Purchase Agreement - Micron Technology Inc. and TECH Semiconductor Singapore Pte. Ltd.
PURCHASE AGREEMENT
------------------
This Purchase Agreement (the "Agreement") is made, as of October 1, 1998,
by and among 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 TECH Semiconductor Singapore Pte. Ltd., a Republic of
Singapore corporation, with its principal place of business at No. 1 Woodlands
Industrial Park D, Street 1, Singapore 738799 ("TECH") (hereinafter individually
a "Party" and collectively the "Parties").
In consideration of the mutual promises and covenants contained herein, the
parties, intending to be legally bound, agree as follows:
1. PURPOSE
-------
1.1 This Agreement implements certain provisions of the Shareholders' Agreement
dated April 11, 1991, amended effective as of May 31, 1991, by Waiver to
Shareholders' Agreement, amended effective as of April 11, 1991 and July
22, 1991, by Amendment Agreement No. 1, amended effective as of February
15, 1993 by Amendment Agreement No. 2, amended as of August 4, 1995 by
Amendment Agreement No. 3, and amended as of October 1, 1998 by Amendment
Agreement No. 4 by and among MICRON, TECH, the Singapore Economic
Development Board (the "EDB"), EDB Investments Pte. Ltd., a corporation
established under the laws of Singapore ("EDBI"), Canon Inc., a corporation
of Japan ("CANON"), Hewlett-Packard Company ("HP"), a Delaware, U.S.A.,
corporation, and Hewlett-Packard Singapore (Private) Limited, a corporation
established under the laws of the Republic of Singapore ("HPSG") (as
amended, the "SHAREHOLDERS' AGREEMENT"), for the purchase by MICRON, and
the sale by TECH to MICRON of PRODUCTS. Capitalized terms used herein, but
not otherwise defined herein, shall have the meanings ascribed to them in
the SHAREHOLDERS' AGREEMENT.
2. PURCHASE ORDERS
---------------
2.1 Purchase orders issued by 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, EDB, EDBI, HP, HPSG and CANON and TECH in the SHAREHOLDERS'
AGREEMENT and Annexes thereto shall have no force or effect.
3. PRODUCTS
--------
3.1 TECH agrees to sell to MICRON and/or MICRON's affiliates (individually or
collectively), and MICRON, or its designee, agrees to purchase, TECH's
entire output (i.e., one hundred percent (100%)) of the finished PRODUCTS
and subject to the terms, conditions and obligations set forth in the
SHAREHOLDERS' AGREEMENT and the Annexes thereto, including this
-1-
<PAGE>
Agreement. Nothing in this Agreement shall be construed to limit MICRON's
right or the right of MICRON's affiliates to purchase products from any
source other than TECH.
4. TERM
----
4.1 This Agreement shall be effective as of the ACQUISITION CLOSING DATE and
shall continue in effect throughout the TERM of the SHAREHOLDERS'
AGREEMENT.
5. PRICING AND PAYMENT TERMS
-------------------------
5.1 TECH shall sell PRODUCTS to MICRON in accordance with the pricing formula
provided in Annex A to the SHAREHOLDERS' AGREEMENT. TECH shall invoice
MICRON for PRODUCTS sold to MICRON on a monthly basis in accordance with
Article 17.6 of the SHAREHOLDERS' AGREEMENT and said Annex A.
5.2 Place of shipment and payment terms are as specified in Articles 17.5, 17.6
and 17.7 of the SHAREHOLDERS' AGREEMENT.
6. DELIVERY
--------
6.1 The delivery dates indicated by MICRON on its purchase orders for PRODUCTS
are important elements of shipment and receiving of PRODUCTS. TECH agrees
to accept any MICRON purchase order, provided that such purchase order:
(i) does not exceed TECH's then current capacity, (ii) reasonably reflects
MICRON's forecasts as described under Article 17.2 of the SHAREHOLDERS'
AGREEMENT, and (iii) does not require delivery within a lead time which is
commercially unreasonable. TECH 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 any purchase order(s), accepted by TECH. In the
event that any PRODUCTS are not shipped in accordance with such delivery
dates, TECH agrees to ship via air freight (or as directed by MICRON) and
to pay for all extra costs; provided, however, that such failure to timely
ship is not due to any direct act or omission of MICRON (including without
limitation any MICRON employee or agent).
6.2 Material failure to meet agreed upon delivery shall be considered a breach
of this Agreement; provided, however, MICRON shall not be entitled to
damage and/or specific performance for any such breach where said breach is
the direct result of any act of MICRON, its employees or agents. TECH
shall not be liable for any penalty or incidental or consequential damages
imposed upon or incurred by MICRON as a result of failure of TECH to
deliver 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.
-2-
<PAGE>
7. TECH'S WARRANTIES AND REPRESENTATIONS
-------------------------------------
7.1 TECH warrants and represents to MICRON that the PRODUCTS will conform to
the SPECIFICATIONS and shall be free from any defects in material and
workmanship for a period of fifteen (15) months from the date of shipment
from TECH 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.
7.2 In the event MICRON determines within the 15-month period specified in
Paragraph 7.01 above that the PRODUCTS are in breach of the warranty set
forth in Paragraph 7.01, MICRON shall notify TECH immediately in writing of
the defect, and TECH 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 costs incurred with
respect to the return of the defective PRODUCTS. A Return Material
Authorization ("RMA") form previously issued by TECH must accompany any
such returned PRODUCTS. MICRON has the right to recommend corrective
action to address variances from the SPECIFICATIONS. Such return shipment
shall be made by MICRON, F.O.B. the destination from which they were
originally shipped to TECH.
7.3 Except as provided in Articles 19.6 and 19.7 of the SHAREHOLDERS'
AGREEMENT, and subject to Paragraph 7.04 below, TECH will hold MICRON
harmless from and indemnify it against all claims made by third parties
arising out of the operations of TECH or the PRODUCTS manufactured by TECH,
including all acts or omissions by TECH's personnel (whether or not such
personnel are direct employees of TECH or have been obtained from one of
the parties to the SHAREHOLDERS' AGREEMENT on a seconding or contractual
basis); provided, however, that liability for such claims is not due to any
direct act or omission of MICRON (including without limitation any MICRON
employee or agent).
7.4 (a) THE WARRANTIES IN THE SHAREHOLDERS' AGREEMENT AND ITS ANNEXES,
INCLUDING THIS AGREEMENT, ARE EXCLUSIVE AND STATED IN LIEU OF ALL OTHER
WARRANTIES, WHETHER 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 THE PRODUCTS. THE WARRANTIES
SHALL NOT APPLY TO ANY OF THE PRODUCTS WHICH HAVE BEEN REPAIRED OR ALTERED,
EXCEPT AS AUTHORIZED BY TECH, OR WHICH SHALL BE SUBJECTED TO MISUSE,
NEGLIGENCE, ACCIDENT OR ABUSE.
(b) The remedies provided in this Agreement are MICRON's sole and exclusive
remedies for breach of TECH's warranties herein. Except as explicitly
provided herein, TECH shall not be liable for any direct damages therefor.
IN NO EVENT (INCLUDING CLAIMS UNDER RIGHTS OF INDEMNIFICATION) SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
-3-
<PAGE>
(c) The limitation of liability for direct damages described in the
previous paragraph shall not apply in the event that any PRODUCTS sold to
MICRON under this Agreement are determined by a court of competent
jurisdiction to be defective and to have directly caused property damage or
bodily injury or death, provided that MICRON provides TECH with a right to
participate with MICRON, at TECH's cost, in the defense of the associated
action.
7.5 The terms "SPECIFICATIONS," "TECHNICAL INFORMATION" and "PRODUCTS" as used
herein shall have the same definitions as in the SHAREHOLDERS' AGREEMENT,
and TECHNICAL ASSISTANCE AGREEMENT.
8. FORCE MAJEURE
-------------
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 war (declared or undeclared), fire, storm, floods, typhoon or other
severe weather conditions, serious earthquake, legal restraints, government
or like interference, judicial action, 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 Party for any delay or failure of performance
caused by any of the above events. "Force Majeure" shall include the
failure to obtain such license(s) and other approvals, including export
licenses, as are required by United States law or other applicable law for
the equipment, technical information, software, technology and PRODUCTS to
be provided pursuant to the terms of this Agreement.
8.2 The Party prevented from performing by the causes identified in Paragraph
8.01 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 with the objective of restructuring the relationship between them
such that the effects of such delay are minimized. If the Parties cannot
agree on a mutually acceptable solution within six (6) months of any
Party's request for such negotiations, any Party may terminate this
Agreement by prior written notice to the other Party.
9. RETURN MATERIAL AUTHORIZATION
-----------------------------
9.1 Defective material shall be returned freight collect to TECH. Replacement
material shall be sent freight prepaid from TECH, which shall absorb the
burden of premium transportation when defect or replacement material places
critical time or delivery schedule constraints on MICRON.
9.2 TECH agrees to provide as soon as reasonably possible, but not exceeding
five (5) work days, RMAs as contemplated by Paragraph 7.02.
-4-
<PAGE>
10. OVERSHIPMENTS
-------------
10.1 TECH 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 TECH's expense.
11. PACKING AND SHIPPING INSTRUCTIONS
---------------------------------
11.1 TECH will properly pack and describe shipments in accordance with MICRON
specifications and applicable carrier regulations. Shipments will be made
at the lowest possible freight charges. MICRON may assist TECH by
providing freight classifications or classifying material. TECH will
insure or declare value on shipments except on parcel post, unless MICRON
specifies otherwise. On shipment where value is declared, TECH will ship
prepaid insured for a minimum of the equivalent of fifty U.S. dollars
(U.S. $50.00) to facilitate tracing. If shipping by air carrier, TECH will
ship freight prepaid. TECH 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 MICRON.
11.2 In case any shipment does not correspond to normal practice in the
industry (e.g., require special handling shipments 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.), TECH
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, TECH 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 TECH 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. TECH agrees
to ship via the carrier specified by MICRON.
12. NOTICE OF LABOR DISPUTE
-----------------------
12.1 Whenever any actual or potential labor dispute delays or threatens to
delay the timely performance of any purchase order issued hereunder, TECH
shall immediately give notice thereof to MICRON.
-5-
<PAGE>
13. APPLICABLE LAW
--------------
13.1 During the INVESTMENT PERIOD, this Agreement shall be governed by and
construed in accordance with the laws of the Republic of Singapore, except
that the validity, scope, interpretation or infringement of MICRON
intellectual property rights (including, without limitation, MICRON
patents, copyrights, maskwork rights and trade secrets) shall be governed
by the laws of Idaho, U.S.A., applicable to contracts made and fully
performed within Idaho. In this Section 13.00, the "INVESTMENT PERIOD"
shall mean such time as EDB and/or any EDB SUBSIDIARY owns at least ten
percent (10%) of the issued ordinary share capital of TECH.
13.2 Subject to Paragraph 13.01 alone, this Agreement shall be governed by and
construed in accordance with the laws of Idaho, U.S.A., applicable to
contracts made and fully performed within Idaho.
13.3 For purposes of any litigation relating to this Agreement, the Parties
consent to the exclusive jurisdiction of the courts of the Republic of
Singapore and Idaho.
14. TERMINATION
-----------
14.1 If TI (including its successors and assigns and any person subrogated to
the rights of TI) shall exercise any remedy under the Reimbursement
Agreement or the Guarantor Security Documents (as defined in the
Reimbursement Agreement), or if any of the Collateral Agent (as defined in
the Credit Agreement), the Agent (as defined in the Credit Agreement) or
any other financial institution party thereto (including any of their
successors or assigns or any person subrogated to the rights of any such
party) shall exercise any remedy under the Credit Agreement or the related
loan or collateral documents, in each case other than one or more
Permitted Remedies (as defined below) or upon proceedings being commenced
or pursued by or against TECH (other than by MICRON or any of its
affiliates) for its bankruptcy, winding-up, dissolution, administration or
re-organization (other than any such proceeding of a frivolous or
vexatious nature discharged within thirty (30) days) or upon the
appointment by any person (other than MICRON or any of its affiliates) of
a receiver, administrator, trustee, judicial manager or similar officer
over TECH or all or a substantial portion of TECH's business, revenues or
assets (any such proceedings or appointment, an "Insolvency Event"), then
in any such event at the option of MICRON (other than an Insolvency Event,
in which case automatically): (A) MICRON's obligations and TECH's rights
under the SHAREHOLDERS' AGREEMENT (but subject to the survival of the
Articles referred to in Article 21.4 thereof, excluding Article 21.1
(which Article 21.1 shall specifically not survive in such instances as
set forth in Article 21.5 thereof)) shall immediately and with no further
action on the part of any PARTY thereto terminate; (B) TECH shall
immediately and with no further action on the part of any PARTY thereto
terminate its manufacture of PRODUCTS and any other use of MICRON
TECHNICAL INFORMATION (as defined in the TECHNICAL ASSISTANCE AGREEMENT)
or MICRON A/T TECHNICAL INFORMATION; (C) without limiting the generality
of the
-6-
<PAGE>
foregoing, the provisions of Article 21.1 of the SHAREHOLDERS' AGREEMENT
shall not apply and no license shall be granted to TECH thereunder or
otherwise; (D) TECH shall immediately destroy or return to MICRON as
instructed by MICRON in the exercise of its sole discretion, destroy all
TECHNICAL DATA (as defined in the TECHNICAL ASSISTANCE AGREEMENT) then in
its possession and any mask sets furnished to TECH pursuant to Section
4.04 of the Technical Assistance Agreement or any other agreement or
understanding; and (E) neither TECH nor any other person shall thereafter
have any claim against or right to any MICRON PATENT (as defined in the
TECHNICAL ASSISTANCE AGREEMENT), MICRON COPYRIGHT (as defined in the
TECHNICAL ASSISTANCE AGREEMENT), MICRON MASKWORK RIGHT (as defined in the
TECHNICAL ASSISTANCE AGREEMENT) or any other tangible or intangible right
or asset of MICRON. Following the receipt of a Default Notice (as defined
in the letter agreement by TI in favor of MICRON dated October 1, 1998),
the shareholders of TECH shall enter into good faith discussions for a
period of thirty (30) days in an effort to determine an appropriate course
of action for TECH. During such period, unless an Insolvency Event shall
have occurred prior to the termination of such thirty (30) day period,
MICRON shall refrain from exercising its termination rights pursuant to
this section. "Permitted Remedies" shall mean the Bank Permitted Remedies
or the TI Permitted Remedies. The "Bank Permitted Remedies" shall be any
remedy against the Borrower that does not result in the cancellation or
unavailability of all or any part of the commitments under the Credit
Agreement (it being understood that the unavailability of commitments
under the Credit Agreement due to TECH's inability to meet conditions
precedent or make representations or warranties shall not in and of itself
constitute a "remedy" for purposes of this section). The "TI Permitted
Remedies" shall be (i) sending of any notice or the demanding of any
payment by TECH owed under the Reimbursement Agreement or pursuant to
Section 5.01(a)(III) of the Reimbursement Agreement, (ii) making of any
payment or prepayment by TI to the Agent, the Security Agent or any other
financial institution party to the Credit Agreement pursuant to the terms
of the Guarantee (as defined in the Reimbursement Agreement), (iii)
delivering a statutory demand under Singapore law, (iv) commencing and
participating in legal proceedings for the sole purpose of obtaining a
monetary judgment and obtaining such a judgment, (v) pursuing, or
suffering to exist, remedies under Section 5.01(c) of the Reimbursement
Agreement, or (vi) enforcing remedies against operating and deposit
accounts, so long as the sum of TECH's total unrestricted cash and cash
equivalents plus the aggregate of all Available Revolving Commitments (as
defined in the Credit Agreement) then available to TECH under the Credit
Agreement is not less than $50.0 million after giving effect to such
remedies.
15. MISCELLANEOUS
-------------
15.1 For purposes of any litigation in the Republic of Singapore, or appeals
arising out of such litigation, the Parties hereby appoint the respective
persons set forth below as their agents for service of process in
Singapore:
-7-
<PAGE>
TECH: TECH Semiconductor Singapore Pte. Ltd.
No. 1 Woodlands Industrial Park D
Street 1
Singapore 738799
Attention: President
MICRON: Micron Semiconductor Asia Pte. Ltd.
990 Bendemeer Road
Singapore 339942
Attention: Site Manager
With copy to: Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
U.S.A.
Attention: General Counsel
For purposes of any litigation in the courts in Idaho, or appeals arising
out of such litigation, the Parties hereby appoint the respective persons
set forth below as their agents for service of process:
TECH: General Counsel
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
U.S.A.
MICRON: General Counsel
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
U.S.A.
With copy to: Site Manager
Micron Semiconductor Asia Pte. Ltd.
990 Bendemeer Road
Singapore 339942
15.2 Except as required by law, for governmental approval or as may be
reasonably required for the operation of TECH, no Party shall, without the
prior written consent of the other Party, disclose (i) to any third party
other than Texas Instruments, Inc., its affiliates, any financial
institution that is a party to the Credit Facility or lending to TECH
thereunder, the PARTIES to the SHAREHOLDERS' AGREEMENT, and their
affiliates either the terms or conditions of this
-8-
<PAGE>
Agreement, or (ii) to any third party 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 TECH.
15.3 TECH agrees to comply with all applicable export control laws and to
obtain all export licenses required for performance of its obligations
hereunder.
15.4 MICRON may assign this Agreement or any obligation hereunder to any
subsidiary of MICRON upon written notice to TECH. In such event, MICRON
shall be the controlling party of such assignee and shall guarantee the
obligations of such assignee under this Agreement. TECH 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 TECH shall be void.
15.5 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.
15.6 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.
15.7 This Agreement may not be modified, except as permitted under Article
7.11(c) of the SHAREHOLDERS' AGREEMENT and with written consent of the
Parties.
15.8 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 instrument.
15.9 All notices , requests, demands, and other communications under this
Agreement shall be in writing and shall be delivered personally (including
by courier) or sent by registered or certified mail (postage prepaid) or
given by facsimile transmission (with confirmation in writing) to the
parties at the following addresses (or to such address as a party may have
specified by notice given to the other pursuant to this provision) and
shall be deemed given when so received:
If to MICRON: Site Manager
Micron Semiconductor Asia Pte. Ltd.
990 Bendemeer Road
Singapore 339942
With copy to: General Counsel
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83716-9632
-9-
<PAGE>
If to TECH: President
TECH Semiconductor Singapore Pte. Ltd.
No. 1 Woodlands Industrial Park D
Street 1
Singapore 738799
Fax: (65) 365-2016
and, to the extent required by Singapore law, on each member of TECH's Board of
Directors at their address of record. All such notices, requests, demands, and
other communications shall be deemed received on the date of receipt by the
recipient thereof if received prior to 5 p.m. in the place of receipt and such
day is a business day in the place of receipt. Otherwise, any such notice,
request, demand or other communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
15.10 All correspondence relating to this Agreement shall be in English.
15.11 This Agreement is written and executed in English. No translation of
this Agreement into any other language shall have any force or effect in
the interpretation of the construction of this Agreement in determination
of the intent of the Parties hereto.
15.12 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.
[The remainder of this page is intentionally left blank. Signatures appear on
the following page.]
-10-
<PAGE>
IN WITNESS WHEREOF, the Parties have signed and dated this Purchase
Agreement in the space provided below.
TECH SEMICONDUCTOR SINGAPORE MICRON TECHNOLOGY, INC.
PTE. LTD.
By:_________________________________ By:__________________________________
Name:_______________________________ Name:________________________________
Title:______________________________ Title:_______________________________
Date:_______________________________ Date:________________________________
-11-