Exhibit 10.w
WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED
BY AN ASTERISK), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
================================================================================
NEWBURY PARK
WAFER SUPPLY AND SERVICES AGREEMENT
among:
ALPHA INDUSTRIES, INC.
a Delaware corporation;
and
CONEXANT SYSTEMS, INC.
a Delaware corporation;
---------------------------------
Dated as of June 25th, 2002
---------------------------------
================================================================================
TABLE OF CONTENTS
PAGE
1. DEFINITIONS........................................................................................ 1
1.1 "Buyer Spin-off"............................................................................ 1
1.2 "Buyer Subsidiary".......................................................................... 1
1.3 "Competitor"................................................................................ 1
1.4 "Confidential Information................................................................... 1
1.5 "Cycle Time"................................................................................ 1
1.6 "Delivery Note"............................................................................. 2
1.7 "Engineering Wafers"........................................................................ 2
1.8 "Final Test Services........................................................................ 2
1.9 "Party"..................................................................................... 2
1.10 "Pizza Mask Wafers" ........................................................................ 2
1.11 "Photomasks................................................................................. 2
1.12 "Post Probe Processing Services"............................................................ 2
1.13 "Price"..................................................................................... 2
1.14 "Probe Services"............................................................................ 2
1.15 "Process Technology"........................................................................ 2
1.16 "Production Wafers"......................................................................... 2
1.17 "Purchase Order"............................................................................ 2
1.18 "Quality Specifications".................................................................... 2
1.19 "Risk Production"........................................................................... 2
1.20 "Services".................................................................................. 2
1.21 "Specifications"............................................................................ 2
1.22 "Supplier Fab".............................................................................. 3
1.23 "Wafers".................................................................................... 3
2. PURCHASE AND SUPPLY OBLIGATIONS.................................................................... 3
2.1 Buyer Purchases............................................................................. 3
2.2 Supplier Supply Obligations................................................................. 3
3. WAFER AND SERVICES PURCHASES ...................................................................... 5
3.1 Scope....................................................................................... 5
3.2 Process Technologies........................................................................ 5
3.3 Wafer Forecasts............................................................................. 5
3.4 Purchase Orders............................................................................. 5
3.5 Acceptance and Acknowledgement.............................................................. 6
3.6 Wafer Lots; Expedited Services.............................................................. 6
3.7 Pizza Mask Wafers........................................................................... 6
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.8 Cancellation and Modifications to Orders ................................................... 6
3.9 Materials................................................................................... 7
3.10 Inactive Material........................................................................... 7
3.11 Risk Production............................................................................. 7
3.12 Rework...................................................................................... 8
3.13 NRE Services................................................................................ 8
3.14 Final Test and Probe Services............................................................... 8
4. DELIVERY AND LOGISTICS ............................................................................. 9
4.1 Delivery.................................................................................... 9
4.2 Wafers...................................................................................... 9
4.3 Product Logistics........................................................................... 9
5. PRICING AND PAYMENTS ............................................................................... 9
5.1 Pricing and Invoices........................................................................ 9
5.2 Costs....................................................................................... 10
5.3 Taxes....................................................................................... 10
6 . TRACKING; REPORTING; AND AUDITS .................................................................... 10
6.1 Wafer Tracking.............................................................................. 10
6.2 Reporting Requirements ..................................................................... 10
7 . WARRANTY AND DISCLAIMER ............................................................................ 10
7.1 Wafer Warranty ............................................................................. 10
7.2 Services Warranty........................................................................... 11
7.3 Disclaimers................................................................................. 11
8 . INDEMNIFICATION..................................................................................... 11
8.1 Indemnification Obligations ................................................................ 11
8.2 Conditions.................................................................................. 12
8.3 Sole and Exclusive Remedy................................................................... 12
9. CONFIDENTIALITY..................................................................................... 12
9.1 Confidentiality Obligations................................................................. 12
9.2 Exceptions.................................................................................. 13
9.3 Confidentiality of this Supply Agreement ................................................... 13
9.4 Injunctive Relief........................................................................... 13
10. LIMITATIONS OF LIABILITY............................................................................ 13
10.1 Disclaimer.................................................................................. 13
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.2 Liability Limitation........................................................................ 13
10.3 Basis of Bargain............................................................................ 14
11. TERM; TERMINATION................................................................................... 14
11.1 Term........................................................................................ 14
11.2 Termination................................................................................. 14
11.3 Termination for Non-Payment................................................................. 14
11.4 Termination of Buyer Spin-off Agreements.................................................... 14
11.5 Effect of Termination....................................................................... 15
12. GENERAL............................................................................................. 15
12.1 Agency...................................................................................... 15
12.2 Governing Law; Venue and Jurisdiction....................................................... 15
12.3 Dispute Resolution and Escalation........................................................... 15
12.4 Third-Party Beneficiaries................................................................... 16
12.5 Compliance with Law......................................................................... 16
12.6 Force Majeure............................................................................... 16
12.7 Amendment; Later Agreement.................................................................. 16
12.8 Assignment.................................................................................. 16
12.9 Notices..................................................................................... 17
12.10 Waiver...................................................................................... 17
12.11 Severability................................................................................ 17
12.12 Counterparts and Facsimile.................................................................. 17
12.13 Rules of Construction....................................................................... 18
12.14 Entire Agreement............................................................................ 18
EXHIBIT A - PRICING........................................................................................... 20
EXHIBIT B - QUALITY SPECIFICATIONS ........................................................................... 21
EXHIBIT C - NEW PROCESS TECHNOLOGY PROCEDURES ................................................................ 22
EXHIBIT D - WAFER CYCLE TIMES ................................................................................ 23
EXHIBIT E - FINAL TEST AND PROBE SERVICES SUPPORT ............................................................ 24
EXHIBIT F - DELIVERY AND LOGISTICS ........................................................................... 25
EXHIBIT G - REPORTS........................................................................................... 26
-iii-
NEWBURY PARK WAFER SUPPLY AND SERVICES AGREEMENT
THIS WAFER SUPPLY AND SERVICES AGREEMENT (the "SUPPLY AGREEMENT") is
entered into as of June 25th 2002 (the "EFFECTIVE DATE") by and between CONEXANT
SYSTEMS, INC., a Delaware corporation ("BUYER") and ALPHA INDUSTRIES, INC., a
Delaware corporation ("SUPPLIER").
RECITALS
A. Buyer desires, on the terms and conditions of this Supply
Agreement, to purchase from Supplier semiconductor wafers and related foundry,
manufacturing, probe, and other services.
B. Supplier is willing to supply such wafers and services to Buyer on
the terms and conditions of this Supply Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Supply Agreement, the Parties agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not expressly defined elsewhere in this
Supply Agreement have the following meanings:
1.1 "BUYER SPIN-OFF" means any entity (including, without limitation,
Mindspeed) that is a successor of any portion of the business of Buyer resulting
from a spin-off or divestiture of such business, regardless of whether or not
Buyer retains an equity or ownership interest in such entity.
1.2 "BUYER SUBSIDIARY" means any entity that at any time during the
term of this Supply Agreement controls, is controlled by, or is under common
control with Buyer, where control means direct or indirect ownership of fifty
percent (50%) or more of the outstanding voting stock or other equity interests
ordinarily having voting rights.
1.3 "COMPETITOR" means a business entity which derives a material
portion of its revenue (over the most recent three (3) year period) from sales
of similar products in similar markets, as compared with the products and
markets of a Party.
1.4 "CONFIDENTIAL INFORMATION" shall mean (i) for information
disclosed after the Effective Date, all non-public information disclosed by one
Party to the other Party pursuant to this Supply Agreement that is identified as
"confidential" or marked with a similar legend at the time of such disclosure
or, if disclosed other than in writing, identified as confidential at the time
of disclosure and confirmed in writing within thirty (30) days, (ii) for
information currently in the possession of the other Party as of the Effective
Date, all non-public information that a reasonable person would have understood
to be confidential, regardless of the form or manner of disclosure, (iii) any
information obtained by one Party's employees or agents while on the premises of
the other Party, which, under the circumstances, a reasonable person would have
understood to be confidential, and (iv) any specifications or technical
information related to Buyer's products (e.g., structure, design, layout) and
Supplier's process technologies that are known to, or otherwise in the
possession of, the other Party as of the Effective Date.
1.5 "CYCLE TIME" means, with respect to a Wafer, Supplier's standard
production cycle measured from the start of Wafer manufacture through shipment.
1.
1.6 "DELIVERY NOTE" means the delivery instructions provided by Buyer
to Supplier for Wafers ordered by Buyer.
1.7 "ENGINEERING WAFERS" means non-production Wafers manufactured by
Supplier for qualification or testing and may include Pizza Mask Wafers.
1.8 "FINAL TEST SERVICES" means the testing of circuits at the
packaged level to meet the Specifications.
1.9 "PARTY" means either Buyer or Supplier, as the context requires,
and "Parties" means Buyer and Supplier collectively.
1.10 "PIZZA MASK WAFERS" means multiple device designs on a single
wafer.
1.11 "PHOTOMASKS" means precision photographic quartz or glass plates
containing microscopic images of integrated circuits for use as master images to
transfer circuit patterns onto semiconductor wafers during the fabrication of
integrated circuits and other semiconductor products.
1.12 "POST PROBE PROCESSING SERVICES" means (i) grinding of Wafers to
appropriate thickness; (ii) scribing of Wafers to commence die formation; (iii)
die singulation; (iv) breaking dies along scribed markings; and (v) final
singulation of each die.
1.13 "PRICE" is defined in Exhibit A.
1.14 "PROBE SERVICES" means electrical testing of individual
semiconductor wafers on a substrate.
1.15 "PROCESS TECHNOLOGY" means the systematic techniques, methods, or
approaches used to manufacture, or test semiconductor chips or assemblies.
1.16 "PRODUCTION WAFERS" means Wafers manufactured by Supplier after
successful qualification and approval for mass production.
1.17 "PURCHASE ORDER" means a written order for the purchase of a
specified quantity of Wafers or Services submitted by Buyer to Supplier.
1.18 "QUALITY SPECIFICATIONS" means the Wafer quality standards and
criteria set forth in Exhibit B, as may they be modified by written agreement of
the Parties from time to time.
1.19 "RISK PRODUCTION" means Wafers specifically identified by Buyer
in a Purchase Order as "Risk Production" that are to be manufactured by Supplier
pursuant to Buyer's Specifications, but for which compliance with the Quality
Specifications is specifically waived. "Risk Production" may include the
following: unverified mask sets, unverified process changes, no supporting
qualification data, and known design rule violations.
1.20 "SERVICES" means Final Test Services, Post Probe Processing
Services, Probe Services, or such other services described in this Supply
Agreement, as applicable.
1.21 "SPECIFICATIONS" means the technical specifications for the
Wafers mutually agreed to in writing by the Parties, as they may be modified
from time to time upon written agreement of the Parties.
2.
1.22 "SUPPLIER FAB" means the Newbury Park Wafer fabrication facility
or other fabrication facilities owned or operated by Supplier.
1.23 "WAFERS" means semiconductor wafers to be processed by Supplier
including Engineering Wafers, Production Wafers, Pizza Mask Wafers, and Risk
Production.
2. PURCHASE AND SUPPLY OBLIGATIONS.
2.1 BUYER PURCHASES.
(a) BUYER PURCHASE ORDERS. During the term of this Supply
Agreement, Buyer may submit Purchase Orders to Supplier for the purchase of
Wafers and Services, as further described herein.
(b) PURCHASES FOR CERTAIN ENTITIES. Supplier agrees that Buyer,
as agent, may, at any time at the prices and in accordance with the terms and
conditions established under this Supply Agreement, place orders for Wafers or
Services on behalf of (i) third parties that are mutually agreed to by the
Parties; (ii) Buyer Subsidiaries; (iii) Buyer Spin-Offs (excluding
SpecialtySemi); and (iv) third parties for which Buyer has an obligation,
existing as of the Effective Date, to provide Wafers. Notwithstanding the
foregoing and for the avoidance of doubt, Supplier hereby acknowledges and
agrees that Buyer may, at any time at the prices and in accordance with the
terms and conditions of this Supply Agreement, place orders for Wafers or
Services on behalf of Rockwell, SiRF, Mindspeed and Lumero. If Buyer places an
order on behalf of a third party, Supplier will, at Buyer's direction, ship
products ordered on behalf of such third party directly to such third party's
facilities, as applicable. Supplier may invoice Buyer or such third party for
such orders, it being understood that the applicable third party may pay the
invoiced amount directly to Supplier, however, Buyer, as agent for such third
party, shall remain jointly and severally liable for any such payments due to
Supplier. Notwithstanding the foregoing, however, if any such third party is
reasonably determined to be a Competitor of Supplier or its affiliates, Supplier
may, upon six (6) months written notice to Buyer, refuse to fulfill orders for
such third party; provided that Supplier will continue to manufacture, supply
and provide to Buyer, in accordance with the Wafer purchase procedures in
Section 3, any Wafers ordered for such third party for delivery prior to the
expiration of such six (6) month period.
(c) BUYER SPIN-OFFS. The Parties acknowledge and agree that each
Buyer Spin-off will have the right to enter into a supply agreement with
Supplier on terms and conditions substantially similar to the terms and
conditions set forth in this Supply Agreement and Supplier agrees to enter into
such agreement upon Buyer Spin-off's request. Such Buyer Spin-off's purchases
are subject to the Buyer Spin-off credit requirements set forth in Section
5.1 (c).
2.2 SUPPLIER SUPPLY OBLIGATIONS.
(a) SUPPLY OBLIGATIONS. Supplier shall use its reasonable
commercial efforts to accept and fulfill all Purchase Orders submitted by Buyer
for Wafers and Services that are within the forecasts submitted by Buyer.
Subject to the availability of required materials, Supplier shall also use
reasonable commercial efforts to accept and fulfill Purchase Orders for Wafers
and Services insofar as not exceeding 120% of Buyer's forecasts; provided that
in no event shall Supplier be required to reallocate capacity committed to other
customers to accept and fulfill such Purchase Orders.
(b) MANUFACTURING PROCEDURES. The Wafers will be manufactured and
produced in accordance with and pursuant to the most current version of
Supplier's Process Change Notice, Specification Number NPF-0570.
3.
(c) NOTICE REQUIREMENTS. If at any time Supplier believes or
becomes aware that it may fail to comply in a material manner with its supply
obligations under this Supply Agreement, or if Supplier believes or becomes
aware that Buyer's forecasts or Purchase Orders for Wafers and Services, when
taken in the aggregate, will exceed the maximum capacity or capability of the
Supplier Fab, then Supplier will promptly notify Buyer in writing. However,
without reduction of this commitment, Supplier shall have no monetary liability
for its failure to do so. In addition, Supplier shall, on a quarterly basis,
provide Buyer with an assessment of known and existing capacity issues at the
Supplier Fab, any capacity issues anticipated over the next fifteen (15) month
period, and the plan to remedy such issues.
(d) DISCONTINUANCE OF WAFER PROCESS. Subject to the restrictions
in this Section 2.2(d), Supplier may terminate the use of any Wafer process at
the Supplier Fab designated as an "End-of-Life-Process." At least eighteen (18)
months prior to the date the discontinuance of such process will commence,
Supplier shall provide Buyer with written notice of its intent to terminate such
Wafer process. Buyer may identify a suitably qualified alternative supplier of
Wafers (the "FOLLOW-ON SUPPLIER"), which selection shall be subject to
Supplier's approval (which shall not be unreasonably withheld or delayed). Upon
selection of a qualified alternative supplier, Supplier shall prepare a
transition plan specifically designed to ensure that there is minimal
interruption in Buyer's supply of Wafers arising in the transfer of production
to the Follow-On Supplier and obtain Buyer's written approval of such transition
plan (which shall not be unreasonably withheld or delayed); however, failure to
obtain Buyer's written approval shall not serve as grounds to extend the
eighteen (18) month notice described in this Section 2.2(d). Supplier will at
Buyer's expense, pre-approved by Buyer (which shall not be unreasonably withheld
or delayed), work with Buyer to perform the transition in accordance with the
Buyer-approved plan and will take all commercially reasonable steps to ensure a
smooth transition. In addition, Buyer will have the right, until the expiration
of eighteen (18) months from the date of Supplier's notice of discontinuance, to
submit Purchase Orders for Wafers to be manufactured or tested with such Wafer
process within such eighteen (18) month period. Supplier will manufacture,
supply, and provide to Buyer, in accordance with the Wafer purchase procedures
in Section 3, any such Wafers that are ordered for delivery prior to the
expiration of such eighteen (18) month period. Buyer acknowledges that all such
Purchase Orders placed during months seven (7) to eighteen (18) of the eighteen
(18) month notice period for Wafers manufactured or tested with an
End-of-Life-Process (i) are non-cancelable and except for non conforming
products are non-returnable and (ii) unless mutually agreed otherwise, will not
exceed the total quantity of such Wafers manufactured or tested with such
End-of-Life-Process ordered during the eighteen (18) month period immediately
prior to the end-of-life notice provided under this section. The foregoing
obligations are in addition to Supplier's other obligations under this Supply
Agreement.
(e) CLOSING OF SUPPLIER FAB. Supplier shall notify Buyer at least
eighteen (18) months prior to the date that Supplier intends to commence any
closure, in whole or in part, of the Supplier Fab. If Buyer elects to do so,
Buyer may identify a suitably qualified alternative supplier of Wafers (the
"FOLLOW-ON SUPPLIER"), and subject to Supplier's approval (which shall not be
unreasonably withheld or delayed), Supplier shall prepare a transition plan
specifically designed to ensure that there is minimal interruption in Buyer's
supply of Wafers arising in the transfer of production to the Follow-On Supplier
and obtain Buyer's written approval of such transition plan (which shall not be
unreasonably withheld or delayed); however, failure to obtain Buyer's written
approval shall not serve as grounds to extend the eighteen (18) month notice
described in this Section 2.2(e). Supplier will seek to perform the transfer of
Wafer processing technology in accordance with the Buyer-approved plan and will
at Buyer's expense take all commercially reasonable steps to ensure a smooth
transition of the Wafer processing. Buyer shall reimburse Supplier for
Supplier's reasonable direct and indirect expenses incurred by Supplier, and
pre-approved by Buyer, in transitioning such technology to the designated
foundry. Buyer will have the right, until the expiration of such eighteen (18)
month period, to continue to submit
4.
Purchase Orders for Wafers to Supplier to be manufactured or tested within such
eighteen (18) month period. Supplier will continue to manufacture, supply, and
provide to Buyer, in accordance with the Wafer purchase procedures in Section 3,
any such Wafers that are ordered. Buyer acknowledges that all such Purchase
Orders placed during months seven (7) to eighteen (18) of the eighteen (18)
month notice period for Wafers manufactured or tested at the Supplier Fab which
is the subject of the closure notice (i) are non-cancelable and except for
non-conforming products are non-returnable and (ii) unless mutually agreed
otherwise, will not exceed the total quantity of such Wafers manufactured or
tested ordered during the eighteen (18) month period immediately prior to the
closure notice provided under this section. The foregoing obligations are in
addition to Supplier's other obligations under this Supply Agreement.
3. WAFER AND SERVICES PURCHASES.
3.1 SCOPE. Upon receipt of an applicable Purchase Order, Supplier
shall provide management, planning and procurement of Wafers and Services for
Buyer. If Probe Services or Final Test Services are ordered, all equipment and
test programs for such Services shall be provided and maintained by Buyer,
provided that Supplier shall be responsible for providing test floor and labor
for such Services. Post Probe Processing Services shall be ordered on a separate
Purchase Order.
3.2 PROCESS TECHNOLOGIES.
(a) DEVELOPED AND QUALIFIED. Buyer will have the right to
purchase Wafers manufactured and Services provided through the use of any
Process Technologies developed and qualified for full-scale production at the
Supplier Fab as of the Effective Date under the terms and conditions of this
Supply Agreement.
(b) NEW TECHNOLOGIES NOT IN DEVELOPMENT. Buyer will not be
entitled under this Supply Agreement to purchase Wafers manufactured and
Services provided through the use of Process Technologies that are not not
developed or qualified for full-scale production at the Supplier Fab as of the
Effective Date. Supplier and Buyer may mutually agree on the terms and
conditions of the development of such Process Technologies and the supply of
Wafers and Services by Supplier to Buyer utilized such Process Technologies in a
separate agreement.
3.3 WAFER FORECASTS. On or about the last day of each calendar month
during the term of this Supply Agreement, Buyer will provide to Supplier a
rolling forecast, covering a minimum period of twelve (12) months, of Buyer's
expected order volumes for Wafers and Services. Buyer's forecasts are for
planning purposes only and will not bind Buyer in any respect. Each such
forecast will include, as applicable: (i) the number of Wafers by Process
Technology and probe platform; (ii) the number of hours by probe platform; and
(iii) the number of hours by tester platform. Only a written Purchase Order
delivered in accordance with Section 3.4 will bind Buyer to purchase specified
volumes of Wafers or Services. Buyer may change or update the forecasts
delivered hereunder at any time upon notice to Supplier.
3.4 PURCHASE ORDERS. All Purchase Orders will conform to the Cycle
Times, lead times and other pertinent details itemized in the Exhibits. Wafers
delivered more than thirty (30) days before scheduled date(s) may be returned to
Supplier. Partial shipments are permitted. Buyer will submit Purchase Orders to
Supplier to cover Buyer's expected purchases of Wafers and Services. Each
Purchase Order for Wafers and Services will specify, as appropriate, the
applicable Purchase Order number, Wafer part number and revision level,
quantity, additional component parts required by Buyer, testers to be used,
price, delivery date, ship-to address, and other applicable information as
determined by Buyer. Supplier
5.
will not commence manufacturing of the Wafers or providing of Services until
Buyer has issued a Purchase Order.
3.5 ACCEPTANCE AND ACKNOWLEDGEMENT. Subject to the limitations set
forth in Section 2.2(a), within three (3) business days after receipt, Supplier
shall use reasonable commercial efforts to accept all Buyer orders for Wafers
and Services in accordance with the delivery dates specified therein. Within
three (3) business days after receipt of each Purchase Order, Supplier will
acknowledge such Purchase Order in writing by fax, e-mail notice, or electronic
data interchange ("EDI") to Buyer's purchasing agent identified on the face of
the Purchase Order. Such acknowledgement shall include Supplier's committed
delivery date for the order; provided that, in establishing such delivery date,
Supplier shall use commercially reasonable efforts to comply with the delivery
dates specified in Buyer's Purchase Order and to meet or reduce the Wafer Cycle
Times set forth in Exhibit D. The Wafer process Cycle Times set forth in Exhibit
D shall be updated quarterly, upon mutual agreement of the Parties. If at any
time during the production of such Wafers or the providing of Services, Supplier
becomes aware that the delivery may be delayed by more than one (1) business
day, Supplier shall promptly provide Buyer with written notice of such delivery
date change or any applicable quantity change.
3.6 WAFER LOTS; EXPEDITED SERVICES. Unless otherwise agreed to in
writing by the Parties, Production Wafers shall be ordered by Buyer and
delivered by Supplier in lots of twenty (20) Wafers and Engineering Wafers shall
be ordered by Buyer and delivered by Supplier in lots of five ( 5 ) to twenty
(20) Wafers. At Buyer's request and to the greatest extent possible consistent
with Supplier's normal production and operational requirements and without undue
impact to Supplier's other production, Supplier will use reasonable commercial
efforts to provide priority processing of Production Wafer lots, Engineering
Wafer lots, and Risk Production. Notwithstanding the foregoing, Supplier shall
have no liability for failure to actually provide priority processing. Supplier
shall provide up to one (1) priority lot to be processed at any one time at no
additional cost to Buyer (herein, the "Allowable Expedited Lot"). If the number
of Allowable Expedited Lots requested by Buyer at any given time is exceeded,
Buyer will be required to pay any additional costs, as mutually agreed by the
Parties, for any such additional lots for which priority processing is actually
provided by Supplier.
3.7 PIZZA MASK WAFERS. Buyer may submit Purchase Orders for Pizza
Mask Wafers, and Supplier shall fulfill such orders, provided that (i) the only
testing of Pizza Mask Wafers required to be performed by Supplier will be
parametric testing; and (ii) Supplier will deliver Pizza Mask Wafers in wafer
form.
3.8 CANCELLATION AND MODIFICATIONS TO ORDERS. Buyer may cancel,
modify or reschedule a Purchase Order as set forth in this Section 3.8.
(a) CANCELLATION BEFORE PROCESS START. For each Purchase Order
for which processing of the Wafers or performance of the Services has not yet
been started, Buyer may cancel or modify a Purchase Order without penalty by
delivering to Supplier a written notice of cancellation or modification not less
than four (4) business days before the start of processing or performance. Such
cancellation shall be without charge or penalty, except that Buyer shall be
obligated to purchase and pay for any materials acquired in respect of
Supplier's anticipated production or Services for Buyer under the cancelled
order(s), as set forth in Section 3.9.
(b) RESCHEDULING. For each Purchase Order, Buyer may reschedule
the delivery one or more times without penalty by delivering to Supplier a
written notice rescheduling such delivery at least thirty (30) days prior to the
originally scheduled delivery date. The maximum time a delivery may be delayed
is ninety (90) days beyond its originally scheduled delivery date.
6.
(c) CANCELLATIONS AFTER PROCESS START. If Buyer cancels a
Purchase Order for Wafers after the date the processing of such Wafers has been
started, then as Buyer's sole liability, and Supplier's sole remedy, for such
cancellation, Buyer will pay to Supplier, an amount equal to the purchase price
for such cancelled Wafers prorated for the amount of processing completed at the
time of notice of cancellation, as set forth in Exhibit A.
(d) CANCELLATION FOR LATE DELIVERY. Notwithstanding any of the
foregoing, Buyer may cancel any Purchase Order, in whole or in part and without
penalty, if Supplier does not deliver the Wafers within six (6) weeks after
Supplier's committed delivery date; provided that there are no extenuating
circumstances causing the delay (e.g., a Lot is dropped and scrapped in line,
the Supplier Fab goes down, or a materials issues). If extenuating circumstances
may or are causing such a delay, Supplier shall notify Buyer in writing of such
extenuating circumstances, along with the projected delivery date for the
delayed Wafers, and the parties shall cooperate in good faith to identify and
implement a mutually agreeable resolution including, without limitation,
Supplier providing priority processing of such Wafers at no additional charge to
Buyer. In the event that extenuating circumstances scraps a Lot in line,
Supplier shall notify Buyer in writing of such event and Buyer may, at Buyer's
discretion, either approve the restart of the Lot or cancel the Lot without
penalty.
3.9 MATERIALS. Except as otherwise specified in Section 3.1,
Supplier shall be responsible for procuring all materials required to
manufacture the quantity of Wafers and to provide the Services ordered by Buyer.
When purchasing such materials, Supplier shall, at a minimum, procure quantities
of materials in such volume to cover shrinkage and scrap associated with the
fabrication process. Supplier will use commercial efforts to plan its
procurement of epitaxial wafers and other production materials consistent with
the first four (4) months of the Buyer's forecast. Supplier agrees to use
reasonable commercial efforts to exercise prudent materials resource planning to
not procure such materials in advance of the time reasonably required to meet
projected production requirements and to mitigate Buyer's materials liability
hereunder.
3.10 INACTIVE MATERIAL. Material purchased to support Buyer forecasts,
as set forth in Section 3.9, which is not consumed within four (4) months of the
material's anticipated time of utilization will be considered "INACTIVE
MATERIAL". Thereafter, Supplier may invoice Buyer for Supplier's cost of all
Inactive Material, and Buyer shall pay such invoice within thirty (30) days of
its receipt. Upon such payment, the Inactive Material will then be segregated as
Buyer furnished material and if later consumed by Buyer will be credited towards
the purchase price. Subject to payment, Inactive Material not consumed within
three hundred and sixty (360) days of receipt will, at Buyer's option, be
scrapped, processed for reclamation, or delivered to Buyer.
3.11 RISK PRODUCTION. At Buyer's request and subject to an applicable
Purchase Order and the orderly operation of Supplier's production, Supplier
shall consider Buyer's request to provide Risk Production to Buyer. With all
Purchase Orders for Risk Production, Buyer shall provide a written statement
setting forth the risk factors or any special circumstances related to the Risk
Production and specifying the lot size and quantity of Risk Production to be
provided. Supplier's acknowledgement, including Supplier modification to such
written statement, if any, will be included as part of a Purchase Order for Risk
Production and shall be deemed an acknowledgement of such risks or
circumstances. Supplier shall use reasonable commercial efforts to provide
processing of Risk Production consistent with its ongoing operations and other
business. Risk Production is offered as a Service hereunder. Without limitation,
Supplier extends no warranties of any kind, express or implied, beyond
Supplier's undertaking to use reasonable commercial efforts in the course of the
fabrication of Risk Production. Without limitation, compliance with the Quality
Specifications and Section 7.1 and Section 7.2 shall not apply to Risk
Production.
7.
3.12 REWORK. Upon Buyer's request and as accepted in Supplier's
acknowledgement, Supplier shall provide Wafer rework services for Buyer. Buyer
shall pay Supplier for rework in accordance with the pricing set forth in
Exhibit A; provided that Supplier remains solely responsible for any and all
rework required for Wafers that do not conform to the Specifications or do not
meet the Quality Specifications.
3.13 NRE SERVICES. At Buyer's request and as accepted in Supplier's
acknowledgement, Supplier shall provide non-recurring engineering services for
new Wafers. The Parties shall negotiate in good faith the terms and conditions
and any applicable costs associated with such engineering services.
3.14 FINAL TEST AND PROBE SERVICES. Supplier agrees to provide Final
Test Services and Probe Services support on Buyer owned testers located at the
Newbury Park Wafer fabrication facility on May 1, 2002. Consistent with
Supplier's practices as of May 1, 2002, or as otherwise agreed by the Parties,
Supplier will provide the required floor space, required operators, production
control services (e.g., WIP reports and lot travelers) and quality services
(e.g., incoming and outgoing inspections). Supplier will also coordinate
calibration activities at Buyer's expense. The Final Test Services and Probe
Services are described in more detail in Exhibit E.
(a) COSTS. These Final Test Services and Probe Services will be
provided at the following agreed charges, intended to approximate Supplier's
costs in providing such Services. The minimum charge per quarter is $162,500.
The minimum charge includes one set of operators (i.e., 4 people, 1 per shift)
of $40,000 per quarter, the fixed facility charge of $60,000 per quarter, and a
fixed rate of $62,500 per quarter for general support. As of the Effective Date,
Buyer and Supplier agree that the Services will include two (2) sets of
operators, resulting in an initial operators' charge of $80,000 per quarter for
labor, or a total initial charge of $202,500 per quarter for Final Test Services
and Probe Services.
(b) CHANGE IN SUPPORT LEVELS. The parties anticipate that a set
of operators can maintain an average of three (3) testers across all four (4)
shifts. With ninety (90) days written notice, Buyer can request Supplier to
increase or decrease the number of sets of operators, and Supplier shall make
reasonable commercial efforts to respond to such requests. In the event that
Buyer reduces its requirement for operators with less than one hundred and
eighty (180) days' notice, provided Supplier cannot successfully reassign any
surplus operator to another appropriate position without prejudice to Supplier's
staffing practices and requirements, Buyer will be responsible for, and shall
promptly reimburse Supplier for, Supplier's severance costs (including without
limitation any salary and benefit continuation for a period of four (4) weeks
plus one (1) week for every year of service and operator level outplacement
services) pertaining to any such terminated operator. Supplier agrees that it
will not give preferential treatment to any such terminated employee, as
compared to the manner in which Supplier would handle termination of other
comparably situated employees. The general overhead charge stated above (i.e.,
$162,500) will support up to three (3) sets of operators. If Buyer would like to
increase the number of operators over three (3) sets of operators, the Parties
shall mutually agree on an equitably increased general overhead charge.
(c) TERMINATION. The minimum length of the Final Test Service and
Probe Service support will be twelve (12) months from the Effective Date. With
ninety (90) days written notice, Buyer may terminate or continue the Services
for another six (6) months (to eighteen (18) months total). If Buyer requests
the extension, Supplier must continue to provide the Services through such
eighteen (18)-month term. Conditional upon Buyer exercising its first extension
rights, ninety (90) days prior to the end of the eighteen (18) months, Buyer
must notify Supplier whether the Services will be renewed for another six
(6)-month period (to twenty-four (24) months total). If Buyer requests the
extension, Supplier must
8.
continue to provide the service through such twenty-four (24)-month term. Ninety
(90) days prior to the end of the twenty-four (24) months, Buyer and Supplier
may mutually agree to extend the Services. Any agreement in extending Services
beyond twenty-four (24) months, must be mutually agreed to between Supplier and
Buyer. Once the service has been terminated, Buyer shall remove all its
equipment from the Supplier Fab in a prompt manner and at Buyer's expense; all
such activities shall be conducted in accordance with Supplier's reasonable
requirements, and coordinated in a manner not to disrupt Supplier's activities.
Buyer shall repair all damage to Supplier's premises caused by such removal.
(d) TAXES. Buyer shall be responsible for the prompt and timely
payment of all taxes arising with respect to its test equipment located at
Supplier's premises under this Agreement.
4. DELIVERY AND LOGISTICS.
4.1 DELIVERY. All Wafers delivered to Buyer shall be delivered F.O.B.
the Supplier Fab. Title to and risk of loss of the Wafers will pass to Buyer
upon delivery of the Wafers to the carrier.
4.2 WAFERS. Supplier shall process all deliveries of those Wafers
that have completed the manufacturing processes, and wafers provided by Buyer
for Services, in accordance with the shipping instructions included in the
Delivery Note or otherwise communicated to Supplier in writing. In the absence
of any such instructions, Supplier will determine the method of shipment and
select the carrier. Buyer will pay, or reimburse Supplier for, all shipping and
handling charges. If Supplier is required to pay such charges to the carrier,
Supplier will include such charges as a line item in an invoice to Buyer and
Buyer will pay such amount in accordance with Section 5.1. Supplier shall use
commercially reasonable efforts to complete all such processing within one (1)
business day from the receipt of the Delivery Note. All Wafers shipped by
Supplier to Buyer under this Supply Agreement will be accompanied by appropriate
documentation regarding shipping location, lot identification numbers, Buyer
product number, quantity shipped, customer name, shipping date, and purchase
order number. At Buyer's request and insofar as consistent with Supplier's
capabilities and established business practices, shipped Wafers may also include
relevant testing data in either hard or soft copy, and may be accompanied by an
exception report to the extent that one exists.
4.3 PRODUCT LOGISTICS. Supplier will provide work-in-process
management Services for Buyer as further described in Exhibit F. Supplier shall
use reasonable commercial efforts to complete these transactions in a timely
manner.
5. PRICING AND PAYMENTS.
5.1 PRICING AND INVOICES.
(a) WAFERS. Supplier will invoice Buyer for Wafers at the
applicable Wafer price calculated pursuant to Exhibit A in effect on the date of
Supplier's acceptance of the Purchase Order. Each such invoice shall be dated on
or after the date such Wafers are shipped and shall itemize the Wafers delivered
and any applicable shipping charges pursuant to Section 4.2. Buyer will pay any
amounts due on such invoices within thirty (30) days of receipt of the invoice.
(b) SERVICES. Supplier will invoice Buyer for Services upon
completion the applicable Service. Pricing for such Services shall be in
accordance with Exhibit A. All invoices for Services shall itemize the Services
actually performed, materials, material burden, and costs associated with any
changes approved in writing by Buyer. Buyer will pay any amounts due on such
invoices within thirty (30) days of receipt of the invoice.
9.
(c) CREDIT REQUIREMENTS. If based on a then-current credit report
of a Buyer Spin-off, Supplier has an issue with the credit of such Buyer
Spin-off, Supplier shall notify such Buyer Spin-off in writing of such issue
and Buyer Spin-off shall have a period of sixty (60) days to resolve the credit
issue. If such issue is not resolved within such sixty (60) day period, Supplier
reserves the right to limit Buyer Spin-off's purchases to a reasonable amount,
such amount to be based on a then-current credit report of the Buyer Spin-off
and mutually agreed to by Supplier and Buyer Spin-off. The foregoing shall apply
to Buyer Spin-off, notwithstanding Buyer Spin-off entering into a separate
agreement with Supplier and assuming the rights and obligations of "Buyer"
hereunder. In addition, in the event Buyer (i.e., Conexant Systems, Inc.) does
not make timely payment on Supplier's invoices and such issue is not resolved
within sixty (60) days' of receipt of Supplier's written notice of such payment
delays, Supplier reserves the right to limit Buyer's purchases to a reasonable
amount, such amount to be based on a then-current credit report of Buyer and
mutually agreed to by Supplier and Buyer.
5.2 COSTS. Except as otherwise provided herein or agreed to in
writing by the Parties, each Party will be solely responsible for the costs and
expenses it incurs in performing its obligations under this Supply Agreement.
5.3 TAXES. Buyer will be responsible for payment of any and all taxes
or related governmental charges ("TAXES") imposed on or arising from Buyer's
purchase of Wafers or Services under this Supply Agreement, excluding any Taxes
on the net income or net worth of Supplier. Taxes shall be specifically
identified by Supplier as a separate line item on Supplier's invoices provided
pursuant to Section 5.1. Upon Buyer's request, Supplier will provide Buyer with
copies of official receipts for the payment of any such Taxes, and any other
information and documents Buyer may reasonably request in order to verify the
payment of such amounts to the appropriate governmental entity.
6. TRACKING; REPORTING; AND AUDITS.
6.1 WAFER TRACKING. All Wafers manufactured and delivered by Supplier
to Buyer shall have backward and forward traceability sufficient to enable
Supplier to identify (i) the processes and materials used in the manufacture of
such Wafers; (ii) the batches or lots of such materials; and (iii) other Wafers
in the same or sequential lots. Such information shall be provided to Buyer,
upon Buyer's request.
6.2 REPORTING REQUIREMENTS. Supplier shall provide Buyer with the
reports specified in Exhibit G, in accordance with frequency or schedule set
forth therein. All such reports shall be in writing and provided to Buyer in the
form (e.g., electronic form) specified in Exhibit G, or otherwise mutually
agreed to in writing by the Parties.
7. WARRANTY AND DISCLAIMER.
7.1 WAFER WARRANTY. For a period of ninety (90) days from the date of
delivery (the "Wafer Warranty Period"), Supplier warrants that the Wafers
delivered hereunder will conform to the applicable Specifications, will be
manufactured in accordance with the Quality Specifications, and will be free
from defects in material, manufacturing and workmanship. Supplier shall, at
Buyer's option, promptly provide replacement Wafers for such defective Wafers or
credit Buyer's account for the amount paid by Buyer for such defective Wafers.
This warranty shall not apply to any Wafers which, after delivery to Buyer, have
been (i) repaired or altered (except by, or under the direction, of Supplier) or
(ii) damaged or subjected to abuse or misuse. Warranty claims hereunder shall be
made by Buyer by making a written warranty claim within the Wafer Warranty
Period. Except as otherwise instructed by Supplier, Buyer shall return all
defective Wafers to Supplier for inspection. Before returning Wafers, Buyer
shall request and obtain a
10.
Return Material Authorization ("RMA") number from Supplier, and will display
such RMA number on the packaging of such returned Wafers. Replacement Wafers
will be warranted in accordance with this Section 7.1. THE FOREGOING REPRESENTS
BUYER'S SOLE REMEDY AND SUPPLIER'S SOLE LIABILITY IN THE EVENT OF A BREACH OF
THE WAFER WARRANTY IN THIS SECTION 7.1.
7.2 SERVICES WARRANTY. For a period of ninety (90) days from
completion of performance of the applicable Service (the "Services Warranty
Period"), Supplier warrants that such Services will be provided in accordance
with performance metrics mutually agreed by the Parties including, without
limitation, quality, yield, and Cycle. Time and, in any event, in a professional
and workmanlike manner. If, during the Services Warranty Period, Supplier is
notified in writing of any breach of this warranty, then Supplier shall, at
Buyer's option and as Supplier's sole liability with respect to such breach of
warranty, promptly re-perform such Services or credit Buyer for such Services.
Re-performed Services will be warranted in accordance with this Section 7.2. THE
FOREGOING REPRESENTS BUYER'S SOLE REMEDY AND SUPPLIER'S SOLE LIABILITY IN THE
EVENT OF A BREACH OF THE SERVICES WARRANTY IN THIS SECTION 7.2.
7.3 DISCLAIMERS. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS
SUPPLY AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED OR OTHERWISE, IN CONNECTION WITH THIS SUPPLY AGREEMENT OR ANY WAFERS
OR SERVICES PROVIDED UNDER THIS SUPPLY AGREEMENT, AND EACH PARTY SPECIFICALLY
DISCLAIMS THE IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY, FITNESS FOR
PARTICULAR PURPOSE AND NONINFRINGEMENT.
8. INDEMNIFICATION.
8.1 INDEMNIFICATION OBLIGATIONS.
(a) BUYER INDEMNITY. Buyer will defend at its own expense any
claim, suit, or action (collectively, "CLAIMS") asserted or brought against
Supplier by a third party to the extent that such Claim is based on a claim that
Supplier's compliance with Buyer's specifications or designs in the production
or sale of Wafers required the infringement of any United States patent or mask
work or misappropriation of any trade secret (a "BUYER INFRINGEMENT CLAIM").
Buyer will pay such damages awarded against Supplier by a court of competent
jurisdiction, or agreed to in a monetary settlement of any such Claim by Buyer,
to the extent that such damages are directly attributable to a Buyer
Infringement Claim. Buyer's indemnification obligation will not apply to Buyer
Infringement Claims that result from or are attributable to (a) any
modifications, combinations, or improvements made to the design or specification
as furnished to Supplier by Buyer (except for modifications, combinations and
improvements requested by Buyer); or (b) use of the design or specification by
Supplier for any purpose other than providing Wafers or Services to Buyer, if
such claim under (a) or (b) would not have arisen but for such modification,
combination, improvement or use.
(b) SUPPLIER INDEMNITY. Supplier will defend at its own expense
any Claims asserted or brought against Buyer by a third party to the extent that
such Claim is based on a claim that Supplier's technology, equipment, or methods
used to manufacture the Wafers or to provide the Services infringes any United
States patent or mask work or misappropriates any trade secret (a "SUPPLIER
INFRINGEMENT CLAIM"). Supplier will pay such damages awarded against Buyer by a
court of competent jurisdiction, or agreed to in a monetary settlement of any
such Claim by Supplier, to the extent that such damages are directly
attributable to a Supplier Infringement Claim. Supplier's indemnification
obligation will not apply to Supplier Infringement Claims that result from or
are attributable to (a) compliance with
11.
Buyer's designs or specifications; (b) any modifications, combinations, or
improvements made to the Wafers after delivery to Buyer; or (c) use of the
Wafers or Services for any unintended purpose, if such claim under (a), (b), or
(c) would not have arisen but for such compliance, modification, combination,
improvement or use. In the event the Wafers or Services are deemed to infringe
and their manufacture, use or sale is enjoined, Supplier shall, at its option,
either (i) arrange for Buyer to have the right to continue using the Wafers or
receiving the Services, or (ii) provide replacement Wafers or Services with
non-infringing comparable wafers or services meeting Buyer's requirements. If
neither of the foregoing in (i) or (ii) are commercially practicable, then
Supplier shall accept return of the Wafers, discontinue the Services, and refund
Buyer's purchase price in respect of the Wafers and/or Services, as the case may
be.
8.2 CONDITIONS. The obligations of the indemnifying Party (the
"INDEMNIFYING PARTY") under Section 8.1 with respect to a Buyer Infringement
Claim or Supplier Infringement Claim (as applicable) (an "INFRINGEMENT CLAIM")
are subject to the following conditions: (a) the indemnified Party (the
"INDEMNIFIED PARTY") must promptly notify the Indemnifying Party in writing of
such Infringement Claim; (b) the Indemnifying Party must have sole control of
the defense and settlement of the Infringement Claim; and (c) the Indemnified
Party must fully cooperate with and provide reasonable assistance to the
Indemnifying Party in the defense and settlement of such Infringement Claim
(which includes furnishing to the Indemnifying Party all evidence in the
possession of the Indemnified Party that is relevant to such Infringement
Claim). Solely to the extent a proposed settlement or stipulated judgment
adversely affects the Indemnified Party, the Indemnifying Party will not accept
such settlement or stipulated judgment of any Buyer Infringement Claim or
Supplier Infringement Claim (as applicable) without the prior written consent of
the Indemnified Party, which consent will not be unreasonably withheld. The
Indemnifying Party will have no liability under this Section 8 for any costs,
losses, liabilities, or damages resulting from the willful acts of the
Indemnified Party or any settlement or compromise incurred or made by the
Indemnified Party without the Indemnifying Party's prior written consent. The
Indemnified Party will have the right to participate, at its own expense, in the
defense or settlement of the Infringement Claim.
8.3 SOLE AND EXCLUSIVE REMEDY. THIS SECTION 8 STATES THE INDEMNIFYING
PARTY'S ENTIRE LIABILITY AND THE INDEMNIFIED PARTY'S SOLE REMEDY WITH RESPECT TO
THE INFRINGEMENT, VIOLATION OR MISAPPROPRIATION OF ANY INTELLECTUAL PROPERTY
RIGHTS OF ANY THIRD PARTY ARISING FROM OR RELATING TO THIS SUPPLY AGREEMENT.
Each Party's obligations under this Section 8 are subject to the limitations of
liability set forth in Section 10.
9. CONFIDENTIALITY.
9.1 CONFIDENTIALITY OBLIGATIONS. The receiving Party ("RECIPIENT")
will hold the Confidential Information of the disclosing Party ("PROVIDER") in
confidence and, except as set forth herein or allowed under Section 9.2, will
not disclose, provide, or otherwise make available such Confidential Information
to any person other than Recipient's employees and independent contractors who
need to have access to such Confidential Information in order for the Recipient
to exercise its rights or perform its obligations under this Supply Agreement.
The Recipient will inform each such employee and independent contractor of the
Recipient's confidentiality obligations under this Supply Agreement, and will
ensure that each such employee and independent contractor has signed a
non-disclosure agreement containing terms no less restrictive than the terms of
this Section 9. Each Party will be liable for any breach of this Section 9.1 by
any of its employees or independent contractors. The Recipient will use the
Provider's Confidential Information solely to exercise its rights or perform its
obligations under this Supply Agreement and for no other purpose. The Recipient
will protect the confidentiality of the Provider's confidential Information
using at least the same efforts Recipient uses to protect its own
12.
confidential and proprietary information of similar nature, but in no event less
than reasonable efforts. The Recipient will return the Provider's Confidential
Information to the Provider promptly upon the Provider's request or termination
of this Supply Agreement; provided that, if the Recipient has continuing rights
or obligations or liabilities under this Supply Agreement, the Recipient may
retain a copy of any Provider Confidential Information reasonably required to
exercise its rights or perform such obligations solely for the period of time
required to meet such obligations. Supplier acknowledges and agrees that Buyer
may disclose the Confidential Information of Supplier to Buyer Subsidiaries and
employees of such Buyer Subsidiaries, in accordance with the restrictions set
forth above and Buyer will be liable for any breach of this Section 9.1 by such
Buyer Subsidiaries or its employees.
9.2 EXCEPTIONS. Disclosure of Confidential Information will be
permitted to the extent required to comply with a valid order of a court or
governmental authority with jurisdiction over the Recipient, provided that the
Provider has been given timely notice of such requirement and that the Recipient
must cooperate with the Provider to limit the scope and effect of such order.
The Recipient's obligations under Section 9.1 with respect to any Confidential
Information of the Provider will terminate if and when the Recipient can prove
by clear and convincing evidence that such Confidential Information (i) was
rightfully in possession of the Recipient, without restriction, prior to
disclosure; (ii) was rightfully received by the Recipient without restriction
from a third party not owing a duty of confidentiality to the Provider; (iii) is
generally available to the public without fault of the Recipient; or (iv) is
independently created by the Recipient.
9.3 CONFIDENTIALITY OF THIS SUPPLY AGREEMENT. Neither Party will
disclose any terms of this Supply Agreement to anyone other than (i) its
attorneys, accountants, and other professional advisors under a duty of
confidentiality; (ii) its subsidiaries, spin-offs, and, in the event of a merger
or acquisition, prospective successor, all of the foregoing under a duty of
confidentiality; and (iii) as required by law or pursuant to a mutually
agreeable press release.
9.4 INJUNCTIVE RELIEF. Each Party acknowledges and agrees that the
other Party would suffer irreparable harm for which monetary damages would be an
inadequate remedy if there were a breach of obligations under Section 9.1. Each
Party further acknowledges and agrees that equitable relief, including
injunctive relief, may be appropriate to protect the other Party's rights and
interests if such a breach were to arise, were threatened, or were asserted.
10. LIMITATIONS OF LIABILITY.
10.1 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS SUPPLY
AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST
PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR EXEMPLARY
DAMAGES ARISING FROM THE SUBJECT MATTER OF THIS SUPPLY AGREEMENT, REGARDLESS OF
THE TYPE OF CLAIM AND EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
10.2 LIABILITY LIMITATION. IN NO EVENT WILL EITHER PARTY'S AGGREGATE,
CUMULATIVE LIABILITY TO THE OTHER ARISING OUT OF OR RELATING TO THIS SUPPLY
AGREEMENT, INCLUDING ANY APPLICABLE PENALTIES, EXCEED THE GREATEST OF: (a)
$250,000 OR (b) THE AGGREGATE OF ALL AMOUNTS PAID AND/OR OWED TO SUPPLIER
PURSUANT TO THIS SUPPLY AGREEMENT DURING THE PRECEEDING 12-MONTH PERIOD. THIS
LIMITATION ON LIABILITY IS CUMULATIVE WITH ALL PAYMENTS BEING AGGREGATED TO
DETERMINE SATISFACTION OF THE LIMIT. THE EXISTENCE OF ONE OR MORE CLAIMS OR
SUITS WILL NOT ENLARGE THE LIMIT.
13.
10.3 BASIS OF BARGAIN. EACH PARTY ACKNOWLEDGES THAT THE MUTUAL
LIMITATIONS OF LIABILITY CONTAINED IN THIS SECTION 10 REFLECT THE ALLOCATION OF
RISK SET FORTH IN THIS SUPPLY AGREEMENT AND THAT EACH PARTY WOULD NOT ENTER INTO
THIS SUPPLY AGREEMENT WITHOUT THESE LIMITATIONS ON LIABILITY.
11. TERM; TERMINATION.
11.1 TERM. This Supply Agreement will take effect on the Effective
Date and will remain in effect for a period of three (3) years from the
Effective Date (the "INITIAL TERM"), unless earlier terminated in accordance
with this Section 11. Following the Initial Term, this Supply Agreement may be
renewed for additional one-year renewal terms (each a "RENEWAL TERM"), upon
mutual agreement of the Parties.
11.2 TERMINATION. This Supply Agreement, or any Purchase Order issued
hereunder, may be terminated as follows:
(a) immediately upon written agreement of the Parties;
(b) immediately upon the expiration of the ninety (90) day cure
period, if a Party materially breaches any provision of this Supply Agreement
and such breach is not cured within ninety (90) days after written notice of
such breach is furnished by the non-breaching Party;
(c) during the continuance of any material breach, by either
Party, at its discretion immediately upon providing written notice to the other
Party, if within any period of twelve (12) months there are three (3) or more
material breaches or failures by the other Party that would constitute grounds
for termination pursuant to this Section 11.2 (without giving effect to cure
periods), regardless of whether such breaches or failures were cured within the
applicable cure periods; or
(d) immediately upon written notice by either Party, at its
discretion, if (i) the other Party becomes insolvent, admits in writing its
inability to pay its debts as they become due, or files or has filed against it
any proceeding in bankruptcy or for reorganization under any federal bankruptcy
law or similar state law, or has any receiver appointed for all or a substantial
part of such Party's assets or business, or makes any assignment for the benefit
of its creditors, or enters into any other proceeding for debt relief, and such
proceeding is not dismissed within sixty (60) days of filing; (ii) the other
Party dissolves, liquidates, or institutes any proceedings for the liquidation
or winding up of its business or for the termination of its corporate charter;
or (iii) the other Party ceases to conduct its business in the ordinary course.
11.3 TERMINATION FOR NON-PAYMENT. In addition to its other rights
under this Section 11, Supplier may suspend performance of its obligations under
this Agreement if Buyer is more than thirty (30) days late in payment of any
undisputed invoices. Upon Buyer's payment of such invoices, Supplier shall
promptly resume performance of its obligations hereunder.
11.4 TERMINATION OF BUYER SPIN-OFF AGREEMENTS. In addition to the
termination rights set forth in Section 11.2, Supplier shall have the right to
terminate without cause a Buyer Spin-off Agreement entered into pursuant to
Section 2.1(c) upon six (6) months prior written notice to such Buyer Spin-off
in the event such Buyer Spin-off is merged with or acquired by an entity that is
reasonably deemed to be a Competitor of Supplier; provided that Supplier will
continue to manufacture, supply, and provide to Buyer Spin-off, in accordance
with the Wafer purchase procedures of such Buyer Spin-off Agreement, any Wafers
ordered by such Buyer Spin-off for delivery prior to the expiration of such six
(6) month
14.
period. This provision shall be incorporated in the Buyer Spin-off Agreements
and shall apply to Buyer Spin-offs, notwithstanding such Buyer Spin-offs
assuming the rights and obligations of "Buyer" under this Agreement.
11.5 EFFECT OF TERMINATION. The rights and obligations under Sections
1 (Definitions), 3.14 (Final Test and Probe Services), 5 (Pricing and
Payments), 7 (Warranty and Disclaimer), 8 (Indemnification), 9
(Confidentiality), 10 (Limitations of Liability), 11.5 (Effect of Termination),
and 12 (General) will survive termination or expiration of this Supply
Agreement for any reason.
12. GENERAL.
12.1 AGENCY. Under this Supply Agreement (i) each Party will be deemed
to be an independent contractor and not an agent, joint venturer, or
representative of the other Party; (ii) neither Party may create any obligations
or responsibilities on behalf of or in the name of the other Party; and (iii)
neither Party will hold itself out to be a partner, employee, franchisee,
representative, servant, or agent of the other Party.
12.2 GOVERNING LAW; VENUE AND JURISDICTION. This Supply Agreement will
be governed by, subject to, and construed in accordance with the internal laws
of the State of California, as such laws apply to contracts between California
residents performed entirely within California. Venue for any dispute however
arising under this Supply Agreement shall be in Orange County, California and
both Parties hereby consent to jurisdiction of the State and Federal Courts in
Orange County, California. The Parties agree that the United Nations Convention
on Contracts for the International Sale of Goods will not apply to this Supply
Agreement.
12.3 DISPUTE RESOLUTION AND ESCALATION.
(a) In the event that any dispute, claim or controversy
(collectively, a "DISPUTE") arises out of or relates to any provision of this
Supply Agreement or the breach, performance or validity of invalidity thereof,
an appropriate authorized manager of Buyer and an appropriate authorized manager
of Supplier shall attempt a good faith resolution of such Dispute within thirty
(30) days after either Party notifies the other Party of such Dispute. If such
Dispute is not resolved within thirty (30) days of such notification, such
Dispute will be referred for resolution to Supplier's President and Buyer's
Chief Executive Office. Should they be unable to resolve such Dispute within
thirty (30) days following such referral to them, or within such other time as
they may agree, Supplier and Buyer shall submit such Dispute to binding
arbitration, initiated and conducted in accordance with the then-existing
American Arbitration Association Commercial Arbitration Rules, before a single
arbitrator selected jointly by Supplier and Buyer. If Supplier and Buyer cannot
agree upon the identity of an arbitrator within ten (10) days after the
arbitration process is initiated, then the arbitration shall be conducted before
three (3) arbitrators, one (1) selected by Buyer and, one (1) selected by
Supplier, and the third selected by the first two. The arbitration shall be
conducted in the County of Orange, California and shall be governed by the
United States Arbitration Act, 9 USC Sections 116, and judgment upon the award
may be entered by any court having jurisdiction thereof. The arbitrator(s) shall
have case management authority and shall resolve the Dispute in a final award
within one hundred eighty (180) days from the commencement of the arbitration
action, subject to any extension of time thereof allowed by the arbitrators upon
good cause shown. There shall be no appeal from the arbitral award, except for
fraud committed by an arbitrator in carrying out his or her duties under the
aforesaid rules; otherwise the Parties irrevocably waive their rights to
judicial review of any Dispute arising out of or related to this Supply
Agreement. Notwithstanding the foregoing, either Party may pursue immediate
equitable relief in the event of a breach of Section 9 or an alleged violation
or misappropriation of the intellectual property rights of either Party.
15.
(b) During any period in which the Parties are resolving a
Dispute pursuant to this Section 12.3, the Parties shall continue to provide the
Wafers and Services pursuant to the terms of this Supply Agreement; provided,
however, that if the Parties jointly determine that any such Wafers or Services
shall be suspended during the period in which the Parties are resolving a
Dispute, then the deadlines and time periods in which such Wafers or Services
are to be provided pursuant to this Supply Agreement (as described herein) shall
be extended for the same amount of time as the Wafers or Services were
suspended.
12.4 THIRD-PARTY BENEFICIARIES. Except for Buyer Spin-offs, there are
no third party beneficiaries of this Supply Agreement. Except for the rights of
Buyer Spin-offs to purchase Wafers from Supplier at the pricing established
under this Supply Agreement, no provision of this Supply Agreement, express or
implied, is intended or will be construed to confer upon or give to any customer
or other person other than the Parties any rights, remedies, or other benefits
under or by reason of this Supply Agreement.
12.5 COMPLIANCE WITH LAW. The Parties will at all times comply with
all applicable foreign, U.S., state, and local laws, rules and regulations
relating to the execution, delivery and performance of this Supply Agreement.
Each Party agrees that it will not export or reexport, resell, ship, provide, or
divert or cause to be exported or reexported, resold, shipped, provided, or
diverted directly or indirectly any software, documentation, or technical data,
nor any Wafer or Service, to any country or to any person or entity for which
the government (or any agency thereof) of the United States, or any foreign
sovereign government with competent jurisdiction requires an export license or
other governmental approval without first obtaining such license or approval.
12.6 FORCE MAJEURE. Neither Party shall be liable for failure or delay
in performance of its obligations under this Supply Agreement to the extent such
failure or delay is due to causes beyond its reasonable control including,
without limitation, an act of God, act of a public enemy, war or national
emergency, rebellion, insurrection, riot, epidemic, quarantine restriction,
fire, flood, explosion, storm, earthquake, or other catastrophe. If a Party's
performance under this Supply Agreement is affected by a force majeure event,
such Party shall give prompt written notice of such event to the other Party and
shall at all times use its reasonable commercial efforts to mitigate the impact
of the force majeure event on its performance under this Supply Agreement.
12.7 AMENDMENT; LATER AGREEMENT. This Supply Agreement may not be
amended, modified, or supplemented by the Parties in any manner, except by an
instrument in writing signed by Buyer and Supplier and specifically reciting
that it amends this Supply Agreement. No purchase order or acknowledgement will
amend this Supply Agreement. All matters designated herein as subject to
agreement of the Parties must be agreed upon in a writing signed by authorized
representatives of both Parties for such agreement to be effective.
12.8 ASSIGNMENT. Except as otherwise expressly provided in this Supply
Agreement, neither Party shall assign or transfer this Supply Agreement or all
or any part of its rights or obligations hereunder, by operation of law or
otherwise, without the prior written consent of the other Party which shall not
be unreasonably refused or delayed. Notwithstanding the foregoing and provided
such entity is not a Competitor of the other Party, either Party may assign this
Supply Agreement in whole or in part (i) to any subsidiary of such Party; (ii)
to a successor of such Party in the event of a merger or acquisition of such
Party; or (iii) to a successor of any portion of the business of such Party
resulting from a divestiture of such business, and constituting the Supplier Fab
in the case of Supplier, or constituting substantially all of Buyer's
business(es) purchasing the Wafers and Services in the case of Buyer, and the
other Party's consent to any of the foregoing assignments will not be required.
Any unauthorized assignment or transfer
16.
shall be null and void. This Supply Agreement shall be binding upon and inure
solely to the benefit of each Party and its successors and permitted assigns.
12.9 NOTICES. Any notice, consent, approval, or other communication
intended to have legal effect to be given under this Supply Agreement (other
than a purchase order or invoice) must be in writing and will be delivered (as
elected by the Party giving such notice): (i) personally; (ii) by postage
prepaid registered or certified airmail, return receipt requested; (iii) by
express courier service providing proof of delivery; or (iv) by facsimile with a
confirmation copy deposited prepaid with an express courier service providing
proof of delivery. Unless otherwise provided herein, all notices will be deemed
to have been duly given on: (y) the date of receipt (or if delivery is refused,
the date of such refusal) if delivered personally, by mail, or by express
courier; or (z) one (1) business day after receipt by telecopy if the telecopy
was accompanied by the mailing of the notice courier service. Each Party may
change its address for purposes hereof on not less than three (3) days' prior
notice to the other Party. Notice hereunder will be sent to the following
addresses:
If to Buyer, to: If to Supplier, to:
Conexant Systems, Inc. Alpha Industries, Inc.
4311 Jamboree Road 25 Computer Drive
Newport Beach, CA 92660-3095 Haverhill, MA 01832-1236
Attn: Chief Executive Officer Attn: President
With a copy:
If to Buyer, to: If to Supplier, to:
Conexant Systems, Inc. Alpha Industries, Inc.
4311 Jamboree Road 25 Computer Drive
Newport Beach, CA 92660-3095 Haverhill, MA 01832-1236
Attn: General Counsel Attn: General Counsel
12.10 WAIVER. If a Party fails to insist on performance of any of the
terms and conditions, or fails to exercise any of its rights or privileges of
this Supply Agreement, such failure will not constitute a waiver of such terms,
conditions, rights, or privileges.
12.11 SEVERABILITY. If the application of any provision or provisions
of this Supply Agreement to any particular facts or circumstances is held to be
invalid or unenforceable by any court of competent jurisdiction, then: (i) the
validity and enforceability of such provision or provisions as applied to any
other particular facts or circumstances and the validity of other provisions of
this Supply Agreement will not in any way be affected or impaired thereby; and
(ii) such provision or provisions will be reformed without further action by the
Parties and only to the extent necessary to make such provision or provisions
valid and enforceable when applied to such particular facts and circumstances.
12.12 COUNTERPARTS AND FACSIMILE. This Supply Agreement may be executed
in any number of counterparts, each of which when so executed and delivered will
be deemed an original, and such counterparts together will constitute one and
the same instrument. The Parties intend that each Party will receive a duplicate
original of the counterpart copy or copies executed by it. For purposes hereof,
a facsimile copy of this Supply Agreement, including the signature pages hereto,
will be deemed to be an original.
17.
12.13 RULES OF CONSTRUCTION. As used in this Supply Agreement, all
terms used in the singular will be deemed to include the plural, and vice versa,
as the context may require. The words "hereof," "herein," and "hereunder" refer
to this Supply Agreement as a whole, including the attached exhibits, as the
same may from time to time be amended or supplemented, and not to any
subdivision in this Supply Agreement. When used in this Supply Agreement, unless
otherwise expressly stated, "including" means "including, without limitation"
and "discretion" means sole discretion. Unless otherwise expressly stated, when
a Party's approval or consent is required under this Supply Agreement, such
Party may grant or withhold its approval or consent in its discretion.
References to "Section" or "Exhibit" will be to the applicable section or
exhibit of this Supply Agreement. Descriptive headings are inserted for
convenience only and will not be utilized in interpreting the Supply Agreement.
This Supply Agreement has been negotiated by the Parties and reviewed by their
respective counsel and will be fairly interpreted in accordance with its terms
and without any strict construction in favor of or against either Party.
12.14 ENTIRE AGREEMENT. As to the subject matter hereof: (i) this
Supply Agreement, including its exhibits, sets forth the entire agreement
between Buyer and Supplier; (ii) no promise, inducement, understanding, or
agreement not expressly contained herein has been made; and (iii) this Supply
Agreement merges and supersedes any and all previous agreements, understandings,
and negotiations between the Parties. The terms and conditions of this Agreement
supersede any terms or conditions in any purchase order, form acknowledgement or
other instrument issued by either Party in connection with this Agreement which
add to or differ from this Agreement and such additional or differing terms and
conditions shall have no force or effect.
18.
IN WITNESS WHEREOF, the Parties have executed this Supply Agreement
as of the Effective Date by the undersigned duly authorized representatives of
each Party.
BUYER: SUPPLIER:
CONEXANT SYSTEMS, INC. ALPHA INDUSTRIES, INC.
By: /s/ Dennis E, O'Reilly By: /s/ Paul E . Vincent
----------------------------- ------------------------------
Name: Dennis E, O'Reilly Name: Paul E . Vincent
Title: Senior Vice President, Title: Vice President,
General Counsel and Chief Financial Officer,
Secretary Treasurer and Secretary
19.
EXHIBIT A - PRICING
GAAS WAFER PRICE THROUGH PCM PASS
- ---------------------------------------------------
PROCESS PRICE
- ---------------------------------------------------
CMD [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------
HDG2 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------
HBT-DG [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------
POST PROBE PROCESSING CHARGE (BY PART NUMBER)
* Includes parametric test, Grind, ink, and scribe and break
- ----------------------------------------------------------------------
PART NUMBER MASK NUMBER COST PER WAFER
- ----------------------------------------------------------------------
CX60057 N/A [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60077 60077 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60077-IB 60077 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60083 60103 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
CX60087 60087 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1901 40065 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1902A24 60044 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1902A6 60044 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1903A24 60017,60072 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1904 40068 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1905 60061 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1906 60062 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1910 60066 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1911 60017,60072 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
R1912 60017,60072 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
RS706 60078 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
RS711 60079 [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ----------------------------------------------------------------------
PRORATED WAFER CANCELLATION COST
- ---------------------------------------------------------------------------------------------
Raw Material Cost Per Step Completed
- ---------------------------------------------------------------------------------------------
CMD [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------------------
HDG2 [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------------------
HBT-DG [CONFIDENTIAL TREATMENT REQUESTED]/*/ [CONFIDENTIAL TREATMENT REQUESTED]/*/
- ---------------------------------------------------------------------------------------------
EXHIBIT B - QUALITY SPECIFICATIONS
Level I
NP-M-0001 Newbury Park Quality Manual
Level II
NP-01084 Epi Wafer Specification
Level II
NP-01065 Wafer Visual Inspection Standard
Level II
NP-CP-4009 HBT Quality Plan
Level II
NP-01064 Specification for Handling, Packaging and Storage of GaAs Products
EXHIBIT C - NEW PROCESS TECHNOLOGY PROCEDURES
NP-01422 HBT3-DG Design Guide
NP-01247 HBT3-DG Design Rule Specification
EXHIBIT D - WAFER CYCLE TIMES
The following sets forth the average wafer cycle times:
Digital Wafer Fabrication = 12 weeks
Post Probe Processing = 2 weeks
EXHIBIT E - FINAL TEST AND PROBE SERVICES SUPPORT
QUALITY ASSURANCE (EFFECTIVELY 1 PERSON OF SUPPORT):
Incoming Package inspection / First Article Inspection on New Products
Outgoing package inspection post test and Shipping Inspection
Wafer Lot acceptance post Fab (GaAs)
Wafer outgoing inspection post scribe, break
Die Visual inspection
Logistical coordination of Test equipment calibration for Buyer owner equipment
Documentation review & Approval TECO, DMS & STR
PRODUCTION CONTROL ACTIVITIES:(EFFECTIVELY 1 PERSON FOR SUPPORT) RECEIVING:
Receive parts, prepare receiving log sheet, verify for package count and damage,
deliver to recipient.
PRODUCTION CONTROL:
Receive parts from Receiving, Match paperwork to Purchase Order.
Prepare Promis lot follower and submit parts and lot follower to Test.
Place Lot Holds and perform Lot splits to support shipment requirements as
directed.
Maintain and report Engineering Held inventory.
PRODUCTION PLANNING:
Participate in scheduling and delivery requirements meetings with Buyer.
Provide delivery commitments based on capacity and indicated priorities.
WIP monitoring to assure on time delivery commitments.
Development of Promis Prods for new products.
Focal point for problem resolution related to Purchase orders, work orders,
actual parts received mismatches.
Co-ordinate procedure changes to meet Buyer requirements.
INDUSTRIAL ENGINEERING : (VARIABLE SUPPORT AS REQUIRED)
Layout support
WIP movement plans
Staffing analysis
Capacity modeling only to support OEE improvement
EXHIBIT F - DELIVERY AND LOGISTICS
SERVICES SUPPLIED TO BUYER
Supplier receives Purchase Order from Buyer
Supplier receives Product with detailed Work Order instructions for
requested Services
Supplier creates Lot Follower in PROMIS for WIP tracking
Supplier performs Services requested
Supplier performs Quality Assurance checks
Supplier prepares Notice to Ship to Buyer
Supplier ships product to Buyer
GOODS SUPPLIED TO BUYER
Supplier receives Purchase Order from Buyer
Supplier creates Lot Follower in PROMIS for WIP tracking
Supplier Fabricates Wafers
Supplier performs Quality Assurance checks
Supplier prepares Notice to Ship to Buyer
Supplier ships Wafers to Buyer
25.
EXHIBIT G - REPORTS
Supplier shall prepare and provide the following reports to Buyer.
Monthly Yield Reports (demonstrated) - fab line yield, probe, assembly,
test - as applicable
Monthly Cycle-Time Report (demonstrated) -
Monthly Queue-Time Report (demonstrated) - can be combined with Cycle-Time
report if easier
Monthly On-Time Delivery Report (demonstrated) -
Weekly WIP Report(snapshot)-
Monthly Diebank Inventory report (snapshot) -
Monthly Raw Material Inventory Report (snapshot) - (substrates, tape/reel
material, trays, etc)
26.