1
Exhibit 10-1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
THIS AGREEMENT is made effective the 17th day of March 1995 BETWEEN:
(1) Chartered Semiconductor Manufacturing Pte Ltd ("CSM"), a company
incorporated in Singapore with its registered office at 2 Science
Park Drive, Singapore Science Park, Singapore 0511; and
(2) Analog Devices B.V. ("Customer"), a Netherlands corporation
with its principal place of business at Beneluxweg 27,
4904 SJ Oosterhout, The Netherlands.
WHEREAS
(A) CSM has invited subscriptions for shares in its share capital to
fund the establishment of a second wafer manufacturing facility in
Singapore ("FABII").
(B) Customer has pursuant to the Analog Devices Subscription and
Participation Agreement of even date hereof ("Analog Devices
Subscription Agreement") agreed to subscribe for shares in the
capital of CSM.
(C) It is a term of the Analog Devices Subscription Agreement that the
parties herein enter into this Agreement for the provision of
wafer manufacturing capacity in FABII to Customer upon the terms
herein.
NOW THEREFORE IT IS HEREBY AGREED as follows:
1. DEFINITIONS
-----------
1.1 In this Agreement, unless otherwise defined herein or the context
otherwise requires, the following words and expressions shall bear
the following meanings:
"Minimum Threshold Level" means an aggregate investment of a
minimum of ******************************************************
*****in the capital of the Company;
"Parties" means CSM and Customer;
"Wafer" means a completed eight-inch silicon wafer;
"Wafer Capacity Allocation" means Wafer manufacturing capacity to
be made available to Customer pursuant to Clause 2;
"S$" means the lawful currency of Singapore;
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
"US$" means the lawful currency of the United States of
America.
1.2 References to Recitals and Clauses are references to
recitals and clauses of this Agreement.
1.3 The headings in this Agreement are inserted for convenience only
and shall be ignored in construing this Agreement.
1.4 Unless the context otherwise requires, words denoting the singular
number shall include the plural and vice versa, words importing
the masculine gender shall include the feminine gender and words
importing a person shall include a company or corporation and vice
versa.
2. WAFER MANUFACTURING CAPACITY
----------------------------
2.1 WAFER CAPACITY ALLOCATION
-------------------------
Subject to the provisions herein, CSM will provide Wafer
processing services to Customer at FABII for the fabrication of
Wafers. Customer's Wafer Capacity Allocation will be determined by
the aggregate amount of share capital to be subscribed by Customer
in the capital of CSM pursuant to the Analog Devices Subscription
Agreement. A commitment to subscribe for an aggregate of no less
than the Minimum Threshold Level will entitle Customer to ***
Wafers per month. The Wafer Capacity Allocation for a greater
subscription commitment will be pro-rated at the rate of ***
Wafers per month to ********* 'B' Ordinary Shares for every
Subscription Share as defined in the Analog Devices Subscription
Agreement beyond the Minimum Threshold Level. Such Wafer Capacity
Allocation is subject to change in accordance with Clauses 2.2,
3.1.4 and 3.1.5 hereof and to Clauses 4.2 (Effect on Wafer
Manufacturing Capacity) and 10.4 (Effect on ADI's Wafer
Manufacturing Rights Upon Transfer) of the Analog Devices
Subscription Agreement.
2.2 CAPACITY ALLOCATION DURING RAMP-UP PERIOD
-----------------------------------------
2.2.1 Customer acknowledges that the total Wafer
Capacity Allocation made available to it is ****
Wafers per month.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
2.2.2 Customer hereby agrees that it will have first
priority on available capacity up to an aggregate of
**** wafers per month and that during FABII's ramp-up
period, Customer's Wafer Capacity Allocation will be
pro-rated in accordance with its shareholding in CSM
relative to the shareholdings of other
shareholder-customers of CSM who have entered into
manufacturing agreements with CSM.
2.3 ADDITIONAL FABII CAPACITY
-------------------------
2.3.1 In addition to the Wafer Capacity Allocation,
Customer together with other shareholder-customers of
CSM who have entered into manufacturing agreements with
CSM shall have a first right of refusal on additional
available FABII capacity at the price set forth in
Clause 6.2 and on terms which the Parties agree to
negotiate in good faith save that if such additional
capacity falls short of the demand from all
shareholder-customers, such capacity shall be allocated
to Customer and the other shareholder-customers pro-rata
to their equity holding in CSM.
2.3.2 Any supply and purchase of additional available
capacity pursuant to Clause 2.3.1 shall be subject to
the conclusion of a wafer supply agreement embodying the
terms agreed between the Parties. The terms of such
wafer supply agreement shall include, inter alia, (a)
Customer's purchase commitment, and (b) a provision
that where Customer's actual orders fall below the
purchase commitment and CSM is unable to sell the excess
capacity to third parties, then Customer shall reimburse
CSM for the unsold capacity *************************
**************************.
2.4 MANUFACTURING AGREEMENT
-----------------------
Notwithstanding any other provisions of this Agreement or the
Analog Devices Subscription Agreement, Customer may, provided that
there are no outstanding breaches by it of the Manufacturing
Agreement and the Analog Devices Subscription Agreement, by prior
written notice assign the right to purchase Wafers to an Affiliate
(as defined in the Analog Devices Subscription Agreement), but
this shall not in any way relieve such Customer from any
obligations hereunder.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
3. FORECASTS
---------
3.1 ******* ROLLING FORECAST
------------------------
3.1.1 Customer shall provide to CSM on a monthly basis,
its rolling ********* forecast of its monthly volume
requirements. The first ********* of each *********
forecast shall be firm and shall be backed by purchase
orders. The initial ******* forecast shall be
accompanied by firm orders for the first ********.
Notwithstanding the foregoing, forecasts during such
first ********* shall be subject to adjustments
(consistent with CSM's cycle time) as determined by
mutual agreement to be negotiated between Customer and
CSM subsequent to this Agreement. Every subsequent
monthly forecast shall be accompanied by a firm order
for the month immediately following the last month in
respect of which a firm order was given.
3.1.2 Best Estimate
-------------
Customer's forecasts shall represent Customer's good
faith estimate of Wafer requirements.
3.1.3 Forecast Below Allocation
-------------------------
Subject to Clause 2 hereof, CSM shall make available
manufacturing capacity for the Wafers included in the
current forecast. If Customer's forecast indicates that
it does not expect to use the maximum capacity that is
available to it during a particular period, CSM may
allocate the available capacity to other customers for
such period and in such manner as it deems fit.
3.1.4 Shortfall of Actual Orders to Forecast
--------------------------------------
Where for any consecutive ******* period, Customer's actual
monthly orders fall below the firm monthly forecast by more
than ***, CSM reserves the right to re-allocate the
Customer's unused Wafer Capacity Allocation as it deems fit
to other customers.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
3.1.5 Reinstatement of Capacity
-------------------------
Customer may request a reinstatement of its Wafer Capacity
Allocation lost pursuant to Clause 3.1.4 by giving CSM at
least ********* written notice. CSM will use its reasonable
efforts to agree such reinstatement taking into consideration
the forecast demands of its other customers but in no case
will such reinstatement be made more than ******** after
receipt of said notice.
3.1.6 Quantity
--------
CSM shall use its best efforts to deliver the exact quantity
of Wafers ordered with each purchase order. However, if for
each purchase order the aggregate quantity of Wafers
delivered by CSM is within ******* **************** of the
quantity ordered, such quantity shall constitute compliance
with Customer's purchase order. In the event CSM fails to
deliver at ********* of Customer's purchase order within the
agreed delivery period, at Customer's request CSM shall make
up the shortfall by shipments over the next ******* period or
such other period as may be mutually agreed in writing.
4. LICENSE
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The Parties agree that any license for the use of Customer's
proprietary technology required for the manufacture of Wafers for
Customer shall be on terms to be agreed between CSM and Customer
and the subject of a separate agreement.
5. ACCEPTANCE, QUALITY AND RELIABILITY CRITERIA
--------------------------------------------
As soon as practicable following the execution of this Agreement,
the Parties shall negotiate in good faith mutually agreed upon
specifications for Wafer acceptance, quality and reliability
criteria.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
6. PRICING AND PAYMENT
-------------------
6.1 PRICING FOR WAFER CAPACITY ALLOCATION
-------------------------------------
The price to be paid by Customer for Wafers purchased
pursuant to Clause 2.1 shall be ********************************
*****************************************************************
*****************************************************************
*************************************************** for equivalent
processes contracted or subsequently contracted for delivery to
any party (including, without limitation, any other shareholder
-customer) at any time during the period Wafers are to be
delivered to Customer and only for Wafers delivered during the
period Wafers are being delivered to such third party.
6.2 PRICING FOR ADDITIONAL CAPACITY
-------------------------------
The price payable for Wafers purchased by Customer pursuant to
Clause 2.3 hereof shall be **************** on mutually agreed
commercial terms.
6.3 INVOICE AND PAYMENT
-------------------
CSM will invoice Customer for Wafers purchased by Customer upon
notification by CSM to Customer that the Wafers are available for
collection at CSM's premises in Singapore. Payment in full in
United States dollars for the invoice will be due within ** days
of receipt of such invoice. CSM reserves the right to impose late
payment charges at ** percent per month (or if such rate is not
allowed by law at the highest rate permissible by applicable law)
on amounts remaining unpaid on due date till the date of actual
payment.
6.4 LETTER OF CREDIT
----------------
In the event Customer fails or neglects to pay within the
stipulated time, CSM reserves the right to require Customer to
provide an irrevocable, confirmed letter of credit from a bank
licensed to carry on banking business in Singapore in favour of
CSM for any subsequent purchase orders. Such letter of credit to
be established within 14 days of the receipt of a Customer's
purchase order by CSM. The letter of credit must be payable at the
issuing bank by sight draft to CSM's order.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
7. DELIVERY OF PRODUCTS
--------------------
The Wafers will be made available for collection from CSM's
premises in Singapore. CSM will notify Customer or its designated
agent in Singapore confirming that the acceptance criteria has
been fulfilled and the date of availability of collection.
8. WARRANTY
--------
8.1 CSM warrants that Wafers delivered hereunder shall meet the
applicable agreed upon acceptance criteria and the quality and
reliability criteria and shall be free from defects in material
and workmanship under normal use and service for a period of
************ from the date of shipment from CSM's facility. If,
during such ************ period:
8.1.1 CSM is notified promptly in writing upon discovery of
any defect in the Wafers, including a detailed
description of such defect; and
8.1.2 such Wafer shall be returned F.O.B. to CSM's facility;
and
8.1.3 CSM's examination of such Wafer disclose that such Wafer
is defective and such defects are not caused by
defective design, accident, abuse, misuse, neglect,
improper installation, repair or alteration by someone
other than CSM or its authorised representative, or
improper testing or use, then within ** day's of receipt
of Wafers by CSM, CSM shall, at Customer's sole option,
either repair, replace, or credit customer for such
Wafers.
9. **********************
----------------------
9.1 ******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
9.2 ******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************.
9.3 ******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
******************************************************************
*************************.
9.4 The Party seeking indemnity ("Party A") shall notify the other
Party ("Party B") of any claim of infringement or of commencement
of any suit, action, or proceedings alleging such infringement
forthwith after receiving notice thereof. Party B shall have the
right in its sole discretion and at its expense to participate in
and control the defence of any such claim, suit, action or
proceedings and in any and all negotiations with respect thereto,
and Party A shall not settle any such claim, suit, action or
proceedings without Party B's prior written approval which
approval shall not be unreasonably withheld. Notwithstanding the
aforesaid, Party B shall have the right, at its option and
expense, at any time to obtain a license to modify the process or
replace equipment or parts or components thereof to obviate or
cure any infringement.
10. NEW TECHNOLOGY
--------------
10.1 DEVELOPMENT
-----------
The Parties recognise that development of new technologies is
critical to the long term success of both Parties. *************
*****************************************************************
************************. The Parties will negotiate in good faith
whether to proceed with the development program taking into
consideration, inter alia, the business potential of the new
technologies. All technology developed separately by Customer
shall be solely owned by
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
Customer. All technology developed separately by CSM shall be
solely owned by CSM. The terms and conditions of any joint
development, including without limitation the right of ownership
shall be as agreed in writing between the Parties prior to such
joint development.
10.2 COST
----
The cost of any new technology development program shall be borne
as agreed by the Parties except for the standard technology that
CSM offers or, to the extent CSM offers the technology roadmap
referenced in Clause l5.1 of the Analog Devices Subscription
Agreement including such part so offered, and excluding customer
specific technology, which shall be borne by CSM.
11. TERM AND TERMINATION
--------------------
11.1 DURATION
--------
This Agreement will expire ** years commencing the earliest date
that CSM achieves an installed capacity of ***** Wafers, unless
extended by mutual agreement between the Parties hereto or earlier
terminated pursuant to this provisions of this Agreement.
11.2 MATERIAL DEFAULT
----------------
Either Party may, at its option, terminate this Agreement if the
other Party defaults in the performance of any material obligation
hereunder and such default has not been corrected within ** days
after receipt of written notice describing such default.
Termination pursuant to this sub-clause 11.2 shall become
effective upon the expiry of the said period of ** days.
11.3 INSOLVENCY
----------
Either Party may immediately terminate this Agreement by written
notice to the other (without prior advance notice) in the event of
the other Party or any company controlling it becoming bankrupt or
insolvent or having made an assignment for the benefit of its
creditors or having filed a petition or having a petition filed
against it under any bankruptcy, corporate reorganisation or other
law for the relief of debtors and not discharged within 60 days or
having commenced or having had commenced against it dissolution or
winding-up proceedings and not discharged within 60 days.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Asterisks denote omissions.
11.4 CSM'S RIGHT TO TERMINATE
------------------------
In addition to the foregoing, CSM may immediately terminate this
Agreement by written notice to the Customer (without prior advance
notice):
11.4.1 **********************************************
**********************************************
**********************************************
**********************************************
**********************************************
**********************************************
***************.
11.4.2 If during the term of this Agreement and in the event
where CSM has not obtained a listing on a recognised
stock exchange, Customer transfers or otherwise disposes
of or loses title to its shares in CSM such that it
holds less than the Minimum Threshold Level.
11.5 PAYMENT UPON TERMINATION
------------------------
In the event of termination of the Agreement by CSM pursuant to
this Clause 11, CSM shall have the right to receive payment for
all wafers-in-process proportional to the degree of finish and
such payment together with all other amounts due from Customer
shall become immediately due and payable by Customer to CSM.
Customer may request and CSM may at its sole discretion agree to
complete the wafers-in-process provided that Customer makes full
payment in advance for such wafers-in-process.
11.6 OTHER REMEDIES
--------------
The remedies referred to in this Clause shall be in addition to
and not in lieu of any other remedies, including damages, which
each Party may be entitled to hereunder at law or in equity as a
result of a breach of this Agreement by the other Party.
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12. TAXES
-----
The amounts payable by Customer under or in connection with this
Agreement shall be exclusive of any goods and services tax
(hereinafter called "tax") chargeable by any government, statutory
or tax authority calculated by reference to the amounts received
or receivable by CSM from Customer and which tax is payable by
Customer. Customer shall pay the tax and CSM acting as the
collecting agent for the government, statutory or tax authority
shall be entitled to collect the tax from Customer in the manner
and within the period prescribed in accordance with the applicable
laws and regulations.
13. ARBITRATION AND GOVERNING LAW
-----------------------------
13.1 ARBITRATION
-----------
Except as otherwise expressly provided hereunder any dispute or
controversy arising in connection with this Agreement which cannot
be settled by mutual or amicable agreement shall be finally
settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce by one or more arbitrators
appointed in accordance with those Rules. The place of arbitration
shall be London. The arbitration shall be conducted in English.
13.2 GOVERNING LAW
-------------
This Agreement shall be governed by the substantive laws of
Singapore.
14. GENERAL
-------
14.1 MODIFICATIONS
-------------
This Agreement may be modified only by a written document signed
by the authorized representatives of the Parties.
14.2 NO ASSIGNMENT
-------------
Subject to Clause 2.4 and unless otherwise agreed in writing, this
Agreement may not be assigned or subcontracted to any third party
without the prior written consent of the other Party.
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14.3 FORCE MAJEURE
-------------
Neither Party shall be liable for any delay or default in the
performance of its obligations under this Agreement caused by
circumstances beyond the control and without the fault or
negligence of such Party, including but not restricted to acts of
God, acts of the public enemy, perils of navigation, fire,
hostilities, war (declared or undeclared), blockade, labour
disturbances, strikes, riots, insurrections, civil commotion,
earthquakes, accidents or other cause(s) beyond the Party's
control.
14.4 COUNTERPARTS
------------
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
14.5 WAIVER
------
Should either of the Parties fail to exercise or enforce any
provision of this Agreement, or to waive any right in respect
thereto, such failure or waiver shall not be construed as
constituting a waiver or a continuing waiver of its rights to
enforce such provision or right or any other provision or right.
14.6 SEVERABILITY
------------
If any provision of this Agreement or the application thereof to
any situation or circumstance shall be invalid or unenforceable,
the remainder of this Agreement shall not be affected, and each
remaining provision shall be valid and enforceable to the fullest
extent.
14.7 NOTICES
-------
14.7.1 All notices, demands or other communications required
or permitted to be given or made under or in connection
with this Agreement shall be in writing and shall be
sufficiently given or made (a) if delivered by hand or
commercial courier, (b) sent by first class prepaid
registered post or (c) sent by legible facsimile
transmission (provided that a copy thereof is sent
immediately thereafter by first class pre-paid
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registered post) addressed to the intended recipient at
its address or facsimile number set out hereunder or to
such other address or facsimile number as any Party may
from time to time notify the other.
For CSM:
--------
2 Science Park Drive
Singapore Science Park
Singapore 0511
Facsimile number: (65) 777 3981
Attn: President
For Customer:
-------------
Bay F-1
Raheen Ind. Estate
Limerick, Ireland
Facsimile number: (353) 613 08448
With Copy to:
Analog Devices Inc.
One Technology Way
P.O. Box 9105
Norwood, MA 02062-9106
United States of America
Facsimile number: (617) 461 4100
Attn: Vice President & General Manager
With Copy to:
Dr. Kenneth Lisiak
804 Woburn Street
Wilmington, MA 01887-34462
United States of America
14.7.2 Any such notice, demand or communication shall be deemed
to have been duly served (a) if delivered by hand or
commercial courier, at the time of delivery; or (b) if
made by successfully transmitted facsimile transmission,
at the time of despatch (provided that immediately after
such despatch, a copy thereof is sent by first
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class pre-paid registered post); or (c) if given or made
by local mail within Singapore two (2) days after
posting and if given or made by airmail, seven (7) days
after posting (and in proving the same it shall be
sufficient to show that the envelope containing the same
was duly addressed, stamped and posted).
14.8 DUE EXECUTION
-------------
Each Party represents and warrants to the other that this
Agreement has been duly authorized and executed and that this
Agreement constitutes a valid and binding obligation of such
Party.
IN WITNESS WHEREOF the Parties hereto have entered into this Agreement
as of the day and year first above written.
Signed by TAN BOCK SENG )
for and on behalf of CHARTERED )
SEMICONDUCTOR ) /S/ TAN BOCK SENG
MANUFACTURING PTE LTD )
in the presence of: )
/S/ LINDA CHANG
------------------------------
Signature of witness
Name of witness: Linda Chang
Designation: Counsel
Signed by JOSEPH E. MCDONOUGH )
for and on behalf of )
ANALOG DEVICES, INC. ) /S/ JOSEPH E. MCDONOUGH
in the presence of: )
/S/ WILLIAM A. WISE, JR.
------------------------------
Signature of witness
Name of witness: William A. Wise, Jr.
Designation: Corp. Counsel
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