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MEMORANDUM OF UNDERSTANDING
BY AND BETWEEN
HYUNDAI ELECTRONICS INDUSTRIES CO., LTD.
AND MAXTOR CORPORATION
This Memorandum of Understanding (the "MOU"), dated September 19, 1995, by and
between Hyundai Electronics Industries Co., Ltd., a Korean corporation,
including its subsidiaries and affiliates ("HEI"), and Maxtor Corporation, a
Delaware corporation, including its subsidiaries and affiliates ("Maxtor"),
confirms the mutual intent of the parties that:
1. HEI will acquire from Maxtor, and Maxtor will transfer to HEI, the
following manufacturing facilities and operations:
- Maxtor Peripherals (S) Pte Limited (but excluding its wholly owned
subsidiary, Maxtor Ireland Limited)
- Maxtor (Thailand) Limited
- Maxtor (Hong Kong) Limited
- IMS International Manufacturing Services Limited, and its wholly owned
subsidiary, IMS International Manufacturing Services (Thailand) Limited
The purchase price to be paid by HEI will be U.S. $100 million, subject to
appropriate adjustments in accordance with the independent appraisal of the real
estate and HEI's and Maxtor's appraisal of the equipment and any new net capital
additions through the closing date, due diligence and mutual agreement on the
resulting adjustment in value. (It is understood that the value of any equipment
that is or will be obsolete in light of Maxtor's new product plans will be
defined in the definitive agreement.) This purchase price reflects the fact that
Maxtor will retain all other balance sheet items (excluding the properties,
plants and equipment) of the above subsidiaries.
2. As part of this transaction, HEI and Maxtor will enter into an exclusive
long-term manufacturing and purchase agreement pursuant to which HEI agrees to
supply 100% of the hard disk drive products to be developed by Maxtor and Maxtor
will use HEI's facilities for 100% of its hard disk drive needs. This agreement
will determine the split and share of the business scope and functions between
the parties as well as the terms and conditions of product transactions. The
transfer prices for the products will be based on a "cost plus margin" formula
to be determined by the parties by mutual agreement in good faith.
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3. HEI will make the necessary investment to modernize the transferred
facilities and to expand capacity required to meet Maxtor's needs. In addition,
HEI will use its best efforts to improve the operating efficiency and economy of
the manufacturing facilities in cooperation with Maxtor. This effort will
include, without limitation, integration of technologies between HEI and Maxtor
to improve the overall competitiveness of the HDD business of Maxtor. These
technologies include those under HEI's control. In addition, HEI will
aggressively pursue manufacturing of some HDD components which are not presently
produced by Maxtor or HEI, including heads and media components.
This Memorandum of Understanding is conditioned upon the parties entering into
definitive agreements. The foregoing is also subject to obtaining requisite
approvals, including, if necessary, the approvals of the parties' respective
boards of directors, as well as the approvals of the U.S. and Korean
governmental agencies. Prior to the execution of a definitive agreement, nothing
in this MOU will prevent Maxtor from considering any proposal(s) initiated by
third parties and negotiating and entering into a definitive agreement based
upon any such proposal.
All discussions pursuant to this Memorandum of Understanding, the fact that such
discussions are occurring, and information related hereto exchanged by the
parties, shall be maintained in strict confidence. The parties agree to disclose
such information only to their respective employees and consultants with a need
to know, provided that such employees and consultants agree to maintain this
matter in confidence. Neither party shall make any announcement or disclosure
concerning the foregoing without the prior consent of the other except as may be
required by applicable securities laws. The parties agree that Exhibit A,
attached hereto, and similar communications and other communications allowed
herein, may be publicly distributed and discussed immediately upon execution of
this MOU.
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This MOU reflects the parties' intent to proceed as set forth herein with the
goal of consummating the transactions contemplated herein on or before December
15, 1995. However, except for obligations of confidentiality and provisions in
the immediately preceding paragraph neither party will incur any obligation
hereunder until a written definitive agreement is executed by the parties, which
agreement will entirely supersede this MOU.
In witness whereof, the parties have caused their duly authorized
representatives to sign this Memorandum of Understanding as of the date first
above written.
MAXTOR CORPORATION HYUNDAI ELECTRONICS
INDUSTRIES CO., LTD.
By /s/ C. S. Park By /s/ X. X. Xxx
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Name C. S. Park Name X. X. Xxx
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Title President Title President
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