII - TERMINATION, BREACH, FORCE MAJEURE
8.1 This contract can be terminated by any party by giving 60 days
notice prior to the commencement of any fiscal year or at any
time if a substantive change in the law occurs in any
jurisdiction in which the parties are engaged in a substantial
business activity.
8.2 Failure to perform any of the terms and conditions herein shall
be deemed a material breach and the aggrieved party may terminate
all or part of the contract by giving 60 days notice; provided,
however, that a party can prevent termination if it can cure or
correct any alleged breach during the 60 day period. The 60 day
period shall commence on the date the breach is communicated to
the offending party. Termination of this Agreement shall not
prejudice any claim for damages or relieve any party from making
payments due or owing.
8.3 If any of the parties hereto shall be prevented or delayed from
performing any of the obligations herein by reason of strike,
threat of imminent strike, fire, flood or other act of nature,
war (declared or undeclared) or insurrection or mob violence,
regulation (formal or informal) of government or regulatory body,
or the failure of any governmental authority to issue any permit,
license or like authorization within a reasonable time after
application therefor, then and only in such event, such failure
to perform shall not be deemed a breach of this Agreement;
provided that the party so delayed shall give notice in writing
to the other party setting out the particulars of the cause
thereof and the date upon which the same arose, and shall give
like notice following the date upon which such cause ceased to
exist. The parties also agree to use reasonable diligence to
remove any cause that interferes with the performance of the
terms and conditions of this contract.
SECTION IX - ASSIGNMENT
9.1 No right or obligation herein shall be assigned by either party,
except for assignments to controlled entities, without the prior
written consent of the other.
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SECTION X - DOMINANT LAW
10.1 This Agreement shall be governed and construed in accordance with
the laws of the State of California, USA and the Internal Revenue
Code of the United States of America, except for paragraph 4.1(B)
above, which shall be governed and construed in accordance with
the laws of the Republic of Singapore.
10.2 In the event that any term or part of this Agreement is held
invalid or unenforceable by a court or administrative agency
having proper jurisdiction, it shall not effect the validity and
enforceability of the other terms.
WITNESS WHEREOF, the parties have signed and executed this Agreement.
SEAGATE TECHNOLOGY, INC.
/s/ Xxxxxx X. Xxxxx
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June 14, 1993
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DATE
WITNESSED
/s/ [Illegible]
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SEAGATE TECHNOLOGY INTERNATIONAL
/s/ [Illegible]
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June 28, 1993
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DATE
WITNESSED
/s/ X. Xxxxxxxx
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