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Exhibit 10.14
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (the "Agreement"), entered into and
effective as of February 26, 1998 ("Effective Date"), is by and among Micron
Technology, Inc., a Delaware corporation ("MTI"), Micron Electronics, Inc., a
Minnesota corporation ("MEI"), and MCMS, Inc. (f/k/a Micron Custom Manufacturing
Services, Inc.), an Idaho corporation (the "Company").
WHEREAS, this Agreement is made pursuant to that certain Amended and
Restated Recapitalization Agreement dated as of February 1, 1998 by and among
MEI, MEI California, Inc. (a wholly-owned subsidiary of MEI), the Company and
Cornerstone Equity Investors IV, L.P. ("Investor") (the "Recapitalization
Agreement");
WHEREAS, in connection with the transactions contemplated by the
Recapitalization Agreement, the parties have each agreed to provide certain
services on a transitional basis pursuant to the terms and conditions hereof;
WHEREAS, the execution and delivery of this Agreement are conditions to
the obligations of MEI and Investor under the Recapitalization Agreement; and
WHEREAS, capitalized terms used and not otherwise defined herein shall
have the meaning ascribed to those terms in the Recapitalization Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree and declare as follows:
ARTICLE 1
PROVISION OF SERVICES
1.1 Scope of Services. MTI shall provide, or cause its Affiliates (other
than MEI and its Affiliates) to provide, to the Company and its Affiliates the
services described in items A through I of Attachment A. MEI shall provide, or
cause its Continuing Affiliates to provide, to the Company and its Affiliates
the services described in items J through P of Attachment A. The Company shall
provide, or cause its Affiliates to provide, to MEI the services described in
items Q through S of Attachment A. Each of the foregoing services shall be
collectively referred to herein as the "Services". Each of the parties will
perform their respective Services, or will ensure that their respective Services
are performed, in a manner which is consistent with the scope of Services
described herein or in Attachments A or B or, if not so described, which is
substantially similar in scope, nature, quality and timeliness as those that the
party has provided to the recipient in past practice.
1.1.1 The Services to be provided by MTI in accordance with item
D(1) of Attachment A (Payroll) shall be: (i) the wiring of money to employee
accounts, (ii) mailing checks,
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and (iii) making deductions for taxes, the 401(k) savings plan, stock plan and
other employee benefits, if any.
1.1.2 The Services to be provided by MTI in accordance with item
A(1) of Attachment A (Financial Accounting Services) shall include
administrative services such as, but not limited to: (i) printing of invoices,
and (ii) general accounting for accounts receivables.
1.1.3 The Services to be provided by MTI in accordance with item
B(1) of Attachment A (Personnel) shall include administrative services such as
relocation, service awards, drug testing, PDS administration, suggestion program
and consulting.
1.1.4 The Services to be provided by MTI in accordance with item
F(1) of Attachment A (Benefits) shall be: (i) administrative services in
connection with general employee benefits and personnel, (ii) the administration
of COBRA benefits for employees of the Company, (iii) administrative services in
connection with processing worker's compensation claims and administrative
support in transitioning pension and welfare benefits and 401(k) plans to new
programs or providers, including administrative support of MEI's 401(k) plan as
a multiple employer plan (the "Multiple Employer Plan") as a result of the
Recapitalization, and (iv) administration of the Company's short-term disability
plan.
1.1.5 The Services to be provided by MEI in accordance with item L
of Attachment A (Treasury) shall be reasonable assistance to effect the
transition of cash management, and any training or other Special Projects to be
billed at the appropriate hourly rate.
1.1.6 The Services to be provided by MTI and MEI in accordance with
items C and N, respectively, of Attachment A (Tax) shall be administrative
support involving issues in the following areas: sales tax, property tax,
federal income tax, state income tax, international tax returns and, with
respect to MEI only, personal income tax returns for ex-patriots in Malaysia and
Belgium.
1.1.7 Notwithstanding anything in this Agreement, with respect to
Personnel Services, Payroll Services and Benefits (as referred to herein and in
Attachment A), the Company shall not require, and MTI shall not be under an
obligation to provide to the Company, any practice, policy, interpretation,
procedure or plan provision which deviates from MTI's practices, policies,
interpretations, procedures or plan provisions with respect to such areas as of
the Effective Date; provided, however, that MTI shall be required to continue to
administer any such deviations by the Company from the foregoing practices,
policies, interpretations, procedures or plan provisions which are administered
by MTI as of the Effective Date. Further, the Company agrees to "mirror" any
changes that MTI may make during the Term, in MTI's sole discretion, to the
foregoing practices, policies, interpretations, procedures or plan provisions in
such areas.
1.2 Access to Employees. At the Company's request and upon reasonable
notice, MTI and MEI shall allow the Company reasonable access during business
hours to their employees or their Affiliates' employees for the purpose of
facilitating the Company's use of the Services;
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provided, however, that such access does not interfere with the business
operations of MTI, MEI or their respective Affiliates, as applicable.
1.3 Existing Contracts. All existing contractual arrangements regarding
the provision of Services between the Company and MTI or MEI or any of their
Affiliates are hereby terminated or superseded, as appropriate, by this
Agreement.
1.4 Proprietary Software. The parties' respective rights and obligations
with respect to certain of the proprietary software of MTI and MEI are set forth
in the "MTI Proprietary Software License Agreement" attached hereto as
Attachment C and the "MEI Proprietary Software License Agreement" attached
hereto as Attachment D.
1.5 Information Technology. MEI and MTI, respectively, will provide the
Company with reasonable access to and support for their Internet Server,
IntrAnet, Wide Area Network and use of their current PBX or, in MEI's and MTI's
sole discretion, shall provide the Company with reasonable assistance to
transition the Company to its own Internet Server, IntrAnet, Wide Area Network
and PBX. MEI and the Company will implement and abide by the MEI/MCMS Technical
Transition Plan set forth in Attachment A.
1.6 Transfer of Third Party Agreements.
1.6.1 Upon the request of the Company, MEI and MTI shall provide
reasonable assistance to the Company to obtain the following third party
software licenses and hardware maintenance agreements:
a. Ross
b. Digital Contract
c. PDS
d. Microsoft Select
e. other software licenses reasonably required by the
Company to be able to operate as a stand-alone entity
1.6.2 Upon the request of the Company, MEI and MTI shall provide
reasonable assistance to the Company in obtaining agreements with the following
vendors:
a. Federal Express/UPS/DHL
b. MCI/AT&T/US West
c. Pagenet
1.6.3 MEI and MTI make no representations or warranties as to
whether any of the foregoing third party software licenses or other agreements
may be transferable to or obtainable by the Company on terms acceptable to the
Company.
1.7 Baan Software. At the request of MTI, the Company shall provide
reasonable assistance to help MTI obtain a license to the Baan software. The
Company makes no representation
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or warranty as to whether any such software license may actually be obtained on
terms acceptable to MTI.
ARTICLE 2
CHARGE FOR SERVICES
2.1 Monthly Service Fee. Except as set forth in Sections 2.2 and 2.3, the
monthly fees to be paid by the parties as of the Effective Date for each of the
Services are set forth on Attachment A beside each Service (collectively, the
"Monthly Service Fees"). For the time period between January 1, 1998 and the
Effective Date, the Company shall pay MEI's and MTI's corporate allocations for
those services that have been administered from MTI and MEI to the Company
during that time period; provided, however, that MEI's corporate allocation to
the Company for that time period shall not exceed $105,538 per any four-week
fiscal month and $131,923 per any five-week fiscal month. The Company shall also
pay for all Special Projects undertaken by MTI or MEI between January 1, 1998
and the Effective Date in connection with transitioning the Company to operate
as a stand alone entity. In addition, the Company shall pay all fees and
expenses (i) associated with MEI's conversion of its 401(k) plan to the Multiple
Employer Plan, including determination letter costs and (ii) generated as a
direct result of the Company's participation in the Multiple Employer Plan. The
Company shall further pay its proportional share (based on the number of
participants from the Company relative to the total number of participants) of
the costs of administering the Multiple Employer Plan, including user fees (each
of the foregoing with respect to the Multiple Employer Plan, the "MEP Fees").
2.2 Special Projects/Hourly Rate Services. The items listed on Attachment
A hereto as Special Projects and Hourly Rate Services (other than Special
Projects commenced between January 1, 1998 and the Effective Date) shall be
provided by MTI, MEI or the Company, as applicable, only upon the prior request
of the receiving party. In advance of performing any such Special Project and/or
Hourly Rate Services, the parties shall agree upon (i) the scope of the services
to be provided, (ii) the number of hours and the personnel necessary to conduct
such services, and (iii) the hourly rate to be charged for such services (unless
such hourly rate has been specified on Attachment A hereto). If, during the
course of performing any such Special Projects or Hourly Rate Services, the
providing party determines that the work to be performed cannot be completed
within the number of hours or using the same personnel as had been previously
agreed to, the providing party shall promptly notify the receiving party
thereof. The receiving party shall then have the right to approve additional
expenditures or modifications of the project and/or services or cancel, by
written notice, the project or services in their entirety. In the event the
project and/or services are cancelled pursuant to this Section 2.2, the
receiving party shall be obligated to pay, and the providing party shall be
entitled to receive, the agreed upon remuneration for all hours expended on such
project and/or services prior to receipt of written notice of cancellation.
2.3 Information Services Special Projects. The Company shall pay one
hundred percent (100%) of the Monthly Service Fees with respect to Information
Services Special Projects (as set forth in item H(2) of Attachment A and more
fully described in Attachment B) ("ISSP Monthly Service Fees") until the total
of such ISSP Monthly Service Fees equals $310,000. If the total of the
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ISSP Monthly Service Fees exceeds $310,000, the Company shall pay seventy five
percent (75%) and MEI shall pay twenty five percent (25%) of such total ISSP
Monthly Service Fees in excess of $310,000, until such total equals $410,000. If
the total of the ISSP Monthly Service Fees exceeds $410,000, the Company and MEI
shall each pay fifty percent (50%) of such total ISSP Monthly Service Fees in
excess of $410,000.
2.4 Payment. After the Effective Date, the applicable service provider
indicated on Attachment A shall provide invoices on or about the first day of
every calendar month with respect to those Services it provided during the
previous month. The parties shall also provide invoices for Special Projects and
MEP Fees incurred beginning as of January 1, 1998. MTI and MEI shall further
provide the Company with invoices for those corporate allocations charged to the
Company between January 1, 1998 and the Effective Date. Invoices shall be
payable within thirty (30) days after the date of such invoice. A per diem
adjustment shall be made for any Service rendered for less than a full month on
the basis of actual calendar days.
2.5 MTI Software Maintenance and Support. During the Term, MEI shall pay
to MTI all charges assessed by MTI for software maintenance and support for the
Company pursuant to item H of Attachment A, provided that the level of such
maintenance and support does not exceed the Company's historical demand therefor
and further provided that if the Company fails to meet the implementation dates
set forth in Attachment B, the Company shall pay to MTI fifty percent (50%) of
the charges assessed by MTI for the maintenance and support of the software for
that period following the applicable implementation dates set forth on
Attachment B. Notwithstanding the foregoing, MEI shall not pay for any software
maintenance or support following the Term.
ARTICLE 3
TERM AND TERMINATION OF SERVICES
3.1 Term. The term of this Agreement (the "Term") shall commence on the
Effective Date, and unless terminated earlier pursuant to Sections 3.2 or 3.3,
shall expire six (6) months thereafter, except that with respect to those
Services that constitute maintenance and support for MIMS only, this Agreement
shall continue for a period of twelve (12) months after the Effective Date.
Notwithstanding the foregoing, the terms of the proprietary software licenses
granted in connection herewith shall be as set forth in the MTI Proprietary
Software License Agreement and the MEI Proprietary Software License Agreement
(Attachments C and D, respectively).
3.2 Termination. The Company shall have the right at any time to terminate
its receipt of any or all Services under this Agreement early by written notice
to MEI or MTI, as applicable, specifying which Service or Services are to be
terminated and the requested date of termination ("Termination Date"); provided,
however, such notice must be given thirty (30) days in advance of the
Termination Date. Upon the termination of some, but not all of the Services, the
Monthly Service Fee shall be reduced by the amount set forth on Attachment A for
such terminated Services.
3.3 Nonpayment. In the event any party does not make timely payment for
Services in accordance with Section 2.4, the provider of such Services shall, in
its sole discretion, have the right
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to either (i) charge interest on such unpaid amounts at the rate of 1.5% per
month, or (ii) discontinue providing those Services relating to such nonpayment
without further liability hereunder with respect to such Services.
ARTICLE 4
INDEMNIFICATION; LIMITATION OF LIABILITY
4.1 Indemnity by MTI. Subject to the limitations set forth in Section 4.5,
MTI shall indemnify, defend and hold the Company and its officers, directors and
Affiliates harmless from and against any and all claims, liabilities, damages,
losses, costs, expenses (including but not limited to settlements, judgments,
court costs and reasonable attorneys' fees), fines and penalties (collectively,
"Losses") due to or relating to MTI's provision of or failure to provide the
Services only to the extent that such Losses result from the gross negligence or
reckless or willful misconduct of MTI and/or any contractors or agents who are
managed or directed by MTI, but in no event for Losses due to the Company's
negligence or reckless or willful misconduct.
4.2 Indemnity by MEI. Subject to the limitations set forth in Section 4.5,
MEI shall indemnify, defend and hold the Company and its officers, directors and
Affiliates harmless from and against any and all Losses due to or relating to
MEI's provision of or failure to provide the Services only to the extent that
such Losses result from the gross negligence or reckless or willful misconduct
of MEI and/or any contractors or agents who are managed or directed by MEI.
4.3 Indemnity by the Company. Subject to the provisions of the
Recapitalization Agreement and the limitations set forth in Section 4.5 hereof,
the Company shall indemnify, defend and hold MTI and MEI and their officers,
directors and Affiliates harmless from and against any and all Losses (i) due to
or relating to the operations and activities of the Company, except to the
extent that such Losses are the direct result of the gross negligence or willful
misconduct of MTI or MEI and/or any contractors or agents who are managed or
directed by MTI or MEI, and (ii) relating to establishment and administration of
a Multiple Employer Plan.
4.4 Term of Indemnity. The indemnities contained in this Article shall
survive for a period of twelve (12) months after the termination or expiration
of this Agreement.
4.5 Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, AT LAW OR IN EQUITY, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR
PUNITIVE, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS OR BUSINESS
INTERRUPTION) ARISING FROM OR RELATING TO ANY CLAIM MADE UNDER THIS AGREEMENT OR
REGARDING THE PROVISION OF OR THE FAILURE TO PROVIDE THE SERVICES.
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ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, this Agreement shall not be assignable or delegable by any
party without the prior written consent of the other parties, which consent
shall not be withheld unreasonably.
5.2 Third Persons. This Agreement is not intended to, and shall not,
create any right in or confer any rights upon persons other than the parties
hereto and, where applicable, their Affiliates.
5.3 Amendment and Waiver. No modification of or amendment to this
Agreement shall be valid unless in writing and signed by each of the parties
hereto referring specifically to this Agreement and stating the parties'
intention to modify or amend the same. Any waiver of any term or condition of
this Agreement must be in writing and signed by the party hereto sought to be
charged with such waiver referring specifically to the term or condition to be
waived, and no such waiver shall be deemed to constitute the waiver of any other
breach of the same or of any other term or condition of this Agreement.
5.4 Status. The parties hereto shall perform all of the services hereunder
as independent contractors and nothing contained herein shall be construed as
constituting any of the parties as an agent or legal representative of any other
party. None of the parties hereto shall have any responsibility with respect to
the employees of any of the other parties.
5.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Idaho without reference to the choice
of law principles thereof.
5.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall, subject to Section 5.12, become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
Copies of executed counterparts transmitted by telecopy, telefax or other
electronic transmission service shall be considered original executed
counterparts for purposes of this Section 5.6, provided receipt of copies of
such counterparts is confirmed.
5.7 Choice of Forum. Each of the parties hereto agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the State of Idaho or an Idaho state court.
5.8 Confidentiality. Each party recognizes that in the performance of this
Agreement, confidential and/or proprietary information belonging to the other
parties may be disclosed or become known to that party or its Affiliates
("Confidential Information"). Each party receiving Confidential Information
shall instruct its employees and agents that Confidential Information shall be
protected from unauthorized use or disclosure as if such information were
Confidential Information of the receiving party, and shall ensure that an
employee or agent who engages in the unauthorized use or disclosure shall be
subject to the same consequences as would arise in the case
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of unauthorized use or disclosure of Confidential Information of the receiving
party. This provision is in addition to and shall not supersede or modify any
confidentiality, nondisclosure or other agreements containing obligations of
confidentiality (including the Recapitalization Agreement) which were entered
into by the parties prior to the Effective Date.
5.9 Notices. All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, by telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below or to such other
address or to the attention of such other person as one party may designate by
written notice to the other parties hereto.
Notice to MTI shall be addressed to:
Micron Technology, Inc.
8000 South Federal Way
Boise, ID 83707
Attention: General Counsel
Telecopy: (208) 368-4540
Notice to MEI shall be addressed to:
Micron Electronics, Inc.
900 East Karcher Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy: (208) 893-8711
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Barry A. Bryer
Telecopy: (212) 403-2000
Notice to the Company shall be addressed to:
MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy: (208) 893-8711
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with a copy to:
Cornerstone Equity Investors, L.L.C.
717 Fifth Avenue
Suite 1100
New York, New York 10022
Attention: Tony Downer
Michael E. Najjar
Telecopy: (212) 826-6798
and
Kirkland & Ellis
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne
Telecopy: (212) 446-4900
5.10 Entire Agreement. This Agreement, including its Attachments, and the
Recapitalization Agreement, including the schedules and exhibits attached
thereto, embody the entire agreement of the parties with regard to the Services
and supersede any prior communications, commitments, representations or
warranties, both written and oral, relating to the Services. The foregoing to
the contrary notwithstanding, nothing in this Agreement shall be deemed to bind
MTI to the terms and provisions of the Recapitalization Agreement or the
schedules and exhibits attached thereto.
5.11 Survival. The provisions of Sections 1.4, 5.5, 5.7, 5.8 and 5.9 and
Article 4 shall survive expiration or termination of this Agreement.
5.12 Effectiveness. The parties' obligations under this Agreement are
conditional upon the Closing, the occurrence of which is subject to various
conditions set forth in the Recapitalization Agreement. This Agreement shall
become operative if and when the Closing occurs and shall be null and void if
the Closing does not occur for any reason. Nothing in this Agreement shall
constitute a representation or promise that any party hereto shall proceed with
the Closing or obligate any party to do so.
5.13 Specific Performance. Each of the parties agree that the Services to
be provided under this Agreement are unique and that any breach on their part of
this Agreement will be remediable by an order of specific performance.
5.14 Severability. Any provision of this Agreement which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
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5.15 Force Majeure. If any party is prevented from complying, either
totally or in part, with any of the terms or provisions of this Agreement by
reason of force majeure (including but not limited to fire, flood, earthquake,
explosion, storm, strike, lockout or other labor trouble, riot, war, rebellion
and/or acts of God), upon written notice by the party prevented from complying,
the requirements of this Agreement, or such of its provisions as may be
affected, shall be suspended during the period of such disability; provided that
the party prevented from complying shall use its commercially reasonable efforts
to remove such disability and shall continue performance with the utmost
dispatch whenever such causes are removed.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above.
MICRON TECHNOLOGY, INC.
By: /s/ W. G. Stover, Jr.
---------------------------------
Name: W. G. STOVER, JR.
Title: V. P. FINANCE, CFO
MICRON ELECTRONICS, INC.
By:
---------------------------------
Name:
Title:
MCMS, INC.
By:
---------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above.
MICRON TECHNOLOGY, INC.
By:
---------------------------------
Name:
Title:
MICRON ELECTRONICS, INC.
By: /s/ T. Erik Oaas
---------------------------------
Name: T. Erik Oaas
Title: Executive Vice President
MCMS, INC.
By:
---------------------------------
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above.
MICRON TECHNOLOGY, INC.
By:
---------------------------------
Name:
Title:
MICRON ELECTRONICS, INC.
By:
---------------------------------
Name:
Title:
MCMS, INC.
By: /s/ Robert F. Subia
---------------------------------
Name: Robert F. Subia
Title: President and CEO
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ATTACHMENT A
4-Week Month 5-Week Month
------------ ------------
Micron Technology, Inc. services provided to MCMS, Inc.
A. FINANCIAL ACCOUNTING SERVICES
1. Ongoing $216 $270
2. Special Projects Hourly Rate Hourly Rate
B. PERSONNEL SERVICES
1. Ongoing $408 $510
2. Special Projects Hourly Rate Hourly Rate
C. TAX SERVICES Hourly Rate Hourly Rate
D. PAYROLL SERVICES
1. Ongoing $3,033 $3,791
2. Special Projects Hourly Rate Hourly Rate
E. RISK MANAGEMENT SERVICES Hourly Rate Hourly Rate
F. BENEFITS
1. Ongoing $3,000 $3,750
2. Short Term Disability Actual UNUM Actual UNUM
Charges Charges
3. Special Projects Hourly Rate Hourly Rate
G. HEALTH SERVICES
1. Ongoing $1,360 $1,700
2. Special Projects Hourly Rate Hourly Rate
H. INFORMATION SERVICES
1. Hardware Utilization/Software Maintenance and Support $9,220 $11,525
(including MIMS)
2. Special Projects Hourly Rate Hourly Rate
I. HOURLY RATE SERVICES AND SPECIAL PROJECTS
Other services and special projects will be provided at the following
hourly rates:
1. Clerical $50/hour $50/hour
2. Professional, Manager, Director $100/hour $100/hour
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ATTACHMENT A (cont'd)
4-Week Month 5-Week Month
------------ ------------
Micron Electronics, Inc. services provided to MCMS, Inc.
J. CORPORATE ADMINISTRATION
1. Special Projects related to: Hourly Rate Hourly Rate
Compensation
Travel
Health Services
Risk Management
Payroll Assistance
Employee Benefits and Welfare
K. ACCOUNTING Hourly Rate Hourly Rate
L. TREASURY $2,767 $3,500
1. Special Projects Hourly Rate Hourly Rate
M. [INTENTIONALLY OMITTED]
N. TAX Hourly Rate Hourly Rate
O. NETWORKING AND TELECOMMUNICATIONS
1. Ongoing
a. Access to local and long distance, per phone line $6.00 $7.50
b. Long distance service Actual Actual
c. Equipment (including switch), per phone line $13.68 $17.10
d. New phone installation with equipment $1,100 $1,100
(per installation) (per installation)
e. Dedicated data line:
Malaysia $9,100 $11,300
Durham $3,800 $4,800
f. Telecom installation, maintenance and troubleshooting Hourly Rate Hourly Rate
g. Pager service:
Local $8.00 each $8.00 each
Nationwide $27.00 each $27.00 each
2. Incidentals Actual Actual
3. Special Projects Hourly Rate Hourly Rate
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ATTACHMENT A (cont'd)
4-Week Month 5-Week Month
------------ ------------
P. HOURLY RATE SERVICES AND SPECIAL PROJECTS
Other services and special projects will be provided at the following
hourly rates:
1. Clerical, Supervisory $50/hour $50/hour
2. Professional, Manager, Director $100/hour $100/hour
MCMS, Inc. services provided to Micron Electronics, Inc.
Q. SpecTek Accounting
1. Ongoing $1,600 $1,995
2. Special Projects Hourly Rate Hourly Rate
R. Cincom Software Support No Charge No Charge
S. HOURLY RATE SERVICES AND SPECIAL PROJECTS
Other services and special projects will be provided at the following
hourly rates:
1. Clerical, Supervisory $50/hour $50/hour
2. Professional, Manager, Director $100/hour $100/hour
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ATTACHMENT A (cont'd)
MEI/MCMS TECHNICAL TRANSITION PLAN
ATTACHED HERETO
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MEI/MCMS Technical Transition Plan
SCOPE
This plan describes the transition of network, telephony and Internet functions
to ensure that MCMS, Inc. and Micron Electronics, Inc. ("MEI") can operate
effectively in a stand alone fashion. This plan addresses the following areas:
Network Equipment
Telephony Equipment
Connectivity, Numbering, & Addressing
Internet
MEI Equipment @ MCMS Facility
NETWORK EQUIPMENT
The attached spreadsheet entitled Network Equipment describes network equipment
that was originally purchased to support the MCMS integration into the Nampa
campus of MEI. It includes router equipment, router upgrade and data switch
hardware. This equipment was purchased under the MCMS facility construction
budget and all costs were allocated to MCMS. The router identified by Asset
#201740 will be returned to MCMS in its entirety; the rest of the equipment will
be retained by MEI and MEI will pay MCMS for the equipment as indicated.
Network Assets Transferred from MCMS to MEI $0
Network Assets Transferred to MEI from MCMS $65,000
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NET Network Asset Transfer to MCMS ($65,000)
TELEPHONY EQUIPMENT
The attached spreadsheet entitled Telephony Equipment describes telephony
equipment that was originally purchased to support the MCMS integration into the
Nampa campus of MEI. It includes cabinets, hand sets, and circuit packs. This
equipment was purchased under the MCMS facility construction budget and all
costs were allocated to MCMS. It also contains hands sets and circuit packs
purchased by MEI to support general growth at MCMS. It also contains a proposed
asset transfer of a telephone switch to allow MCMS to operate a stand alone PBX.
MCMS must pay for all telephone handsets it purchases between the time of this
report and the completion of the transition. The parties shall pay for the
equipment transferred as indicated on the spreadsheet and as summarized below.
Telephony Assets Transferred to MCMS from MEI $46,395
Telephony Assets Transferred to MEI from MCMS $18,340
- -------------------------------------------------------
NET Telephony Asset Transfer to MCMS $28,055
TOTAL ASSETS TRANSFERRED
- ------------------------
A total of all assets transferred to MCMS is as follows:
Network Assets Transferred to MCMS: ($65,000)
Telephony Assets Transferred to MCMS: $28,055
- -------------------------------------------------------
Total Assets Transferred to MCMS: ($36,945)
1
19
CONNECTIVITY, NUMBERING, & ADDRESSING
Unless otherwise agreed to by the parties by amendment as provided for in the
Transitional Services Agreement:
1. LAN: All LAN connections between MCMS and MEI shall be disconnected 90
days after closing.
2. WAN: All WAN connections supporting MCMS that are currently terminated in
the MEI facility (e.g. Durham, Malaysia) shall be moved to the MCMS
facility within 90 days of closing. MEI shall retain all CSU/DSU equipment
located within MEI facilities.
3. NUMBERING: MCMS will retain use of DID ranges 898-2600 thru 2899 and
898-1000 thru 1289. Any numbers beyond these range required by MCMS must
be obtained through MCMS's service provider.
4. IP Addressing: MCMS may retain use of internal IP addresses currently used
by MCMS. Any external IP addresses shall be provided by MCMS. Existing
external IP addresses currently being utilized by MCMS shall be retained
by MEI.
5. FAX: MEI will cease providing FAX server services to MCMS 90 days after
closing.
6. DIAL UP CONNECTIONS: MEI dial in connections (RAS) will no longer be
available for use by MCMS 90 days after closing.
7. EMAIL: MEI will cease providing EMAIL services to MCMS 90 days after
closing.
8. PAGING: MEI will cease to provide MCMS paging services 90 days after
closing.
INTERNET/INTRANET
INTERNET
MEI will cease providing external internet connectivity, web hosting services,
and firewall services 90 days after closing.
INTRANET
All intranet files unique to MCMS will be transferred to MCMS via network
connections or tape drives, whichever is in place at time of transfer. Transfer
of the files is contingent on MCMS ability to provide intranet services. All
files will be transferred within 90 days of closing. All "hot links" from MCMS
Infonet pages to MEI Infonet pages will be removed at closing and all MCMS
browsers will default to the MCMS home page. MCMS access to the MEI Infonet
will be blocked as soon as the MCMS intranet is operational (expected by
mid-March 1998).
MEI PRESENCE AT MCMS
The following equipment will be located at the MCMS facility as long as the MEI
call center is located in the MCMS facility. This equipment will be dedicated to
the sole use of MEI and will be operated and maintained by MEI personnel. MEI
will retain title to the equipment. MEI will also require full access to the
equipment on 7X24 basis with an MCMS IT escort.
2
20
COM1
M13SLSSWH1 172.30.20.254
M13SLSSWH2 172.30.20.234
COM4
M13COM4H1 172.30.20.253
M13COM4H2 172.30.20.252
M13COM4H3 172.30.20.243
M13COM4H4 172.30.20.242
M13COM4H5 172.30.20.241
M13COM4H6 172.30.20.237
M13COM4H7 172.30.20.236
M13COM4H8 172.30.20.235 Labeled as "Sales Net"
M13COM4H10 172.30.20.232 Labeled as "Sales Net"
M13COM4H11 172.30.20.231 Labeled as "Sales Net"
M13COM4H12 172.30.20.230
M13COM4H13 172.30.20.228 Labeled as "Sales Net"
Telephone Cabinet
COM5
M13COM5H1 172.30.20.251
M13COM5H2 172.30.20.249
M13COM5H3 172.30.20.247
M13COM5H4 172.30.20.246
M13COM5H5 172.30.20.245
M13COM5H6 172.30.20.244
M13COM5H7 172.30.20.240
M13COM5H8 172.30.20.239
M13COM5H9 172.30.20.238
M13COM5H10 172.30.20.229
CMS Server Room
M13MEICDDI1 172.30.20.248
_MEI13BDC1 172.30.20.1
CMS Conference Room 16
Video Conferencing Unit
3
21
Network Eqpt.
- ---------------------------------------------------------------------------------------------------------------------------
ASSET # DESCRIPTION STATUS TRANSFER INFORMATION Fair Market AMOUNT AMOUNT
Value TRANSFERRED TRANSFERRED
TO MEI TO MCMS
===========================================================================================================================
201740 Router Resides at MEI Hardware can be moved to N/A N/A N/A
Karcher facility. MCMS
Supports only MCMS.
- ---------------------------------------------------------------------------------------------------------------------------
201741 Router Resides at MEI Hardware cannot be moved $30,000.00 $30,000.00 N/A
Karcher facility. to MCMS. Transfer must be
Shared between MEI dollars only.
& MCMS.
- ---------------------------------------------------------------------------------------------------------------------------
201742 Switch Resides at MEI Hardware cannot be moved $10,000.00 $10,000.00 N/A
Karcher facility. to MCMS. Transfer must be
Shared between MEI dollars only.
& MCMS.
- ---------------------------------------------------------------------------------------------------------------------------
201743 Switch Resides at MEI Hardware cannot be moved $10,000.00 $10,000.00 N/A
Karcher facility. to MCMS. Transfer must be
Shared between MEI dollars only.
& MCMS. Purchase
Price - $16.5K.
- ---------------------------------------------------------------------------------------------------------------------------
201745 Router Upgrade Resides at MEI WAN Hardware cannot be moved $15,000.00 $15,000.00 N/A
router located at the to MCMS. Transfer must be
Karcher facility. dollars only.
Shared between MEI
& MCMS. Purchase
Price - $25K.
===========================================================================================================================
Total $65,000.00
- ---------------------------------------------------------------------------------------------------------------------------
Micron Electronics, Inc. Confidential Network Eqpt. Page 1
22
Telephony Equipment
- ---------------------------------------------------------------------------------------------------------------------------
P.O. # DESCRIPTION STATUS TRANSFER Fair Market AMOUNT AMOUNT
INFORMATION Value TRANSFERRED TRANSFERRED
TO MEI TO MCMS
===========================================================================================================================
A35335 EPN Cabinet Resides at MCMS Assets can be retained N/A N/A
facility. Used by MCMS
solely by MCMS.
Purchase price - $19K.
Purchased under MCMS
construction budget.
- ---------------------------------------------------------------------------------------------------------------------------
A35335 EPN Cabinet Resides in new MEI Must be retained $ 18,340.00 $ 18,340.00 N/A
manufacturing facility. by MEI
Purchase price - $19K.
Purchased under MCMS
construction budget.
- ---------------------------------------------------------------------------------------------------------------------------
A35335 Phone Sets Reside in MCMS Assets can be retained N/A N/A
facility. Solely used by MCMS
by MCMS. Purchase
price - $82.5K. Purchased
under MCMS construction
budget.
- ---------------------------------------------------------------------------------------------------------------------------
A35335 20 Circuit Packs Reside in MCMS Assets can be retained N/A N/A
($2350 ea.) facility. Solely used by MCMS
by MCMS. Purchase
price - $47.1K. Purchased
under MCMS construction
budget.
- ---------------------------------------------------------------------------------------------------------------------------
Various 3 Circuit Packs Reside in MCMS Assets can be retained
facility. Solely used by MCMS
by MCMS. Purchased
by MEI from telecom
growth budget.
- ---------------------------------------------------------------------------------------------------------------------------
220173-0000 ANALOG CARDS, 16-PORT (3 EA) $ 5,700.00 N/A $ 5,700.00
- ---------------------------------------------------------------------------------------------------------------------------
Various 4 Circuit Packs Reside in MCMS Assets can be retained
($4100 ea.) facility. Solely used by MCMS
by MCMS. Purchased
by MEI from telecom
growth budget.
- ---------------------------------------------------------------------------------------------------------------------------
NO Asset # TN2224 (4 each) $ 16,400.00 N/A $ 16,400.00
- ---------------------------------------------------------------------------------------------------------------------------
Micron Electronics, Inc. Confidential 2/16/98 Page 1
23
Telephony Equipment
- ---------------------------------------------------------------------------------------------------------------------------
P.O. # DESCRIPTION STATUS TRANSFER Fair Market AMOUNT AMOUNT
INFORMATION Value TRANSFERRED TRANSFERRED
TO MEI TO MCMS
===========================================================================================================================
Various 2 Phone sets Reside in MCMS Asset can be retained
($695 ea.) facility. Solely used by MCMS
by MCMS. Purchased
by MEI from telecom
growth budget.
- ---------------------------------------------------------------------------------------------------------------------------
220137-0000 8434 PHONE SETS (2 EA) $ 1,390.00 N/A $ 1,390.00
- ---------------------------------------------------------------------------------------------------------------------------
Various 23 Phone sets Reside in MCMS Asset can be retained
($375 ea.) facility. Solely used by MCMS
by MCMS. Purchased
by MEI from telecom
growth budget.
- ---------------------------------------------------------------------------------------------------------------------------
220101-0000 8410 PHONE SETS (23 EA) $ 8,625.00 N/A $ 8,625.00
- ---------------------------------------------------------------------------------------------------------------------------
Various 24 Phone sets Reside in MCMS Asset can be retained
($595 ea.) facility. Solely used by MCMS
by MCMS. Purchased
by MEI from telecom
growth budget.
- ---------------------------------------------------------------------------------------------------------------------------
220138-0000 8411 PHONE SETS (20) $ 11,900.00 N/A $ 11,900.00
220136-0000 8412 PHONE SETS (4) $ 2,380.00 N/A $ 2,380.00
- ---------------------------------------------------------------------------------------------------------------------------
Total $ 18,340.00 $ 46,395.00
- ---------------------------------------------------------------------------------------------------------------------------
Micron Electronics, Inc. Confidential 2/16/98 Page 2
24
ATTACHMENT B
IT Transition Requirements Between MTI and MCMS
Migration Testing/Implementation Total
--------- ---------------------- -----
Payroll 800 400 1,200
MIMS 600 200 800
System Utilities 500 500
Ross GL/FA 200 100 300
Manufacturing 150 100 250
Network 50 50
Total 2,250 850 3,100
PAYROLL
1. Jan 1 -- MCMS begins selection process for 3rd party provider for payroll
and benefit services. (MTI provides limited service) It is the expectation
of MCMS to select benefit providers that mirror the current MTI benefits.
Limited amount of development will be necessary.
2. Feb -- MCMS meets with AON to define project plan for 3rd party payroll
processing services
3. Feb -- MTI provides resources to define and enter data necessary to
provide payroll services for MCMS employees on their new benefit plan.
4. Apr-May-June -- MTI, CMS and 3rd party provider define and develop system
migration requirements and develop and implement strategy. MTI dedicates 2
FTE people to the project for two months. These estimated hours spent by
MTI is 800 hours.
5. July-Aug -- Testing, Training and Parallel process occurs. MTI provides
personnel for approximately 400 hours to provide test/conversion support
6. Sept -- Live on 3rd party payroll, MTI drops processing of MCMS payroll.
Supporting applications for benefits, personnel (time Sheet, PCR, and TimeOff).
The 3rd party provider should have their own application software to provide
input for these systems. However, if they do not, MCMS would acquire from MTI
the application code for the software. IT would be the responsibility of MCMS to
integrate the applications with the third party provider of the payroll systems.
Determination for the actual usage of the software will be done as part of the
3rd party selection process.
Training has been converted by MTI. MCMS will utilize these systems in a
standalone mode. Implementation of this, it is expected to implement by 1 April.
Applicant Tracking -- Used heavily by MCMS personnel department. A project would
be established for the migration of CMS data. Associated hours are included in
the 800 hour payroll migration estimate. However, because of the tight
integration with the MTI payroll system (PDS) it is not a functional product
until the separation from MTI is completed.
-B-1-
25
Other associated applications (Time Sheet, Time off, Personnel Change Request,
New Employee) will be evaluated for use with the new 3rd party software. There
is no requirement except to provide the source code and data structures by MTI.
MIMS
Effort for MIMS is composed of 4 month effort. There will also be 12 months of
phone support provided by MTI after the Closing.
It is expected that the conversion process will take 600 hours of direct support
on the MIMS Systems, and an additional 500 hours for related peripheral systems
such as Mail, Paging, and runtime routines.
Following conversion there will be an additional effort of 200 hours for testing
and parallel processing before final implementation.
1. Jan -- begin project planning, review hardware planning, install MIMS and
related software.
2. Jan-Feb -- data migration begins
3. Mar-April -- testing and implementation
4. April 6th is the current scheduled date the MTI will convert data and MCMS
will begin final testing.
5. May 1 -- scheduled completion of the project for MCMS.
ROSS - GENERAL LEDGER AND FA
300 hours -- Project is composed of 200 hours for data conversion and 100 hours
for support after implementation.
Project time line:
1. Jan-Feb -- Meeting with Ross System and acquire licenses as necessary.
2. Feb-Mar -- Define design and develop data conversion effort
3. Apr-May -- Parallel testing effort and implementation for GI, Fixed Asset,
and Currency Management
MANUFACTURING
150 hours porting data; 100 hours following migration.
Manufacturing is composed of several smaller programs that are being replaced
currently by other methods, but still may be needed for a period of time. The
applications are to be transferred to MCMS as they are now composed. If data
cleanup is found to be necessary then it is expected to be limited in scope and
estimated at 150 hours. After migration, it is expected there would be 100 hours
of additional support that may be necessary.
Project Time line
-B-2-
26
1. Jan/Feb Meet with MCMS management team to define the actual
requirements for migration. Design and develop required
migration plans for the following applications:
ECN -- Engineering Change Notice
SPEC -- Specifications (process is currently migrating to
Network based specs)
OperCert - Operator Certification
2. Mar/Apr -- MCMS will test applications as needed.
3. May 1 is scheduled date for implementation of applications.
-B-3-
27
ATTACHMENT C
MTI PROPRIETARY SOFTWARE LICENSE AGREEMENT
This MTI PROPRIETARY SOFTWARE LICENSE AGREEMENT ("Agreement"),
entered into and effective as of February __, 1998 ("Effective Date"), is by and
between Micron Technology, Inc., a Delaware corporation ("Licensor") and MCMS,
Inc. (f/k/a Micron Custom Manufacturing Services, Inc.), an Idaho corporation
("Licensee").
WHEREAS, this Agreement is made pursuant to that certain Amended and
Restated Recapitalization Agreement dated as of February 1, 1998, by and among
Licensee, Micron Electronics, Inc., a majority-owned subsidiary of Licensor
("MEI"), MEI California, Inc. (a wholly-owned subsidiary of MEI) and Cornerstone
Equity Investors IV, L.P. ("Investor") (the "Recapitalization Agreement"), and
more particularly Exhibit A (Transitional Service Agreement Term Sheet) attached
thereto;
WHEREAS, in connection with the transactions contemplated by the
Recapitalization Agreement, Licensee desires to obtain from Licensor, and
Licensor has agreed to grant to Licensee, a license in perpetuity to use the
Software (as defined herein) upon the terms and conditions set forth below; and
WHEREAS, the execution and delivery of this Agreement are conditions
to the obligations of MEI and Investor under the Recapitalization Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree and declare as follows:
1. DEFINITIONS. The following terms when used herein with initial
capital letters (whether used in the singular or plural form) shall have the
meaning set forth in this Section 1. All other capitalized terms used by not
otherwise defined herein shall have the respective meanings assigned to them in
the Recapitalization Agreement.
(a) Affiliate. The term "Affiliate" shall mean any person, and any
corporation, partnership or other entity, that directly or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with the party specified.
(b) Derivative Work. The term "Derivative Work" shall mean a work
which is based upon one or more preexisting works, such as a modification,
revision, enhancement, translation, condensation, expansion, or any other form
in which such preexisting work may be recast, transformed, or adapted. For
purposes hereof, a Derivative Work shall include any compilation that
incorporates a preexisting work.
28
(c) MCMS Business. The term "MCMS Business" shall mean the design,
assembly and testing of custom complex printed circuit boards, memory intensive
products and system level assemblies for third party electronics original
equipment manufacturers.
(d) Software. The term "Software" shall mean Licensor's proprietary
software programs that fall within the categories listed on Schedule A attached
hereto and Licensor's customized applications of the software programs listed on
Schedule B, in both object code and source code format, and any related
specifications, instructions and documentation (including by way of example,
user manuals and schematics), and further including any of Licensor's upgrades
of such software programs (in object code and source code format) and the
documentation related thereto to the extent Licensor upgrades such programs and
documentation for its own use during the term of this Agreement.
2. LICENSE.
(a) Grant of License. Licensor hereby grants to Licensee, and
Licensee hereby accepts, a worldwide, perpetual, paid-up, royalty-free,
nonexclusive, nontransferable right and license to use the Software in the
conduct of the MCMS Business and the right to prepare and have prepared
Derivative Works of the Software for use in the conduct of the MCMS Business.
The foregoing rights and licenses granted hereunder shall extend to the benefit
of Licensee's Affiliates provided that such Affiliates agree in writing to
assume and abide by the obligations and restrictions established hereunder.
(b) License Restrictions. The foregoing license is subject to the
following restrictions:
(i) Licensee may not copy the Software without the prior
written consent of Licensor except (1) to make a copy of any part of the
Software to the extent such copying is required in the utilization of the
Software in the MCMS Business or (2) to create a Derivative Work. Licensee may
copy the system documentation provided by Licensor in connection with Licensee's
permitted use of the Software.
(ii) Licensee may not sell, sublicense, convey, transfer,
assign (other than in accordance with Section 7(a) hereof), make available for
time-sharing or service bureau purposes or otherwise provide the Software to any
third party without Licensor's prior written approval.
(iii) Licensee may not publish or otherwise disclose to third
parties, or permit its employees or agents or anyone else to publish or disclose
to third parties, the Software for purposes other than those contemplated by
this Agreement without Licensor's prior written approval.
(c) Reservation of Rights. No rights are granted under the Software
except as expressly set forth in this Article 2, and all rights not expressly
granted are reserved.
-2-
29
(d) Delivery. Within thirty (30) days after the Effective Date of
this Agreement, Licensor shall deliver to Licensee two (2) copies of magnetic or
optical (i.e., CD-ROM) media containing both source code and object code which
embody the Software, and any related documentation.
(e) Maintenance and Upgrades. For a period of six (6) months
following the Effective Date, Licensor shall provide Licensee with the benefit
of all upgrades, modifications and enhancements to, and maintenance of, the
Software to the same extent that Licensor upgrades, modifies, enhances and
maintains the Software for its own use; provided, however, that with respect to
the software listed on Schedule A under the heading "MIMS," the foregoing
obligations shall continue for a period of twelve (12) months following the
Effective Date.
(f) Archival Copies. For a period of six (6) years following the
Effective Date, Licensor shall make reasonably available to Licensee archival
copies of the Software that fall within categories I and II of Exhibit A
attached hereto and the data associated therewith.
3. LIMITATION OF LIABILITY.
ANY PROVISION IN THE TRANSITION SERVICES AGREEMENT NOTWITHSTANDING
THE SOFTWARE IS LICENSED ON AN "AS IS" BASIS WITHOUT ANY WARRANTY. ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, FUNCTIONALITY, ABILITY TO
INTERFACE WITH OTHER SOFTWARE AND NONINFRINGEMENT, ARE HEREBY DISCLAIMED. IN NO
EVENT SHALL LICENSOR BE LIABLE FOR LOSS OF PROFITS, LOSS OR INTERRUPTION OF
BUSINESS, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES ARISING
OUT OF OR RELATING TO LICENSEE'S USE OF THE SOFTWARE, EVEN IF LICENSOR HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
4. PROPRIETARY RIGHTS.
(a) Software. As between Licensor and Licensee, title to the
Software and all intellectual property rights therein, including without
limitation any copyright, trade secret, patent and other proprietary rights,
any registrations of and the right to register any of the foregoing, and any and
all renewals and extensions of any such copyright or patent, are and shall at
all times remain the property of Licensor. Copyright registrations or other
intellectual property right protection for the Software shall only be obtained
and maintained by Licensor in its name and at its expense and discretion. All
authorized copies of the Software and related documentation shall reproduce
Licensor's copyright and confidentiality notices or shall otherwise bear a
notice as reasonably specified by Licensor from time to time.
(b) Derivative Works. As between Licensor and Licensee, title to any
authorized Derivative Work of the Software prepared by or for Licensee and all
intellectual property rights therein, including without limitation any
copyright, trade secret, patent and other proprietary rights, and registrations
of and the right to register any of the foregoing, and any and all renewals
-3-
30
and extensions of any such copyright or patent, shall be the property of
Licensor. Copyright registrations or other intellectual property right
protection for any Derivative Work prepared by or for Licensee shall only be
obtained and maintained by Licensor in its name and at its expense and
discretion. Licensee shall be licensed to use such Derivative Works on the same
terms and conditions as set forth herein respecting Software.
5. CONFIDENTIALITY AND NONDISCLOSURE.
Licensee shall keep the Software in confidence by using at least the
same physical and other security measures as Licensee uses for its own
confidential technical information and documentation. Licensee shall not
disclose and, except as otherwise provided in this Agreement, shall not make or
permit others to make copies or reproductions of the Software, or any aspect
thereof, to anyone other than those of its employees, agents or independent
contractors (including, without limitation, software developers, systems
integration companies, technical support consultants, and outsourcing companies)
who have a need to know and are bound to protect such information against any
other use or disclosure. The foregoing shall not prohibit or limit Licensee's
use of information (i) independently developed by Licensee without reference to
the Software; (ii) acquired by it from a third party without continuing
restriction on use; or (iii) which is, or becomes, publicly available through no
breach by Licensee of this Agreement.
6. TERMINATION.
(a) By Licensee. Licensee may terminate this Agreement with respect
to any or all of the Software at any time upon thirty (30) days prior written
notice to Licensor.
(b) By Licensor. Licensor may terminate this Agreement upon
forty-five (45) days' written notice to Licensee if Licensee is in material
breach or default of any term or condition of this Agreement, provided that such
material breach or default is not cured within said forty-five (45) day period.
(c) Events Upon Termination. Upon termination of this Agreement for
any reason, the following provisions shall have effect:
(i) All rights and licenses granted to Licensee hereunder
shall immediately cease and all rights in the Software shall revert to Licensor.
(ii) Licensee shall promptly cease all use of the Software
but, in any event, shall cease such use within thirty (30) days of termination
of this Agreement.
(iii) Licensee shall promptly return to Licensor the Software,
all disks, tapes and other tangible items embodying the Software and all copies
of related documentation, or shall certify to Licensor in writing that the
foregoing have been destroyed.
(iv) Termination of this Agreement shall not affect the
continued enforceability of Article 5.
-4-
31
(d) Indemnification. Licensee shall indemnify, defend and hold
Licensor harmless from any and all claims, suits or judgments to which Licensor
may be or is exposed arising out of any breach of the provisions herein by
Licensee.
7. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement and Licensor's rights and
obligations hereunder shall be freely assignable and transferable by Licensor;
provided, however, that as a condition to the effectiveness of such assignment,
such assignee shall affirm in writing its agreement to be bound by all of the
obligations of Licensor hereunder. Licensee may not assign, delegate or transfer
this Agreement or any of its rights, interests or obligations hereunder to
anyone without the prior written consent of Licensor. For purposes of this
Section 7(a), any merger, consolidation, sale of substantially all of Licensee's
assets or transfer of a controlling interest in Licensee ("Transaction") shall
be deemed to be an attempted assignment, delegation or transfer of the rights
and obligations under this Agreement and shall require the prior written consent
of Licensor. In the absence of obtaining such prior written consent, this
Agreement shall be deemed terminated as of the day immediately preceding the
effective date of such Transaction.
(b) Waivers and Amendments. No modification of or amendment to this
Agreement shall be valid unless in a writing signed by the parties hereto
referring specifically to this Agreement and stating the parties' intention to
modify or amend the same. Any waiver of any term or condition of this Agreement
must be in a writing signed by the party hereto sought to be charged with such
waiver referring specifically to the term or condition to be waived, and no such
waiver shall be deemed to constitute the waiver of any other breach of the same
or of any other term or condition of this Agreement.
(c) Notices. All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission service
to the appropriate address or number as set forth below or to such other address
or to the attention of such other person as one party may designate by written
notice to the other party hereto.
Notices to Licensor shall be addressed to:
Micron Technology, Inc.
8000 South Federal Way
Boise, Idaho 83707
Attention: General Counsel
Telecopy No: (208) 368-4540
-5-
32
Notices to Licensee shall be addressed to:
MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy No: (208) 893-8711
(d) Interpretation. The headings and captions contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The use of the word "including"
herein shall mean "including without limitation."
(e) No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
person.
(f) Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings, whether written or
oral, relating to such subject matter.
(g) Severability. Any provision of this Agreement which is invalid
or unenforceable shall be ineffective to the extent of such invalidity or
unenforceability without affecting in any way the remaining provisions hereof.
(h) Relationship of Parties. Except as specifically provided herein,
neither Licensor nor Licensee shall act or represent or hold itself out as
having authority to act as an agent or partner of the other party, or in any way
bind or commit the other party to any obligations. The rights, duties,
obligations and liabilities of the parties shall be several and not joint or
collective, and nothing contained in this Agreement shall be construed as
creating a partnership, joint venture, agency, trust or other association of any
kind, each party being individually responsible only for its obligations as set
forth in this Agreement.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Idaho without reference to the
choice of law principles thereof.
(j) Choice of Forum. Each of the parties hereto agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the State of Idaho or an Idaho state court.
-6-
33
(k) Counterparts. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.
* * * * *
-7-
34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the Effective Date.
MICRON TECHNOLOGY, INC. MCMS, INC.
By:_________________________ By:___________________________
Name: ______________________ Name:_________________________
Title:______________________ Title:________________________
35
SCHEDULE A
Categories of MTI Proprietary Software
I. Payroll
II. MIMS
A. Sales
B. Finished Goods
C. Shipping
D. Export License
E. Accounts Receivable
F. Credit
G. Return Material
H. EDI with Sales/Accounts
I. MTI Shipping Agent
J. Any other modules necessary or useful for the complete effective
implementation or utilization of MIMS
III. General Employee Benefits
IV. Personnel
V. Training
VI. Applicant Tracking
36
SCHEDULE B
Customized Applications
SPECS
ECN
Manufacturing Part Lookup
Operator Certification
Accident Reporting
Hazardous Material Tracking
37
ATTACHMENT D
MEI PROPRIETARY SOFTWARE LICENSE AGREEMENT
This MEI PROPRIETARY SOFTWARE LICENSE AGREEMENT ("Agreement"),
entered into and effective as of February __, 1998 ("Effective Date"), is by and
between Micron Electronics, Inc., a Minnesota corporation ("Licensor") and MCMS,
Inc. (f/k/a Micron Custom Manufacturing Services, Inc.), an Idaho corporation,
and its wholly-owned subsidiaries (collectively, "Licensee").
WHEREAS, this Agreement is made pursuant to that certain Amended and
Restated Recapitalization Agreement dated as of February 1, 1998, by and among
Licensee, Licensor, MEI California, Inc. (a wholly-owned subsidiary of Licensor)
and Cornerstone Equity Investors IV, L.P. ("Investor") (the "Recapitalization
Agreement"), and more particularly Exhibit A (Transitional Service Agreement
Term Sheet) attached thereto;
WHEREAS, in connection with the transactions contemplated by the
Recapitalization Agreement, Licensee desires to obtain from Licensor, and
Licensor has agreed to grant to Licensee, a license in perpetuity to use the
Software (as defined herein) upon the terms and conditions set forth below; and
WHEREAS, the execution and delivery of this Agreement are conditions
to the obligations of Licensor and Investor under the Recapitalization
Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree and declare as follows:
1. DEFINITIONS. The following terms when used herein with initial
capital letters (whether used in the singular or plural form) shall have the
meaning set forth in this Section 1. All other capitalized terms used by not
otherwise defined herein shall have the respective meanings assigned to then in
the Recapitalization Agreement.
(a) Derivative Work. The term "Derivative Work" shall mean a work
which is based upon one or more preexisting works, such as a modification,
revision, enhancement, translation, condensation, expansion, or any other form
in which such preexisting work max be recast, transformed, or adapted. For
purposes hereof, a Derivative Work shall include any compilation that
incorporates a preexisting work.
(b) MCMS Business. The term "MCMS Business" shall mean the design,
assembly and testing of custom complex printed circuit boards, memory intensive
products and system level assemblies for third party electronics original
equipment manufacturers.
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(c) Software. The term "Software" shall mean any version of
Licensor's proprietary Legal Department Docket software program, in both object
code and source code format, and any related specifications, instructions and
documentation (including by way of example, user manuals and schematics) and
further including any of Licensor's upgrades of such software programs (in
object code and source code format) and the documentation related thereto to the
extent Licensor upgrades such programs and documentation for its own use during
the term of this Agreement.
2. LICENSE.
(a) Grant of License. Licensor hereby grants to Licensee, and
Licensee hereby accepts, a worldwide, perpetual, paid-up, royalty-free,
non-exclusive, nontransferable right and license to use the Software in the
conduct of the MCMS Business and the right to prepare and have prepared
Derivative Works of the Software for use in the conduct of the MCMS Business.
(b) License Restrictions. The foregoing license is subject to the
following restrictions:
(i) Licensee may not copy the Software without the prior
written consent of Licensor except (1) to make a copy of any part of the
Software to the extent such copying is required in the utilization of the
Software in the MCMS Business, (2) to make an archival or back-up copy of the
Software and related documentation or (3) to create a Derivative Work. Licensee
may copy the system documentation provided by Licensor in connection with
Licensee's permitted use of the Software.
(ii) Licensee may not sell, sublicense, convey, transfer,
assign (other than in accordance with Section 7(a) hereof), make available for
time-sharing or service bureau purposes or otherwise provide the Software to any
third party without Licensor's prior written approval.
(iii) Licensee may not publish or otherwise disclose to third
parties, or permit its employees or agents or anyone else to publish or disclose
to third parties, the Software for purposes other than those contemplated by
this Agreement without Licensor's prior written approval.
(c) Reservation of Rights. No rights are granted under the Software
except as expressly set forth in this Article 2, and all rights not expressly
granted are reserved.
(d) Delivery. Within thirty (30) days after the Effective Date of
this Agreement, Licensor shall deliver to Licensee two (2) copies of magnetic or
optical (i.e., CD-ROM) media containing both source code and object code which
embody the Software, and any related documentation.
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3. LIMITATION OF LIABILITY.
ANY PROVISION IN THE TRANSITION SERVICES AGREEMENT NOTWITHSTANDING,
THE SOFTWARE IS LICENSED ON AN "AS IS" BASIS WITHOUT ANY WARRANTY OTHER THAN ANY
WARRANTIES SET FORTH IN THE RECAPITALIZATION AGREEMENT. ALL OTHER WARRANTIES
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, FUNCTIONALITY, ABILITY TO
INTERFACE WITH OTHER SOFTWARE AND NON-INFRINGEMENT, ARE HEREBY DISCLAIMED. IN NO
EVENT SHALL LICENSOR BE LIABLE FOR LOSS OF PROFITS, LOSS OR INTERRUPTION OF
BUSINESS, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES ARISING
OUT OF OR RELATING TO LICENSEE'S USE OF THE SOFTWARE, EVEN IF LICENSOR HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
4. PROPRIETARY RIGHTS.
(a) Software. As between Licensor and Licensee, title to the
Software and all intellectual property rights therein, including without
limitation any copyright, trade secret, patent and other proprietary rights, any
registrations of and the right to register any of the foregoing, and any and all
renewals and extensions of any such copyright or patent, are and shall at all
times remain the property of Licensor. Copyright registrations or other
intellectual property right protection for the Software shall only be obtained
and maintained by Licensor in its name and at its expense and discretion. All
authorized copies of the Software and related documentation shall reproduce
Licensor's copyright and confidentiality notices or shall otherwise bear a
notice as reasonably specified by Licensor from time to time.
(b) Derivative Works. As between Licensor and Licensee, title to any
authorized Derivative Work of the Software prepared by or for Licensee and all
intellectual property rights therein, including without limitation any
copyright, trade secret, patent and other proprietary rights, and registrations
of and the right to register any of the foregoing, and any and all renewals and
extensions of any such copyright or patent, shall be the property of Licensor.
Copyright registrations or other intellectual property right protection for any
Derivative Work prepared by or for Licensee shall only be obtained and
maintained by Licensor in its name and at its expense and discretion. Licensee
shall be licensed to use such Derivative Works on the same terms and conditions
as set forth herein respecting Software.
5. CONFIDENTIALITY AND NONDISCLOSURE.
Licensee shall keep the Software in confidence by using at least
the same physical and other security measures as Licensee uses for its own
confidential technical information and documentation. Licensee shall not
disclose and, except as otherwise provided in this Agreement, shall not make or
permit others to make copies or reproductions of the Software, or any aspect
thereof, to anyone other than those of its employees, agents or independent
contractors (including, without limitation, software developers, systems
integration companies, technical support
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consultants, and outsourcing companies) who have a need to know and are bound to
protect such information against any other use or disclosure. The foregoing
shall not prohibit or limit Licensee's use of information (i) independently
developed by Licensee without reference to the Software; (ii) acquired by it
from a third party without continuing restriction on use; or (iii) which is, or
becomes, publicly available through no breach by Licensee of this Agreement.
6. TERMINATION.
(a) By Licensee. Licensee may terminate this Agreement at any time
upon thirty (30) days prior written notice to Licensor.
(b) By Licensor. Licensor may terminate this Agreement upon ninety
(90) days' written notice to Licensee if Licensee is in material breach or
default of any term or condition of this Agreement, provided that such material
breach or default is not cured within said ninety (90) day period.
(c) Events Upon Termination. Upon termination of this Agreement for
any reason, the following provisions shall have effect:
(i) All rights and licenses granted to Licensee hereunder
shall immediately cease and all rights in the Software shall revert to
Licensor.
(ii) Licensee shall promptly cease all use of the Software
but, in any event, shall cease such use within thirty (30) days of termination
of this Agreement.
(iii) Licensee shall promptly return to Licensor the Software,
all disks, tapes and other tangible items embodying the Software and all copies
of related documentation, or shall certify to Licensor in writing that the
foregoing have been destroyed.
(iv) Termination of this Agreement shall not affect the
continued enforceability of Article 5.
(d) Indemnification. Licensee shall indemnify, defend and hold
Licensor harmless from any and all claims, suits or judgments to which Licensor
may be or is exposed arising out of any breach of the provisions herein by
Licensee.
7. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement and Licensor's rights and
obligations hereunder shall be freely assignable and transferable by Licensor;
provided, however, that as a condition to the effectiveness of such assignment,
such assignee shall affirm in writing its agreement to be bound by all of the
obligations of Licensor hereunder. Licensee may not assign, delegate or transfer
this Agreement or any of its rights, interests or obligations hereunder without
the prior written consent of Licensor; provided, however, that Licensee may
assign its rights and
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obligations under this Agreement to a successor in interest to the MCMS Business
that assumes in writing all of Licensee's obligations hereunder.
(b) Waivers and Amendments. No modification of or amendment to this
Agreement shall be valid unless in a writing signed by the parties hereto
referring specifically to this Agreement and stating the parties' intention to
modify or amend the same. Any waiver of any term or condition of this Agreement
must be in a writing signed by the party hereto sought to be charged with such
waiver referring specifically to the term or condition to be waived, and no such
waiver shall be deemed to constitute the waiver of any other breach of the same
or of any other term or condition of this Agreement.
(c) Notices. All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission service
to the appropriate address or number as set forth below or to such other address
or to the attention of such other person as one party may designate by written
notice to the other party hereto.
Notices to Licensor shall be addressed to:
Micron Electronics, Inc.
900 East Karcher Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy No: (208) 898-7411
Notices to Licensee shall be addressed to:
MCMS, Inc.
16399 Franklin Road
Nampa, Idaho 83687
Attention: General Counsel
Telecopy No: (208) 893-8711
(d) Interpretation. The headings and captions contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The use of the word "including"
herein shall mean "including without limitation."
(e) No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction shall be applied against
any person.
(f) Entire Agreement. This Agreement and the Recapitalization
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject
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matter hereof and supersede all prior agreement and understandings, whether
written or oral, relating to such subject matter.
(g) Severability. Any provision of this Agreement which is invalid
or unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
(h) Relationship of Parties. Except as specifically provided herein,
neither Licensor nor Licensee shall act or represent or hold itself out as
having authority to act as an agent or partner of the other party, or in any way
bind or commit the other party to any obligations. The rights, duties,
obligations and liabilities of the parties shall be several and not joint or
collective, and nothing contained in this Agreement shall be construed as
creating a partnership, joint venture, agency, trust or other association of any
kind, each party being individually responsible only for its obligations as set
forth in this Agreement.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Idaho without reference to the
choice of law principles thereof.
(j) Consent to Jurisdiction. Each of the parties hereto agrees that
it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court other than a federal
court sitting in the State of Idaho or an Idaho state court.
(k) Counterparts. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), all of which
shall be considered one and the same agreement, and shall become effective when
one or more such counterparts have been signed by each of the parties and
delivered to the other party.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the Effective Date.
MICRON TECHNOLOGY, INC. MCMS, INC.
By:_________________________ By:___________________________
Name: ______________________ Name:_________________________
Title:______________________ Title:________________________