Sample Business Contracts

Purchase Agreement - Micron Technology Inc. and KTI Semiconductor Ltd.

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                             PURCHASE AGREEMENT

     This Purchase Agreement (the "Agreement") is made this 30th day of
September, 1998, by and between Micron Technology, Inc., a Delaware, U.S.A.
corporation, with its principal place  of business at 8000 South Federal Way,
Boise, Idaho 83716-9632, U.S.A. ("Micron"), and KTI Semiconductor  Limited, a
Japanese corporation, with its headquarters located at 302-2, Hirano-cho,
Nishiwaki, Hyogo Prefecture, 677-0063, Japan ("KTI").  Micron and KTI are
hereinafter sometimes individually referred to as a "Party" and collectively as
the "Parties".

     In consideration of the mutual promises and covenants contained herein, the
Parties, intending to be legally bound, agree as follows:


     1.1  This Agreement implements certain provisions of the Shareholders'
          Agreement dated March 19, 1990, among KTI's shareholders  and
          ratified, joined in and accepted by KTI on May 22, 1990, and amended
          September 28, 1990 by Amendment #1, amended November 5, 1992 by
          Amendment #2, amended effective as of June 7, 1993 by Amendment #3,
          amended July 14, 1993 by Amendment #4, amended December 15, 1993 by
          Amendment #5, amended March 24, 1994 by Amendment #6, amended June 27,
          1994 by Amendment #7, amended effective as of November 1, 1995 by
          Amendment #8, amended effective as of November 1, 1996 by Amendment
          #9, amended effective as of January 1, 1998 by Amendment #10, amended
          March 26, 1998 by Amendment #11, amended June 23, 1998  by Amendment
          #12, and amended [September 30, 1998] by Amendment #13 to
          Shareholders' Agreement (as so amended, and as hereafter amended or
          otherwise modified from time to time, the "Shareholders' Agreement")
          for the purchase by Micron, and the sale by KTI to Micron, of those
          Products (as defined in the Shareholders' Agreement) which are more
          specifically set forth in Attachment 1 which is incorporated herein by
          this reference (hereinafter "Products").


     2.1  Purchase orders issued by Micron and/or its affiliates (hereinafter
          individually or collectively ("Micron")) under this Agreement are for
          administrative, payment and accounting purposes.  The terms and
          conditions of any purchase order so issued which purports to alter,
          amend or extend provisions or terms of manufacture, sale and delivery
          of Products as agreed to by Micron, KOBE and KTI in the Shareholders'
          Agreement and Annexes thereto shall have no force or effect.

     3.1  KTI agrees to sell to Micron or its designated Affiliate (as that term
          is defined in the Shareholders Agreement) and Micron or its designated
          Affiliate agrees to purchase, KTI's entire output (i.e., one hundred
          percent (100%), of the finished Products subject to the terms,
          conditions and obligations set forth in the Shareholders' Agreement
          and the Annexes thereto, including this Agreement.  Such terms,
          conditions and obligations include without limitation SECTIONS 8 (WORK
          and 10 (MANUFACTURING CHANGES) of the Technical Assistance Agreement
          dated as of  September 30, 1998 between Micron, Kobe Steel Ltd., a
          Japanese corporation, with its headquarters located at 3-18,
          Wakinohama 1-Chrome, Chuyou-Ku, Kobe, Japan, and KTI  (as hereafter
          amended or otherwise modified from time to time, the "Technical
          Assistance Agreement").  Nothing in this Agreement shall be construed
          to limit Micron's right or the right of Micron's affiliates to
          purchase any semiconductor devices similar to the Products from any
          source other than KTI

4.   TERM

     4.1  This Agreement shall be effective as of the Acquisition Closing Date
          (as defined in Amendment #13 to the Shareholders' Agreement) and shall
          continue in effect throughout the Term of the Shareholders' Agreement
          (as defined therein), unless earlier terminated or modified by mutual
          agreement in writing by Micron and KTI.


     5.1  KTI shall sell the Products to Micron in accordance with the pricing
          formula provided in Annex A to the Shareholders' Agreement.   KTI
          shall invoice Micron for Products sold to Micron on a monthly basis in
          accordance with Section 18.6 of the Shareholders' Agreement and such

     5.2  Place of shipment and payment terms are as specified in Sections 18.5,
          18.6 and 18.7 of the Shareholders' Agreement.


     6.1  The delivery dates indicated by Micron on its purchase orders for the
          Products are important elements of shipment and receiving of Products.
          KTI agrees to take all reasonable efforts so that the Products shall
          be delivered to Micron's designated delivery point on the dates set
          forth in the applicable purchase order(s) accepted by KTI, unless the
          Parties agree otherwise in writing. In the event that any Products are
          not shipped in accordance with such delivery dates, KTI agrees to ship
          via air freight (or as directed by Micron) and to pay for all extra

     6.2  Failure of KTI to meet agreed upon delivery shall be considered a
          breach of contract.  Furthermore, KTI agrees to pay to Micron any
          penalty and damages imposed upon or incurred by Micron for failure of
          KTI to deliver any of the Products on such delivery dates.

     6.3  In addition to the packing and shipping instructions in Paragraph 11
          below, the Products shall be packaged in accordance with commercially
          accepted standards, or  to applicable Micron specifications, to ensure
          safe arrival at Micron's designated delivery point.


     7.1  KTI warrants and represents to Micron that the Products will conform
          to the Specifications and shall be fit for their intended purpose and
          use and shall be free from any defects in material and workmanship for
          a period of two (2) years from the date of each shipment from KTI of
          the Products, provided that said period may be renegotiated for a
          longer period of time to conform to the industry standard current at
          the time of renegotiation.  KTI's failure to take corrective actions
          for the next production lots after written notification of the
          problem(s) is provided to KTI may be considered by Micron to be a
          material breach of this Agreement.

     7.2  In the event Micron determines that the Products are defective in
          workmanship or otherwise in breach of the warranty set forth in
          Paragraph 7.1, Micron shall notify KTI immediately in writing of the
          defect, and KTI shall promptly, at Micron's option, either repair or
          replace any defective Products at no cost to Micron, or credit to
          Micron's account Micron's purchase price and all reasonable out of
          pocket shipping costs incurred with respect to the return of the
          defective Products; provided, however, in the event such defect is
          directly attributable to a material error in the Technical Information
          transmitted by Micron to KTI under the Technical Assistance Agreement,
          then Micron agrees that during the two (2) year warranty period Micron
          will indemnify KTI for all direct manufacturing and material costs
          associated with the repair or replacement of the defective Products
          manufactured for Micron. MICRON SHALL NOT BE LIABLE FOR ANY
          INTERRUPTION.  A Return Material Authorization ("RMA") form previously
          issued by KTI must accompany any such returned Products.

     7.3  Following receipt of each shipment, Micron shall perform an incoming
          test on each shipment of the Products shipped hereunder.  In the event
          that such Products fail to conform to the Specifications as evidenced
          by the Micron incoming inspection, Micron shall have the right to
          return, after confirmation of failures, such Products to KTI for
          rework or replacement at no cost to Micron.  Micron has the right to
          recommend corrective action to address any such variances from
          Specifications.  Such return shipment shall be made by Micron F.O.B.
          the destination from which they were originally shipped by KTI.

     7.4  If the Products fail Micron's incoming inspection tests at the
          shipping destination as designated on the Micron purchase order,
          Micron may so advise KTI in writing and receive, at Micron's option,
          prompt replacement of the Products or credit in that amount against
          pending or future Micron orders for the Products.

     7.5  Except as provided in Section 20.5 of the Shareholders' Agreement, KTI
          will hold Micron harmless from and indemnify Micron against all claims
          made by third parties arising out of the operations of KTI or the
          Products manufactured by KTI, including all acts or omissions by KTI's
          personnel (whether or not such personnel are direct employees of KTI
          or have been obtained from one of the parties to the Shareholders'
          Agreement on a seconding or contractual basis).

     7.6  The warranties in the Shareholders' Agreement and its Annexes,
          including this agreement, are stated in lieu of all other warranties,
          express, statutory, or implied, and neither assume nor authorize any
          other person to assume for the parties any other liabilities in
          connection with the manufacture or sale of said Products.  The
          warranties shall not apply to any of such Products which have been
          repaired or altered, except as authorized by KTI, or which shall be
          subjected to misuse, negligence, accident, or abuse.

     7.7  The terms "Specifications," "Technical Information," and "Products" as
          used herein shall have the same definitions as in the Technical
          Assistance Agreement.


     8.1  Should any Party be prevented from performing its contractual
          obligations under this Agreement due to the cause or causes of force
          majeure such as acts of God, acts of war (declared or undeclared),
          fire, storm, floods, typhoon or other severe weather conditions,
          serious earthquake, strikes, boycotts, legal restraints, government or
          like interference, accidental damage to equipment, as well as any
          other cause outside the control of that Party, that Party shall not be
          liable to the other for any delay or failure of performance caused by
          any of the above events.

     8.2  The Party prevented from performing by the causes identified in
          Paragraph 8.1 shall notify the other Party of the occurrence of any of
          the above events in writing by cable or telex within the shortest
          possible time.

     8.3  Should the delay caused by any of the above events continue for more
          than ninety (90) days, the Parties shall settle the problem of further
          performance of this Agreement through friendly negotiations as soon as
          possible. In the event that the Parties cannot meet to negotiate or
          cannot reach agreement, the Agreement may be terminated by prior
          written notice of one Party to the other Party.


     9.1  Defective material shall be returned freight collect to KTI.
          Replacement material shall be sent freight prepaid from KTI, which
          shall absorb the burden of premium transportation when defect or
          replacement material places critical time or delivery schedule
          constraints on Micron.

     9.2  KTI agrees to provide as soon as reasonably possible, but not
          exceeding five (5) work days, RMAs as contemplated by Paragraph 7.2


     10.1 KTI shall ship only the quantity(ies) specified in purchase orders
          placed under this Agreement.  However, any deviation caused by
          conditions of loading, shipping, packing or allowances in
          manufacturing processes may be accepted by Micron according to the
          overshipment allowance indicated on the face of Micron purchase
          orders.  If no allowance is shown, no percentage overshipment is
          allowed.  Micron reserves the right to return any overshipment in
          excess of the allowance at KTI's expense.


     11.1 KTI will properly pack and describe shipments in accordance with
          Micron specifications and applicable carrier regulations.  Shipment
          will be made at the lowest possible freight charges.  Micron may
          assist KTI by providing freight classifications or classifying
          material.  KTI will insure or declare value on shipments except on
          parcel post, unless Micron specifies otherwise.  On shipments where
          value is declared, KTI will ship prepaid insured for fifty U.S.
          dollars  (US $50.00) to facilitate tracing.  If shipping by air
          carrier, KTI will ship freight prepaid.  KTI shall consolidate the air
          and surface shipments on single bills of lading insofar as possible so
          as to avoid premium freight costs unless instructed otherwise by

     11.2 In case any shipment does not correspond to normal practice in the
          industry (e.g., require special handling shipment or air ride
          suspension, or air shipment over five hundred (500) pounds, or over
          one hundred twenty (120) inches long or wide or over fifty-six (56)
          cubic feet, etc.), KTI agrees to notify Micron's appropriate traffic
          department seventy-two (72) hours prior to shipment for special
          shipping instructions.

     11.3 Each box, crate or carton will show Micron's full street address and
          purchase order number regardless of how shipped.  On air carrier
          shipments, a packing list shall accompany each container and shall
          describe the contents of such container.  On all other shipments, KTI
          will provide a packing list to accompany each shipment, referencing
          the appropriate purchase order number.  The bill of lading also will
          reference the purchase order number.

     11.4 KTI is responsible for packing shipments correctly based on the
          carrier/mode utilized.  Charges for packing and crating shall be
          deemed part of the purchase price and no additional charges will be
          made therefor unless specifically requested by Micron on the purchase
          order.  KTI agrees to ship via the carrier specified by Micron.


     12.1 Whenever any actual or potential labor dispute delays or threatens to
          delay the timely performance of any purchase order issued hereunder,
          KTI shall immediately give notice thereof to Micron.


     13.1 This Agreement and any purchase order issued hereunder shall not be
          governed by the United Nations Convention on the International Sale of
          Goods; rather this Agreement and any purchase order issued hereunder
          shall be governed by, construed and enforced in accordance with the
          laws of the State of New York, U.S.A. The Parties hereby submit to the
          exclusive jurisdiction of the Federal Courts of the United States of
          America and specifically the U.S. District Court for the Southern
          District of New York.

     13.2 For the purpose of any proceeding before the Federal Courts, the
          Parties hereby appoint the respective persons set out below as their
          agents for service of process in New York:

          Micron:  CT Corporation System    KTI:  c/o Kobe Steel USA Inc.
                   1633 Broadway                  535 Madison Avenue
                   New York, NY 10019             New York, NY 10022
                   USA                            USA

     14.1  All notices and formal communications required or permitted to be
           given hereunder shall be served on each Party in writing, via
           facsimile transmission, registered letter, telex or prepaid cable
           and shall be valid and sufficient when served on a Party at the
           following address:

           If to KTI:                           if to Micron:

           KTI Semiconductor Limited            General Counsel
           302-2                                Micron Technology, Inc.
           Hirano-cho, Nishiwaki                8000 South Federal Way
           Hyogo Prefecture, 677-0063, Japan    Boise, Idaho  83716-9632

     14.2  Except as required by law, for governmental approval or as may be
           reasonably required for the operation of KTI, the parties shall not,
           without the prior written consent of the other, disclose to any third
           party, other than the Parties to the Shareholders' Agreement either
           the existence or contents of this Agreement, or any information of a
           proprietary nature which it obtains or which becomes available to it
           as the result of this Agreement or of the operations of KTI.

     14.3  KTI agrees to comply with all applicable export control laws and to
           obtain all export licenses required for performance of its
           obligations hereunder.

     14.4  Micron may assign this Agreement or any obligation hereunder to any
           Affiliate (as that term is defined in the Shareholders' Agreement)
           of Micron upon written notice to KTI. In such event, Micron shall
           be the controlling Party of such assignee and shall guarantee the
           obligations of such assignee under this Agreement. KTI shall not
           assign or transfer this Agreement or any portion hereof, or
           subcontract any obligation hereunder, without the prior written
           consent of Micron. Any such attempted assignment, transfer or
           subcontract by KTI shall be void.

     14.5  The headings of the Paragraphs of this Agreement are for reference
           purposes only and shall not be deemed to affect in any way the
           meaning or interpretation of the Paragraphs to which they refer.

     14.6  The failure on the part of any Party to exercise or enforce any
           rights conferred on it hereunder shall not be deemed to constitute a
           waiver of any rights or operate to bar the exercise or enforcement of
           any such right at any time or times thereafter.

     14.7  This Agreement may be executed in one or more counterparts, each of
           which shall be enforceable against the Parties executing such
           counterparts, and all of which together shall constitute one

     14.8  This Agreement may not be modified, except with the written consent
           of the Parties.

     14.9  If any provision of this Agreement shall be held invalid or
           unenforceable by any court of competent jurisdiction or as a result
           of future legislative action, such holding or action shall be
           strictly construed and, subject to applicable law, shall not affect
           the validity or effect of any other provisions hereof.

                  [Remainder of Page Intentionally Left Blank]

     IN WITNESS WHEREOF, the Parties have signed and dated this Purchase
Agreement in the space provided below.

By:   _________________________   By:   _________________________   
Name: _________________________   Name: _________________________   
Title:_________________________   Title:_________________________   
Date: _________________________   Date: _________________________