EXHIBIT 10.13
Intel/ChipPAC Confidential
CHIPPAC LIMITED and INTEL CORPORATION
MATERIALS AGREEMENT
This Agreement (the "Agreement") is entered into as of July 1, 1999 (the
"Effective Date) by and between ChipPAC Limited, a British Virgin Islands
company, having a place of business at Craigmuir Chambers, Road Town, Tortola,
British Virgin Islands and its subsidiaries (hereinafter "Company"), and Intel
Corporation, a Delaware corporation, having its principal place of business at
2200 Mission College Blvd., Santa Clara CA 95052 and its subsidiaries
(hereinafter "Intel"). Company and Intel are sometimes referred to as a "Party"
and collectively referred to as the "Parties".
RECITALS
WHEREAS, Intel has agreed to purchase, and ChipPAC, Inc., the parent company of
the Company, has agreed to sell, certain ChipPAC, Inc. securities (the
"Investment") subject to the terms and conditions set forth in that certain
Stock Purchase Agreement dated as of July __, 1999 (the "Stock Purchase
Agreement"); and
WHEREAS, the Parties have previously entered into an Assembly Services
Agreement/Corporate Purchase Agreement No. 0995ELR001, dated 199_, between
Hyundai Electronics America, Hyundai Electronics Industries Co., Ltd. and
ChipPAC, Inc. and the Parties are in the process of novation of such agreement
and replacement with a comparable agreement between ChipPAC Limited and Intel
(the "CPA"), and this Agreement is intended to be an addendum to the CPA and to
amend, modify and supplement such CPA;
NOW, THEREFORE, for good and valuable consideration, including the
investment by Intel pursuant to the Stock Purchase Agreement, the receipt and
sufficiency of which is acknowledged, the Parties agree as follows:
AGREEMENT
1. CONSTRUCTION AND DEFINITIONS
1.1 Construction. All references in this Agreement to "Sections" refer to
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the sections of this Agreement. As used in this Agreement, neutral pronouns and
any variations thereof shall be deemed to include the feminine and masculine and
all terms used in the singular shall be deemed to include the plural, and vice
versa, as the context may require. The words "hereof," "herein" and "hereunder"
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and other words of similar import refer to this Agreement as a whole, as the
same may from time to time be amended or supplemented, and not to any
subdivision contained in this Agreement. The word "including" when used herein
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is not intended to be exclusive and means "including, without limitation." This
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Agreement shall be construed without regard to any presumption or other rule
requiring construction hereof against the Party causing this Agreement to be
drafted.
1.2 Definitions. As used in this Agreement, the following capitalized
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terms have the meanings provided below:
(a) Upside Capacity means the right as set forth in this Agreement to
direct a portion of the Capacity for purchase by Intel.
(b) Capacity means that Company will establish and maintain manufacturing
facilities capable of producing Products in sufficient quantity to meet the
current and forecasted acquisition needs of Intel. Any forecasts of future
requirements which may be provided by Intel to Company are estimates only and
shall be non-binding upon Intel.
(c) Intellectual Property Rights shall mean any or all of the following
and all rights in, arising out of, or associated therewith: (i) all United
States and foreign patents and utility models and applications therefor and all
reissues, divisions, renewals, reexaminations, extensions, provisionals,
continuations and continuations-in-part thereof, and equivalent or similar
rights anywhere in the world in inventions and discoveries ("Patents"); (ii) all
trade secrets, know how and proprietary information; (iii) all copyrights,
copyrights registrations and applications therefor and all other rights
corresponding thereto throughout the world ("Copyrights"); (iv) all mask works,
mask work registrations and applications therefor, and any equivalent or similar
rights in semiconductor masks, layouts, architectures or topology ("Maskworks");
(v) all industrial designs and any registrations and applications therefor
throughout the world; (vi) all trade names, logos, trade dress, domain names,
common law trademarks and service marks, trademark and service mark
registrations and applications therefor and all goodwill associated therewith
throughout the world ("Trademarks"); and (vii) any similar, corresponding or
equivalent rights to any of the foregoing anywhere in the world, including but
not limited to Computer Program Rights and Registrations and applications
therefor.
(d) Product(s) means those products or services described in the CPA or
any related Purchase Order Release issued under the CPA by Intel to Company,
including any referenced drawing or specification for such product or service.
(e) Technology shall mean any or all of the following (i) works of
authorship including, without limitation, computer programs, source code and
executable code, whether embodied in software, firmware or otherwise,
documentation, designs, flow charts, specifications, logic diagrams, programmer
notes, protocols, files, records, data and mask works, (ii) inventions (whether
or not patentable), improvements, and technology, (iii) proprietary and
confidential information, including technical data and customer and supplier
lists, trade secrets and know how, (iv) databases, data compilations and
collections and technical data, (v) tools, methods and processes, and all
instantiations of the foregoing in any form and embodied in any media.
(f) Term shall have the meaning set forth in Section 11.2.
2. PRODUCT PRICING
2.1 Price Negotiation. The Parties agree to enter into periodic price
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negotiations with the intent of achieving the most competitive pricing of the
Products supplied by Company to Intel, [redacted*]. Company agrees to respond to
an Intel request for quotation for Products within a fourteen (14) day period of
receipt of such request by Company. Additionally, Company agrees to respond in
writing to Intel and commence negotiations for [redacted*] situations within
five (5) business days of receipt of Intel's request under [redacted*], with
consummation of such negotiations completed within five (5) additional business
days.
2.2 Pricing [redacted*]. Company shall provide the following [redacted*]
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based upon the Intel dollar purchase volume from Company during each specified
time period according to the following schedule:
[schedule redacted*]
* Dollar purchase volume in millions of US dollars.
[redacted*] are not affected
* Confidential treatment requested.
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by fluctuations in currencies, and amounts are represented in U.S. dollars. The
first [redacted*] payment shall be made within thirty (30) days after year-end,
December 31, 1999 and shall be prorated based on the number of days in 1999 that
the Agreement was effective. Similarly, [redacted*] payments will be made four
(4) weeks after the end of each calendar year throughout the Term of this
Agreement with the final [redacted*] payment within thirty (30) days of
expiration of this Agreement. See attached Appendix A for an example of this
calculation.
2.3 [redacted*]
2.4 Payment Discount. A [redacted*] discount in the amounts due and
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payable shall be taken and Intel shall pay Company invoices within
ten (10) days of receipt of correct invoices by Intel. However, in
the event Intel payments are received by Company within [redacted*]
days from receipt of invoice by Intel despite Intel's intent to pay
within ten days from invoice receipt, the [redacted*] discount shall
still be applicable to such invoices, it being understood that Intel
shall use commercially reasonable efforts to pay such invoices
within such ten day period, and that if such payments chronical1y
fall outside the ten day period, the Parties shall meet to discuss
the implications of same in the context of the Agreement.
3. PRODUCTION CAPACITY
3.1 Upside Capacity. Company shall provide [redacted*] Capacity, on a
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Right of First Refusal basis, within thirty (30) days of submission
of request to Company by Intel. Company will insure priority loading
to Intel when Capacity is limited. Requests by Intel for greater
than [redacted*] Capacity which require additional equipment will be
subject to vendor lead times and availability, and would be
negotiated accordingly.
3.2 [redacted*]
3.3 Priority Product Re-Qualification. In the event Company changes its
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components or component vendors based upon cost considerations and such change
necessitates re-qualification of Products, Intel agrees to prioritize the re-
qualification process of such Products, unless the Parties agree that there is
insufficient payback for such re-qualification effort.
4. TECHNOLOGY TRANSFERS
* Confidential treatment requested.
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4.1 Intel shall have a Right of First Offer (i.e. Company shall offer to
Intel prior to offering to any other entity) to obtain a license from Company to
its Intellectual Property Rights with respect to any new Technology developed by
Company which is necessary or desirable for the manufacture of the Product(s).
Such license shall contain the following grants to Intel:
(a) Copyright License. A non-exclusive, world-wide, irrevocable, non-
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transferable, fully paid up, royalty free, perpetual license (without the
right to transfer or sublicense except as set forth in "c" below) to
reproduce and, prepare derivative works of, publicly perform, publicly
display and distribute the Technology and derivative works thereof to third
parties through incorporation in an Intel product manufactured using, or
derived from the Technology;
(b) Other Intellectual Property Licenses. A non-exclusive, world-wide,
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irrevocable, nontransferable, fully paid up, royalty free, perpetual
license (without the right to transfer or sublicense except as set forth in
"c" below) under all Intellectual Property Rights now or later owned or
controlled by Company to make, use, sell, distribute, offer for sale, and
import the Technology and derivative works thereof pursuant to Intel's
exercise of the rights granted to it in the copyright licenses under
Section 4(a) of this Agreement;
(c) "Have Made" Rights. In the event Company has insufficient Capacity to
meet Intel's requirements, a) for more than a sixty (60) day period based
upon a mutually agreed upon level of Capacity, or b) for more than one
hundred twenty (120) day period based upon an increase in demand by Intel
above the mutually agreed upon level of Capacity, such license shall also
include "have reproduced" and "have prepared derivative works" under
copyright and "have made" rights under Patents to allow the transfer or
sublicensing of the Technology by Intel to establish and maintain an
alternative source of supply capable of supporting Intel's requirements for
Products only.
Such license shall be free of any development cost or royalty and will be
limited to the right to use the Technology solely at Intel's manufacturing
facilities (or approved subcontract manufacturing if subsection 4(c) is
applicable) for the production of Products, including successor Products.
However, Intel agrees to reimburse Company for the Transfer Cost for such
Technology. "Transfer Cost" is defined as actual cost incurred by the Company to
transfer the Technology to Intel, and is limited to engineering man-hours and
other actual payroll costs, actual travel and actual incidental expenses.
Additionally, Company agrees to grant comparable rights to any subsequent
manufacturing improvements and/or value engineering made by Company for Product
previously transferred. Except as provided in Section 4(c) above, Intel shall
not provide Company Technology to any third party semiconductor packager.
4.2 For jointly developed Technology, the Intellectual Property Rights
shall be negotiated separately by the Parties, provided that, in any event the
ownership and right to use the Intellectual Property Rights in Jointly developed
Technology shall have an 18-month period of exclusivity between the Parties.
5. ROADMAP REVIEWS
The parties shall conduct quarterly roadmap reviews to evaluate Company
technology roadmaps against the requirements of Intel business groups. Session
will also be used to address cost reduction opportunities or programs, and
qualification of any new Company sites, including Shanghai. Synergy activities
toward mutually used technologies will also be addressed in this forum.
6. EXCLUSIVITY OF SUPPLY
For the terms of this Agreement, Intel agrees to not enter into agreements with
competitors of Company (defined as firms which supply products which are a)
qualified by Intel and b) are form, fit and function compatible with Products)
[redacted*].
*Confidential treatment requested.
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7. AUDIT
7.1 Audit Rights of Intel. For purposes of this Agreement only, and not
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in derogation of any other audit provision which may exist between the Parties,
during the Term, Company will maintain complete and accurate records required
by its performance under this Agreement, including Product pricing. Upon thirty
(30) days written notice and not more often than twice per calendar year, Intel
may audit Company's books and records to ensure Company's compliance with the
terms and conditions of this Agreement. At Intel's option or upon Company's
written demand, such audit will be performed by an independent third party at
Intel's expense; provided, however, if any audit reveals that Company is not
materially complying with the terms of this Agreement, Company shall pay the
costs of such audit. The auditor shall keep the results of such audit
confidential, and, if conducted by a third party, any failure by Company to
abide by the obligations of this Agreement shall be reported to Intel. At the
end of the Term, Intel shall have the option of conducting a final end-of-term
audit; if Intel does not avail itself of this option within thirty (30) days of
the end of the Term, such option shall expire.
7.2 Certification of Intel Provided Information. Intel shall provide
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Company's independent third party auditors such information as will reasonably
substantiate the [redacted*] required by Section 3.2. Such information shall be
retained as confidential and such auditors may inform Company of its
professional opinion regarding Intel's compliance or non-compliance with the
provisions of Section 3.2. No other use of the information may be made by such
auditors. Additionally, Intel agrees that, prior to submission of a request for
quotation by Intel, the Intel Finance Department will certify the accuracy of
representations regarding Product pricing quotations from competitors which are
made by Intel pursuant to Section 2.3.
8. OWNERSHIP
8.1 Company Technology. Company shall own all right, title and interest in
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and to any Technology it solely develops in the course of performance of this
Agreement not using Confidential Information of Intel (other than residuals) or
develops independent of this Agreement, including all Intellectual Property
Rights therein.
8.2 Intel Technology. Intel shall own all right, title and interest in
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and to any Technology that it solely develops in the course of performance of
this Agreement not using Confidential Information of Company (other than
residuals) or develops independent of this Agreement, including all
Intellectual Property Rights therein.
9. CONFIDENTIALITY
9.1 Confidentiality Information. Confidential Information is any information
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disclosed by one Party to the other in connection with this Agreement, which the
disclosing Party believes to include confidential information, is designated
with an appropriate legend such as "CONFIDENTIAL" (or other label indicating its
confidential nature or status) at the time of disclosure if in documentary or
other tangible form, and if such disclosure is initially oral or visual and not
reduced to written or documentary form at the time of disclosure, is identified
as confidential at the time of disclosure, summarized or identified in a written
document that is marked with an appropriate legend indicating its confidential
status, and provided to the other Party within twenty (20) days following such
oral or visual disclosure. For each item of Confidential Information, the Party
disclosing the item shall be called the "Disclosing Party," and the Party
receiving the item shall be called the "Receiving Party."
9.2 Confidentiality Obligation. The Receiving Party shall hold all
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Confidential Information of the Disclosing Party in trust and confidence, and
protect it as the Receiving Party would protect its own confidential
information (which, in any event, shall not be less than reasonable protection)
and shall not use such Confidential Information for any purpose other than that
contemplated by this Agreement. Unless agreed by the Disclosing Party in
writing, the Receiving Party shall not disclose any Confidential Information of
the Disclosing Party, by publication or otherwise, to any person other than
employees, officers or directors who (i) are bound to written confidentiality
obligations consistent with and at least as restrictive as those set forth
herein and (ii) have a need to know such Confidential Information for purposes
of enabling a Party to exercise its rights and perform
*Confidential treatment requested.
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its obligations pursuant to this Agreement Confidential Information shall remain
confidential information until such time as it qualifies for non-confidential
treatment pursuant to any exception in Section 9.3. Exceptions
9.3 Exception. The obligations specified in Section 9.2 shall not
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apply to any Confidential Information to the extent that the Receiving Party can
demonstrate that such Confidential Information: (a) it is already known to the
Receiving Party without restriction prior to the time of disclosure by the
Disclosing Party; (b) it is acquired by the Receiving Party from a third party
without confidentiality restriction and does not originate with the Disclosing
Party; (c) it is independently developed or acquired by the Receiving Party by
employees or contractors without access to such Confidential Information; (d) it
is approved for release by written authorization of the Disclosing Party; (e) it
is in the public domain at the time it is disclosed or subsequently falls within
the public domain through no wrongful action of the Receiving Party; or (f) it
is furnished to a third party by the Disclosing Party without a similar
restriction on that third party's right of disclosure. In addition, the
obligations specified in Section 9.2 shall not prohibit Company from disclosing
the general existence of this Agreement (i.e. describing that Company has a TAM
agreement with Intel) and a general description of its primary provisions to a
potential investor in a private placement memorandum or prospectus seeking debt
or equity financing or if required by applicable statute. Such disclosure, in
any event, is subject to and conditional upon Intel's right, in its reasonable
discretion, to review and edit the private placement memorandum or prospectus or
statutorily required disclosure, including deletions of text, prior to any such
disclosure.
9.4 Compelled Disclosure. Notwithstanding the foregoing, a Receiving
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Party may disclose Confidential Information if it is disclosed pursuant to the
requirement of a governmental agency or disclosure is permitted or required by
operation of law, provided that the Receiving Party use its best efforts to
notify the Disclosing Party in advance of such disclosure and seeks confidential
treatment for such Confidential Information.
9.5 Residual Information. The restrictions regarding Confidential
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Information shall not apply to one Party's use of the Residuals from the other
Party's Confidenfial Information. The term "Residuals" as used in this paragraph
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shall mean the Confidential Information in intangible form (i.e., not in written
or other documentary form, including tape or diskette) which may be retained by
those employees of Company or Intel who have had access to the other's
Confidential Information, including ideas, concepts, know-how, or techniques
contained therein. Neither Party shall have any obligation to limit or restrict
the assignment of such employees or to pay royalties for any work resulting from
the use of such Residuals.
10. WARRANTIES AND DISCLAIMERS
10.1 General Warranty. Each Party hereby represents and warrants to the
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other that: (i) all corporate action on the part of such Party, its officers,
directors and shareholders necessary for the authorization of this Agreement and
the performance of all obligations of such Party hereunder has been taken; and
(ii) this Agreement, when executed and delivered, will be a valid and binding
obligation of such Party enforceable in accordance with its terms.
10.2 No Conflict. Each Party hereby represents and warrants to the other
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that such Party's making of this Agreement and performance hereunder does not
and will not violate any agreement existing between such Party and any third
party.
11. EFFECTIVE DATE, TERM, TERMINATION AND CANCELLATION.
11.1 Effective Date. Notwithstanding the Effective Date of July 1, 1999,
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this Agreement shall not become effective unless and until Company has 1)
executed the Stock Purchase Agreement and ancillary agreements, and 2) Company
has consummated the transactions contemplated in the Stock Purchase Agreement
and ancillary agreements. Upon the occurrence of these conditions, this
Agreement shall be in full force and effect retroactive to the Effective Date.
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11.2 Agreement Term. This Agreement shall commence on the Effective Date
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and shall terminate thirty (30) months thereafter (the "Term"), unless earlier
terminated as provided below or extended by mutual agreement of the Parties. The
Term of the CPA is hereby extended to be coterminous with this Agreement.
11.3 Termination by Either Party. Either Party shall have the right to
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terminate this Agreement under the following conditions: (a) mutual agreement
between the Parties; and (b) upon sixty (60) days notice for any material breach
of this Agreement by the other Party which breach is not cured within such sixty
(60) day period.
11.4 Termination of CPA. In the event the CPA is terminated pursuant to
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its terms, this Agreement shall likewise terminate concurrent with the CPA
termination date.
11.5 Survival. Each Party's obligations to pay any amount due and owing
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and to deliver and accept any Product(s) ordered prior to the CPA and Sections
1, 4, 7, 8, 9 and 12.3 of this Agreement shall survive the expiration or
termination of this Agreement.
12. MISCELLANEOUS
12.1 Merger, Modification, Waiver. Except for the other applicable
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documents mentioned below and the CPA, this Agreement contains the entire
understanding between Intel and Company with respect to the subject matter
hereof, and merges, and supersedes all prior and contemporaneous agreements,
dealings and negotiations. No modification, alteration or amendment shall be
effective unless made in writing, dated and signed by duly authorized
representatives of both parties. No waiver of any breach hereof shall be held to
be a waiver of any other or subsequent breach.
12.2 Other Applicable Documents. This Agreement shall incorporate by
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reference the following additional terms: Attachment A, [redacted*] and any
amendments or additions thereto.
12.3 Covenant Not to Sue. Company agrees not to assert any patent right
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(US or foreign), which is owned or controlled by it or its subsidiaries,
against, Intel or any customer, direct or indirect, or any contractors, direct
or indirect, based on the manufacture, use, import, offer for sale or sale of
any product or service for so long as Intel does not assert a patent claim
against the Company, its subsidiaries affiliates, or their customers, direct or
indirect, agents and contractors for the manufacture, use import, offer for sale
or sale of the Company's products or services. If the Company assigns or
attempts to assign ownership of any of its patents to a third party not bound by
this covenant not to sue (whether directly or by operation of law), then
effective upon such assignment or attempted assignment, Company agrees that
Intel shall have a nonexclusive, nontransferable license, without right of
sublicense, under such assigned patents to make, use and sell Intel
products.
12.4 Jurisdiction and Czhoice of Law Any claim arising under or relating
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to this Agreement shall be governed by the internal substantive laws of the
State of Delaware or federal courts located in Delaware, without regard to
principles of conflict of laws. Each party hereby agrees to jurisdiction and
venue in the courts of the State of Delaware for all disputes and litigation
arising under or relating to this Agreement. Company represents that it is
undergoing a corporate recapitalization with the ultimate goal of it being the
parent of both its Korean and Chinese subsidiaries. Company agrees to submit
itself and its subsidiaries to the jurisdiction of the State or Federal Courts
of Delaware pursuant to this Section 12.4, including receipt of service of
process.
12.5 Relationship of the Parties. This Agreement is not intended to be,
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nor shall it be construed as, a joint venture, association, partnership,
franchise or other form of business relationship. Neither Party shall have nor
hold itself out as having any right or power or authority to assume, create, or
incur any expense, liability or obligation, expressed or implied, on behalf of
the other Party, except as expressly provided herein. Except as expressly
agreed, each Party shall bear its own costs and expenses incurred under or in
conjunction with its performance of its obligation contained in this Agreement.
12.6 Existing Agreement and Relationship to this Agreement. All terms and
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conditions set forth in the CPA shall remain in effect and control the purchase
of Company's Products except in the event of a direct
*Confidential treatment requested.
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conflict or inconsistency. This Agreement is intended to supplement the CPA. In
the event of any direct conflict or inconsistency between the CPA and this
Agreement, the terms and conditions of this Agreement shall control. Upon any
change of control, this Agreement will survive and the new owners would be
required to honor all obligations set forth therein.
12.7 Assignment. Except for assignment to a wholly owned subsidiary, for
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a period five (5) years from the Effective Date, the obligations of the Company
under this Agreement may not be assigned, whether by operation of law or
otherwise, without the prior written consent of the Intel, which consent may not
be unreasonably withheld. Intel reserves the right to withhold such consent if
in its good faith reasonable judgement, such proposed assignee is not capable of
meeting Company's obligations under the Agreement. Subject to the foregoing,
this Agreement shall inure to and benefit and bind the successors and permitted
assigns of the Parties.
12.8 Notices. All notices, demands or consents required or permitted
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hereunder shall be in writing and shall be delivered, sent by facsimile (with
confirmation copy by mail) or telex, or mailed to the respective Parties at the
addresses first set forth in the first paragraph of this Agreement or at such
other address as shall have been given to the other Party in writing for the
purposes of this clause. Such notices and other communications shall be deemed
effective upon the earliest to occur of (i) actual delivery, (ii) five (5) days
after mailing, addressed and postage prepaid, returned receipt requested, as
aforesaid, or (iii) one (1) business day after transmission by telex, telegram
or facsimile where receipt has been confirmed by the same type of transmission
or in writing received by the sender.
12.9 Severability. The provisions of this Agreement are severable and if
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any one or more such provisions shall be determined to be invalid, illegal or
unenforceable, in whole or in part, the validity, legality and enforceability of
any of the remaining provisions or portions thereof shall not in any way be
affected or impaired thereby and shall nonetheless be binding between the
Parties hereto.
12.10 Titles and Headings. Titles and headings to Sections herein are
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inserted for convenience of reference only and are not intended to affect the
meaning or interpretation of this Agreement.
12.11 Counterparts. This Agreement may be executed in multiple
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counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
duly authorized officers or representatives to be effective as of the date first
above written.
Intel Corporation ChipPAC Limited
By: /s/ Craig C. Brown By: /s/ Richard Parsons
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Name: Craig C. Brown Name: Richard Parsons
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Title: Director, Assembly/Test Title: DIRECTOR
Materials Group -----------------------------
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Appendix A
[redacted*]
*Confidential Treatment requested.
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