Component Recovery Revenue Sharing Agreement - Micron Semiconductor Inc. and Micron Custom Manufacturing Services Inc.
COMPONENT RECOVERY
REVENUE SHARING AGREEMENT
This Component Recovery Revenue Sharing Agreement is
entered into effective as of July 14, 1994 (the "Effective
Date"), by and between Micron Semiconductor, Inc., and Idaho
corporation located at 2805 E. Columbia Road, Boise, Idaho
83706 ("MSI"), and Micron Custom Manufacturing Services,
Inc., and Idaho corporation located at 8445 Westpark Street,
Boise, Idaho 83704 ("MCMS").
WHEREAS, MSI is engaged in the business of developing and
manufacturing semiconductor memory devices and MCMS in
engaged in the business of recovering semiconductor memory
devices for sale to third parties; and
WHEREAS, MSI wishes to sell and MCMS wishes to purchase
semiconductor memory devices manufactured by MSI which do
not meet MSI's full specifications and utilize them in less
critical applications;
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the parities hereto
agree as follows:
1. Definitions. As used in this Agreement, the following
terms have the following meanings:
(a) "Affiliated company" means any entity which is
fifty percent (50%) owned or controlled by MCMS or by Micron
Technology, Inc. and any entity which is fifty percent (50%)
owned or controlled by any such entity.
(b) "Components" means MSI semiconductor memory
devices, in die or packaged form, including but not limited
to DRAMs, SRAMs, and VRAMs, which have failed MSI's
electrical or burn-in tests or otherwise do not meet MSI's
databook specifications for such devices.
(c) "MSI's Average Sales Price" means:
(i) with respect to a non-DRAM component, MSI's
gross revenues from direct sales in the previous fiscal
month of any such component meeting MSI's databook
specifications, divided by the total number of such direct
sales components sold during the same period; and
(ii) with respect to a DRAM component, the sum of
(a) MSI's gross revenues from direct sales in the
previous fiscal month of any such component meeting MSI
databook specifications;
(b) MSI's book revenues from sales by
distributors in the previous fiscal month of any such
component meeting MSI databook specifications; and,
(c) MSI's gross revenues from direct sales of
modules in the previous fiscal month less applicable
assembly changes relating to such module;
divided by the total number of direct, distributor and
module components sold during the same period.
2. Sale of Components. MSI hereby grants to MCMS the
right to purchase all of MSI's Components and to resale the
Components upon the terms and conditions set forth herein.
Accordingly, MSI shall not sell Components to any third
party whether in the form of components, modules or board
level products
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without first offering such Components for sale to MCMS
in accordance with this Agreement. Nothing contained
herein shall obligate MSI to produce Components for sale
to MCMS, or obligate MCMS to purchase Components made
available for sale by MSS.
3. Component Recovery. MSI hereby grants to MCMS the
right to enter onto MSI's premises at all reasonable
business hours to recover Components from MSI. This right
shall include the right by MCMS personnel directly or
indirectly, with or without MSI's assistance, (i) to
retrieve Components form MSI's Probe area; (ii) to select
and assemble Components retrieved from MSI's Probe area for
submission to MSI's Assembly area for packaging
(encapsulation) by MSS; (iii) to retrieve from MSI's
Assembly area Components packaged by MSI for MCMS, and (iv)
to retrieve Components directly from MSI's Test area. for
the purpose of allowing MCMS personnel to select and
assemble Components for packaging by MS in MSI's Assembly
area, MSI agrees to make available to MCMS at no cost
approximately 300 square feet of Assembly cleanroom floor
space for use by MCMS personnel and equipment; provided,
however, that MSI may for reasonable business purposes deny
MCMS access to MSI's manufacturing site, recover Components
and provide such Components to MCMS off-site at MSI's cost.
All risk of loss and all costs associated with the
fabrication, probe, assembly and testing of Components by
MSI, including Components selected by MCMS for packaging by
MSI, shall be borne by MSI up to the point of delivery to
MCMS. Except as otherwise provided above, the point of
delivery shall be deemed to be the point of shipment by MSI
at MSI's manufacturing site or the point of direct retrieval
by MCMS personnel of packaged Components at MSI's
manufacturing site.
4. Revenue Sharing. In consideration of the sale to MCMS
of the components, MCMS hereby agrees to pay to MSI and
amount equal to fifty percent (50%) of the total amount of
net revenues obtained by MCMS from sales of the Components
to third parities and affiliated companies and derived from
intracompany sales to MCMS's contract assembly operations.
For the purpose of determining revenues from sales to
affiliated companies and intracompnay sales to MCMS's
contract assembly operations, prices for such components
shall be based on MSI's Average Sales Price and established
in accordance with the transfer price schedule set forth in
Schedule A attached hereto.
5. Payment of Revenue Sharing Amount. Unless otherwise
provided herein, MSI's share of revenues derived from sales
to third parities and intracompany sales of Components shall
be paid by MCMS to MSI net forty-five (45) days after the
end of each MCMS fiscal month. Any amount not received by
MSI when due shall be subject to a service charge of 1.5%
per month from the due date. MCMS shall pay all of MSI's
costs and expenses (including reasonable attorneys' fees) to
enforce MSI's rights under this Section.
6. Inspection of Records. MCMS shall keep full, clear and
accurate records with respect to third party and
intracompany sales of Components. MSI shall keep full,
clear and accurate records with respect to the Average Sales
Price used for the purpose of calculating the price of
Components. Each party's records shall be kept at the
party's principal place of business and shall be open at all
reasonable times during the term of this Agreement to the
inspection of a mutually agreeable third party. Neither
party hereto shall unreasonably withhold from the other
information necessary to confirm compliance with the terms
of this Agreement, including by not limited to information
pertaining to intellectual property rights and agreements
pertaining to the Components. In the event a party requests
and inspection as provided herein, such party shall bear all
costs and expenses associated with such inspection, unless
such inspection reveals noncompliance with the terms of this
Agreement by the other party, in which case the noncomplying
party shall bear all such costs and expenses.
7. Intellectual Property Rights. Each party hereby grants
to the other party the right to use and make available as
reasonably requested the intellectual property of the other,
including but not limited to patents, patent applications,
software programs, and copyrighted materials, as appropriate
to identify, recover and sell the Components. In addition
to bearing all costs of development and manufacture of
Components, MSI shall bear sole responsibility for, and
shall promptly pay when due, all royalty obligations arising
from patent license agreements entered into by MSI, or
Micron Technology, Inc. on behalf of MSI,
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and associated with sales of the Components to and by MCMS.
MSI hereby agrees to indemnify MCMS for any damages incurred
in the event of nonpayment by MSI of any such royalty obligations,
provided that such indemnification royalties arising form a
bona fide dispute by MSI regarding the terms or extent of
such obligations.
8. Confidentiality. Each party acknowledges that it will
have access to certain information and materials concerning
the business, plans, customers, technology, and products of
the other pertaining to the subject matter of this Agreement
that are confidential and of substantial value to the other
party. Each party agrees that it will not at any time
disclose such confidential information to any third party.
9. No Warranty. MSI MAKES NO WARRANTIES, EXPRESSED OR
IMPLIED, REGARDING THE COMPONENTS, INCLUDING, BUT NOT
LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY OR OTHERWISE.
MSI DOES NOT MAKE TO MCMS OR ANY CUSTOMER OF MCMS, AND
HEREBY EXPRESSLY DISCLAIMS ANY OTHER REPRESENTATION OR
WARRANTY OF ANY KIND WITH RESPECT TO THE COMPONENTS. ALL
COMPONENTS ARE SOLD "AS IS" AND "WITH ALL FAULTS".
10. Limitation on Liability. Except as otherwise provided
herein, in the event of termination by either party in
accordance with any of he provisions of this Agreement,
neither party shall by liable of he provisions of this
Agreement, neither party shall be liable to the other
because of such termination, for compensation, reimbursement
or damages on account of the loss of prospective profits or
anticipated sales, or on account of any expenditures or
commitments in connection with the business or goodwill of
either party.
11. Patent Indemnity. MSI represents and warrants that the
delivery and sale of components hereunder will not infringe
any patent, trademark or other intellectual property rights
of third parities. MSI shall indemnify and hold MCMS
harmless of and from any and all losses, including without
limitation loss of good will and loss of business
opportunities, costs, claims, liabilities and expenses,
including attorneys' fees, incurred by MCMS with respect to
any such infringement of any patent, trademark or other
intellectual property rights, provided that such
indemnification shall not exceed that amount equal to MSI's
share of he net revenues derived from the sale by MCMS of he
infringing products. MCMS shall have the right to offset
against payments due to MSI hereunder the amount to any
indemnification owed by MS and to MCMS under this Section.
12. Term and Termination.
12.1 Term. The term of this Agreement shall commence
on the Effective Date and shall continue thereafter for a
period of three (3) full fiscal years from the fiscal year-
end next following the Effective Date, subject to earlier
termination in accordance with the provisions of this
Section.
12.2 Termination by Mutual Agreement. This Agreement
may by terminated at any time upon the mutual written
agreement of the parties.
12.3 Survival of certain Terms. Upon any termination
of this Agreement, any provision of this Agreement which by
its terms appears to be applicable to periods or actions
occurring after termination of the Agreement, shall remain
in full force and effect.
13. Application to Subsidiaries. The obligations of either
party hereunder shall be applicable to subsidiaries of each
such party. "subsidiary" shall mean any entity owned 50% or
more by a party.
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14. General Provisions.
14.1 Governing Law. This Agreement shall be governed
by and construed under the laws of the State of Idaho. The
federal and sate courts within the State of Idaho shall have
exclusive jurisdiction to adjudicate any dispute arising out
of this Agreement.
14.2 Entire Agreement. This Agreement sets forth the
entire agreement and understanding of the parities relating
to the subject matter herein and merges all prior
discussions between them. No modification of or amendment
to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing signed by
the party to be charged.
14.3 Notices. Any notice required or permitted by
this Agreement shall be in writing and shall be sent by
prepaid registered or certified mail return receipt
requested, addressed to the other party at the address shown
at the beginning of this Agreement or at such other address
for which such party give notice hereunder. Such notice
shall be deemed to have been given three (3) days after
deposit in the mail.
14.4 Force Majeure. Nonperformance of either party
shall be excused to the extent that performance is rendered
impossible by strike, fire, flood, governmental acts or
orders or restrictions, or any other reason where failure to
perform is beyond the control and not caused by the
negligence of the nonperforming party.
14.5 Nonassignability and Binding Effect. The rights
and obligation of each party hereunder may not be assigned
or transferred directly or indirectly without the prior
written consent of the other party, which consent shall not
be unreasonably withheld. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of
the parities hereto, their successors and assigns.
14.6 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one
instrument.
MICRON SEMICONDUCTOR, INC. MICRON CUSTOM MANUFACTURING
SERVICES, INC.
By: /s/ Steven R. Appleton By: /s/ Joseph M. Daltoso
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Title: President Title: Chairman and President
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Schedule A
Intercompany Transfer Price
MCMS MCMS
Purchase MCMS Purchase MCMS
MSI Price Purchase Price Purchase
Previous for Full Price for Printer Price
Fiscal Specification for Systems Buffer Grade for Audio
Month's ASP Parts Grade Parts Parts Grade Devices
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X .975(X) .8288(X) .70(X) .25(X)
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AMENDMENT NUMBER 1 TO AMENDED AND RESTATED
COMPONENT RECOVERY AGREEMENT
THIS AMENDMENT NUMBER 1 (this "Amendment") is entered into by and between
Micron Technology, Inc., a Delaware corporation ("MTI") and Micron Electronics,
Inc., a Minnesota corporation ("MEI").
WHEREAS, MTI and MEI entered into that certain Amended and Restated
Component Recovery Agreement with an effective date of September 2, 1999 (the
"Agreement");
WHEREAS, MTI and MEI desire to amend the Agreement in accordance with the
terms set forth below:
NOW THEREFORE, MTI and MEI agree as follows:
1. Amendment. Section 11 of the Agreement is amended by adding the following
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as the last sentence thereof:
A party desiring to exercise its option under this Section 11 shall provide
the other party with not less than thirty (30) days written notice prior to
the effective date of the exercise of the option; provided, however, that
such written notice requirement shall not be construed to extend the term
of this Agreement as provided in Section 17.1 herein.
2. No Further Modification. Except as set forth herein, the provisions of the
-----------------------
Agreement remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be effective
as of the date of the last signature set forth below.
MICRON TECHNOLOGY, INC. MICRON ELECTRONICS, INC.
By: /s/ By: /s/
Name: Roderic W. Lewis Name: Steven Arnold
Title: VP Legal Affairs Title: VP, General Counsel
Date: November 13, 2000 Date: November 16, 2000
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