1
EXHIBIT 10.84
PURCHASE AGREEMENT
BETWEEN
MATSUSHITA KOTOBUKI ELECTRONICS INDUSTRIES, LTD.,
AND
MAXTOR CORPORATION
Confidential treatment requested. Confidential information
in this agreement have been omitted and filed separately with the
Securities and Exchange Commission.
2
TABLE OF CONTENTS
Page
----
1. DEFINITIONS ................................................................. 1
1.1 "Confidential Information" ........................................... 1
1.3 "Engineering Change" ................................................. 1
1.4 "High End Products" .................................................. 1
1.5 "Master Agreement" ................................................... 1
1.6 "Mobile Products" .................................................... 1
1.7 "Products" ........................................................... 2
1.8 "Product Specifications" ............................................. 2
1.9 "Purchase Order" ..................................................... 2
1.10 "Maxtor" ............................................................. 2
1.12 "Spare Parts" ........................................................ 2
1.13 "Technical Information" .............................................. 2
1.14 "Unique Customer Configured Products" ................................ 2
2. CONTROLLING DOCUMENT ........................................................ 3
2.1 Controlling Agreement ................................................ 3
2.2 Conflicts ............................................................ 3
3. PURCHASE ORDERS ............................................................. 3
3.1 Orders ............................................................... 3
3.2 Confirmation ......................................................... 3
3.3 Contents ............................................................. 3
3.4 Emergency Orders ..................................................... 4
3.5 Shipment Report ...................................................... 4
4. FORECASTS/COMMITMENTS ....................................................... 4
4.1 Purchase Orders ...................................................... 4
4.2 Commitments .......................................................... 4
4.3 Discontinuance of Model .............................................. 4
5. PRICES ...................................................................... 4
5.1 Price ................................................................ 4
5.2 Special Pricing ...................................................... 4
6. CURRENCY .................................................................... 5
7. TAXES ....................................................................... 5
8. PURCHASE ORDER RESCHEDULES AND FORECAST ADJUSTMENTS ......................... 5
9. PAYMENT TERMS ............................................................... 6
10. TITLE ....................................................................... 6
i
3
TABLE OF CONTENTS
(CONTINUED)
Page
----
11. DELIVERY .................................................................... 6
11.1 Transportation ....................................................... 6
11.2 Packaging ............................................................ 6
11.3 Delivery Times ....................................................... 7
12. INSPECTION AND ACCEPTANCE .................................................. 7
12.1 MKE Inspection ...................................................... 7
12.2 Maxtor Inspection ................................................... 7
12.3 Maxtor Corrections .................................................. 8
12.4 Non-conforming Acceptance ........................................... 8
12.5 Lot Failures ........................................................ 8
12.6 Ongoing Reliability Testing ......................................... 8
12.7 OEM Customer Inspection ............................................. 9
13. WARRANTY, PATENT INDEMNIFICATION ........................................... 9
13.1 MKE Warranty ........................................................ 9
13.2 Maxtor Warranty ..................................................... 9
13.3 Remedy .............................................................. 9
13.4 Warranty Costs ...................................................... 9
13.5 Exclusive Remedy ................................................... 10
13.6 Warranty and Service by MKE for Sales by MKE to MKE Customers ...... 10
13.7 Patent Indemnification ............................................. 10
14. ENGINEERING CHANGES ....................................................... 10
14.1 MKE Changes ........................................................ 10
14.2 Maxtor Changes ..................................................... 11
15. SPARE PARTS ............................................................... 11
15.1 Spare Parts During Product Manufacture ............................. 11
15.2 Prices of Spare Parts During Product Manufacture ................... 11
15.3 Spare Parts After Termination of Product Manufacturing ............. 11
15.4 Prices for Spare Parts After Termination of Product Manufacturing .. 11
16. DOCUMENTATION ............................................................. 12
16.1 Maxtor's Brands .................................................... 12
17. COMPONENTS. ............................................................... 12
18. TERM AND TERMINATION ...................................................... 13
18.1 Term ............................................................... 13
18.2 [ * ] .............................................................. 13
18.3 Rights Upon Termination ............................................ 13
19. ARBITRATION ............................................................... 13
* Confidential material redacted and filed separately with the Commission.
ii
4
TABLE OF CONTENTS
(CONTINUED)
Page
----
20. GOVERNMENTAL CONSENTS ..................................................... 14
20.1 Compliance with Laws ............................................... 14
21. MISCELLANEOUS ............................................................. 14
21.1 Nonassignability ................................................... 14
21.2 Failure to Enforce ................................................. 14
21.3 Governing Law ...................................................... 14
21.4 Severability ....................................................... 15
21.5 Notices ............................................................ 15
21.6 Entire Agreement ................................................... 15
21.7 Force Majeure ...................................................... 15
21.8 LIMITATION OF LIABILITY ............................................ 16
21.9 Agency ............................................................. 16
21.10 Headings ........................................................... 16
21.11 Trading Company .................................................... 16
iii
5
PURCHASE AGREEMENT BETWEEN MATSUSHITA KOTOBUKI ELECTRONICS INDUSTRIES, LTD.,
AND MAXTOR CORPORATION
THIS PURCHASE AGREEMENT is made by and among MATSUSHITA KOTOBUKI
ELECTRONICS INDUSTRIES, LTD., a Japanese corporation, and its subsidiaries
(hereinafter collectively, "MKE"), as listed in the attached schedule
("Schedule") which will be modified by MKE from time to time and MAXTOR
CORPORATION, a Delaware corporation, and its subsidiaries (hereinafter
collectively, "Maxtor"), as listed in the attached schedule ("Schedule") which
will be modified by Maxtor from time to time. This Agreement is entered into as
of the 2nd day of April, 2001 (the "Effective Date"). In consideration of the
mutual covenants and promises in this Agreement, the parties agree as follows:
1. DEFINITIONS.
The following terms, as used in this Agreement, shall have the meanings
referenced below:
1.1 "Confidential Information" shall have the meaning set forth in the
Master Agreement.
1.2 "Desktop Products" shall mean Products with [*] inch-size and
designated for primarily for the storage needs of traditional desktop and
portable computer systems for commercial and consumer use including, but not
limited to, desktop PCs, commercial PCs, portable PCs, home PCs and laptop PCs.
These products also may be designed for, or use in, non-computer storage
applications, including, but not limited to, consumer devices (e.g. cameras,
personal assistants, audio and video appliances, games, etc.), commercial
devices (e.g. routers, hubs, switches, storage subsystems, storage systems,
etc.), which require digital storage.
1.3 "Engineering Change" regarding design shall mean any electrical or
mechanical changes to the Products or Spare Parts, proposed by Maxtor or MKE,
which would affect the performance, reliability, safety, serviceability,
appearance, dimensions, tolerances, final assembly or Product Specifications of
the Products. Regarding manufacturing process, "Engineering Change" shall mean
any change to the manufacturing process, proposed by Maxtor or MKE, which may
affect form, fit, function, quality, and/or reliability of the Products.
1.4 "High End Products" shall mean Products designed primarily for the
commercial storage needs of high performance storage and computation systems
including, but not limited to, use in servers, workstations, disk arrays,
storage systems, storage subsystems, mini and mainframe computers.
1.5 "Master Agreement" means the Master Agreement between MKE and Maxtor
dated as of even date herewith.
1.6 "Mobile Products" means [*].
* Confidential material redacted and filed separately with the Commission.
1
6
1.7 "Products" shall mean [*].
1.8 "Product Specifications" shall mean the specifications for the
Products mutually agreed by the parties from time to time in accordance with the
procedures of the parties.
1.9 "Purchase Order" shall mean purchase orders submitted to MKE from
Maxtor in accordance with Sections 3 ("Purchase Orders") and 4
("Forecasts/Commitments") of this Agreement.
1.10 "Maxtor" shall also include any subsidiary of Maxtor listed in the
Schedule or subsequently added, as provided hereinafter, or deleted by Maxtor.
Maxtor may add any subsidiary in which it has greater than fifty percent (50%)
ownership or control, provided however, if a third person or entity having an
ownership interest in any such subsidiary is a competitor of Maxtor in the sale
of hard disk drives to the public, then the consent of MKE shall be required
prior to such subsidiary being added by Maxtor, which consent shall not be
unreasonably withheld.
1.11 "MKE" shall also include any subsidiary of MKE listed in the
Schedule or subsequently added, as provided hereinafter, or deleted by MKE. MKE
may add any subsidiary in which it has greater than fifty percent (50%)
ownership or control, provided however, if a third person or entity having an
ownership interest in any such subsidiary is a competitor of Maxtor in the sale
of hard disk drives to the public, then the consent of Maxtor shall be required
prior to such subsidiary being added by MKE, which consent shall not be
unreasonably withheld.
1.12 "Spare Parts" shall mean all spare parts for the Products.
1.13 "Technical Information" shall mean all non-public information and
know-how which is proprietary to Maxtor or MKE, as the case may be, related to
the development and manufacturing of any Products, including all inventions,
processes and discoveries known, actively used, or hereafter developed by either
party with respect thereto during the term of this Agreement. Technical
Information shall be mutually exchanged between the parties solely for the
purpose of contributing to, or assisting with, the design, manufacturing,
marketing, testing and service of the Products. No exchange of Technical
Information shall be deemed to transfer, license or otherwise assign from one
party to the other party any proprietary rights any party hereto may have in the
Technical Information, and one party's rights to use the other party's Technical
Information shall be set forth in Section 9.1 and 9.2 of Master Agreement.
1.14 "Unique Customer Configured Products" shall mean Products based
upon standard Products but incorporating changes that may include electrical,
hardware interface, firmware and/or form factor made pursuant to the terms of
this Agreement. The specifications of such products will be mutually confirmed
in writing on an as-needed basis.
2. CONTROLLING DOCUMENT.
2.1 Controlling Agreement. All purchases of the Products by Maxtor from
MKE shall be subject to the terms and conditions of this Agreement, the Master
Agreement and the exhibits, if any, attached to each. Any additional,
inconsistent and conflicting clauses in any Purchase Order, release, acceptance
or other written correspondences from one party to the other, are to be
* Confidential material redacted and filed separately with the Commission.
2
7
considered rejected and of no effect. Any addition to, deletion from or
modification of any of the provisions of this Agreement shall be made in writing
signed by duly authorized representatives of both parties and shall state that
it is an amendment of this Agreement.
2.2 Conflicts. If a conflict arises between any of the terms in the
following documents, the order of precedence shall be: (i) this Agreement, (ii)
the Master Agreement, and (iii) written terms on any issued and accepted
Purchase Order.
3. PURCHASE ORDERS.
3.1 Orders. The purchase and sale of Products and Spare Parts shall be
made against specific Purchase Orders placed by Maxtor to MKE and accepted by
MKE during the term of this Agreement in accordance with the provisions hereof,
provided that such acceptance shall not be unreasonably withheld or delayed in
accordance with the provisions hereof. Purchase Orders and change orders may be
placed by facsimile. A Purchase Order may provide for delivery of the Products
for a period up to [*] days following normal expiration of this Agreement and
all terms and conditions of this Agreement shall govern. Subject to the
provisions of Section 18.2 ("Termination"), no Purchase Order is required to be
accepted by MKE on and after the expiration or the termination of this
Agreement. Any Purchaser Order issued, or to be issued, for any firm commitment
of purchase of Products hereunder shall be noncancellable except as otherwise
provided for in Sections 11.3 ("Delivery Times") and 21.7 ("Force Majeure")
hereof and Maxtor shall be responsible for taking deliveries of and paying for
all Products set forth in such Purchase Order.
3.2 Confirmation. MKE will notify Maxtor of receipt of a Purchase Order
within five (5) working days after receipt of Maxtor's Purchase Order.
Confirmation of receipt and acceptance by MKE may be by facsimile. No individual
Purchase Order shall be binding upon MKE unless and until accepted in writing by
MKE, but such acceptance shall not be unreasonably withheld or delayed.
3.3 Contents. All Purchase Orders for Products and Spare Parts submitted
by Maxtor shall state the following: (i) price, (ii) the quantities ordered,
(iii) delivery dates, (iv) destination (which shall be the mutually agreed
Maxtor facility unless otherwise specifically agreed by the parties), (v)
requested method of shipment (and specific carrier if desired) and (vi) Product
model or Spare Parts number in accordance with the terms and conditions hereof.
Maxtor shall use the form of Purchase Order agreed upon by the parties from time
to time to place the Purchase Order and emergency orders referred to in Section
3.5 ("Emergency Orders") below. Any additional or inconsistent terms contained
on such form of Purchase Order shall not be applicable and are hereby rejected.
3.4 Emergency Orders. The monthly rolling forecasts and Purchase Orders
placed by Maxtor under Sections 3.1 ("Orders") and 4.2 ("Commitments") shall not
prevent Maxtor from placing emergency orders for Products for delivery up to the
quantities as may be agreed to by MKE in accordance with the provisions hereof
in less than ninety (90) days and MKE agrees to make reasonable efforts to
deliver the Products on the requested schedule but shall have no liability
hereunder for failure to deliver such emergency orders on the requested
schedule.
* Confidential material redacted and filed separately with the Commission.
3
8
3.5 Shipment Report. MKE will supply Maxtor a weekly shipment report for
all Products shipped during the past week, which report shall specify the
quantity, part number (including revision or configuration level), shipment date
and commercial invoice number with the form and method to be mutually agreed
upon between the parties.
4. FORECASTS/COMMITMENTS.
4.1 Purchase Orders. Maxtor will issue a non-cancelable Purchase Order
on a monthly basis, on or before the 10th day of such month, [*].
4.2 Commitments. The initial [*] period of any forecast shall be
accompanied by a Purchase Order of Maxtor for the purchase of Products set forth
in such forecast. The next [*] period shall be a projection of the quantities of
Products needed by Maxtor, and not regarded as a commitment of Maxtor to
purchase such Products but shall be regarded only for planning purposes.
4.3 Discontinuance of Model. Maxtor shall promptly notify MKE of
Maxtor's decision to discontinue to order any specific model of Product.
Notwithstanding any such notice, Maxtor shall remain obligated to purchase the
specific model of Product pursuant to the application of Section 3.1 ("Orders")
and Section 8 ("Purchase Order Reschedules and Forecast Adjustments").
5. PRICES.
5.1 Price. The purchase price to Maxtor for each item of the Products
sold to Maxtor shall be [*].
5.2 Special Pricing.
(a) In order to obtain business from specific potential
customers identified by Maxtor and deemed to be in the mutual best interests of
Maxtor and MKE, Maxtor and MKE shall in good faith work together to establish a
mutually agreeable price for the Products between MKE and Maxtor where such
special pricing may be necessary in order for Maxtor to obtain the business from
such customers.
(b) All prices to Maxtor for Products, Unique Custom Configured
Products and/or Spare Parts, where MKE's trading company provides export
services from Japan, shall be F.O.B. Japanese Port (Osaka, Kobe or their
vicinity) as designated by Maxtor [*] the Ex-MKE factory price for such
Products, Unique Custom Configured Products and/or Spare Parts as set forth in
Section 5.1 ("Price") above.
6. CURRENCY.
MKE sales of Products and Spare Parts to Maxtor shall be in U.S.
Dollars.
* Confidential material redacted and filed separately with the Commission.
4
9
7. TAXES.
The price for the Products includes all taxes necessary to pass title to
the Products, Unique Customer Configured Products and Spare Parts to Maxtor at
the delivery point. In the case of substantially high rate taxes, charges or
duties such as 100% sanctions, Maxtor and MKE agree to meet immediately and to
agree upon a method to resolve such problem. Title to the Products, Unique
Customer Configured Products and Spare Parts shall pass to Maxtor from MKE
ex-MKE Factory unless MKE's Trading Company provides export services, in which
event title shall pass to Maxtor F.O.B. Japanese Port (Osaka, Kobe or their
vicinity) as designated by Maxtor.
8. PURCHASE ORDER RESCHEDULES AND FORECAST ADJUSTMENTS.
[*].
It is expected that a significant portion of Maxtor's business will
require special configuration of the Products. Some may be as minor as code
changes while others may require special brackets or other hardware changes.
Maxtor's customers also will change the mix of Products in addition to their
configuration with virtually no lead time. Therefore, Maxtor shall be able to
change the configuration and mix of Products on a weekly basis. Maxtor and MKE
will work together to establish a mutually agreeable procedure for changing the
configuration and mix of Products and Unique Customer Configured Products.
9. PAYMENT TERMS.
Unless otherwise specifically provided herein, all payments, including
without limitation payments for the Products, Unique Customer Configured
Products and Spare Parts made by Maxtor hereunder shall be payable in U.S.
Dollars, [*], in case of Products manufactured in Japan and [*], in case of
Products manufactured in Singapore, after delivery of the Products, Unique
Customer Configured Products or Spare Parts to Maxtor. Delivery of the Products,
Unique Customer Configured Products or Spare Parts shall be deemed to occur when
such Products, Unique Customer Configured Products or Spare Parts are delivered
ex-MKE Factory unless MKE's designated Trading Company provides export service
to Maxtor, in which event delivery shall be deemed to occur when the Products,
Unique Customer Configured Products and/or Spare Parts are delivered F.O.B.
Japanese Port (Osaka, Kobe or their vicinity) as designated by Maxtor.
[*].
10. TITLE.
Title to the Products, Unique Customer Configured Products and/or Spare
Parts and risk of loss shall pass to Maxtor upon MKE's delivery thereof, as
delivery is defined in Section 9 ("Payment Terms") above regardless of any
provisions for payment of freight or insurance or form of shipping documents.
* Confidential material redacted and filed separately with the Commission.
5
10
11. DELIVERY.
11.1 Transportation. The method of transportation and the carrier
selected shall be as specified by Maxtor in its Purchase Order. All
transportation charges, including insurance, shall be paid by Maxtor.
11.2 Packaging. The method of packaging shall be in accordance with
specifications established by Maxtor from time to time. The cost of packaging
for shipment to the United States is included in the price. Each shipment shall
include a packing list containing: (i) Purchase Order number, (ii) Product,
Unique Customer Configured Products or Spare Part number, and (iii) quantity of
shipped Products, Unique Customer Configured Products or Spare Parts. Serial
numbers of Products shipped to Maxtor shall be delivered concurrently with the
packing list but by separate communications in accordance with the parties'
standard practices. Maxtor shall indemnify and hold harmless MKE from and
against any and all liabilities, cost, expenses, loss and damages, arising out
of or relating to the packaging for the Products provided that the Products and
Spare Parts are packed in conformity with Maxtor's specifications.
11.3 Delivery Times. The delivery dates and quantities specified by
Maxtor in its Purchase Orders accepted by MKE are firm. If a delivery date,
along with the appropriate quantities, is missed by more than five (5) days,
then Maxtor may reschedule the delivery in question.
12. INSPECTION AND ACCEPTANCE.
12.1 MKE Inspection. MKE shall provide and maintain an inspection
procedure and quality assurance program for Products and Spare Parts and their
production processes. Complete records of all inspection work done by MKE
including equipment calibration, shall be made available to Maxtor upon its
request and reasonable times during the term of this Agreement. Maxtor is
authorized to perform source inspection and quality assurance audits at MKE's
manufacturing facilities, but this shall not relieve MKE of its obligation to
deliver conforming Products or waive Maxtor's right of inspection and acceptance
at destination.
12.2 Maxtor Inspection. All Products, Unique Customer Configured
Products and Spare Parts ordered by Maxtor under this Agreement shall be subject
to inspection and acceptance by Maxtor at its destination in accordance with
incoming inspection test procedures agreed to by MKE. All Products, Unique
Customer Configured Products and Spare Parts shipped, under this Agreement will
comply one hundred percent (100%) to the Product Specifications. Products,
Unique Customer Configured Products and Spare Parts which fail to pass Maxtor's
incoming test or inspection requirements for the Products, Unique Customer
Configured Products and Spare Parts which have been established by the mutual
agreement of Maxtor and MKE may be rejected by Maxtor and returned to MKE for
repair or replacement, with all costs to repair or replace and of transportation
(with MKE choosing the carrier) and risk of loss from Maxtor's principal
facility, to be paid as provided below.
(a) During the Agreement term, and by mutual agreement between
Maxtor and MKE, MKE shall provide at MKE's expense, at Maxtor's facility,
technical personnel for purpose of analyzing manufacturing defects found during
incoming acceptance tests.
6
11
(b) In the event that MKE's technical personnel at Maxtor's
facility cannot correct defects relating solely to manufacturing defects within
a reasonable number of working days following MKE's receipt of Maxtor's notice
of defects, the non-conforming Products, Unique Customer Configured Products and
Spare Parts may be returned to MKE for repair or replacement. Maxtor shall
notify MKE prior to return of nonconforming Products, Unique Customer Configured
Products or Spare Parts. All returned Products, Unique Customer Configured
Products or Spare Parts will be shipped to MKE's designated facility.
(c) All shipments of non-conforming Products, Unique Customer
Configured Products or Spare Parts pursuant to (b) above shall be made freight
collect and MKE assumes risk of loss and damage during transit. Replacement
Products, Unique Customer Configured Products or Spare Parts will be delivered
to Maxtor, at Maxtor's applicable facility, at MKE's expense within thirty (30)
days after the date of receipt of non-conforming Products, Unique Customer
Configured Products or Spare Parts by MKE. Should MKE fail to repair or replace
rejected Products, Unique Customer Configured Products or Spare Parts and return
conforming Products, Unique Customer Configured Products or Spare Parts to
Maxtor within thirty (30) days, Maxtor shall have the option to cancel without
cost or liability the purchase of such Products, Unique Customer Configured
Products or Spare Parts and receive, at Maxtor's option, a credit or rebate if
payment has been made. Maxtor shall pay freight charges, insurance and other
customary charges for transportation for improperly rejected Products, Unique
Customer Configured Products or Spare Parts. Notwithstanding the foregoing,
Maxtor and MKE shall separately negotiate in good faith if either party believes
that different procedures for repair and replacement of High End Products or
other new Products should be established because of the differences in such
Products.
(d) It is understood that all costs to repair or replace and of
transportation with respect to defective Products, Unique Customer Configured
Products or Spare Parts shall be the [*].
12.3 Maxtor Corrections. Maxtor may attempt to correct deficiencies with
Spare Parts purchased under this Agreement. Such correction by Maxtor shall
neither invalidate nor act as a waiver of Maxtor's rights to satisfaction under
Section 12.2 ("Maxtor Inspection") above nor affect any other terms of this
Agreement, including, but not limited to, the warranty under Section 13
("Warranty"). The act of payment for Products or Spare Parts shall not of itself
signify acceptance by Maxtor of the Products or Spare Parts.
12.4 Non-conforming Acceptance. Maxtor may choose to accept Products,
Unique Customer Configured Products or Spare Parts which fail to conform in a
minor aspect to the specifications established by this Agreement without
prejudice to its right to reject non-conforming items in the future. If Maxtor
so chooses, Maxtor will notify MKE of its intent to accept non-conforming items.
MKE agrees to negotiate in good faith a price reduction for such items based
upon Maxtor's added expenses to correct such deficiencies provided that the
basis for non-conformance is not the result of a design defect. After the
parties agree on a price Maxtor will notify MKE that Maxtor has accepted the
non-conforming items.
* Confidential material redacted and filed separately with the Commission.
7
12
12.5 Lot Failures. If a lot fails the acceptance quality yield level
established by the parties from time to time then Maxtor may reject the entire
lot and require MKE technical personnel to verify individual Products in the lot
as acceptable provided that the basis for failure of quality yield level is not
the result of a design defect.
12.6 Ongoing Reliability Testing. MKE shall perform ongoing reliability
testing in a manner and frequency mutually agreed upon by the parties from time
to time.
12.7 OEM Customer Inspection. MKE shall allow with prior arrangement,
Maxtor's OEM customers to perform or cause to be performed inspection, audit
and/or test of Product and/or manufacturing process. The OEM customer is to be
accompanied by a Maxtor employee(s) who will be the interface between the OEM
customer and MKE.
13. WARRANTY, PATENT INDEMNIFICATION.
13.1 MKE Warranty. The MKE warranty period extended to Maxtor shall be
[*]. Such warranty period shall commence from the date of delivery of Products
by MKE to Maxtor as described in Section 9 ("Payment Terms") hereof. All
Products, Unique Customer Configured Products or Spare Parts furnished under
this Agreement, except for software/firmware and product interface components
supplied by Maxtor, will be warranted by MKE to be free of defects in materials
and workmanship, and will conform to applicable Product Specifications, drawings
and/or samples provided or incorporated in this Agreement. Notwithstanding the
above, the warranty period may be adjusted by mutual agreement based on the
warranty period that Maxtor actually provides to its customers. The terms of the
warranty periods will be reviewed on an annual basis. Maxtor and MKE agree to
negotiate in good faith adjustments of the warranty period due to competitive
market conditions.
13.2 Maxtor Warranty. Maxtor warrants for the period of time that Maxtor
warrants to its customers from the date of delivery of Products by Maxtor to its
customers that all Products, Unique Customer Configured Products and Spare Parts
furnished under this Agreement will be free from defects in design. These
warranties shall survive any inspection, delivery, payment and termination or
expiration of this Agreement, and shall run to MKE and MKE Customers, or its
successors and assigns.
13.3 Remedy. Correction of warranty defects hereunder shall be performed
at either Maxtor's or MKE's facility, as MKE and Maxtor shall agree. MKE shall,
with the mutual agreement of Maxtor, repair or replace all defective Products,
Unique Customer Configured Products and Spare Parts within thirty (30) days of
receipt of defective Products returned to it by Maxtor. During the term of this
Agreement, and if mutually agreed between Maxtor and MKE, MKE shall provide, at
Maxtor's facility, technical personnel for the purpose of analyzing and
repairing defects in the Products, Unique Customer Configured Products and Spare
Parts. Notwithstanding the foregoing, Maxtor and MKE shall separately negotiate
in good faith if either party believes that different procedures for repair and
replacement of High End Products or other new Products should be established
because of the differences in such Products.
* Confidential material redacted and filed separately with the Commission.
8
13
13.4 Warranty Costs. [*] The parties shall review on a semi-annual basis
the procedures for warranty repairs and allocation of warranty expenses as well
as the reimbursement policy for such warranty repairs as hereinafter set forth.
Initially, a report shall be prepared by MKE and Maxtor on a calendar quarterly
basis indicating the warranty costs incurred by the parties pursuant to this
Section 13. Within thirty (30) days after a warranty cost report is submitted,
the owing party shall reimburse the owed party. Any disputes pursuant to this
Section 13 shall be resolved by arbitration in the manner established by Section
19 ("Arbitration") below.
13.5 Exclusive Remedy. THE WARRANTIES SET FORTH ABOVE CONSTITUTE THE
SOLE AND EXCLUSIVE REMEDY OF MKE AND MAXTOR REGARDING THE PERFORMANCE OF THE
PRODUCTS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, MAXTOR AND MKE MAKE
NO WARRANTIES, EXPRESS OR IMPLIED, AND HEREBY EXPRESSLY DISCLAIM ALL OTHER
WARRANTIES, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. NEITHER MKE NOR MAXTOR SHALL BE LIABLE FOR
CONSEQUENTIAL DAMAGES.
13.6 Warranty and Service by MKE for Sales by MKE to MKE Customers. MKE
shall at its cost, expense and responsibility, warrant the Products and/or
provide after-sales service on the Products sold to MKE Customers hereunder.
Notwithstanding, Maxtor shall at MKE's request provide in good faith reasonable
technical advice and assistance regarding Product design in support of such
warranty and after-sales service. Maxtor shall reasonably support MKE's requests
regarding customer specifications, firmware changes, and assignment of part
numbers for Product sold hereunder. The parties agree to negotiate in good faith
reasonable terms and conditions regarding any specification and/or schedule
changes.
13.7 Patent Indemnification. The provisions of Section 11 ("Patent
Indemnification") of the Master Agreement shall be deemed incorporated into this
Agreement.
14. ENGINEERING CHANGES.
14.1 MKE Changes. MKE shall notify Maxtor of any Engineering Change
proposed to be made by MKE to the Product, Spare Parts, or manufacturing process
and shall supply a written description of the expected effect of the Engineering
Change on the Product or manufacturing process, including the effect on
performance, all test results of the proposed change, reliability, quality and
serviceability and any cost changes expected by the Engineering Change. In
deciding whether or not to give its consent to the inclusion of an MKE-proposed
Engineering Change, Maxtor may elect to evaluate parts and/or designs specified
as part of the proposed change. Maxtor agrees to approve or disapprove
MKE-proposed changes or respond with alternate proposals within sixty (60)
working days of receipt of a written request including all necessary
documentation and materials to correctly evaluate the requested change for
changes requiring customer approval and ten (10) working days for changes
requiring only Maxtor approval. Maxtor will use its best effort to reduce the
response time for MKE-proposed changes that require customer approval.
* Confidential material redacted and filed separately with the Commission.
9
14
14.2 Maxtor Changes. Maxtor may request, in writing, that MKE
incorporate an Engineering Change into the Product or a manufacturing process.
Such request will include a description of the proposed change sufficient to
permit MKE to evaluate its feasibility and the proposed effect on quality,
reliability, performance, cost and serviceability. Within ten (10) working days
of such request by Maxtor, MKE will advise Maxtor of the terms and conditions
under which it would make the Engineering Change requested by Maxtor. MKE's
evaluation shall be in writing and shall state the cost savings or increase, if
any, expected to be created by the Engineering Change, and its effect on the
performance, quality, reliability, safety, appearance, dimensions, tolerance,
inventory cost and lead time, provided such advice and evaluation by MKE shall
be deemed conditional only and such change request shall be of no force and
effect until such time as Maxtor and MKE shall agree in writing upon a
commensurate increase or decrease in the purchase price or revision of delivery
schedule or both. If Maxtor requests MKE in writing to incorporate an
Engineering Change into the Product or manufacturing process and it is agreed to
by MKE, the Product Specifications will be amended as required. MKE shall not
unreasonably refuse to incorporate Maxtor's Engineering Changes into the Product
or manufacturing process.
15. SPARE PARTS.
15.1 Spare Parts During Product Manufacture. During the manufacture of
the Products Maxtor shall have the right to order all piece parts for the
purpose of providing service on the Products by Maxtor, or any authorized third
party repair organization. Maxtor will order Spare Parts with at least ninety
(90) days lead time and MKE agrees to supply the Spare Parts.
15.2 Prices of Spare Parts During Product Manufacture. The prices of all
piece parts or subassemblies that compose the Product [*] of the total Product
price to Maxtor.
15.3 Spare Parts After Termination of Product Manufacturing. Maxtor
shall have the right to purchase the recommended Spare Parts and MKE agrees to
supply these Spare Parts for a period of [*] years after discontinuance of a
relevant model of a Product. Maxtor shall also have the right to purchase all
mutually agreed upon individual piece parts from MKE or their vendors during
this time period so that MKE is not required to stock every individual piece
part. MKE will assist Maxtor in purchasing and obtaining the best prices from
their vendors.
15.4 Prices for Spare Parts After Termination of Product Manufacturing.
After termination of this Agreement, Prices for the Spare Parts shall be
mutually agreed upon, however, the parties agree to negotiate commercially
reasonable prices for said Spare Parts. At Maxtor's option certain Spare Parts
of U.S. manufacture may be purchased directly from the manufacturers. Warranty
for MKE-supplied Spare Parts will be the same as for the Product under Section
13 ("Warranty"). Order lead times and payment terms for parts and subassemblies
shall be the same as for Spare Parts.
* Confidential material redacted and filed separately with the Commission.
10
15
16. DOCUMENTATION.
16.1 Maxtor's Brands.
(a) Maxtor grants to MKE the right to apply such of Maxtor's
Brands to the Products to be manufactured and delivered to Maxtor pursuant to
this Agreement as Maxtor shall direct upon reasonable written notice. Maxtor's
Brands shall not be used in combination with any other tradenames, trademarks,
characters, figures or marks by MKE without the prior written approval of
Maxtor. Maxtor represents and warrants that it is the sole and exclusive owner
of Maxtor's Brands and that the use thereof on the Product will not infringe the
rights of any third party.
(b) Maxtor's Brands shall be affixed to each unit of the
Product, in such manner as may be specified by Maxtor trademark guidelines
issued by Maxtor to MKE from time to time.
(c) Maxtor shall indemnify and hold harmless MKE from and
against any and all liabilities, costs, expenses, loss and damages, including
reasonable counsel fees and expenses for the cost of settlement, arising out of
or relating to any claim by any third party of any proprietary right or interest
in Maxtor's Brands or any claim relating to any art work, labeling and other
printed matters supplied by or included at the direction of Maxtor. Maxtor
shall, at the request of MKE, assume the defense of any action or suit against
MKE relating hereto, by reputable counsel reasonably acceptable to MKE retained
at Maxtor's expense, and shall pay any damages assessed against or otherwise
payable by MKE as a result of the disposition of any such action or suit. MKE
shall promptly notify Maxtor of the commencement of any such action or suit, or
threats thereof, and Maxtor shall be afforded the opportunity to determine the
manner in which such action or suit should be handled or otherwise disposed of.
Maxtor shall not effect any settlement that does not provide for the full and
unconditional release of all applicable claims against MKE without MKE's prior
written consent. Notwithstanding the foregoing, if MKE is a named party in any
action or suit, MKE may participate in any such action or suit at its own
expense and by its own counsel. MKE shall not undertake to settle, or agree to
any settlement herein, without first obtaining the written consent of Maxtor.
17. COMPONENTS.
MKE and Maxtor agree to work together and mutually agree on sourcing of
parts components to insure that consideration be given to sources outside MKE,
given price, quality, delivery and other procurement considerations are equal.
While Maxtor and MKE will jointly develop the specifications for the key
components and parts, Maxtor shall be responsible for establishing the actual
specifications for such components and parts. MKE shall be responsible for the
components and parts after such components and parts successfully pass MKE's
incoming test inspection subject to Section 13.1 ("MKE Warranty") and Section
13.2 ("Maxtor Warranty") hereof. Notwithstanding the aforesaid, should the
application of the previous sentence work a hardship on either party, Maxtor and
MKE shall, in good faith, negotiate a reasonable commercial solution.
11
16
It is contemplated that all components and parts for the Products or
Unique Customer Configured Products will be either provided by MKE or other
worldwide sources resulting in the lowest total cost.
Maxtor shall provide reasonable assistance to MKE to resolve any
material problems of such components and parts if such problems may occur after
the commencement of mass-production of such components and parts.
18. TERM AND TERMINATION.
18.1 Term. This Agreement shall be effective as of the date first set
forth above and shall continue in effect for a period of [ * ] whereupon this
Agreement shall be terminated on [ * ] unless otherwise agreed to by the parties
in writing. The parties will, in good faith, negotiate a new Purchase Agreement
during [ * ] ("Negotiation Period"). Any such new Purchase Agreement will
contain payment terms, [ * ], that are substantially identical to the payment
terms recited in Section 9. ("Payment Terms") of this Agreement. In the event
the Master Agreement terminates for any reason, this Agreement shall terminate
concurrently.
18.2 [ * ].
18.3 Rights Upon Termination.
(a) In the event of any termination of this Agreement, Articles
1, 6, 9, 13, 15, 16, 19, 20 and 21, and Section 18.3 shall survive.
(b) In addition, in the event of any valid termination of this
Agreement by MKE due to a material breach by Maxtor, MKE shall be entitled to
damages as awarded in arbitration pursuant to Section 19 ("Arbitration").
(c) In addition, in the event of any valid termination of this
Agreement by Maxtor due to a material breach by MKE, Maxtor shall be entitled to
damages as awarded in arbitration pursuant to Section 19 ("Arbitration").
(d) This Section sets forth the sole remedy of a party in the
event of a material breach of this Agreement by the other party.
19. ARBITRATION.
This Agreement shall be governed in all respects by the laws of the
United States of America and by the laws of the State of California, excluding
its conflict of law provisions. This Agreement is prepared and executed in the
English language only and any translation of this Agreement into any other
language shall have no effect. All disputes, controversy or claim arising out of
or relating to this Agreement, or the breach, termination, or invalidity
thereof, shall be settled by arbitration in accordance with the International
Commercial Arbitration Rules of the American Arbitration Association. The place
of arbitration shall be Geneva, Switzerland. The
* Confidential material redacted and filed separately with the Commission.
12
17
language of the arbitration shall be English. The award rendered by the
arbitrator shall include costs of the arbitration, reasonable attorneys' fees
and reasonable costs for experts and other witnesses. Judgment on the award may
be entered in any court having jurisdiction. The parties agree that the
arbitrator shall have the authority to issue interim orders for provisional
relief, including, but not limited to, orders for injunctive relief, attachment
or other provisional remedy, as necessary to protect either party's name,
proprietary information, trade secrets, know-how or any other proprietary right.
The parties agree that any interim order of the arbitrator for any injunctive or
other preliminary relief shall be enforceable in any court of competent
jurisdiction. In addition, either party shall be free to seek provisional relief
from any court of competent jurisdiction, in order to protect that party s name
or proprietary rights, prior to or after the arbitration procedure set forth in
this Section.
Anything in this Agreement to the contrary notwithstanding, in no event
shall the failure to agree upon the prices of the Products and the minimum
quantities be subject to arbitration.
20. GOVERNMENTAL CONSENTS.
20.1 Compliance with Laws. All parties agree during the term of this
Agreement to comply with all applicable laws of any country or government
authority including, but not limited to Foreign Exchange and Foreign Trade Act
and Export Trade Control Order of Japan and administrative guidance prohibiting
use of products or technology for design or manufacture of nuclear weapons,
chemical weapons, biological weapons or missiles, or Export Administration
Regulations of the United States. The parties recognize and agree that products
and technology delivered or transferred from one party to the other party may be
subject to restrictions on export or re-export imposed by the United States
Department of Commerce or the Ministry of Economy, Trade and Industry of Japan.
21. MISCELLANEOUS.
21.1 Nonassignability. Except as specifically permitted by this
Agreement, neither party may assign, transfer or sublicense any of the rights or
obligations arising under this Agreement (including any affiliate or subsidiary
of a party) other than to a successor to its entire business by reason of merger
or sale of assets provided that the other party first receives written notice of
any such proposed merger or sale of assets and the intended successor in
interest of such proposed merger or sale of assets pursuant to such transaction
acknowledges in writing to be bound by the terms and conditions of this
Agreement, without the prior written consent of the other party, and any
attempted assignment without such consent shall be void and without effect.
21.2 Failure to Enforce. The failure of either party to enforce at any
time or for any period of time the provisions of this Agreement shall not be
construed to be a waiver of such provisions or of the right of such party to
enforce each and every such provision.
21.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, United States of America,
excluding its conflict of law provisions.
13
18
21.4 Severability. In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be unenforceable, the remaining portions of this Agreement shall remain in
full force and effect.
21.5 Notices. Any notice which any party desires or is obligated to give
to the other shall be given in writing and sent to the appropriate address shown
below or to such other address as the party to receive the notice may have last
designated in writing in the manner herein provided. Unless otherwise provided,
any notice required or permitted under this Agreement shall be given in writing
and shall be deemed effective (i) if personally delivered, at the time delivered
by hand, (ii) if delivered by facsimile transmission, upon confirmation of
transmission, (iii) if by courier, on the business day such courier guarantees
delivery, and (iv) if delivered by U.S. Mail, seven (7) business days after
deposit in the U.S. mail, postage prepaid, all properly addressed as follows:
Maxtor Corporation
000 XxXxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Copy to: General Counsel
facsimile: (000)000-0000
Matsushita Kotobuki Electronics
Industries, Ltd.
0-0 Xxxxxxx-Xxxxx
Xxxxxxxxx-Xxxx. Xxxxxx 000 - 0000, Xxxxx
Attention: President
facsimile: 011-81-(878) 511047
21.6 Entire Agreement. Except for the Master Agreement, this Agreement
and any attachments or exhibits hereto constitute the entire agreement among the
parties pertaining to the subject matter hereof, and any and all other written
or oral agreements existing between the parties are expressly canceled. Any
modifications of this Agreement must be in writing and signed by duly authorized
officers of all parties.
21.7 Force Majeure. In the event of any delay in performance or failure
of performance of obligations under this Agreement by either party due to any
causes arising from acts of God, war, mobilization, riot, strike, fire,
earthquake, flood, embargo, delay of carrier, power failure or attributable to
acts, events or omissions beyond the reasonable control of the party concerned,
such delay or failure of performance shall not be deemed a default and the party
so delayed or prevented shall be under no liability for loss or injury suffered
by the other party. Nothing in this paragraph shall affect the right of either
party to terminate this Agreement as otherwise provided herein.
14
19
21.8 LIMITATION OF LIABILITY. IN NO EVENT AND UNDER NO CIRCUMSTANCES
SHALL ANY PARTY UNDER THIS AGREEMENT BE LIABLE FOR ANY SPECIAL OR CONSEQUENTIAL
DAMAGES OR LOSS OF PROFITS OF THE OTHER PARTY OR PARTIES OR ANY EXPENDITURES,
COSTS OR INVESTMENTS MADE OR INSURED BY THE OTHER PARTY OR PARTIES AS PROVIDED
HEREIN.
21.9 Agency. This Agreement does not create a principal to agent,
employer to employee partnership, joint venture, or any other relationship
except that of independent contractors between Maxtor and MKE.
21.10 Headings. Headings to Paragraphs and Sections of this Agreement
are to facilitate reference only, do not form a part of this Agreement, and
shall not in any way affect the interpretation hereof.
21.11 Trading Company. Unless otherwise agreed to in writing by MKE and
Maxtor, MKE and Maxtor agree that either Maxtor will establish a "trading
company" (as hereafter defined) or establish a relationship with an existing
trading company acceptable to MKE, for the purpose of expediting the necessary
documentation for that shipment of Products and Spare Parts under this Agreement
and the importation of components and parts by Maxtor for MKE and may be
responsible pursuant to the specific terms and times of payment as provided for
elsewhere in this Agreement for the collection and payment of all monies due to
the appropriate party under this Agreement during the term of this Agreement and
any other functions necessary to carry out the business between Maxtor and MKE.
A "trading company" shall mean such organization existing, or to exist, which
is, or shall be, able to effect the functions described in the proceeding
sentence. At any time during the term of this Agreement, Maxtor shall have the
right to establish its own trading company to act as such in replacement of any
prior existing relationship, or Maxtor may change its relationship from a
non-Maxtor affiliated trading company to any other non-Maxtor affiliated trading
company, with the written consent of MKE, which shall not be unreasonably
withheld.
15
20
IN WITNESS WHEREOF, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written. Notwithstanding such execution, this Agreement shall become
effective only after obtaining required approval of the government of Japan.
MAXTOR CORPORATION
By: /s/ Xxxxxxx X Xxxxxx
-------------------------------
Name: Xx. Xxxxxxx X Xxxxxx
Title: President and CEO
MATSUSHITA KOTOBUKI
ELECTRONICS INDUSTRIES, LTD.
By: /s/ Tomiyasu Chiba
-------------------------------
Name: Xx. Xxxxxxxx Chiba
Title: President
16
21
SCHEDULE 1.10
LIST OF SUBSIDIARIES OF MAXTOR
Maxtor Asia Pacific Limited Hong Kong
Maxtor Disc Drives Pty Limited Australia
Maxtor Europe GmbH Germany
Maxtor Europe Limited United Kingdom
Maxtor International Sarl (2) Switzerland
Maxtor Europe SARL France
Maxtor Japan Limited Japan
Maxtor Korea Limited Republic of Korea
Maxtor Ireland Limited Ireland
Maxtor Peripherals (S) Pte. Limited Singapore
Maxtor Sales Private Limited Singapore
Maxtor Receivables Corporation California
Maxtor Thailand Limited Thailand
Maxtor Malaysia Sdn Bhd Malaysia
Maxtor Sub Bermuda
Maxtor Sub Gibraltar
Maxtor Sub Luxemburg
Maxtor Realty Corporation California
17
22
SCHEDULE 1.11
LIST OF SUBSIDIARIES OF MKE
1. Matsushita Kotobuki Electronics Industries Singapore Pte. Ltd. (Singapore)
2. PT. Matsushita Kotobuki Electronics Peripherals Indonesia (Indonesia)
3. Matsushita Kotobuki Electronics Peripherals of America Inc. (USA)
18
