EXHIBIT 10.16
ADVANCE PAYMENT AGREEMENT
AREAS MARKED "***" REPRESENT SECTIONS FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. THESE OMITTED SECTIONS HAVE BEEN
FILED SEPARATELY WITH THE COMMISSION.
THIS ADVANCE PAYMENT AGREEMENT (the "Agreement"), is entered into
this 17th day of May, 1996, by and between SEIKO EPSON
CORPORATION, a Japanese corporation having its principal place of
business at 3-5, Owa 3-chome, Suwa-shi, Nagano-ken 392, Japan
("Epson") and Xilinx, Inc., a Delaware corporation having its
principal place of business at 2100 Logic Dr., San Jose, CA
95124, U.S.A.("Xilinx").
1 Background
l.l Epson
Epson is in the business of designing, manufacturing, testing
and selling semiconductor devices, among other products. Epson
manufactures such semiconductor devices at its plant located
at 281 Fujimi, Fujimi-machi, Suwa-gun, Nagano-ken 399-02,
Japan (the "Fujimi Facility") and its plant located at 166-3
Jurizuka, Sakata-shi, Yamagata-ken 998-01, Japan (the "Sakata
Facility").
1.2 Xilinx
Xilinx is in the business of designing, developing and
marketing CMOS programmable logic devices and related
development system software.
1.3 Scope of Agreement
Epson and Xilinx have an ongoing business relationship whereby
Epson fabricates semiconductor devices for Xilinx. The parties
entered into an advance payment agreement dated April 1, 1994
*** The parties desire to expand their relationship.
Specifically, Xilinx desires to develop and sell high
performance, advanced architecture semiconductor devices and
Epson desires to construct *** CMOS process line in order to
fabricate such semiconductor devices (as hereinafter further
defined the "New Facility Wafers"). Accordingly, Epson and
Xilinx agree that, pursuant to the terms and conditions of
this Agreement, Xilinx will pay to Epson Three Hundred Million
U.S. dollars (US$300,000,000) of which Two Hundred Million
U.S. dollars (US$200,000,000) shall be made as an advance
payment (as hereafter further defined the "Advance Payment")
to be used as a credit to purchase New Facility Wafers from
Epson over a specified period of time, and of which One
Hundred Million U.S. dollars (US$100,000,000) shall be made in
such method as will be determined later in accordance with
Article 11 of this Agreement. In exchange for receipt of the
Advance Payment, Epson will commit to provide Xilinx with (a)
*** Wafers over a specified time period and (b) a specified
number of Free Wafers (as hereafter further defined the "Free
Wafers"). However, the ordering, fabrication, testing and
delivery requirements for the New Facility Wafers covered by
this Agreement will be set forth in a purchase agreement
between Xilinx and Epson (as hereafter further defined the
"Purchase Agreement"). The parties acknowledge and agree that
even though their obligations with respect to the quantity of
the Products sold and purchased under this Advance Payment
Agreement are stipulated in terms of "wafers", pricing of New
Facility Wafers, ***, will be done on a "good die basis" under
the Purchase Agreement.
1.4 Responsibility for Process
The parties agree that each party will contribute to the
design and implementation of the process line contemplated by
this Agreement. Epson expects significant contributions from
Xilinx in the construction of the *** Wafer CMOS process line
described above, similar to Xilinx's contributions to previous
process generations, and Xilinx expects to be able to make
significant contributions to the process in order to optimize
the processes for Xilinx products.
2 Definitions
2.1 "Advance Payment" will mean the Two Hundred Million U.S.
Dollar (US$200,000,000) payment to be made by Xilinx to
Epson in the manner described in Article 4.1.
2.2 "Equipment" will mean the semiconductor fabrication equipment
that Epson will install in the New Facility for purposes of
fabricating New Facility Wafers.
2.3 "Existing Agreements" will mean those contracts for the
development, fabrication, testing and/or sale of
semiconductor devices between Epson and Xilinx in effects as of
the date of this Agreement.
2.4 "Free Wafers" will have the meaning ascribed to it in Article
8.
2.5 "Fujimi Facility" will have the meaning ascribed to it in
Article 1.1.
2.6 "New Facility" will mean the *** CMOS process line
constructed at the Site using the Equipment.
2.7 "New Facility Wafers" will mean the semiconductor wafers
fabricated by Epson for Xilinx at the New Facility. The
parties agree that New Facility Wafers will consist of high
performance, advanced architecture semiconductor devices. The
parties do not intend that the New Facility will be used to
fabricate low performance, less advanced architecture
semiconductor devices.
2.8 "Price" will have the meaning ascribed to it in Article 10.1.
2.9 "Products" will mean those specific types of New Facility
Wafers fabricated using the same masks and the same process
flow and identified by the same series or product name or
number. The Products will be ordered, fabricated, delivered
and sold pursuant to the terms and conditions of Purchase
Agreement(s). The Products which the parties desire to
fabricate at the New Facility will be negotiated and agreed by
and between Epson and Xilinx, referring to the Technology Road
Map attached hereto as Exhibit B. which may be reviewed and
amended from time to time by mutual agreement of the parties.
The parties acknowledge, however, that the final determination
of what Products will be fabricated may depend on the results
of joint development and product qualification.
2.10 "Projected Completion Schedule" will have the meaning
ascribed to it in Article 3.1.2.
2.11 "Purchase Agreement(s)" will mean the agreement(s) by and
between Epson and Xilinx pursuant to which Epson agrees to
sell and Xilinx agrees to purchase the Products, and the terms
of which shall be negotiated and agreed by and between the
parties after the execution of this Agreement.
2.12 "Purchase Commitment" will have the meaning ascribed to it
in Article 7.1 and Exhibit C attached hereto.
2.13 "Sakata Facility" will have the meaning ascribed to it in
Article 1.1.
2.14 "Site" will mean that portion of the Sakata Facility where
the New Facility will be constructed.
2.15 "Subsidiary" will mean any corporation, partnership, joint
venture or other legal entity which agrees in writing to be
bound by the terms and conditions of this Agreement and more
than fifty percent (50%) of whose ownership rights are
controlled directly or indirectly by Epson or Xilinx, case may
be, but only so long as such control exists.
2.16 "Supply Commitment" will have the meaning ascribed to it in
Article 6.1 and Exhibit C.
2.17 "*** Process" will mean the ***, CMOS process owned,
licensed or developed by Epson which will be used at the New
Facility. The *** Process will include (a) all process flow,
process steps, process conditions (and modifications thereto)
used to manufacture semiconductor wafers at the New Facility
as well as (b) all methods, formulae, procedures, technology
and know-how associated with such process steps and process
conditions. The *** Micron Process will not include any
methods, formulae, procedures, technology or know-how licensed
or received from Xilinx under this Agreement, the Existing
Agreements or other agreements executed between the parties in
the future unless otherwise agreed in writing. If the parties
find it necessary or convenient to document process flow for
any Product, such documentation will be signed by the parties
and attached to the appropriate Purchase Agreement as an
exhibit.
3 Construction of New Facility
3.1 Construction and Operation of the New Facility
3.1.1 Location and Costs
Epson hereby agrees, subject to its receipt of the full amount
of the Advance Payment as provided in Article 4.1, to
construct the New Facility at the Site and to install the
Equipment therein.
3.1.2 Completion Schedule
The projected completion schedule for the construction of the
New Facility (the "Projected Completion Schedule") is set
forth in Exhibit A attached hereto. In the event Epson has
reason to believe that any item in the Projected Completion
Schedule designated as a "Construction Milestone" will be
delayed by more than thirty (30) calendar days, Epson will
promptly notify Xilinx in writing and (a) explain the reason
for the delay, (b) describe the estimated amount of time that
construction will be delayed and (c) describe the action that
Epson will take to minimize the delay.
3.1.3 Business Interruption Insurance
Epson will use its best efforts to obtain business
interruption insurance coverage for the New Facility once the
construction of the New Facility is complete. The insurance
will cover at least such risks as are usually insured against
by companies engaged in the manufacture of semiconductor
devices in Japan. Epson will maintain such business
interruption insurance coverage during the term of this
Agreement. Epson will furnish to Xilinx, upon written request,
full information concerning the business interruption
insurance coverage.
3.1.4 First Shipment Delay
For every month that Product production shipment is delayed
beyond *** as specified in Exhibit A, Epson shall, in addition
to the Free Wafers as prescribed in Article 8 hereof, provide
additional free wafers, *** .
3.1.5 Design Requirements
Epson acknowledges that Xilinx's insurers have set forth
certain safety and security requirements for semiconductor
fabrication facilities, and Epson agrees to work with Xilinx
to incorporate such requirements into the design of the New
Facility to the extent reasonably requested by Xilinx and
commercially feasible.
3.2 Representations of Epson
In order to induce Xilinx to enter into this Agreement and to
make the Advance Payment hereunder, Epson hereby represents
and warrants that:
3.2.1 Corporate Status
Epson (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power to own or lease its
assets and to transact the business in which it is currently
engaged and (c) is in compliance with all requirements of law
except to the extent that the failure to comply therewith will
not materially affect the ability of Epson to perform its
obligations under this Agreement.
3.2.2 Corporate Authority
(a) Epson has the corporate power, authority and legal right
to execute, deliver and perform this Agreement and has taken
as of the date hereof all necessary corporate action to
execute this Agreement, (b) the person executing this
Agreement has actual authority to do so on behalf of Epson and
(c) there are no outstanding assignments, grants, licenses,
encumbrances, obligations or agreements, either written, oral
or implied, that prohibit execution of this Agreement.
3.2.3 Ownership of the Site
Epson has such right, title and interest in and to the Site
and the structures located thereon as is required to permit
the operation of the Site as currently conducted and
contemplated to be conducted under this Agreement.
3.3 Representations of Xilinx
In order to induce Epson to enter into this Agreement and to
make the Supply Commitment, Xilinx hereby represents and
warrants that:
3.3.1 Corporate Status
Xilinx is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power to own or lease its
assets and to transact the business in which it is currently
engaged and (c) is in compliance with all requirements of law
except to the extent that the failure to comply therewith will
not materially affect the ability of Xilinx to perform its
obligations under this Agreement.
3.3.2 Corporate Authority
(a) Xilinx has the corporate power, authority and legal right
to execute, deliver and perform this Agreement and has taken
as of the date hereof all necessary corporate action to
execute this Agreement, (b) the person executing this
Agreement has actual authority to do so on behalf of Xilinx
and (c) there are no outstanding assignments, grants,
licenses, encumbrances, obligations or agreements, either
written, oral or implied, that prohibit execution of this
Agreement.
4 Advance Payment
4.1 Advance Payment
Xilinx shall pay to Epson an amount equal to Two Hundred
Million U.S. Dollars (US$200,000,000) ("the Advance Payment"),
which Advance Payment will be credited against certain future
purchases by Xilinx of New Facility Wafers as provided in
Article 5. Xilinx will pay the Advance Payment in the
following installments:
a) First installment of Thirty Million U.S. Dollars
(US$30,000,000) by May 28, 1996 or such later date,
which may be designated in writing by Epson.
b) Second installment of Thirty Million U.S. Dollars
(US$30,000,000) by November 1, 1996.
c) Third installment of Thirty Million U.S. Dollars
(US$30,000,000) by May 1, 1997.
d) Fourth installment of Thirty Million U.S. Dollars
(US$30,000,000) by November 1, 1997 or installment and
acceptance of the first wafer stepper, as part of Equipment,
whichever is later.
e) Fifth installment of Thirty Million U.S. Dollars
(US$30,000,000) by February 1, 1998 ors mass
production start, whichever is later.
f) Sixth installment of Fifty Million U.S. Dollars
(US$50,000,000) to become due and payable by
Xilinx on or after the later of April 1,1998 and the date the
unused balance of the Advance Payment becomes less
than One Hundred Twenty-Five Million U.S. dollars
(US$125,000,000) . Payment of such sixth installment shall
be made by Xilinx by the end of the month following
the month during which such sixth installment becomes due.
4.2 Payment Method
All payments made by Xilinx to Epson will be in immediately
available funds and will be made by wire transfer in U.S.
Dollars to the following bank account of Epson at:
Fuji Bank, Head Office
5-5, Otemachi 1-chome, Chiyoda-ku, Tokyo 100, Japan
For the Account of Seiko Epson Corporation.
4.3 Non-Refund of Advance Payment
The Advance Payment will not be refundable except as provided
in Articles 6.4.1 or 15.4.
5 Application of Advance Payment
5.1 Purchase of New Facility Wafers
The Purchase price of all New Facility Wafers purchased by
Xilinx as determined in accordance with Article 10.1 will be
credited against the amount of the Advance Payment until the
aggregate dollar value of all New Facility Wafers purchased,
calculated pursuant to Article 5.2, equals or exceeds the
amount of the Advance Payment.
5.2 Calculation of Aggregate Value of Wafers Purchased
The Advance Payment will be offset and reduced at the end of
each calendar month in the manner set forth in Exhibit D
attached hereto.
5.3 Obligations After the Completion of Off-setting the Advance
Payment
Xilinx will be required to pay for all New Facility Wafers in
accordance with the Purchase Agreements once the Advance
Payment has been fully offset and reduced. Xilinx will make
the payments to Epson in U.S. Dollars based on the Price.
Further, Epson will be required to fulfill the Supply
Commitment and Xilinx will be required to fulfill the Purchase
Commitment until Xilinx has purchased *** New Facility Wafers.
After Xilinx has purchased this fixed volume of the New
Facility Wafers, during the effective period of this
Agreement, Epson and Xilinx will continue to make efforts to
supply and purchase at the rate of *** under fair and
competitive prices to be determined between the parties.
6 Supply Commitment
6.1 Supply Commitment
Epson commits to supply to Xilinx a total of *** New Facility
Wafers and Epson will fabricate such New Facility Wafers on a
monthly basis in the manner set forth in Exhibit C attached
hereto (the "Supply Commitment").
6.2 Purchase Agreements
The Supply Commitment will apply to Products covered by all
Purchase Agreements. The parties anticipate that such Purchase
Agreements will apply to high performance, advanced
architecture semiconductor devices which require fabrication
using the *** Process. The parties will execute all Purchase
Agreements required in connection with this Agreement.
6.3 Excess Capacity
Epson will use its best efforts to provide Xilinx with excess
capacity for the New Facility in the manner specified below:
First, in the event that Xilinx desires to purchase New
Facility Wafers in excess of the Purchase Commitment, Xilinx
will specify in writing the amount of capacity required, the
Product(s) it desires to purchase and the date from which such
capacity is required.
Second, Epson will then determine how much capacity is
available and notify Xilinx of its determination. Epson will
give Xilinx priority over third parties for excess capacity of
the New Facility except to the extent that Epson is already
obligated to provide such third parties with capacity.
Third, the parties will then mutually agree upon a preliminary
excess capacity allocation. Any excess capacity allocated
under this Article 6.3 will be applied to the Supply
Commitment and to the Purchase Commitment.
In order to provide Xilinx with first priority for unused
capacity, Epson agrees to give Xilinx monthly written notice
of any unused capacity for the next six (6) months, and to
provide Xilinx the first right to reserve such unused capacity
for any New Facility Wafers which Xilinx desires to purchase
in excess of the Purchase Commitment. Xilinx will have a
reasonable time to elect to reserve such excess capacity.
6.4 Failure to Meet Supply Commitment
6.4.1 Failure Due to Epson
In the event that (a) Epson fails to fulfill the Supply
Commitment in the manner specified by this Agreement by the
end of any month or (b) Epson has reason to believe that it
will be unable to fabricate the Supply Commitment by the end
of such month, then Epson will take the following measures:
First, Epson will promptly notify Xilinx in writing and
describe the nature of the difficulty.
Second, Epson will use its best efforts to remedy the
difficulty in an expeditious manner by the end of the second
full month following the month in which Epson is unable to
meet the Supply Commitment (in other words, the third month
including the month in which the difficulty occurs).
Third, Epson will use its best efforts to make available
during the above-referenced three (3) month period sufficient
capacity at the Sakata Facility and the Fujimi Facility to
cover the deficiency between the Supply Commitment and the
actual capacity subject to completion of product
qualification. The parties acknowledge, however, that Epson
cannot guarantee the use of capacity at the Sakata Facility or
the Fujimi Facility.
***
Fifth, in the event that the above measures are insufficient
and the parties are unable to negotiate in good faith a
resolution of the difficulty, then Xilinx, at its option, may
elect to be repaid that portion of the Advance Payment
currently outstanding and Xilinx shall have no further
obligations under this Agreement.
6.4.2 Failure Due to Xilinx
Notwithstanding anything contained in Article 6.4 to the
contrary, in the event that Epson fails to fulfill the Supply
Commitment in any month due to (a) design defects in Products
caused by Xilinx, (b) design changes requested by Xilinx, (c)
process flow changes requested by Xilinx or (d) any other
reason caused by Xilinx, Epson will only be required to make
reasonable efforts to fulfill the Supply Commitment in such
month. Provisions concerning Xilinx's failure to fulfill its
Purchase Commitment are set forth in Article 7.2.
6.4.3 Failure Due to Both Parties
Notwithstanding anything contained in Article 6.4.1, 6.4.2 or
7.1 to the contrary, in the event that Epson fails to fulfill
the Supply Commitment (and Xilinx fails to fulfill the
Purchase Commitment) due to difficulties caused jointly by
Xilinx and Epson, the parties will mutually agree in writing
upon a fair and equitable solution.
6.4.4 Failure Due to Catastrophe
In the event that any fire, flood, earthquake, explosion or
any other catastrophe prevents Epson from fabricating New
Facility Wafers for Xilinx, (a) Epson will immediately
implement the measures required by Article 6.4.1, (b) Epson
will permit Xilinx to inspect the New Facility, and (c) the
parties will begin good faith negotiations to agree on a
corrective action plan.
7 Purchase Commitment
7.1 Purchase Commitment for the New Facility Wafers
Xilinx will purchase each month the number of New Facility
Wafers (the "Purchase Commitment") equal to the Supply
Commitment until *** wafers have been purchased. Xilinx will
not be required to fulfill the Purchase Commitment in the
event that Epson fails to fulfill the Supply Commitment in the
manner specified in Article 6.4.1. Instead, Xilinx will be
required to purchase those New Facility Wafers that Epson is
able to fabricate. Xilinx will not be required to fulfill the
Purchase Commitment in the event of difficulties caused by
both Epson and Xilinx. Instead, the parties will mutually
agree in writing upon a fair and equitable solution.
7.2 Sale of Unused Capacity
In the event that Xilinx is unable to fulfill the Purchase
Commitment in any month for reasons not due to Epson, Epson
will use its best efforts to sell unused capacity to other
customers, or to allocate unused capacity for the fabrication
of Epson products during such month. Further, Epson's Supply
Commitment for such month will be reduced to the same extent
that Xilinx is unable to fulfill the Purchase Commitment. When
Xilinx desires to increase its monthly purchases after Epson
has sold or otherwise allocated unused capacity, then Epson
will use its best efforts to increase capacity for Xilinx to
the Supply Commitment in an expeditious manner. The parties
will mutually agree upon the specific rate at which Epson will
be required to ramp up capacity to the Supply Commitment.
8 Free Wafers
Epson will provide Xilinx with *** free wafers of a Product
specified by Xilinx at a time specified by Xilinx for, and in
addition to, every *** New Facility Wafers ordered and
accepted by Xilinx (the "Free Wafers"). Free Wafers will be
provided free of charge to Xilinx and will not be credited
against the amount of the Advanced Payment. Epson will provide
Free Wafers until Xilinx has received *** New Facility Wafers
(excluding the Free Wafers). Epson will provide Xilinx with
Free Wafers as an inducement for Xilinx to enter into this
Agreement.
9 Fabrication and Purchase and Sale of the Product
9.1 General Terms and Conditions
The terms and conditions for the prototype wafer fabrication,
wafer fabrication, order and acceptance, shipping, insurance
and warranty for the Products will be set forth in the
Purchase Agreements. The parties hereby express their
good-faith commitment to sign all Purchase Agreements required
to implement the terms and conditions of this Agreement. Epson
agrees to provide all Products covered by this Agreement in
the manner required by the Purchase Agreements. The parties
acknowledge that a best estimation and target of defect
densities as at the date of this Agreement is set forth in
Exhibit E attached hereto, which will be reviewed and amended
from time to time by the parties hereto, and will be
incorporated into all Purchase Agreements.
9.2 Start of Production
Qualification testing for the Products will be conducted in
the manner mutually agreed upon in writing by the parties.
Once any Product has been qualified, Epson will begin mass
production of such Product.
9.3 Turn Around Time
The parties acknowledge that the lead time for shipment of New
Facility Wafers, defined as the time from Xilinx's process
release until delivery of New Facility Wafers to assembler,
known as a "turn around time", is of the essence, and agree
that the parties shall set annual target turn around time and
make their joint efforts to achieve such target in accordance
with Exhibit F ("Turn Around Time").
10 Wafer Pricing and Payment
10.1 Determination of Price
The parties have already expressly agreed to (a) certain
procedures to annually determine prices of New Facility Wafers
(the "Price") and (b) certain procedures of determining the
price of all Products per die, as described in Exhibit D. The
Price herein shall be applicable until Xilinx has completed
the purchase of *** wafers under the terms of this Agreement.
10.2 Shipping. Insurance. Taxes. Duties and Other Fees
Epson will deliver the Products to Xilinx's designated
facility in Japan or Xilinx's designated carrier in Japan on
an F.O.B. basis. Epson will be responsible for paying, in
connection with such sale and delivery in Japan (a) all
domestic freight, insurance and other shipping expenses and
(b) sales, use, excise, ad valorem, withholding or other
taxes. The risk of loss will pass to Xilinx at F.O.B. point in
Japan. Further, Xilinx will be responsible for paying all
freight, insurance, fees, expenses, taxes, tariffs and duties
required in connection with the export of the Products from
F.O.B. point in Japan and the import into any other country.
10.3 Payment
Other than through offset of the Advance Payment, Xilinx will
not be required to pay for any New Facility Wafers delivered
under this Agreement or any Purchase Agreement until the
Advance Payment has been fully offset and reduced. Once the
Advance Payment is fully offset and reduced, Xilinx will be
required to pay Epson in the manner specified in the Purchase
Agreements based on the Price until Xilinx has purchased ***
New Facility Wafers.
10.4 Die Based Transaction
Notwithstanding anything to the contrary contained herein, the
parties acknowledge and agree that all purchases made pursuant
to Purchase Agreements, starting with the purchase of ***
devices, will be made on a "good die basis" even though the
Supply Commitment, the Purchase Commitment and other
obligations of this Agreement are described on a wafer basis.
Such "good die basis" transaction shall be made in reference
to "Die Pricing Mechanism in Exhibit D" and "Defect Density
Goal" in Exhibit E.
11 Additional Funding by Xilinx
Xilinx agrees to make funding to Epson of one hundred
million U. S. dollars (US$100,000,000) , in addition to its
funding of the Advance Payment, in accordance with the
following conditions:
a) At such time as Xilinx makes the
sixth installment of the Advance Payment pursuant to Section
4.1(f) above (the "Sixth Installment Date"), the parties
shall commence negotiations on the form of the additional
funding comprising the following funding methods:
i) security deposit;
ii) additional advance Payment ("additional Advance
Payment"); or
iii) other commercially reasonable alternative.
b) If Xilinx chooses the security deposit alternative, the
parties shall negotiate in good faith the detailed conditions
of such security deposit, including without limitation the
following: i) discount rate on the Price calculated in Free
Wafers; and
ii) repayment schedule
c) If the parties agree on the additional Advance Payment
alternative, Xilinx's additional funding shall be made
as an additional Advance Payment, and will be deemed to be
a part of the Advance Payment for all purposes
hereunder.
d) Regardless of the form of the funding agreed to by the
parties, Xilinx's additional funding shall be made
subject to the following conditions, unless the parties
agree otherwise:
i) payment shall be made in two installments of
fifty million U.S. dollars (US$50,000,000) each, which
will become due and payable when the unused balance of
the Advance Payment and any previously-paid additional
Advance Payment becomes less than one hundred twenty-five
million U.S. dollars (US$125,000,000), provided that if
the security deposit alternative is chosen, the first
installment shall be made at such time as Xilinx has
purchased fifty million U.S. dollars (US$50,000,000) of
New Facility Wafers subsequent to the Sixth Installment
Date, and the second installment shall be made at such
time as Xilinx has purchased fifty million U.S. dollars
(US$50,000,000) of New Facility Wafers subsequent to the
date the first security deposit installment is paid; and
ii) other conditions, including Free Wafers and
procedures to offset from the additional Advance Payment
shall remain unchanged from those applied to the original
Advance Payment.
12 Technical Cooperation and Support
The parties desire to engage in various types of joint
development and technical cooperation activities required to
fabricate Products and to effectuate the terms and conditions
of this Agreement. The parties agree to negotiate in good
faith a joint development and technical cooperation agreement
in the future. Also the parties will continue to develop
jointly *** process under the terms of separate agreements to
be executed between the parties from time to time for specific
projects or product development work.
13 Intellectual Property Rights
Epson warrants that it has all necessary rights to develop,
manufacture and sell to Xilinx the New Facility Wafers. Epson
will indemnify and hold harmless Xilinx from any loss, damage
or expense (including attorney's fees) arising from claims
that the sale or use of the New Facility Wafers infringes on
the intellectual property rights of third parties except where
such infringement is caused by Xilinx's instruction or
specifications thereto.
14 Confidential Information
14.1 Definitions
"Confidential Information" means technical information,
specifications, data, drawings, designs or know-how disclosed
between Epson and Xilinx in connection with this Agreement.
Confidential Information does not include information or
material that is expressly covered by confidentiality
provisions of Existing Agreements, it being understood that
such provisions will apply.
14.2 Marking
If Confidential Information is provided in a tangible form, it
will be marked as confidential or proprietary. If Confidential
Information is provided orally, it will be treated as
confidential and proprietary if it is treated as confidential
or proprietary at the time of disclosure by the disclosing
party and described as such in a writing provided to the other
party within thirty (30) days of the oral disclosure, which
writing will be marked as confidential or proprietary.
Material that is not marked as required by this Article 14.2
will not be deemed Confidential Information.
14.3 Restrictions on Use
During the term of this Agreement and for a period of ***
years following disclosure of any Confidential Information,
the receiving party will: (a) hold the Confidential
Information in confidence using the same degree of care that
it normally exercises to protect its own proprietary
information but no less than a reasonable degree of care, (b)
restrict disclosure and use of Confidential Information solely
to those employees (including any contract employees or
consultants) of such party on a need-to-know basis, and not
disclose it to other employees or parties, and (c) restrict
the number of copies of Confidential Information to the number
required to carry out its obligations under this Agreement.
14.4 Exceptions to Confidentiality Obligations
Neither party will use or disclose the other party's
Confidential Information except as permitted by this
Agreement. The receiving party, however, will have no
obligations concerning the disclosing party's Confidentiality
Information if the disclosing party's Confidential
Information:
a) is made public before the disclosing party discloses it
to the receiving party;
b) is made public after the disclosing party discloses it to
the receiving party (unless its publication is a breach
of this Agreement or any other agreement between Epson and
Xilinx);
c) is rightfully in the possession of the receiving party
before the disclosing party discloses it to the receiving
party
d) is independently developed by the receiving party without
the use of the Confidential Information, if such
independent development is supported by documentary
evidence; or
e) is rightfully obtained by the receiving party from a
third party who is lawfully in possession of the
information and not in violation of any contractual, legal
or fiduciary obligation to the disclosing party with
respect to the information.
14.5 Return of Confidential Information
Upon termination of this Agreement, a party who has received
Confidential Information from the other party pursuant to this
Agreement will return, within fourteen (14) days of the
disclosing party's request for return, all Confidential
Information that was obtained or learned by the receiving
party from the disposing party, together with all copies,
excerpts and translations thereof.
15 Term and Termination of Agreement
15.1 Term
The term of this Agreement will extend from the date first
written above until March 31, 2002, unless terminated earlier
pursuant to Article 15.2 or 15.3. After the expiration of this
Agreement, Epson and Xilinx shall continue to make efforts to
supply and purchase a certain volume of wafers per month under
fair and competitive prices to be determined between the
parties.
15.2 Termination
Either party may terminate or suspend this Agreement
immediately and without liability upon written notice to the
other party if any one of the following events occurs;:
a) the other party files a voluntary petition in bankruptcy
or otherwise seeks protection under any law for the
protection of debtors;
b) a proceeding is instituted against the other party under
any provision of any bankruptcy laws which is not
dismissed within ninety (90) days;
c) the other party is adjudged bankrupt;
d) a court assumes jurisdiction of all or a substantial
portion of the assets of the other party under a
reorganization law;
e) a trustee or receiver is appointed by a court for all or
a substantial portion of the assets of the other
party;
f) the other party becomes insolvent, ceases or suspends all
or substantially all of its business;
g) the other party makes an assignment of the majority of
its assets for the benefit of creditors; or
h) a direct competitor of one party acquires, through
merger, consolidation, acquisition or otherwise, an
interest in excess of fifty percent (50%) of the voting
securities or assets of the other party.
15.3 Termination for Cause
If either party fails to perform or violates any material
obligation of this Agreement, then, sixty (60) days after
providing written notice to the breaching party specifying the
default (the "Default Notice"), the non-breaching party may
terminate this Agreement, without liability, unless:
a) the breach specified in the Default Notice has been cured
within the sixty (60) day period; or
b) the default reasonably required more than sixty (60) days
to correct, and the defaulting party has begun
substantial corrective action to remedy the default within such
sixty (60) day period and diligently pursues such action,
in which event, the non-breaching party may not terminate
or suspend this Agreement unless one hundred twenty (120) days
has expired from the date of the Default Notice
without such corrective action being completed and the default
remedied.
15.4 Effect of Termination
In the event of any termination of this Agreement, Epson shall
pay to Xilinx within thirty (30) days after such termination
an amount of money equal to the unused balance of the Advance
Payment (including the dollar amount equivalent to the
outstanding balance of Free Wafers, if any, resulting from
delays in wafer shipment as prescribed in Articles 3.1.4 and
6.4.1).
15.5 Survival of Obligations
The following Articles will survive any expiration,
termination or cancellation of this Agreement and the parties
will continue to be bound by the terms and conditions thereof:
13, 14, 15.2,15.3 and 15.4.
16 Miscellaneous
16.1 Order of Precedence
In the event of any conflicts between this Agreement and any
Purchase Agreement, any purchase orders, acceptances,
correspondence, memoranda, listing sheets or other documents
forming part of an order for the Products placed by Xilinx and
accepted by Epson, priority will be given first to this
Agreement, second to the Purchase Agreements, third to Epson's
acceptance, fourth to Xilinx's order and then to any other
documents. In no event, however, will either party's standard
terms and conditions be applicable to the transactions between
the parties, unless expressly accepted in writing by the other
party.
16.2 Dispute Resolution
16.2.1 Meeting of Executives
In the event that any dispute or disagreement between the
parties as to any provision of this Agreement arises, prior to
taking any other action, the matter will be referred to
responsible executives of the parties for consideration and
resolution. Any party may commence such proceedings by
delivering a written request to the other party for a meeting
of such responsible executives. The other party will be
required to set a date for the meeting to be held within
thirty (30) days after receipt of such request and the parties
agree to exercise their best efforts to settle the matter
amicably.
16.2.2 Location of Meeting
In the event that Epson initiates the proceedings described in
Article 16.3.1, the first meeting will be held in San Jose,
California and all subsequent meetings will alternate between
Tokyo, Japan, and San Jose, California. In the event that
Xilinx initiates the proceedings described in Article 16.3.1,
the first meeting will be held in Tokyo, Japan and all
subsequent meetings will alternate between San Jose,
California and Tokyo, Japan.
16.2.3 Demand for Arbitration
Any dispute relating to and/or arising out of this Agreement
will be decided exclusively by binding arbitration under
procedures which ensure efficient and speedy resolution. Such
an arbitration may be commenced by either party involved in
the dispute (i) after the expiration of a sixty (60) day
period following the written request to resolve the dispute,
and/or (ii) at such earlier time as any party involved
repudiates and/or refuses to continue with its obligations to
negotiate in good faith. The arbitration hearing will be
conducted in the State of Hawaii, and will be in the English
language (with translations and interpretations as reasonable
for the presentation of evidence and/or conduct of the
arbitration). Notwithstanding anything to the contrary, any
party may apply to any court of competent jurisdiction for
interim injunctive relief as may be allowed under applicable
law with respect to irreparable harm which cannot be avoided
and/or compensated by such arbitration proceedings, without
breach of this Section 16.3.3 and without any abridgement of
the powers of the arbitrators.
The arbitration will be conducted under the Rules of the Asia
Pacific Arbitration Center. Notwithstanding anything to the
contrary, (i) the arbitrators will have the power to order
discovery to the extent they find such discovery necessary to
achieve a fair and equitable result and (ii) the arbitrators
shall require pre-hearing exchange of documentary evidence to
be relied upon by each of the respective parties in their
respective cases in chief, and pre-hearing exchange of briefs,
witness lists,and summaries of expected testimony.
The arbitrators will make their decision in writing.
16.2.4 Arbitrators
The arbitration will be conducted by three (3) arbitrators. No
person with a beneficial interest in the dispute under
arbitration may be an arbitrator. The parties will make
reasonable efforts to select arbitrators with experience in
the field of computers and law.
16.2.5 Binding Effect
The decision or award rendered or made in connection with such
arbitration will be binding upon the parties and judgment
thereon may be entered in any court having jurisdiction and/or
application may be made to such court for enforcement of such
decision or award. However, the arbitrators will not have the
authority to create any licenses. They will only be permitted
to enforce licenses which the parties have otherwise agreed to
in the Agreement or the Existing Agreements.
16.2.6 Expenses
The expenses of the arbitrators will be shared equally by the
parties; each party will otherwise be responsible for the
costs and attorney's fees incurred by it.
16.3 Consequential Damages
IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES
(INCLUDING LOST PROFITS) WHETHER BASED ON WARRANTY, CONTRACT,
TORT OR ANY OTHER LEGAL THEORY REGARDLESS OF WHETHER SUCH PARTY
HAD ACTUAL OR CONSTRUCTIVE NOTICE OF SUCH DAMAGES.
16.4 Assignment
Neither party will assign, transfer or otherwise dispose of
this Agreement in whole or in part without the prior consent
of the other party in writing, and such consent will not be
unreasonably withheld. Except as the case set forth in Article
14.2 (h) above, this Agreement may be assigned to any
Subsidiary or to a successor who has acquired a majority of
its business or assets of the assigning party.
16.5 Public Announcements
Neither party will publicly announce the execution or
existence of this Agreement or disclose the terms and
conditions of this Agreement without first submitting the text
of such announcement to the other party and receiving the
approval of the other party of such text, which approval,
unless public disclosure is required by a court or a
government agency, may be withheld for any reason. However,
Xilinx may disclose the existence and the terms of this
Agreement in a registration statement filed with the
Securities and Exchange Commission or in accordance with
generally accepted accounting procedures under the rules of
the Securities and Exchange Commission or National Association
of Securities Dealers Automated Quotations.
16.6 Notice and Communications
Any notices required or permitted to be given hereunder will
be in English and be sent by (i) registered airmail or (ii)
cable, facsimile or telex to be confirmed by registered
airmail, addressed to:
To Epson:
281 Fujimi, Fujimi-machi, Suwa-gun
Nagano-ken 399-02, Japan
Attn: Nobuo Hashizume,
Director and Corporate General Manager
Semiconductor Operations Division
Tel: 81-266-61-1211
Fax: 81-266-61-1270
To Xilinx:
2100 Logic Dr., San Joses CA95124, U.S.A.
Attn: Willem Roelandts
President and Chief Executive Officer
Tel: 1-408-559-7778
Fax: 1-408-559-7114
Any such notice will be deemed given at the time of its receipt
by the addressee.
16.7 Relationship of the Parties
Epson and Xilinx are independent contractors and neither of
them will be nor represent themselves to be the legal agent,
partner or employee of the other party for any purpose.
Neither party will have the authority to make any warranty or
representation on behalf of the other party nor to execute any
contract or otherwise assume any obligation or responsibility
in the name of or on behalf of the other party. In addition,
neither party will be bound by, nor liable to, any third
person for any act or any obligations or debt incurred by the
other party, except to the extent specifically agreed to in
writing by the parties.
16.8 Waiver and Amendment
Failure by either party, at any time, to require performance
by the other party or to claim a breach of any provision of
this Agreement will not be construed as a waiver of any right
accruing under this Agreement, nor will it affect any
subsequent breach or the effectiveness of this Agreement or
any part hereof, or prejudice either party with respect to any
subsequent action. A waiver of any right accruing to either
party pursuant to this Agreement will not be effective unless
given in writing.
16.9 Severability
In the event that any provision of this Agreement will be
unlawful or otherwise unenforceable, such provision will be
severed, and the entire agreement will not fail on account
thereof, the balance continuing in full force and effect, and
the parties will endeavor to replace the severed provision
with a similar provision that is not unlawful or otherwise
unenforceable.
16.10 Rights and Remedies Cumulative
The rights and remedies provided herein will be cumulative and
not exclusive of any other rights or remedies provided by law
or otherwise.
16.11 Headings
The Article headings in this Agreement are for convenience only
and will not be considered a part of, or affect the
interpretation of, any provision of this Agreement.
16.12 Governing Language
This Agreement and all communications pursuant to it will be
in the English language. If there is any conflict between the
English version and any translated version of this Agreement,
the English version will govern.
16.13 Force Majeure
Except as otherwise expressly provided for herein, no party
will be liable in any manner for failure or delay in
fulfillment of all or part of this Agreement directly or
indirectly owing to any causes or circumstances beyond its
control, including, but not limited to, acts of God,
governmental order or restrictions, war, war-like conditions,
hostilities, sanctions, revolutions, riot, looting, strike,
lockout, plague or other epidemics, fire and flood.
16.14 Counterparts
This Agreement may be executed in any number of counterparts,
and all such counterparts will together constitute but one
Agreement.
16.15 Integration
This Agreement sets forth the entire agreement and
understanding between the parties as to its subject matter and
supersedes all prior agreements, understandings and memoranda
between the parties, except for the Existing Agreements. No
amendments or supplements to this Agreement will be effective
for any purpose except by a written agreement signed by the
parties.
16.16 Government Approvals; Export Control Laws
Epson will file all reports and notifications that may be
required to be filed with any agency of the Government of
Japan in order to allow the performance of this agreement
according to its terms. Xilinx will be responsible for
obtaining all licenses and permits required to export the
Products from Japan. Neither party will transmit indirectly or
directly any Products or technical information contained in
the Confidential Information except in accordance with
applicable Japanese and United States export control laws,
regulations and procedures.
IN WITNESS WHEREOF, the parties have signed this Agreement as
of the date first above written.
SEIKO EPSON CORPORATION
By: /s/ Nobuo Hashizume
Name: Nobuo Hashizume
Title: Director and Corporate General Manager
Semiconductor Operations Division
XILINX, INC.
By: /s/ Willem Roelandts
Name: Willem Roelandts
Title: President and Chief Executive Officer
AREAS MARKED "***" REPRESENT SECTIONS FOR WHICH CONFIDENTIAL
TREATMENT AS BEEN REQUESTED. THESE OMITTED SECTIONS HAVE BEEN
FILED SEPARATELY WITH THE COMMISSION.
EXHIBIT A
"Projected Completion Schedule"
EXHIBIT B
"Process Road Map"
EXHIBIT C
"Supply/Purchase Commitment"
EXHIBIT D
"Price Determination Procedure"
"Advance Payment Offset Procedure"
"Die Pricing Mechanism"
EXHIBIT E
"Defect Densities Goal"
EXHIBIT F
"Turn Around Time"
EXHIBIT A
T-Wing Start-Up Schedule
***
EXHIBIT B
Seiko VLSI Technology Roadmap
***
EXHIBIT C
Supply/Purchase Commitment
***
EXHIBIT D
Price Determination Procedure
***
Advance Payment Offset Procedure
***
Die Pricing Mechanism
***
EXHIBIT E
Defect Densities Goal
***
EXHIBIT F
Turn Around Time
***