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EXHIBIT 10.2
EXECUTION COPY
TRANSITION SERVICE AGREEMENT
This Transition Service Agreement ("Agreement") is made and entered into
this 6th day of May, 1999 by and between and Amkor Technology Korea, Inc., a
corporation organized under the laws of the Republic of Korea ("ATK"), and Anam
Semiconductor, Inc., a corporation organized under the laws of the Republic of
Korea ("Anam").
W I T N E S S E T H:
WHEREAS, Anam and Amkor Technology, Inc. ("ATI") have entered into a
certain Asset Purchase Agreement dated as of December 30, 1998 (the "Asset
Purchase Agreement") and an amendment to the Asset Purchase Agreement dated May
3, 1999 (the "Amendment"), pursuant to which ATK and ATI will purchase and
acquire from Anam the assets in K4; and
WHEREAS, in order to support the continued and uninterrupted operation
of K4 from the time of Closing, the parties to the Asset Purchase Agreement and
the Amendment agreed to enter into an arrangement whereby Anam will continue to
provide to ATK certain of its services that have been provided by Anam to K4
prior to the Closing Date, in accordance with the terms and conditions of this
Agreement and Section 4.7 of the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
obligations set forth herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. Unless otherwise defined in this Agreement,
all of the capitalized terms used in this Agreement shall have the same meanings
as they are defined in the Asset Purchase Agreement.
ARTICLE II
TERM
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Section 2.1. Term. The term of this Agreement shall commence on the
Closing Date of the Asset Purchase Agreement (the "Effective Date") and shall
continue until the parties to this Agreement separately agree, unless terminated
on an earlier date pursuant to Article 7 of this Agreement.
ARTICLE III
THE SERVICES
Section 3.1. Services to be provided by Anam. During the term of this
Agreement, Anam shall provide to ATK all of the services and parts and
components currently provided to the Business by Anam including, among other
things, the research and development, accounting, data processing, materials
procurement, electronic data processing, administrative services and all other
such support services as are reasonably required in connection with the
operation of the Business as described in detail in the Schedules attached to
this Agreement (collectively, "Services" and, individually, "Service"), upon the
detailed terms and at the rates specified in such Schedules.
Section 3.2 Services to be Provided.
(a) Anam shall ensure that the Business is continued to be
provided with all of the Services, on the terms and conditions not less
favorable than the terms and conditions pursuant to which such services and
parts and components are now being provided to the Business.
(b) In addition to the Services, Anam shall ensure that all
services currently made available to the employees of the Business including,
without limitation, cafeteria, clinic and human welfare services continue to be
provided to the Transferred Employees on the same terms and conditions as such
services which have been provided to them.
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Section 3.3. Specifics and Costs of Services.
(a) The attached Schedules of Services and costs are subject to
change with the parties' mutual written consent. The parties hereto shall use
good faith efforts to discuss any change of charge for a Service; provided,
however, that any occurrence of events and change of circumstances shall not
justify stopping a provision of Services by Anam under this Agreement.
(b) ATK is contracting for use of Anam's system on an "as-is"
basis. After the Closing Date, if there will be any modifications to Anam_s
systems at ATK's request, Anam will make its best efforts to implement such
modifications at an actual cost basis.
(c) If there will be a separation of system at ATK's discretion
for the implementation of ATK's own independent systems, Anam agrees to
cooperate as reasonably requested by ATK in order to effectuate such separation.
Section 3.4. Additional Services. In addition to the Services, the
parties hereto acknowledge that there may be additional services and facilities
which have not been identified herein but which have been used by K4 prior to
the Closing Date and which shall continue to be required or desired by ATK until
the termination of this Agreement, or such later date as the parties may agree
upon. If any such additional services or facilities are identified and requested
by ATK, and Anam agrees to provide such services, ATK will be charged at a rate
to be agreed by Anam and ATK.
ARTICLE IV
PAYMENT AND INVOICE
Section 4.1. Service Fees.
(a) The fees payable by ATK to Anam for the Services shall be as
set forth in Schedules (the "Service Fees").
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Notwithstanding anything to the contrary contained herein, ATK shall not be
charged under this Agreement for any Service that is specifically required to be
performed under any other agreement between Anam and ATK and any such other
Service shall be performed and charged for in accordance with the terms of such
other agreement.
(b) In the event that a Service commences, expires or terminates
on any day other than the first day of a calendar month, the applicable Service
Fee shall be calculated on a pro rata basis based on the actual number of days
during which the Service was provided and a month of 30 days.
Section 4.2. Payment.
(a) Anam shall invoice ATK monthly in arrears within fifteen (15)
calendar days of the end of the month in question in relation to an amount
payable for the Services provided to ATK during such month. ATK shall pay an
amount invoiced by Anam and any sales, value-added or similar taxes on any
amounts to be paid to Anam hereunder in full within thirty (30) calendar days of
the date of receipt of Anam's invoice.
(b) Other than the Service Fees, no cost or expense, including
any out-of-pocket expense paid to a third party by Anam as result of Services
provided hereunder by Anam to ATK, shall be charged separately to ATK.
ARTICLE V
WARRANTIES
Section 5.1. Express Warranties. Anam warrants that the Services under
this Agreement shall be of substantially the same type and quality as have been
provided for the benefit of K4 prior to the Effective Date, and shall be of such
type and quality as are reasonably required to appropriately operate K4 in a
commercially reasonable manner.
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ARTICLE VI
INDEMNITY; LIMITATION OF LIABILITY
Section 6.1. Indemnity. Anam shall indemnify and hold harmless ATK from
and against any loss, demand, liability, claim, cost or expense of whatever kind
(collectively, "Damages") arising from and incurred by ATK due to the negligence
or willful misconduct of Anam or its personnel assigned for the Services under
this Agreement.
Section 6.2 Survival. The provisions of this Article VI shall survive
the termination of this Agreement.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
(a) This Agreement may be terminated with respect to all or a
portion of the Services at any time as follows:
(i) by mutual written agreement of the parties;
(ii) at the written election of one party, in the event of
a material default by the other party of its obligations
hereunder, which default shall not have been cured within
sixty (60) calendar days after written notice given by the
non-defaulting party to the defaulting party; or
(iii) at the written election of one party, in accordance
with Section 8.1(d).
(b) ATK may terminate any Service(s) provided pursuant to this
Agreement on ninety (90) days prior written notice to Anam, unless otherwise
specified in Schedules. If ATK elects to terminate a Service, it will bear the
costs of interfacing any new
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system to the remaining Anam systems which it continues to use. ATK shall no
longer be obligated to pay Anam the Service Fees attributable to such canceled
Service(s) following the effective termination date of such Service(s) provided
that ATK fully pays any and all Service Fees, charges or other similar payment
due and accrued in connection with Service(s) provided up to and including the
effective termination date.
(c) No termination of this Agreement (including any early
termination of a Service pursuant to paragraph (b) above) shall discharge,
affect or otherwise modify in any manner the rights and obligations of the
parties hereto which have accrued or have been incurred prior to such
termination, including, without limitation, the obligation of ATK to pay Anam
any and all amounts payable hereunder for, or related to, the Services
theretofore provided.
ARTICLE VIII
FORCE MAJEURE
Section 8.1. Force Majeure.
(a) A party is not liable for a failure to perform any of its
obligations under this Agreement insofar as it proves that the failure was due
to an impediment beyond its reasonable control.
(b) An impediment within paragraph (A) above may result from
events including, but not limited to, (i) war, whether declared or not, riots,
acts of sabotage, explosions, fires, destruction of equipment/machines, or
inability to obtain raw materials, (ii) natural disasters, such as violent
storms, earthquakes, floods and destruction by lightning, (iii) the intervention
of any Governmental Authority, and (iv) boycotts, strikes and lock-outs of all
kinds and work-stoppages.
(c) A party seeking relief hereunder shall as soon as practicable
after the impediment and its effects upon its ability
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to perform became known to it give notice to the other party of such impediment.
(d) If the grounds for relief subsist for [ninety (90)] days or
more, either party shall be entitled to terminate this Agreement with written
notice to the other party pursuant to Article 5.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Notices. All notices, reports and other written
communications permitted or required to be delivered by the provisions of this
Agreement shall be delivered to the party due to receive such notice, report, or
other written communication personally, by facsimile or by air courier service
at the relevant address set out below or such other address as the party may
specify by notice to the other:
to Anam: Anam Semiconductor, Inc.
280-2, 2-ga, Xxxxxx-xxxx
Xxxxxxxx-xx, Xxxxx 000-000 Xxxxx
Attn: X.X. Xxx
to ATK: Amkor Technology Korea, Inc.
Advanced Science & Xxxxxxxxxx Xxxxxxx, 0 xxxxx
Xxxxxxx-xxxx, Xxx-xx, Xxxxxxx 500-470 Korea
Attn: Xxxxxxx X. X'Xxxxx
Section 9.2. Governing Law and Jurisdiction. This Agreement and the
terms and conditions hereof shall be governed by and construed and interpreted
in accordance with the laws of the Republic of Korea. Any and all disputes which
may not be amicably settled by the parties shall be subject to the non-exclusive
jurisdiction of the Seoul District Court, and Anam and ATK each hereby agree and
consent to be subject to the jurisdiction of such court.
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Section 9.3. Effectiveness. The parties' obligations under this
Agreement are conditioned upon the Closing, the occurrence of which is subject
to various conditions set forth in the Asset Purchase Agreement. This Agreement
shall become operative if and when the Closing occurs and shall be null and void
if this Closing does not occur for any reason.
Section 9.4. Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define or
limit the scope, extent or intent of this Agreement or any provisions hereof.
Section 9.5. Amendment; Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Anam and ATK, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
Section 9.6. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be deemed invalid,
illegal or unenforceable to any extent or for any reason, such provision shall
be severed from this Agreement and the remainder of this Agreement and the
application thereof shall not be affected and shall be enforceable to the
fullest extent permitted by law. A provision which is valid, legal and
enforceable shall be substituted for the severed provision.
Section 9.7. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any Person other than Anam or ATK, or their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
Section 9.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same agreement.
Section 9.9. Entire Agreement. This Agreement, the Asset
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Purchase Agreement and the other agreements referred to in the Asset Purchase
Agreement contain the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matter.
Section 9.10. Relationship of the Parties. Anam shall perform all
Services hereunder as an independent contractor. This Agreement does not create
a fiduciary or agency relationship between Anam and ATK, each of which shall be
and at all times remain independent companies for all purposes hereunder.
Nothing in this Agreement is intended to make either party a general or special
agent, joint venturer, partner or employee of the other for any purpose.
Section 9.11. Assignment. Neither party to this Agreement may assign any
of its rights or obligations under this Agreement, without the prior written
consent of the other party hereto.
Section 9.12. Fulfillment of Obligations. Any obligation of any party to
any other party under this Agreement, which obligation is performed, satisfied
or fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
Section 9.13. Public Announcement. Prior to the Closing, neither Anam
nor ATK shall, without the approval of the other party hereto, make any press
release or other public announcement concerning the terms of the transactions
contemplated by this Agreement, except as may be required to comply with
requirements of any applicable Laws, and the rules and regulations of any stock
exchange upon which the securities of one of the parties is listed, in which
case the party shall use its Best Efforts to advise the other party thereof and
the parties shall use their Best Efforts to cause a mutually agreeable release
or announcement to be issued; provided that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed in counterparts the day and year first written above.
ANAM SEMICONDUCTOR, INC.
By: /s/
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Name:
-------------------------
Title:
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AMKOR TECHNOLOGY KOREA, INC.
By: /s/
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Name:
-------------------------
Title:
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Schedule A
PLANNING SERVICES
A. Contents of Services
This Service includes budget and investment control, performance
evaluation, projection of annual business plan, collection of data &
information, government & public relations. Details of the services that
will be provided to ATK are as follows:
_ Provide a guide line for investment and budget, including review
of the feasibility of proposed investments;
_ Provide annual business plan, which involves the following year_s
P&L projection, investments plan, resources, and related matters;
_ Collect and provide an internal and external data and
information, including the data and information regarding yield
rate, cost, turnover rate, investment status, semiconductor
market overview, new package trend, customer related information,
etc;
_ Provide services relating government relation; and
_ Provide company related news and advertisement to the public
whenever it is necessary.
B. Service Fee
Fee to be paid by ATK per month shall be US$40,250 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 7
employees of Anam out of 24 employees working for planning service are
exclusively assigned for the service to ATK.
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Schedule B
SPECIAL CUSTOMER SERVICES
A. Contents of Service
This Service is for the biggest customer of ATK, Intel. The services
includes quality improvement of Intel products, cost reduction
follow-up, critical part inventory, maintain direct communication with
Intel, and all related matters.
B. Service Fee
Fee to be paid by ATK per month shall be US$6,417 (exclusive of any VAT)
which has been agreed by the parties, on the assumption that 3 employees
of Anam out of 7 employees working for special customer service are
exclusively assigned for the service to ATK.
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Schedule C
GENERAL AFFAIRS (GA) SERVICES
A. Contents of Service
This Service includes company security, employees benefits, document
control, overseas business trip control, information desk, fixed asset
control, sub-contractor control, company transportation control,
printing house, broadcasting, and related matters. Details of the
services that will be provided for ATK are as follows:
_ Manage fixed assets including allocation of equipment,
liquidation of equipment, establishment and maintenance of asset
management control system, etc;
_ Coordinate contracts for outsourcing;
_ Establish strategy for operating vehicles, cafeteria, etc;
_ Support and manage employees' overseas trip such as reservation
of air ticket and hotel, travel expenses, etc; and
_ Provide printing service using printing house in K1.
B. Service Fee
Fee to be paid by ATK per month shall be US$29,000 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 8
employees of Anam out of 153 employees working for general affairs
service are exclusively assigned for the service to ATK.
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Schedule D
HUMAN RESOURCE DEVELOPMENT SERVICES
A. Contents of Service
This Service includes hiring and retirement, allocation of employees,
performance rating, promotion of employee, training and education of
employee, company regulation, and rewarding and punishment of employees.
Details of the services are as follows:
_ [Hire operators independently;]
_ [Evaluate performance of employees in connection with promotion
and reward & punishment of employees;] and
_ Establish company regulations.
Training for the employees hired for the operation of K4 shall be dome
independently by ATK at its own costs.
B. Service Fee
Fee to be paid by ATK per month shall be US$80,083 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 18
employees of Anam out of 90 employees working for human resource
development service are exclusively assigned for the service to ATK.
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Schedule E
EMPLOYEE-RELATED SERVICES
A. Contents of Service
This Service includes labor strategy, employee benefits, company outdoor
program, employee health program, payroll & social security payment and
other labor-related matters. Details of the services which will be
provided to ATK are as follows:
_ Provide advice to the management of employees;
_ Manage funds for the employee benefit, decide the types and value
of the gifts and bonuses to be given to the employees; and
_ Manage employee payrolls, severance pay and the social security
payments.
B. Service Fee
Fee to be paid by ATK per month shall be US$8,333 (exclusive of any VAT)
which has been agreed by the parties, on the assumption that 4 employees
of Anam out of 25 employees working for employee related service are
exclusively assigned for the service to ATK.
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Schedule F
FINANCE & ACCOUNTING SERVICES
A. Contents of Service
This Service will include following:
_ Manage funds;
_ Provide foreign exchange service relating to export and import;
_ Prepare accounting books and records for monthly closing;
_ Manage tax payment; and
_ Manage receipts and disbursements.
B. Service Fee
Fee to be paid by ATK per month shall be US$133,083 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 9
employees of Anam out of 30 employees working for financing and
accounting services are exclusively assigned for the services to ATK.
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Schedule G
EXPORT & IMPORT IN LOGISTICS
A. Contents of Service
This Service will include following:
_ Support custom related services when imported materials are
transferred to ATK;
_ Select and contract with forwarders for exporting and importing;
_ Provide custom clearance and other government related services;
_ Prepare record of exporting and importing performances; and
_ Manage Anam Trade Information Service Tracking System at K4.
B. Service Fee
Fee to be paid by ATK per month shall be US$9,833 (exclusive of any VAT)
which has been agreed by the parties, on the assumption that 3 employees
of Anam out of 14 employees working for financing and accounting
services are exclusively assigned for the services to ATK.
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Schedule H
MATERIAL CONTROL
A. Contents of Service
This Service will include following:
_ Die input and labeling;
_ Die receiving and inspection;
_ Manage die flow;
_ Manage material inventory and xxxx-back services; and
_ Manage carrying in/out of other materials and spare parts.
B. Service Fee
Fee to be paid by ATK per month shall be US$9,670 (exclusive of any VAT)
which has been agreed by the parties, on the assumption that 4 employees
of Anam out of 74 employees working for material control service are
exclusively assigned for the service to ATK.
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Schedule I
PURCHASING SERVICES
A. Contents of Service
This Service will include following:
_ Establish purchasing strategy:
_ Market trend analysis (PCB, L/F, Equipment, etc);
_ Price negotiation (PCB, L/F, Equipment, etc);
_ Select supplier;
_ Follow-up monitoring (Delivery, Quality, Inventory, etc); and
_ Manage purchasing system
B. Service Fee
Fee to be paid by ATK per month shall be US$16,830 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 8
employees of Anam out of 27 employees working for purchasing service are
exclusively assigned for the service to ATK.
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Schedule J
R&D SERVICES
A. Contents of Service
This Service will include following:
_ Manages Technology Information Management System;
_ Produce technology engineering report, and hold technology
related seminars;
_ Develop new package design and run simulations
_ Develop direct/indirect material and support suppliers of ATK;
_ Support K4 plant for its new package line-up; and
_ License relevant patent to ATK;
B. Service Fee
Fee to be paid by ATK per month shall be US$63,083 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 24
employees of Anam out of 102 employees working for R&D service are
exclusively assigned for the service to ATK.
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Schedule K
QA SUPPORTING SERVICES
A. Contents of Service
This Service includes will include following:
_ Material and Die incoming quality assurance;
_ Conduct an audit for suppliers;
_ Conduct reliability test for the finished goods; and
_ Quality related specification and document control.
B. Service Fee
Fee to be paid by ATK per month shall be US$32,920 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 16
employees of Anam out of 80 employees working for QA supporting service
are exclusively assigned for the service to ATK.
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Schedule L
CUSTOMER SERVICES
A. Contents of Service
This Service includes direct communication with customer and providing
data that customer has requested. Details of the services are as
follows:
_ Customer resident support;
_ Sales support (billing service, new customer service
representative training, etc);
_ Manufacturing monitoring (On-time delivery monitoring, emergency
lot control, hand-carry service, etc); and
_ Follow-up "Voice of Customer"
B. Service Fee
Fee to be paid by ATK per month shall be US$23,250 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 15
employees of Anam out of 63 employees working for customer service are
exclusively assigned for the service to ATK.
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Schedule M
SALES & MARKETING SERVICES
A. Contents of Service
This Service is for sales and marketing in both domestic and Japan
customers. Details of the services are as follows:
_ Contract with domestic and Japan customer;
_ Produce forecast for the customer;
_ Manage delivery time and cost of products;
_ Analyze market trend and package trend; and
_ Maintain good relationships with customers.
B. Service Fee
Fee to be paid by ATK per month shall be US$17,583 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 7
employees of Anam out of 23 employees working for sales and marketing
service are exclusively assigned for the service to ATK.
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Schedule N
PRODUCTION PLANNING SERVICES
A. Contents of Service
This Service includes the following:
_ Produce overall production volume forecasts and conduct
performance control;
_ Produce summary sheets of manpower and equipment efficiency;
_ Control capacity and material usage;
_ Control plant lay-out;
_ Support expatriates support (housing, vehicles, tax, etc);
_ Conduct cost control:
- ABC (Activity Based Costing)
- Produce cost modeling
- Generate line cost and P&L by PKG, plant, company
- Calculate and analyze average sales price; and
_ Select equipment and demonstration of new equipment
_ Manage overall "Suggestion Program";
_ Manage and support ATK's "Small Group Activity" and "Improvement
Team Activities";
_ Improve working environment and minimize loss or rejection in
production line;
_ Manage the Product Data Base; and
_ Enter orders (pin count updates, registration of a new package)
B. Service Fee
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Fee to be paid by ATK per month shall be US$37,830 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 11
employees of Anam out of 33 employees working for production planning
service are exclusively assigned for the service to ATK.
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Schedule O
ICS SERVICES
A. Contents of Service
This Service includes the following:
_ Develop all the information and technology programs for the
plant;
_ Develop and establish inter-company networking system- Notes
System (e-mail, information sharing system);
_ Select hardware (PC, Server, Video conference equipment, etc) and
maintain the hardware;
_ Select software for the office users; and
_ Maintain telecommunications system.
B. Service Fee
Fee to be paid by ATK per month shall be US$182,417 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 15
employees of Anam out of 51 employees working for ICS service are
exclusively assigned for the service to ATK.
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Schedule P
MANAGEMENT ASSISTANCE SERVICES
A. Contents of Service
This Service includes the following:
_ Provide financial management, including overall management of
financial matters, including contacts with the creditor banks and
development of the financial policies.
_ Coordinate public relations with public media, such as
newspapers, magazines and broadcasting companies, publication of
monthly corporate magazine for Anam's and ATK's employees and
coordination of CI ("Corporate Identity") project.
_ Provide support for the senior management of Anam and ATK.
_ Provide construction, environment and safety management services
in connection with the management of environment and construction
of K4.
B. Service Fee
Fee to be paid by ATK per month shall be US$60,916 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 15
employees of Anam out of 46 employees working for management support
service are exclusively assigned for the service to ATK.
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Schedule Q
SECRETARIAL SUPPORT
A. Contents of Service
This Service includes the following:
_ Provide secretarial support for the senior management of Anam and
ATK, including the Chairman of Anam.
_ Provide assistance and coordination services among Anam, Anam USA
and ATI.
B. Service Fee
Fee to be paid by ATK per month shall be US$27,666 (exclusive of any
VAT) which has been agreed by the parties, on the assumption that 4
employees of Anam out of 12 employees working for secretarial support
are exclusively assigned for the service to ATK.
