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EXHIBIT 10.19
Dated the 9th day of July 1996
BARINET COMPANY LIMITED
and
IMS INTERNATIONAL MANUFACTURING
SERVICES (H.K.) LIMITED
*********************************************
LEASE
of
ALL THOSE Third Floor and Flat Roof appertenant thereto,
Fourth Floor, Fifth Floor, Portion of Roof and Eight Car
Parking Spaces on Xxxxxx Xxxxx xx Xxxx Xxxxx Xxxxxx,
00 Xxx Xxxx Street, Xxx Xxxx Bay, Kowloon.
*********************************************
REGISTERED in the Land Registry by
Memorial No.
on
REGISTERED in the Land Registry
by Memorial No. 7104804 p. Land Registrar.
on 11 June 1997
for Land Registrar
XXXXXXX XXXX & CO.
SOLICITORS
Room 1206, 12th Floor
ASIA STANDARD TOWER
00-00 XXXXX'X XXXX XXXXXXX
XXXX XXXX
Tel : 0000 0000
Fax : 0000 0000
Ref : DW/CN/538/96
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THIS LEASE made the 9th day of July one thousand nine hundred and ninety-six
B E T W E E N
(1) BARINET COMPANY LIMITED whose registered office is situate at 00xx Xxxxx,
Xxxx Xxxxxx Xxxxx, Xxxx Place, Xx. 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx
(hereinafter called the Landlord"); and
(2) IMS INTERNATIONAL MANUFACTURING SERVICES (H.K.) LIMITED (formerly known as
MAXTOR (HONG KONG) LIMITED) whose registered office is situated at 5th
Floor, Asia Trade Centre, 19 Xxx Xxxx Street, Xxx Xxxx Bay, Kowloon, Hong
Kong (hereinafter called "the Tenant"),
WHEREBY IT IS AGREED as follows:-
l. In consideration of the rents and the Tenant's covenants hereinafter
reserved and contained the Landlord HEREBY DEMISES to the Tenant ALL THOSE
premises more particularly described in the First Schedule hereto
(hereinafter called "the Premises") TO HOLD the same onto the Tenant for
the term specified in the Second Schedule hereto (hereinafter called "the
term") determinable as hereinafter provided YIELDING AND PAYING therefor
the rent set out in the Third Schedule hereto (hereinafter called "the
Rent"),
2. THE TENANT HEREBY COVENANTS WITH THE LANDLORD as follows:-
Outgoings
(1)
(a) To pay the Rent reserved hereby and any increase therein
in Hong Kong currency in the manner stipulated in the Third
schedule hereto and by autopay if demanded without any deduction
therefrom;
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(b) To pay rates charged on the Premises as assessed by the
Government.
(c) To pay and discharge all deposits and charges in respect of gas,
water, electricity and telephones as may be shown by the separate
meter or meters installed in the Premises or by accounts rendered
to the Tenant;
(d) To produce to the Landlord within a reasonable time on written
demand made by the Landlord receipts for rates gas water
telephone electricity charges paid by the Tenant;
(e) To pay to the Landlord (without prejudice to any other right or
remedy of the Landlord hereunder) on demand interest at the rate
of 4% per annum over the rate of 4% per annum over the rate from
time to time quoted by The Hongkong and Shanghai Banking
Corporation Limited as its prime or best lending rate for Hong
Kong Dollars in Hong Kong such interest to be calculated on a
daily basis in respect of any payment not paid on the due date
from the date upon which such payment ought to have been paid to
the actual date at payment. Landlord's Expenses (2) To pay on
written demand made by the Landlord all reasonable costs and
expenses (including without limitation thereof Solicitors' costs,
Surveyors', Architects, and Engineers' fee and bailiffs' costs)
properly incurred by the Landlord :(a) incidental to the
preparation and service of any notice under Section 58 of the
Conveyancing and Property ordinance or incurred in or in
contemplation of
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proceedings hereunder or thereunder save and except in
circumstances where forfeiture is avoided otherwise than by
relief granted by the court;
(b) resulting from all applications by the Tenant for any consent or
approval of the Landlord required by this Lease whether or not
the application is granted together with any stamp duties on any
licences and duplicates in connection therewith.
Compliance with Ordinances
(3) To obey and comply with and to indemnify the Landlord against the
breach of all ordinances, regulations, by-laws, rules and requirements
of any Governmental or other competent authority relating to the use
and occupation of the Premises and without prejudice to the generality
of the foregoing to obtain any licence approval or permit required by
any Governmental or other competent authority in connection with the
Tenant's use or occupation of the Premises prior to the commencement
of the Tenant's business and to maintain the same in force during the
currency of this tenancy and to indemnify the Landlord against the
consequences of a breach of this provision.
Repair
(4) Save and except as provided by Clause 3(3) below at all times during
the Term to keep the interior of the Premises and every part thereof
including without prejudice to the generality of the foregoing the
interior of the walls ceilings and floors, the windows, internal and
external window frames and doors thereof and the Landlord's fixtures
fittings and installations in the Premises in good and tenantable
repair and
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condition (fair wear and tear damage caused by structural latent or
inherent defects excepted) and in whole or in part to renew the same
as necessary and to paint the exterior of the Premises as and when the
Tenant considers reasonable and if the Tenant is the tenant of any
roof of the Building to carry out routine maintenance to such roof but
not major or structural repairs or repairs caused by inherent or
latent defects.
Repair of Electrical Installations
(5) At all times during the term to repair or replace any electrical
installation or wiring installed by the Tenant if the same becomes
dangerous or unsafe or if so reasonably required by the Landlord or by
the relevant utility company and in so doing the Tenant shall use only
a contractor approved by the Landlord in writing for the purpose (such
approval not to be unreasonably withheld or delayed). The Tenant shall
have the right to increase the electrical loading at the Premises and
for this purpose will have the right to build an additional
transformer room in the Premises subject to compliance with all
regulations and requirements of the relevant utility company in
connection therewith for this purpose the Tenant will use only a
contractor approved by the Landlord as aforesaid. The Tenant shall
permit the Landlord or its agent to test the Tenant's wiring in the
Premises at any time upon request being made. The Tenant shall
indemnify the Landlord and hold it harmless against any cost claim
damage or proceedings resulting from or attributable to any
malfunction or disrepair of the electrical installation or apparatus
installed by the Tenant in the Premises.
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Drains and Sewage
(6) Not to allow to pass into the sewers drains or watercourses serving
the Building any noxious or deleterious effluent or other substance
which may cause an obstruction in or injury the said sewers drains or
watercourses and in the event of such obstruction or injury if
required by the Landlord at the Tenant's cost forthwith to remove such
obstruction and to make good all damage to the satisfaction of the
Landlord and if the Tenant shall refuse to remove such obstruction and
make good any damage, the Landlord shall have the right to perform the
matters aforesaid and claim all costs, expenses and damages properly
incurred or sustained by the Landlord from the Tenant.
Landlord's Access
(7)
(a) To permit the Landlord and its agents upon prior appointment
(except in case of emergency) with all necessary workmen
materials and appliances at all reasonable times during normal
business hours (or at any time in case of emergency) to enter
upon and examine the condition of the Premises and thereupon the
Landlord may serve upon the Tenant a notice in writing specifying
any defect decay redecoration or want or reparation which is the
responsibility of the Tenant hereunder to be remedied and require
the Tenant promptly after service of such notice commence and
thereafter proceed diligently with the execution of which repairs
and redecoration then to permit the Landlord with all necessary
workmen materials and appliances to enter
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upon the Premises and execute such repairs and redecoration and
the cost thereof (which expression shall include without
limitation all necessary and reasonable legal costs and
Surveyors' fees and other reasonable expenditure whatsoever
attendant thereon) shall be paid by the Tenant to the Landlord on
demand and be recoverable as a debt;
(b) To permit the Landlord upon prior appointment (save that no such
notice shall be required in the case of any emergency) and its
agents and other persons authorized by them with all necessary
workmen materials and appliances at all reasonable time during
normal business hours (or at any time in case of emergency) to
enter upon the Premises to execute repairs on any part of the
Building or the fixtures fittings or appliances therein which is
the responsibility of the Landlord hereunder and for the purpose
of executing the same to erect scaffolding or to place ladders
upon the Premises or any part thereof causing as little
inconvenience and physical damage as practicable and all such
damage thereby occasioned to the Premises being made good by the
Landlord.
Restriction on Alterations
(8)
(a) Not without the prior written consent of the Landlord (such
consent not to be unreasonably withheld or delayed) and the
approval of all relevant Governmental authorities if necessary to
build or erected any building on the Premises or on any part
thereof and not without such consent as aforesaid to
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make or to permit or suffer to be made any addition or alteration
to the Premises or to any part thereof or to any fixtures and
fittings therein of any nature whatsoever whether structural or
non-structural and at the request of the Landlord forthwith to
demolish and remove any building addition or alteration built
erected or made in breach of the foregoing covenant and to
restore the Premises and the fixtures and fittings thereof to
their previous condition to the satisfaction of the Landlord;
(b) Not without the prior written consent of the Landlord (such
consent not to be unreasonably withheld or delayed) and the
approval of all relevant Government authorities if necessary to
alter or permit or suffer to be altered any main electricity
cable gas or water pipe or drain or heating apparatus not cut
maim or injure or permit or suffer to be cut maimed or injured
any of the walls or floors of the Premises or any part of the
main structure of the Building or other structural members
thereof nor attach anything to any structural wall of the
Premises;
(c) If notwithstanding the foregoing terms and provisions the
Landlord shall at its sole discretion decide to permit the Tenant
to make any addition or alteration to the Premises or the
fixtures and fittings and the Tenant shall carry out such works
then at the expiration or sooner determination of the term the
Tenant will if required by the Landlord at the Tenant's own cost
reinstate and make good to the satisfaction of the Landlord the
Premises and the fixtures and fittings and restore the same as if
such addition or alteration (or such of them
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as may be specified by the Landlord) had not been made and to pay
the reasonable expenses properly incurred by the Landlord
incidental to the superintendence of such reinstatement and
making good as well as for all reasonable costs expenses and
losses incurred by the Landlord due to the failure of the Tenant
to comply with this provision.
Alienation
(9) Not to assign underlet mortgage charge or part with possession of or
transfer the Premises or any part thereof or any interest therein nor
permit or suffer any arrangement or transaction whereby any person who
is not a party to this Lease obtains the use or possession of the
Premises or any part thereof regardless of whether any rental or other
consideration is given provided that the Tenant shall have the right
with the consent of the Landlord (such consent not to be unreasonably
withheld or delayed) to license or part with possession of the
Premises or part thereof to its associated companies or subsidiary
companies or to sublet the whole or any part or parts of the Premises
provided further that if the rent actually received from any sub-
tenant in respect of the Premises or any part thereof exceeds the rent
payable by the Tenant in respect of that part the Tenant shall pay to
the Landlord the amount of such excess less all costs and expenses
incurred by the Tenant in connection with the subletting or in
connection with enforcing the terms of any sub-tenancy agreement
against any sub-tenant.
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Notice
(10) As soon as practicable on receipt of notice (whether by advertisement
or otherwise) to give full particulars to the Landlord of any
permission notice order claim or proposal for a notice order or claim
made given or issued by Government affecting the Premises and if so
issued by Government affecting the Premises and if so required by the
Landlord to produce such permission notice order claim or proposal for
a notice order or claim to the Landlord.
Use of the Premises
(11)
(a) Not to use or permit or suffer to be used the Premises or any
part thereof for any illegal or immoral purpose or for any
dangerous noxious noisy or offensive trade business or purpose
whatsoever;
(b) To use the Premises for such purposes as set out in the
Occupation Permit relating to the Premises and in the Crown Grant
document under which the Premises are held fro the Crown provided
that the Tenant shall have the right, with the consent of the
Landlord (such consent not to be unreasonably withheld) to apply
to the relevant government authorities for permission to change
the use or uses of the Premises and the Tenant shall pay all
costs and expenses incidental to such application and to carry
out and perform all conditions imposed by the relevant government
authorities on the grant of such change of user of the Premises
or parts thereof;
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(c) To obtain and renew all necessary consents required by law
relating to the use of the Premises and not to breach the terms
of such consents and to fully indemnify the Landlord for any
failure of the Tenant to use the Premises for the permitted
purposes and/or the breach by the Tenant of any terms of the
Crown Grant and/or Occupation Permit and/or waiver or other
modification letter(s) relating to the Premises.
Access
(12) Not to do any act or thing whereby any entrance or exit of the
Building or any of the common parts thereof which the Tenant is
authorized to use may be impeded or hindered in any way whatsoever.
Floor Loading
(13) Not to do or bring or permit to be done or brought in or upon the
Premises anything which may put on the Premises any weight stress or
strain in excess to that which the same are designed to bear.
Nuisance
(14) Not to do or permit to suffer anything in or upon the premises or
any part thereof or on any Property over which the Tenant exercises
rights which may be or become a nuisance or annoyance to the Landlord
or the tenants owners or occupiers of other premises in the Building.
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Landlord's Insurance
(15)
(a) Not to do or allow to be alone anything whereby any insurance for
the time being effected in respect of the Premises or the
Building (including without prejudice to the generality of the
foregoing insurance against loss of rent in respect of the
Premises) or any part thereof may, be rendered void or voidable
or be in anyway affected nor do or allow to be done anything
whereby any additional premium may become payable for any
insurance in respect of the Premises or the Building and to
comply with all reasonable recommendations of the insurers as to
fire precautions relating to the Premises and to repay to the
Landlord on demand all reasonable sums paid by the Landlord by
way of increased premium or premia and all reasonable expenses
incurred by the Landlord in and about any renewal of such policy
or policies arising from or rendered necessary by a breach of
this sub-clause;
(b) In the event of the Premises or any part thereof being destroyed
or damaged to give notice in writing thereof to the Landlord
forthwith on the happening of such event.
Storage
(16) Not to bring keep store or suffer to be brought, kept or stored in or
upon the Premises or any part thereof any petrol or petroleum products
or any other dangerous explosive or inflammable substances whatsoever
without the appropriate consents from the relevant authorities
provided that the Tenant shall be entitled to store such products or
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substances in such quantities as are permitted by the relevant
authorities and subject to any conditions imposed by the relevant
authorities (if any).
Signs and Placards
(17) Not to erect name signs at the entrance to or on the exterior of the
Premises or on the roof of the Building nor to affix place or exhibit
or permit or suffer to be affixed placed or exhibited to or upon the
exterior of the Premises or to or through any windows thereof or to
any part of the Building without all necessary consents from the
Government.
Landlord's signs
(18) To permit the Landlord at any time during the last three (3) months of
the term to affix and retain without interference upon any part of the
Premises a notice for reletting the Premises provided that the sign
does not interfere with the Tenant's own sign or its business and to
allow the Landlord during the last three (3) months of the term to
show the Premises to prospective purchasers or tenants upon prior
appointment with the Tenant and causing as little inconvenience as
possible to the Tenant.
Delivery-up
(19) At the determination of the term at the Landlord's indiscretion either
to remove all fixtures and fittings installed by and on behalf of the
Tenant in the Premises and to make good all damage caused by their
removal and to yield up the same or (provided the Landlord agreed such
agreement not to be unreasonably withheld or delayed) to yield up the
Premises with all fixtures and fittings which have been affixed to the
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Premises by or on behalf of the Tenant and which have become part of
the Premises with vacant possession and in accordance with the
agreements terms and provisions of this Lease.
Crown Lease
(20) Not to breach the terms of the Crown Lease relating to the Building
and to indemnify the Landlord against any breach of the term of this
Clause.
3. LANDLORD'S AGREEMENTS
The Landlord HEREBY AGREES with the Tenant as follows:
Quiet Enjoyment
(1) That the Tenant paying the Rent hereby reserved and performing and
observing the several covenants on the part of the Tenant herein
contained shall and may peaceably and quietly hold and enjoy the
Premises during the term without any interruption by the Landlord or
any person rightfully claiming through under or in trust for the
Landlord.
Crown Rent and Property Tax
(2) To pay the Crown Rent and Property Tax in respect of the Premises.
Maintenance
(3) To put and keep the exterior of the Building the roof (save and except
as referred to in Clause 2(4)), foundations, main structure and main
drains pipes cables and services pipes cables and services thereof and
the lifts the air-conditioning system the common parts and common
services and facilities thereof in good and substantial repair and
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condition and maintain the same save and except where any damage is
caused by the act or neglect of the Tenant unless the same is covered
by the Landlord's insurance Provided that in the event that the
Landlord sells a portion of the Building and enters into a Deed of
Mutual Covenant under which the exterior root foundations and main
structure of the Building and main drains pipes cables and services
thereof and the common parts and common services and facilities
thereof are maintained and repaired than the Landlord's obligations in
relation to the repair of any of the items referred to in this Clause
then the Landlord's liability hereunder shall be reduced accordingly.
(4) In the event that the Landlord shall take up management of the
Building in accordance with Clause 4 (10) hereof.
(a) To provide put in repair and maintain adequate means of access to
and egress from the Premises (to the satisfaction of the Tenant)
with or without appliances and xxxxxxx together with the use of
such passenger and cargo lifts, escalators, driveways, ramps,
entrances, loading and unloading bays, staircases, landings and
corridors, lift lobbies and common parts and facilitates in the
Building as may be necessary for the Tenant's business in and use
and enjoyment of the Premises.
(b) The Landlord agrees to ensure that the tenants licensees or
occupiers of other part(s) of the Building will not interfere
with or hinder the rights of the Tenant hereunder or the carrying
out of the Tenant's business in the Premises or the enjoyment
and/or use of the Premises under this Agreement and the Landlord
agrees to take such action as may be necessary against such other
tenants
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licensees or occupiers and to incorporate such duties conditions
and obligations in the tenancy agreements or licenses to be
entered into with other tenants licensees or occupiers so as to
ensure the Tenant will continue to enjoy the use of the Premises
and the rights and protection provided by this Agreement.
(c) To provide such management services for the Building as are
consistent with the running of an industrial building of similar
quality in the vicinity including, but without limitation to the
foregoing, the repair and maintenance of all the access ways,
driveways, ramps, the common parts, common services and
facilities of the building and the disposal of refuse and rubbish
from the Building.
(d) To maintain adequate ventilation and lighting for the common
parts and areas of the Building.
(e) To provide a caretaker throughout the day and night and to lock
up the Building in accordance with the House Rules prevailing in
force from time to time of the Building. During such times as the
Building is being locked up as aforesaid, persons or vehicles
entering into or leaving the Building would have to identify
themselves to the caretaker.
(f) To allow the Tenant the right to continue to maintain and/or to
erect a sign and the Tenant's logo on the external walls of the
Building (as currently affixed) and occupying an area of 10 feet
by 35 feet and a slat on the notice
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board/company directory/board to display its name on the main
lift lobby of the Building and on the lift lobbies of each floor
of the Premises.
4. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as follows:
Re-entry
(1) Subject to Section 58 of the Conveyancing and Property Ordinance, if
the Rent hereby reserved or any part thereof shall at any time be
unpaid after the due date thereof (wither formally demanded or not) or
if any of the agreements or obligations on the part of the Tenant
herein contained shall not be performed and observed or if the Tenant
(being an individual) or being individuals any one of them) shall
become bankrupt or if the Tenant (being a company) shall enter into
liquidation whether compulsory or voluntary (save for the purpose of
amalgamation or reconstruction of a solvent company) or if a receiver
shall be appointed of the Tenant's undertaking or if the Tenant shall
enter into an agreement or make any arrangement with creditors for
liquidation of the debts of the Tenant by composition or otherwise or
suffer any distress or process of execution to be levied on the goods
of the Tenant then and in any such case it shall be lawful for the
Landlord at any time thereafter to re-enter upon the Premises or any
part thereof in the name of the whole and thereupon the term shall
absolutely determine but without prejudice to any right of action of
the Landlord in respect of any antecedent breach of any of the
agreements on the part of the Tenant herein contained. All costs and
expenses of and incidental to any demand for rent or any other sum
payable under these presents or actions or distraint for the recovery
of
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the same shall be paid by the Tenant on a full indemnity basis and
shall be recoverable from the Tenant.
Cesser of Rent
(2) In the event of the Premises or any part thereof being damaged or
destroyed by any cause or made inaccessible save and except the act
neglect or default of the Tenant so as to be unfit for occupation or
use or inaccessible then the Rent reserved hereby and other charges
payable hereunder or a fair proportion thereof according to the nature
and extent of the damage sustained shall cease to be payable by the
Tenant from the date of such damage or destruction until the Premises
are restored fit for occupation and use and accessible PROVIDED that
there shall be no cesser of Rent if any insurance policy affected by
the Landlord shall have been rendered void or voidable in whole or in
part by the act or default of the Tenant or any person deriving title
under the Tenant or if the moneys payable under any such policy in
respect of loss of rent shall not be paid to the Landlord by virtue of
the act or default of the Tenant and PROVIDED that the Landlord shall
be under no obligation to reinstate the Premises or any part so
damaged or destroyed but if the Premises have not been reinstated
within two months of the date of occurrence of such damage or
destruction rendering them unfit for occupation or use or inaccessible
the Tenant shall have the right to terminate the term on giving
written notice to the Landlord.
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Deposit
(3)
(a) The Tenant shall deposit with the Landlord the sum and further
sums (if any) specified in the Fourth Schedule hereto
(hereinafter called "the deposit") to secure the due observance
and performance by the Tenant of the agreements, stipulations and
conditions herein contained and on the Tenant's part to be
observed and performed. The deposit shall be retained by the
Landlord for its own use and benefit throughout the Term free of
any interest to the Tenant with power for the Landlord, without
prejudice to any right or remedy hereunder, to deduct therefrom
the Rent and other charges payable hereunder which is in arrear
or any loss or damage sustained by the Landlord and properly
payable by the Tenant as a result of any breach or non-observance
or non-performance by the Tenant of any of the agreements,
stipulations or conditions herein contained. In the event of any
deduction being made by the Landlord from the deposit in
accordance herewith, the Tenant shall on demand by the Landlord
forthwith further deposit the amount so deducted. In the event of
any deduction(s) so made by the Landlord, the Landlord shall
provide in writing an itemized account of all such deductions
made from the deposit within 10 business days after each such
deduction.
(b) Subject as aforesaid, the deposit or a proportionate part thereof
as the case may be shall be refunded to the Tenant by the
landlord without interest within fourteen (14) days after the
expiration or sooner determination of the term and
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the delivery of vacant possession to the Landlord or within
fourteen (14) days of the settlement of the last outstanding
claim by the landlord against the Tenant in respect of any
breach, non-observance or non-performance of any of the
agreements, stipulations or conditions herein contained and on
the part of the Tenant to be observed and performed, which ever
is the later.
(c) Without prejudice to sub-clause (a) of this Clause, the Tenant
shall not be entitled to apply and/or direct the landlord to
apply the deposit towards the payment of any money due and
payable by the Tenant to the landlord hereunder.
(d) Notwithstanding the foregoing, if the Landlord shall go into
liquidation (whether voluntary or compulsory) or if a receiver
shall be appointed over the whole or any part of the Premises
then the Tenant shall forthwith be entitled to the return of the
said deposit in full (subject to such lawful deductions which by
that time shall have been lawfully made by the Landlord
therefrom) and/or shall be entitled to apply the said deposit in
full against any demand or claim for rent (or other sums payable
hereunder by the Tenant) made by the Landlord or any such
liquidator or receiver.
Non-liability of Landlord
(4) Except as provided herein and so far as permitted by law the Landlord
shall not be liable for any loss damage or inconvenience suffered or
incurred by the Tenant or occupier of the Premises or any of its or
their respective servants employees licensees invitees or visitors or
by any other person or persons by reason or in consequence of
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any act neglect default or omission of any tenant or occupier of any
other premises in the Building.
Waiver
(5) The acceptance of Rent by the landlord shall not be deemed to operate
as a waiver by the landlord of any right to proceed against the Tenant
in respect of any breach non-observance or non-performance of the
convenants or obligations on the part of the Tenant herein contained.
Premium
(6) The Tenant acknowledges that no fine premium key money or
consideration other than that details of which are contained in this
Lease has been paid by the Tenant to the Landlord for the grant of
this Lease.
Rent to be paid in advance
(7) For the purpose of the landlord and Tenant (Consolidation) Ordinance
the Rent reserved hereby re in arrears if not paid in advance as
herein provided.
Verbal warranties
(8) This Lease sets out the full agreement reached between the parties and
no other representations have been made or warranties given relating
to the landlord or the Tenant or the Building or the Premises and if
any such representation or warranty has been given or implied the same
is hereby waived unless the same has been made in writing and signed
on behalf of the landlord or the Tenant.
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Notices
(9) Any notice in writing to be served hereunder shall if to be served on
the Tenant be sufficiently served if addressed to the Tenant and sent
by prepaid post to or delivery by messenger at the Tenant's registered
office and if to be served on the landlord be sufficiently served if
addressed to the landlord and sent by prepaid post to or delivered by
messenger at the office of the landlord given above or at the
landlord's registered office. A notice sent by post shall be deemed to
be given when in due course of post it would be delivered at the
address to which it is sent. A notice delivered by messenger shall be
deemed to be given upon delivery.
(10) The Tenant shall itself be responsible for management of the Building
at their own costs (latent inherent and structural defects expected)
until the Landlord shall have agreed to enter into lease(s) tenancies
licenses and/or agreements with other tenant(s) lessees licensees or
other persons to occupy use or share any other part(s) of the Building
not hereby demised to the Tenant whereupon the Landlord is required to
give to the Tenant not less than one month prior notice in writing to
take over management of the whole Building with effect from the date
of such occupation use or sharing of the Building or any part thereof.
The management fees payable by the Tenant for management services to
be rendered by the Landlord or the Manager appointed by it shall
initially be in the sum of appointed by it shall initially be in the
sum of HK$57,245.00 per month during the period commencing the date
when the landlord takeover management of the Building as aforesaid to
31st December 1997 which shall be payable in advance on the first day
of each calendar month and is
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subject to annual increment by the Landlord or the Manager by giving
to the Tenant one month prior written notice provided that such
increase shall be accompanied by a memorandum setting out the reasons
for the increase and provided that such fees or charges shall not be
increased more than once in each calendar year.
(11) the Tenant hereby covenants not to do any act or thing whereby the
staircase giving access to and egress from the portion of the Roof of
the Building not demised to the Tenant (which staircase is shown
colored pink on the roof plan annexed hereto) shall be obstructed or
hindered in any way whatsoever.
(12) Notwithstanding anything herein contained to the contrary at any time
after 1st January 1998 the Tenant shall be entitled to terminate this
Lease by (i) giving to the Landlord not less than six months' notice
in writing or paying six months' rent in lieu of notice and (ii)
paying to the Landlord by way of liquidated damages a lump sum
equivalent to the then prevailing one month rent whereupon this Lease
will cease and determine at the expiration of the said notice but
without prejudice to the rights or claims of either party against the
other in respect of any antecedent breaches.
5. Costs
Each party shall pay its own costs of and incidental to the
preparation and completion of this Lease but the stamp duty and
registration fees on this Lease and its duplicate shall be borne by
the parties hereto in equal shares.
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6. Interpretation
(a) In this Lease if the context permits or requires words importing the
singular number shall include the plural number and words importing
the masculine feminine or neuter gender shall include the other or
others of them;
(b) the headings contained in this Lease are for convenience only and
shall not be referred to in the construction or interpretations of
this Lease;
(c) where there are two or more persons included in the expressions "the
Tenant" or "the Landlord" then all convenants by the obligations of
the Tenant or the Landlord as the case may be shall be deemed to be
made and given by such persons jointly and severally;
(d) references to any ordinance herein contained shall be deemed to refer
to any modification or reenactment thereof for the time being in
force.
AS WITNESS the hands of the parties hereto the day and year first above
written.
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FIRST SCHEDULE
The Premises
ALL THOSE Third Floor and Flat Roof appurtenant thereto, Fourth Floor, Fifth
Floor, portion of Roof and eight Car Parking Spaces on Xxxxxx Xxxxx xx Xxxx
Xxxxx Xxxxxx, 00 Xxx Xxxx Street, Xxx Xxxx Bay, Kowloon which are more
particularly shown and coloured yellow on the Ground Floor Plan, Third Floor
Plan, Fourth Floor Plan, Fifth Floor Plan and Roof Plan attached hereto.
SECOND SCHEDULE
The term
Two years commencing from 1st January 1997 to 31st December 1998 with an option
to renew for a further term of two years which option is more particularly
described below:
Option To Renew
(i) The Tenant shall be entitled to an option to renew this Agreement for
another term of two (2) years from the expiry date of the term
(hereinafter called "the renewal period").
(ii) The above option
(a) shall be subject to there being no outstanding breaches by the Tenant
of the terms, stipulations, obligations and conditions contained in
this Lease during the term; and
(b) shall be exercised by notice in writing served on the landlord not
less than three (3) months and not more than six (6) months prior to
the date on which the term is due to expire.
(iii) The renewal period shall be held under the same terms and conditions as
are contained in this Agreement save and except for (a) the provisions of
this Clause and (b) the rent payable for
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the renewal period ("the revised rent") which shall be determined in
accordance with subClause (iv) below.
(iv) The revised rent shall be agreed by the landlord and Tenant not earlier
than 60 days and not later than 30 days before the expiry of the term but
in the event that they fail so to do then either party shall, in default
of agreement in the meantime either upon the amount of the revised rent or
upon the appointment of an independent Surveyor to determine the revised
rent, be entitled to request the President for the time being of the Hong
Kong Institute of Surveyors to appoint an independent Surveyor to
determine the same as an expert and not as an arbitrator and his decision
shall be final and finding on the parties hereto. The fees payable to such
independent Surveyor in respect of, and the other costs (if any) involved
in, any determination made in pursuance of this Clause shall be borne by
the parties in equal shares.
(v) The revised rent shall be the prevailing market rent per month at which
the Premises might reasonably be expected to be let without a premium on
the open market by a willing landlord to a willing tenant it being assumed
that the Premises are to be let with vacant possession on the same terms
as this Agreement (save this Clause) and in the same state of repair and
condition as the Premises are then in at the said expiry date for a term
of two years commencing on the said expiry date.
(vi) If at the said expiry date the amount of the revised rent shall not for
any reason have been determined in accordance with the provisions of this
Clause then the Tenant shall continue to pay on account thereof the same
monthly rent as was last payable under the term created by this Agreement
but so that the revised rent in respect of the period between the said
expiry
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27
date and the date of determination of the revised rent shall become due
and payable as soon as it is so determined and the Tenant or the Landlord
shall after notification of the revised rent so determined forthwith pay
to the Landlord or the Tenant (as the case may be) any excess or
shortfall (if any) of the revised rent over or below the rent already
paid by the Tenant in respect of the said period.
(vii) The Landlord and the Tenant shall cause a memorandum containing details
of the further term and the revised rent determined pursuant to this
Clause to be endorsed on this Agreement and the counterpart thereof. The
stamp duty payable on such endorsement shall be borne by both parties in
equal shares and each party shall pay its own legal costs in relation to
the preparation, completion and execution of such endorsement.
(viii) Notwithstanding any of the foregoing, if the revised rent as determined
by the Surveyor is higher than that anticipated by the Tenant, the Tenant
may within one month of receipt of the notification of the amount of the
revised rent, give not less then 30 days written notice to the landlord
to the effect that the Tenant will deliver up vacant possession of the
Premises to the Landlord and this Lease (as may be extended) will
therefore be terminated on the date of delivery of vacant possession as
stated in the Tenant's notice as aforesaid.
THIRD SCHEDULE
The Rent
HONG KONG DOLLARS FIVE HUNDRED AND NINETY-SEVEN THOUSAND FIVE HUNDRED AND SIXTY
ONLY (HK$597,560.00) per month payable in advance on the first day of each
month.
-00-
00
XXXXXX XXXXXXXX
Xxxxxx Xxxxxxx
XXXX XXXX DOLLARS ONE MILLION ONE HUNDRED AND NINETY-FIVE THOUSAND ONE HUNDRED
TWENTY ONLY (HK$1,195,120.00) being two months' rental for the term.
SIGNED BY )
)
)
--------------------------------------- )
for and on behalf of the Landlord )
whose signature(s) is/are verified by: )
SIGNED BY )
)
)
--------------------------------------- )
for and on behalf of the Tenant )
)
in the presence of: )
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EXHIBIT 10.12
MANUFACTURING SERVICES AGREEMENT
This Manufacturing Services Agreement ("Agreement") is entered into by
and between Maxtor Corporation, a Delaware corporation, with its principal place
of business at 000 Xxxxx Xxxx Xxxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000, X.X.X.
("Maxtor") and International Manufacturing Services, Inc., a Delaware
corporation, with its principal place of business at 000 Xxxxx Xxxx Xxxxxxx, Xxx
Xxxx, Xxxxxxxxxx 00000 X.X.X. ("IMS"). This Agreement is effective as of May 16,
1996 ("Effective Date").
RECITALS
WHEREAS, Maxtor wishes to procure certain products and manufacturing
services from IMS;
WHEREAS, IMS is willing to provide such products and services on the
terms and conditions set forth below;
WHEREAS, concurrent with the execution of this Agreement, Maxtor and IMS
will close certain related transactions set forth in that certain
Recapitalization Agreement dated as of May 16, 1996 and that certain Redemption
Agreement and Stockholders Agreement of even date therewith (the "Related
Agreements");
NOW THEREFORE, in consideration of the mutual promises and covenants set
forth herein and in the Related Agreements, the parties agree as follows:
AGREEMENT
1. Product Appendix. IMS will sell and Maxtor will purchase the products
set forth in Exhibit A, as amended from time to time by mutual agreement
("Products"). For each Product, Maxtor will specify, from time to time, (i) a
xxxx of materials listing the components of the Product; (ii) which components
are to be procured by IMS and which are to be consigned to IMS by Maxtor; and
(iii) approved vendors from whom IMS must source particular components. The
parties shall agree in writing on any Product-specific tooling (manufacturing or
test) and any other equipment which is required to be acquired by IMS solely for
use in manufacturing or testing such Product, along with the financial and
ownership arrangements for such tooling and equipment. IMS shall not change any
vendor of a Product component or any manufacturing process for any Product
without Maxtor's prior written approval.
2. Orders and Forecasts. Every fiscal month, Maxtor shall issue to IMS
binding purchase orders ("Orders") for Products, covering a thirteen (13) week
period from such issue date and a nonbinding forecast for an additional
subsequent thirteen (13) week period. No Order shall be binding upon IMS unless
accepted by IMS in writing, subject to Section 7.3 ("Sales Commitment"),
provided
30
that if such written acceptance is not received by Maxtor within five (5)
working days from date of Order issuance, said Order shall be deemed accepted.
3. Purchase Price. Purchase prices under this Agreement are set forth in
Exhibit A as amended from time to time by both parties in writing. Purchase
prices will be FOB IMS' applicable manufacturing facility and do not include any
foreign, federal, state, local or other taxes or duties or charges of any kind
that may be applicable. When IMS has the legal obligation to collect such taxes,
the appropriate amount (excluding taxes based on IMS' net Income) will be added
to Maxtor's invoice and paid by Maxtor unless Maxtor provides IMS with a valid
tax exemption certificate authorized by the appropriate taxing authority. IMS
agrees to keep its prices competitive and shall use reasonable commercial
efforts to achieve ongoing cost reductions and to lower prices proportionately.
The parties shall meet at least once a quarter, and more often if appropriate in
the reasonable judgement of either party, to negotiate price changes. At such
meetings, IMS will disclose to Maxtor all cost elements related to the Products.
4. Payment Terms. Payment terms shall be net thirty (30) days from
receipt of invoice by Maxtor. All invoices shall be paid in U.S. dollars. If IMS
terminates this Agreement for cause pursuant to Section 14 ("Term and
Termination"), all outstanding invoices will automatically be accelerated and
will become immediately due and payable.
5. Shipping Terms, etc.
5.1 Shipping Terms. All Products shall be packed for shipment in
accordance with reasonable industrial practice and marked for shipment to
Maxtor's designated shipping destination and delivered to Maxtor's carrier agent
FOB IMS' applicable manufacturing facility. IMS will obtain Maxtor's written
approval prior to any change from IMS' present packaging. IMS will xxxx all
containers with necessary lifting, handling and shipping information and with
Order information, date of shipment and the names of the consignee and
consignor. An itemized packing list will accompany each shipment which shall
include (i) Order information, and (ii) the description, part number, revision
level and quantity of the Products so shipped. RISK OF LOSS SHALL PASS TO MAXTOR
AT IMS' SHIPPING LOCATION UPON DELIVERY TO MAXTOR'S CARRIER AGENT. Maxtor shall
select the carrier. All freight, insurance and other shipping expenses,
including without limitation any special packaging expenses, shall be paid by
Maxtor. Delivery shall not occur until IMS has obtained any export license or
other official authorization necessary for export of the Products. Export
licensing shall be the sole responsibility and at the sole expense of IMS.
5.2 Miscellaneous. Maxtor's Order number must appear on all invoices,
packing lists and bills of lading and shall appear on each package, container or
envelope on each shipment. Either an invoice or delivery order may be used when
making deliveries, with each set containing three (3) copies. A complete packing
list specifying Maxtor's applicable Order number, quantity of goods shipped and
part number shall be enclosed with each shipment. Bills of lading shall be
mailed in triplicate to the destination address shown on the face of each Order,
or to the consignee of the Order, on the day shipment is made.
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6. Order Cancellation and Rescheduling.
6.1 Rescheduling. Maxtor may gives notice to IMS, either by facsimile
transmission, in other written form, or orally with follow-up written
confirmation, requesting rescheduling of Products for which purchase orders have
been accepted by IMS. IMS shall reply within two (2) working days. The following
rules shall apply based on the number of calendar weeks notice IMS is given
prior to the scheduled shipment date:
Time Prior to Delivery Limits on Rescheduling
--------------------------------------------------------------------------------
up to [*] [*]
[*] weeks [*]
[*] weeks [*]
[*] weeks [*]
Maxtor's request for new ship date(s) more than ninety (90) days beyond the
original ship date(s) shown on the affected purchase order shall be deemed a
cancellation of the original purchase order governed by Section 7.2. If Maxtor's
reschedule request represents an acceleration or increase, IMS will use its best
efforts to meet the requested delivery dates.
6.2 Cancellation. Any purchases of material by IMS shall be solely for
the account of IMS, except for raw materials detailed in the bills of materials
for the corresponding Products. IMS shall not purchase any materials to be
consigned by Maxtor. Maxtor shall not be responsible for excess and obsolete
inventory which is not covered by a Maxtor Purchase Order or other written form
of authorization from Maxtor. Maxtor shall be responsible for exposures caused
by EOL, rescheduling and engineering changes where IMS has purchased property
under written authorization from Maxtor according to lead-time and within the
cancellation window on the attached Exhibit C. Beyond that, IMS shall use
reasonable commercial efforts to mitigate the costs incurred by IMS on account
of any such cancellation, and any and all resulting liability of Maxtor. Once
formal notification of cancellation has been received, IMS shall promptly cease
all efforts in fulfillment of canceled Orders and shall promptly cancel orders
to suppliers (in consultation with Maxtor where a cancellation penalty may be
incurred). At the option of IMS, Maxtor shall purchase all or any portion of the
materials purchased by IMS consistent with raw material lead times, and within
the cancellation windows in Exhibit C unless Maxtor has provided written
authorization to exceed the cancellation window. Maxtor must settle all valid
claims from IMS regarding surplus inventory within forty-five (45) days of
receipt of IMS' written demand setting for the grounds of the claim in
reasonable detail. The foregoing, together with the remedies set forth in
Section 7.1 ("Purchase Commitment"), shall be IMS' sole and exclusive remedies
for any canceled Orders. The foregoing remedies shall also apply to Products
manufactured by IMS for contractors of Maxtor named on Exhibit D, which Exhibit
may be amended by Maxtor from time to time.
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32
6.3 Product Mix Changes. It is understood that market conditions or
requirements by Maxtor's customers may require changes in Product mix and it
is anticipated that such changes may occur frequently. IMS, therefore, grants to
Maxtor the right at any time to make changes to the Product mix without penalty
to the extent such changes do not materially alter IMS' raw materials
requirements, as long as such changes are made more than fifteen (15) days prior
to delivery. Maxtor and IMS agree to work together to respond to such changes in
a timely manner.
7. Purchase and Sale Commitments.
7.1 Purchase Commitment. Maxtor agrees to place Orders with IMS,
which Orders IMS shall accept, and Maxtor agrees to accept corresponding
conforming shipments from IMS aggregating as follows:
Period Quarterly Unit Volume
--------------------------------------------------------------------------------
Initial [*] period following the [*]
Effective Date
Second [*] period following the [*]
Effective Date
Third [*] period following the Effective [*]
Date
IMS' sole and exclusive remedies for Maxtor's failure to place any of the above
orders and/or Maxtor's cancellation of such Orders once placed shall be (i)
suspension during the first year following the Effective Date, until cure of
such failure, of the interest payments not yet paid and due under that certain
Twenty Million Dollar ($20,000,000) Seven Percent (7%) Senior Subordinated Note
issued at the closing of the Acquisition Transaction, provided that such unpaid
interest will be repaid in equal monthly installments during the thirteen (13)
months following cure of such failure, and (ii) if applicable, the remedies set
forth in Section 6.2 ("Cancellation"). All purchases of Products by contractors
of Maxtor named on Exhibit D shall be considered purchases of Products by Maxtor
for purposes of this Section 7 ("Purchase and Sale Commitments").
7.2 Condition of Purchase Obligation. Maxtor's commitment to purchase
the amounts set forth in Section 7.1 ("Purchase Commitment") is conditioned upon
IMS providing Products competitive in both price and quality. If Maxtor
qualifies, pursuant to the qualification criteria set forth in Exhibit E, which
criteria may be amended from time to time by Maxtor at its sole discretion, one
or more alternate suppliers of Products whose price or quality is more favorable
to Maxtor than IMS' price or quality and who are capable of meeting Maxtor's
quality and volume (in whole or in part) requirements, Maxtor shall so notify
IMS in writing. [*] Maxtor's purchase commitments set forth in Section 7.1
("Purchase Commitment") shall be reduced to the extent of Products as to which
IMS is not price or quality competitive.
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7.3 Sales Commitment. IMS agrees to accept Orders placed by Maxtor and
to manufacture and sell such Products to Maxtor in the amounts specified in
Section 7.1 ("Purchase Commitment") above. IMS acknowledges that due to the
primary source nature of the Products, it is important that IMS maintain the
ability to increase its manufacturing capacity upon Maxtor's reasonable request.
IMS shall provide for reasonable contingency plans, including but not limited to
double shifts and triple shifts of personnel, so as to expeditiously increase
IMS' manufacturing capacity to meet Maxtor's customer demand. [*] IMS will be
responsible for processing sufficient Product starts, procuring sufficient
inventory (except those components to be procured by Maxtor pursuant to Section
9 ("Product Materials")) and taking all other actions to provide Maxtor with the
quantity of Product set forth in accepted Orders.
8. Inspection and Acceptance.
8.1 Testing. IMS will ensure that each Product meets Maxtor
specifications and is tested prior to shipment in accordance with quality and
reliability testing methods and procedures for such Product as specified by
Maxtor from time to time. IMS will provide to Maxtor only those Products
conforming to the applicable test requirements unless IMS has obtained prior
written approval from Maxtor for any deviation from such requirements.
8.2 Acceptance. Maxtor shall inspect each shipment and return all
non-conforming units to IMS with a return authorization number obtained from IMS
with shipping cost to be borne by IMS. All returned Products must be accompanied
by a written notice describing with reasonable particularity any defects
rendering the Products non-conforming. IMS shall, at its expense, replace within
ten (10) business days of return all non-conforming Products or refund the
purchase price therefor. In addition to any such replacement and refund, IMS
shall promptly reimburse Maxtor for reasonable costs, expenses and fees incurred
by Maxtor as a result of non-conforming Products. Within ten (10) business days
of IMS' receipt of any non-conforming Product, IMS will perform failure analysis
and provide Maxtor with a failure analysis report and a corrective action plan
detailing the actions IMS shall take to avoid or minimize similar defects in the
future.
9. Consignment. Maxtor may consign to IMS certain component parts,
equipment and/or other materials (the "Materials") for use in assembling and
testing Products. IMS agrees to (1) receive shipments of Materials ordered by
Maxtor and designated for delivery to IMS, (2) perform incoming inspection and
testing of Materials as reasonably required by Maxtor (any such Maxtor-required
and Maxtor-unique testing to be at Maxtor's expense), (3) store and insure such
Materials until needed, (4) use such Materials solely for the benefit of Maxtor,
and (5) provide inventory and stocking reports to Maxtor. IMS shall provide such
services with respect to Materials stored by IMS for up to one hundred twenty
(120) days at no charge. The parties shall negotiate in good faith on
reimbursement to IMS for IMS' actual incremental costs incurred in connection
with storage of Material in excess of one hundred twenty (120) days. IMS shall
be responsible and liable for all Materials consigned by Maxtor to IMS, unless
IMS provides Maxtor within forty-eight (48) hours of arrival of any consigned
Materials with written notice and an accompanying receipt showing a discrepancy
between the amount and/or type of Materials actually received by IMS and the
amount and/or type consigned by Maxtor, as shown on applicable shipping
documents. Notwithstanding IMS' management and storage of the consigned
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Materials, Maxtor will retain all rights, title and interest to such Materials.
IMS agrees that all Maxtor consigned Materials are the property of Maxtor and
shall not mortgage, pledge, assign or borrow against such Materials or otherwise
create or attempt to create a security interest in the Materials. IMS will post
signs, make public filings, and take such other steps reasonably calculated to
notify third parties concerning Maxtor's ownership of such Materials. IMS agrees
to maintain fire and extended insurance, including all risk and earthquake
coverage, on the building containing and contents of the Materials in an amount
agreed upon by the parties. IMS shall name Maxtor as an additional assured with
respect to the contents of the Materials and shall, if required by Maxtor,
furnish certificates or adequate proof of the foregoing insurance. IMS will be
liable to Maxtor for damages for loss of, or injury to, the consigned Materials
caused by IMS' failure to exercise such care in regard to the Materials as a
reasonably careful person would exercise under like circumstances. IMS agrees to
accept responsibility for the actual cash value of any Materials while such
Materials are in IMS' custody. In the event of any canceled Orders involving
Materials, IMS shall ship such Materials to Maxtor (at Maxtor's expense). [*]
IMS requests that consigned components are received by IMS at least five (5)
business days prior to the scheduled Product shipment date and in sufficient
quantities to allow for normal component attrition.
10. Limited Warranty. IMS warrants that the Products sold to Maxtor shall
conform to the corresponding written product specification provided by Maxtor to
IMS and current at the time of Maxtor's Order ("Specification") [*] for a period
of twelve (12) months from the date of receipt by Maxtor. The materials portion
of this warranty shall not apply to the extent of defects in the Product
directly attributable to the failure of any Materials consigned or supplied to
IMS by Maxtor. All claims for breach of warranty with respect to any unit of the
Products must be received by IMS no later than fifteen (15) days after the
expiration of the warranty period. The warranty does not extend to any Products
(i) which have been subjected to misuse, neglect, excessive deterioration or
erosion, abuse, accident, improper installation, extreme electrical or physical
stress, or any other use by Maxtor in violation of or contrary to IMS'
instructions; (ii) which have been repaired or altered in any manner by anyone
other than IMS or persons expressly authorized by IMS; or (iii) which are
defective as a result of causes external to the Product. IMS' sole and exclusive
obligation with respect to defective Products returned under warranty shall be,
at IMS' option, repair or replacement thereof or refund of the purchase price.
THE EXPRESS WARRANTY AND WARRANTY REMEDIES PROVIDED IN THIS SECTION ARE MAXTOR'S
SOLE AND EXCLUSIVE REMEDIES FOR BREACH OF THE WARRANTIES IN THIS SECTION. IMS
MAKES, AND HAS MADE, NO OTHER WARRANTIES TO MAXTOR, AND IMS HEREBY EXPRESSLY
DISCLAIMS ANY AND ALL OTHER WARRANTIES, WRITTEN OR ORAL, EXPRESS, IMPLIED, OR
STATUTORY, IN ANY MANNER OR FORM WHATSOEVER, INCLUDING, BUT NOT LIMITED TO ANY
WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR
NONINFRINGEMENT OF THIRD PARTY RIGHTS (EXCEPT AS EXPRESSLY PROVIDED IN SECTION
17 ("INDEMNIFICATION")). Maxtor shall pay IMS such amounts as are mutually
agreed from time to time for (i) testing of returned units in "no problem found"
situations (i.e., where Product units returned to IMS conform to the above
warranty) and (ii) network of returned units where the failure of the units to
conform to the above warranty is not due to any breach of warranty by IMS (e.g.,
situations where the Product unit has been abused or damaged by persons other
than IMS).
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11. Epidemic Failure. In the event of an epidemic failure of a Product,
the parties shall immediately work together to identify the nature of the
failure and to determine whether the failure results from certain components of
the Product or manufacture of the Product. For purposes of this Section,
"epidemic failure" shall mean a group of failures occurring within a thirty (30)
day period of a same or similar nature where the failure rate for such thirty
(30) day period is ten percent (10%) or more above the failure rate for the
particular Product over the term of this Agreement prior to such event. Maxtor
and IMS shall agree on an equitable allocation of the cost of resolving the
problem vis-a-vis Maxtor's customers and in regard to the relevant component(s)
vendors which shall depend on whether the primary source of the problem is
Maxtor's procurement of Materials for the Products or IMS' procurement of
components for or manufacture of the Product. Maxtor and IMS shall cooperate in
good faith to identify the most cost-effective solution to the problem.
12. Limitation of Liability. EXCEPT AS SET FORTH IN SECTION 17.2
("INDEMNIFICATION BY IMS") AND SECTION 17.3 ("INFRINGEMENT INDEMNIFICATION BY
MAXTOR") AND EXCEPT FOR BREACH OF THE OBLIGATIONS SET FORTH IN SECTION 18.1
("CONFIDENTIAL INFORMATION"), EITHER PARTY'S MAXIMUM LIABILITY ARISING OUT OR
RELATING TO THIS AGREEMENT SHALL BE LIMITED TO THE TOTAL PAYMENTS MADE BY MAXTOR
TO IMS HEREUNDER. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR
ANY OTHER PERSON OR ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT,
EXEMPLARY OR PUNITIVE DAMAGES, HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT,
NEGLIGENCE OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, DAMAGES BASED ON LOSS OF
PROFITS OR BUSINESS OPPORTUNITY), AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION SHALL APPLY NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
13. Engineering or Process Changes.
13.1 Definition. The term "Engineering Change(s)" shall mean those
mechanical, electrical, piece part or subassembly design or Specification
changes, made to the Products or to any manufacturing, assembly or testing
method, procedure or process ("Process"), or, which, if made, could affect the
schedule, performance, reliability, availability, serviceability, appearance,
dimensions, tolerances, safety or costs, such determination to be made solely by
Maxtor.
13.2 IMS Change(s). IMS will notify Maxtor of any Engineering Change
proposed to be made by IMS to the Products or Process, and will supply a written
description of the expected effect of the Engineering Change on the Products,
including its effect on price, performance, reliability and serviceability.
Maxtor may elect to evaluate the prototype, parts and/or designs specified as
part of the proposed change and IMS shall provide the prototype, parts and/or
design to Maxtor at no charge for such evaluation. Maxtor agrees to use
commercially reasonable efforts to respond, within five (5) working days after
receipt of IMS' request for non-critical changes and within twenty-four (24)
hours for critical changes, as to whether or not Maxtor will negotiate with IMS
as to a transition plan and time frame for implementing such Engineering
Changes. IMS will not change or modify the Products or
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36
Process by implementation of such Engineering Change without Maxtor's prior
written approval. Maxtor, in its reasonable discretion, may reject any and all
IMS requested changes.
13.3 Maxtor Change(s). Maxtor may request, in writing and in a manner
similar to IMS' request as set forth in Section 13.2 ("IMS Change(s)"), that IMS
incorporate any non-critical Engineering Change into the Products, and IMS will
provide to Maxtor its written response within five (5) working days after
receipt of Maxtor's request. For critical Engineering Changes, as determined by
Maxtor, IMS will respond within twenty-four (24) hours of Maxtor's written
request. IMS' response will state the cost savings or increase, and labor,
inventory and scrap material impact, if any, expected to be created by the
Engineering Change, and the effect on the schedule, performance, reliability,
availability, safety, serviceability, appearance, dimensions, tolerances, and
composition of bills of material of the Products. If Maxtor requests IMS to
incorporate an Engineering Change into the Products, the applicable
Specifications will. be amended as required subject to mutual agreement on
reimbursement to IMS for its extra costs (including labor, manufacturing
supplies and inventory) incurred as a result of the Engineering Change. IMS will
not unreasonably refuse to incorporate Maxtor's Engineering Changes into the
Products.
14. Term and Termination. The term of this Agreement shall begin on the
Effective Date and continue for three years thereafter unless earlier terminated
as provided herein. Either party may terminate this Agreement for default by the
other party of any material obligation, unless the defaulting party cures such
material breach within thirty (30) days after receipt of written notice from the
non-defaulting party. In the event this Agreement is terminated by IMS upon
Maxtor's default, Maxtor shall be responsible for payment or cancellation
charges for any issued and accepted Orders as provided in Section 6 ("Order
Cancellation and Rescheduling"). In the event this Agreement is terminated by
Maxtor for IMS' default, IMS shall be responsible for payment of any and all
costs and expenses associated with Maxtor's transfer of Orders to another
supplier, including without limitation the incremental cost to procure
substitute goods in accordance with Section 2712 of the Uniform Commercial Code.
15. Maxtor Equipment. IMS shall be responsible for diligence and care in
the use, routine calibration and repair, maintenance and protection of any
Maxtor furnished equipment, including without limitation any Product-specific
tooling and equipment, and shall be liable for repairs or replacement due to
normal failure or wear and tear, and maintenance costs, provided, that HDAs
shall be supplied, maintained, repaired and replenished by Maxtor.
16. [*]
17. Indemnification.
17.1 Indemnification by Maxtor for Products. Maxtor shall defend,
indemnify and hold IMS, its successors and assigns, harmless from and against
all actions, claims, liabilities, losses and expenses (including reasonable
attorneys' fees) arising out of or relating to Maxtor's gross negligence or
intentional misconduct in its distribution, sale or use of any Product. Such
indemnification obligation will be conditioned upon IMS (i) giving Maxtor prompt
notification in writing as to any such action; (ii)
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tendering full control of the defense of such action to Maxtor; and (iii)
providing Maxtor with full information and assistance (at Maxtor's expense) for
such defense. IMS may participate in any such defense with counsel of its
choosing at its expense. Maxtor will not be responsible for any settlement or
compromise made without its consent.
17.2 [*]
17.3 Infringement Indemnification by Maxtor. Maxtor shall defend,
indemnify and hold IMS, its successors and assigns, harmless from and against
all actions, claims, liabilities, losses and expenses (including reasonable
attorneys' fees) arising out of or relating to any claim of infringement or
misappropriation by a Product developed from designs provided by Maxtor for such
development, of any patent, copyright, trade secret, or any other intellectual
property right of any third party to the extent such infringement or
misappropriation arises out of use of such Maxtor designs. Such indemnification
obligation will be conditioned upon IMS (i) giving Maxtor prompt notification in
writing as to any such action; (ii) tendering full control of the defense of
such action to Maxtor; and (iii) providing Maxtor with full information and
assistance (at Maxtor's expense) for such defense. IMS may participate in any
such defense with counsel of its choosing at its expense. Maxtor will not be
responsible for any settlement or compromise made without its consent.
18. Confidentiality; Intellectual Property Rights.
18.1 Confidential Information. Each party (the "Disclosing Party", as
applicable) agrees during the term of this Agreement and thereafter to take all
steps reasonably necessary to hold the Confidential Information of the other
party (the "Receiving Party", as applicable) in trust and confidence.
"Confidential Information" includes, but is not limited to, technical and
business information relating to the Disclosing Party's inventions or products,
research and development, production, manufacturing and engineering processes,
costs, profit or margin information, employee skills and salaries, finances,
customers, marketing, and production and future business plans, and any third
party's proprietary or confidential information disclosed to the Receiving Party
in the course of providing services to the Disclosing Party. Notwithstanding the
other provisions of this Agreement, nothing received by the Receiving Party will
be considered to be the Disclosing Party's Confidential Information if (1) it
has been published or is otherwise readily available to the public other than by
a breach of this Agreement; (2) it has been rightfully received by the Receiving
Party from a third party without confidential limitations; (3) it has been
independently developed for the Receiving Party by personnel or agents having no
access to the Disclosing Party's Confidential Information; or (4) it was known
to the Receiving Party prior to its first receipt from the Disclosing Party. The
Receiving Party shall use the Disclosing Party's Confidential Information only
for the purposes of providing and receiving Products and services to and from
the Disclosing Party as set forth herein, unless otherwise mutually agreed in
writing. The Receiving Party may disclose the Disclosing Party's Confidential
Information to affiliates and to third persons, including contractors, solely
for the purposes of this Agreement or as otherwise allowed herein (e.g., Section
18.4 ("License of IMS Rights")), including consultation regarding the purchase
or provision of Products and services, but only under the terms of a written
confidentiality agreement with such third person containing confidentiality and
use terms substantially similar to those imposed herein upon a Receiving Party.
The foregoing shall not affect Maxtor's rights under
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Section 18.4 ("License of IMS Rights"), except that Maxtor shall require third
persons who receive such Section 18.4 IMS Intellectual Property which is IMS
Confidential Information, to execute such written confidentiality agreement.
18.2 No Conflict of Interest. Each party agrees during the term of
this Agreement not to accept work, enter into a contract or accept an obligation
inconsistent or incompatible with such party's obligations under this Agreement
or the scope of services rendered for the other party hereunder. Each party
warrants that to the best of its knowledge, there is no other existing contract
or duty on such party's part inconsistent with this Agreement. The parties agree
that the foregoing obligations shall not be construed in any manner to supersede
or conflict with the terms and conditions of Section 7.2 ("Condition of Purchase
Obligation") above.
18.3 Ownership of Proprietary Rights. Nothing in this Agreement shall
convey to either party any proprietary or intellectual property rights,
including without limitation, copyrights, trademarks, trade secrets, patents,
moral rights, contract rights and licensing rights (the "Intellectual Property
Rights") belonging to the other party, or be deemed to license either party to
use any such Intellectual Property Rights of the other party, except for the
express limited purposes set forth herein.
18.4 [*]
18.5 Joint Work Product. The term "Joint Work Product" means any new
or useful art, discovery, improvement or invention whether or not patentable,
and all related know-how, designs, mask works, trademarks, formulae, processes,
manufacturing techniques, trade secrets, ideas, artwork, software or other
copyrightable or patentable works, where the conception or reduction to practice
thereof occurs subsequent to the Effective Date and one or more personnel of
both Maxtor and IMS contribute materially to such conception or reduction to
practice. Maxtor and IMS shall jointly own the Joint Work Product, with each
owning an undivided one-half interest, and each shall be free to commercially
exploit Joint Work Product far its own account and nonexclusively license Joint
Work Product to third parties without any obligation to account for profits to
the other joint owner.
18.6 Return of Maxtor Property. The term "Maxtor Work Product" means
any new or useful art, discovery, improvement or invention whether or not
patentable, and all related know-how, designs, mask works, trademarks, formulae,
processes, manufacturing techniques, trade secrets, ideas, artwork, software or
other copyrightable or patentable works developed by Maxtor without the material
contribution of IMS or otherwise acquired or licensed by Maxtor. Except as set
forth in a separate written licensing agreement:
(a) IMS shall have no right to use any Maxtor Work Product
provided by Maxtor to IMS, or learned by IMS from Maxtor, except to perform
services for Maxtor as contemplated by this Agreement.
(b) Upon termination of this Agreement for any reason or in any
manner, or at any earlier time upon Maxtor's request, IMS agrees to promptly
deliver all Maxtor property, including but not limited to all tangible
embodiments of the Maxtor Work Product, and all copies of Maxtor
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property in IMS' possession to Maxtor, or promptly destroy all such Maxtor
property and promptly certify in writing to its destruction.
19. Miscellaneous Provisions.
19.1 Entire Agreement. This Agreement constitutes the entire agreement
between the parties regarding the subject matter hereof and supersedes all prior
agreements and understandings between the parties relating thereto. This
Agreement may not be modified except by a writing signed by an authorized
representative of both parties.
19.2 Independent Contractor. The relationship of the parties
established by this Agreement is that of independent contractors, and nothing
contained herein shall be constructed to constitute either party as the agent of
the other party or as partners, joint ventures, co-owners or otherwise as
participants in a joint or common undertaking.
19.3 Advertising. No advertising by either party shall display or
contain any trademarks or references to the other party without the other
party's prior written approval.
19.4 Assignment and Subcontracting. This Agreement may not be assigned
by either party without the advance written consent of the other party, which
shall not be unreasonably withheld. Notwithstanding the foregoing, either party
may assign this Agreement to any affiliate or subsidiary or pursuant to a
merger, sale of all or substantially all of its assets, or other corporate
reorganization. IMS shall not subcontract any of its rights or obligations
hereunder to any third party without Maxtor's prior written approval, which
shall not be unreasonably withheld.
19.5 Force Majeure. Except for Maxtor's payment obligations, neither
party shall be liable to the other party arising out of delays or failures to
perform under the Agreement to the extent that any such delays or failures
result from any cause beyond the reasonable control of the party affected by a
force majeure event; provided, that the party affected by any such cause shall
promptly inform the other of all relevant information. If any such force majeure
event extends beyond ninety (90) days, either party shall have the right to
terminate this Agreement upon written notice to the other party.
19.6 Governing Law. This Agreement shall be governed by the laws of
the State of California, without reference to conflict of laws principles. The
United Nations Convention on Contracts for the International Sale of Goods is
specifically excluded from application to this Agreement.
19.7 Venue. All disputes arising under this Agreement shall be brought
in the Superior Court of the State of California in Santa Xxxxx County or the
Federal District Court of San Jose, California, as permitted by law. The
Superior Court of Santa Xxxxx County and the Federal District Court of San Xxxx
shall each have exclusive jurisdiction over disputes under this Agreement. IMS
consents to the personal jurisdiction of the above courts.
19.8 English Language. This Agreement is executed in the English
language only, and any translations hereof are of no force and effect.
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19.9 Invalidity. If any provisions or portion thereof of this
Agreement is held to be unenforceable or invalid, the remaining provisions and
portions thereof shall nevertheless be given full force and effect.
19.10 No Waiver. No failure to delay on the part of either party in
exercising any right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right or remedy preclude any
other or further exercise thereof or of any other right or remedy. No provision
of this Agreement may be waived except in a writing signed by the party granting
such waiver.
19.11 No Licenses Created. Nothing contained in this Agreement shall
be construed as conferring any license, right to use or other right with respect
to information, trademark or tradenames of either party.
19.12 Counterparts. This Agreement may be executed in counterparts,
all of which taken together shall constitute one single agreement between the
parties.
19.13 Limitation of Action. No action, regardless of form, arising out
of this Agreement, may be brought by either party more than one year after the
cause of action has arisen, or in the case of nonpayment, one year from the date
the last payment was due.
19.14 Survival. Sections 10, 11, 12, 15, 17, 18 and 19 shall survive
any expiration or termination of this Agreement.
19.15 Construction. This Agreement has been negotiated by the parties
and their respective counsel. This Agreement will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against any party. Any ambiguity will not be interpreted against the drafting
party.
IN WITNESS WHEREOF, Maxtor and IMS have caused this Manufacturing Services
Agreement to be executed by their respective officers, duly authorized.
MAXTOR: IMS:
Maxtor Corporation International Manufacturing Services, Inc.
By: By:
-------------------------------- ----------------------------------
Name: Name:
------------------------------ -------------------------------
Title: Title:
----------------------------- -------------------------------
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EXHIBIT A
PRODUCTS AND PRICES
Maxtor and IMS have agreed that in calendar 1996, Maxtor will give IMS
first right of refusal to manufacture units up to 1.924 million each quarter.
The forgoing does not constitute a purchase order.
CQ2 96 CQ3 96 CQ4 96 CQ1 96
BOM NO. DESCRIPTION PRICE PRICE PRICE PRICE
----------- ----------------- ------------ ------------ ------------ ------------
US$ US$ US$ US$
[*] [*]
[*] [*] [*] [*]
REWORK*
1" REWORK (NORMAL)
1" REWORK (FIELD)
2.5 REWORK
MXT REWORK
* Rework charges above are for full rework completed by IMS. Partial rework
charges will be negotiated in good faith between the parties.
Note:
1. The price for CQ296 is confirmed while the price for the rest of three
quarters is for reference only.
2. The selling price for 2.5" is full turnkey and sales is from IMS to HSD.
42
EXHIBIT A
(Continued)
CONSIGNED PARTS LIST
PART NO. DESCRIPTION
----------------- -------------------------------------------------------
[*] [*]
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43
EXHIBIT B
THIS EXHIBIT IS INTENTIONALLY OMITTED
44
EXHIBIT C
CANCELLATION WINDOWS
CANCELLATION
COMMODITY (NOT-TO-EXCEED)
----------------------- --------------------------
ASICx* [*] Days
Memory * [*] Days
Osc. Custom [*] Days
Transistors [*] Days
Diodes [*] Days
Caps (Tant.) [*] Days
Resistor [*] Days
PCB [*] Days
Ferrite [*] Days
Connector/Socket [*] Days
Cap Cer [*] Days
Inductor [*] Days
* Per supplier cancellation window plus [*] worth of raw and WIP in IMS.
-------------------------
[*] Confidential Treatment Requested
45
EXHIBIT D
Hyundai Storage Division
00
XXXXXXXX X
# XXXXXXXX MAX. POINT WEIGHT AGE MAX. WEIGHT
1. Quality 5 X2 10
2. Total Cost 5 X2 10
3. Capacity 5 X2 10
4. Time To Market 5 X2 10
5. Joint Profit Program 5 X1 5
6. Delivery Performance 5 X1 5
7. Technology Leadership 5 X1 5
8. Finance 5 X1 5
9. History/Flexibility 5 X1 5
10. Fit for Application 5 X1 5
The Maximum Total Weighted Score is 70 and Minimum is 35.
We can assign the following grading:
WEIGHT SCORE GRADING
------------------------- ------------------------------
35-49 Pass/Average
50-59 Good
60-70 Very Good/Excellent
