EXHIBIT 10.12
Dated this __ th day of June, 1998
An
Assembly / Final Test
Subcontract Agreement
Between
This Subcontractor whose name and address
are stated in Section Two of the first schedule
and
Fairchild Semiconductor, Inc.
whose business registration address
is stated in Section Three of the first schedule
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THIS AGREEMENT is made the day and year stated in Section One of the First
Schedule hereto between:
1. The Subcontractor whose name and address are set out in Section Two of the
First Schedule (hereafter called the "Assembler") of one part; and
2. Fairchild Semiconductor, Inc. with its address set out in Section Three of
the First Schedule (hereafter called "FSC" or "Fairchild") of the other
part.
WHEREAS:
1. Fairchild is engaged in the business of designing, manufacturing and
marketing semiconductor devices.
2. Assembler is engaged in the business of manufacturing various electronic
components and semiconductor devices.
3. This assembly agreement is applicable only to the list of packages
referenced in Section One and Two of the Second Schedule.
4. The parties mutually desire that the Assembler assemble certain integrated
circuits designed by Fairchild subject to the terms and conditions below.
5. The parties also mutually desire that the Assembler provide final test
service on assembled packages listed in the Second Schedule, Section One.
NOW, THEREFORE, the parties hereto agree as follows:
1. SCOPE OF WORK
a) Assembler shall perform certain semiconductor assembly and final
test work for Fairchild. The semiconductor devices (hereafter the
"Devices") shall be assembled and/or tested in a good and
workmanlike manner in accordance with Assembler's standard
specifications and Fairchild's specific specifications listed in the
Third Schedule (hereafter the "Specifications").
b) Notwithstanding anything contained herein to the contrary, Fairchild
reserves the right to engage any other subcontractor to perform any
assembly and/or final test work on a per need basis. This agreement
shall in no way be interpreted or construed to be an exclusive
dealing with the Assembler.
2. TERMS
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a) The term of this Agreement is as stipulated in Section Four of the
First Schedule. Fairchild will notify Assembler is writing ninety
(90) days prior to the expiration of this Agreement whether or not
it desires to renew this Agreement. Should Fairchild desire such a
renewal, then both parties will enter into a good faith negotiation
regarding the same. Failure by Fairchild to provide such notice to
Assembler shall be deemed to be notice by Fairchild that it does not
desire to renew this Agreement. If Assembler is not notified 90 days
prior to the expiration of this Agreement, then Assembler should
make reasonable effort to begin a dialogue with Fairchild concerning
the plans of both parties.
b) Fairchild shall be entitled, in its sole discretion, to renew this
Agreement for at least one additional year term under the same terms
and conditions stated herein, by notification to Assembler at least
ninety (90) days prior to the expiration of this Agreement.
3. MATERIALS / FACILITIES
a) Assembler shall supply all materials related to the assembly, except
for the items listed in Section Five of the First Schedule.
The items listed in Section Five of the First Schedule may be
updated by the parties from time to time, at the request of
Fairchild, but at a minimum once per quarter. Fairchild shall mark
the equipment in such a manner as to serve notice to all third
parties that such equipment is owned solely by Fairchild.
Assembler shall not place any contrary marks upon Fairchild
equipment and shall confirm to any third party Fairchild's ownership
of such listed equipment.
Assembler shall cooperate with Fairchild in making any filings or
registration permitted by applicable law to publish Fairchild's
ownership of said equipment, including, without limitation, any
filings or registrations permissible, if any, under the Thailand
Registration of Machinery Act (No. 2) B.E. 2530 (1987).
Assembler agrees that Fairchild may, upon reasonable notice, enter
Assembler's premises to recover said equipment in a non-disruptive
manner, regardless of whether the Assembler is in default of this
Agreement. Assembler agrees to cooperate fully with any Fairchild
efforts to retrieve any and all said equipment. Assembler further
agrees to maintain said equipment in reasonable working order, with
reasonable wear and tear excepted.
b) Assembler shall ensure that all materials and assembly processes
used to assemble Fairchild's Devices are free of ODC's (Ozone
Depleting Chemicals).
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c) Assembler shall be responsible for supplying the assembly and final
test facilities and all equipment (unless otherwise set forth in
this Agreement) and personnel necessary to perform assembly and/or
test work contemplated hereunder. Unless Assembler has received
Fairchild's prior written consent otherwise, all assembly and/or
test work shall be performed at the facility specified in Section
Two of the First Schedule hereto.
d) Fairchild agrees to accept the liability for any unique raw
materials that the Assembler has purchased for Fairchild's Devices,
if unused, provided that the Assembler has purchased this inventory
using Fairchild's 8 period rolling forecast and used reasonable lead
time provided by the vendor. Any excess to this amount is the
responsibility of the Assembler.
Fairchild's liability for such raw material shall be subject to
right of setoff against any amounts owed by Assembler to Fairchild
hereunder.
Fairchild's shall be liable under this Paragraph only to the extent
Assembler can deliver such raw materials to Fairchild free and clear
of all liens and encumbrances of others.
4. ASSEMBLY PLAN
a) For information and planning purposes, Fairchild will provide
Assembler with a eight (8) period rolling forecast (hereafter the
"Forecast") with quantities by package type as shown in Section One
of the Second Schedule.
b) A new Forecast shall be due during the last week of each period
(Fairchild's fiscal year calendar) and Assembler shall respond to
the Forecast with a one hundred percent (100%) firm assembly
commitment for the first period within five (5) working days as long
as the immediate period forecast is not higher than that committed
in the previous period.
c) Based on the Forecast provided by Fairchild, Assembler shall ensure
that the proportionate weekly capacity is available to enable linear
loading of Fairchild's orders. Fairchild shall make reasonable
effort to ensure linear loading to the Assembler.
d) If Assembler starts factory program material more than thirty (30)
days ahead of customers request data, then the Assembly assumes
liability for the total value of the product unless the starts are
authorized by Fairchild.
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5. PRICES
a) The prices to be paid by Fairchild for devices assembled and/or
tested pursuant to this agreement shall be mutually agreed to by
both Assembler and Fairchild. A Pricing Agreement shall be
documented noting effectivity date, and signed by representatives of
both the Assembler and Fairchild. A Pricing Agreement shall be
incorporated in this agreement into by reference in Section Two,
Second Schedule, and will be expressed in U.S. Dollars. Prices shall
be negotiated on an annual basis, as a minimum. Updates on a
quarterly basis shall be permitted when mutually agreed upon between
Assembler and Fairchild. Yields used in determining the pricing
shall be reviewed on an annual basis, as a minimum.
b) All prices are to be expressed in terms of unit pricing that include
all the materials supplied by the Assembler unless otherwise
specified. Pricing shall reflect whether product is to be standard
packed in tubes or packed utilizing tape and reel.
c) Unit pricing that is reduced contingent on specific minimum volumes
shall be documented on the Pricing Agreement. Failure by Fairchild
to meet the minimum quantity volumes required shall result in a
quarterly penalty payment. Penalty payment shall be calculated as in
the example provided below:
// Volume Price Break 500KU per week
// Actual Volume Load 400KU per week
// Penalty Payment 1.3MU times (base price less
volume price)
d) Prices agreed by both Assembler and Fairchild shall be effective
throughout the term of this contract except as updated quarterly by
mutual agreement between the Assembler and Fairchild. Any cost
improvement or steps taken by Fairchild to reduce the existing price
shall be incorporated into the Pricing Agreement in the quarter
immediately following the identification and acceptance of reduction
by the Assembler. Any cost reduction generated by the Assembler
through improved utilization or efficiency of equipment and/or
operators being employed shall benefit the Assembler exclusively
until the next contractual pricing agreement is incorporated.
e) New products introduced by Fairchild for the Assembler to assemble
and/or final test shall be priced through mutual agreement between
Fairchild and Assembler. Pricing of new products shall follow the
format mutually agreed to in the Pricing Agreement by both Assembler
and Fairchild.
6. PAYMENT TERMS
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a) Payment to Assembler by Fairchild shall be made on a Net Thirty (30)
Days basis from the date of invoice, if not specified otherwise in
Section Three of the Second Schedule.
b) All payments shall be made in United States dollars (US$) unless
specified otherwise in Section Three of the Second Schedule.
c) Assembler shall purchase die from Fairchild at those prices defined
by the Transfer Price File while the Assembler remains on buy-sell
agreement with Fairchild. Invoices for said die shall be due and
payable by Assembler on a Net Thirty (30) Days basis and paid in
United States dollars.
Assembler's payment obligations shall be secured by a security
interest in the die being purchased from Fairchild hereunder, until
all obligations of Assembler hereunder have been satisfied in full.
Assembler hereby grants to Fairchild a security interest in all die
purchased from Fairchild and in all proceeds thereof until the
purchase price for the die, and all obligations of Assembler
hereunder have been satisfied in full.
7. TURNAROUND TIME
a) Assembler shall use its best efforts to ship Devices (assembly only
or assembly and test) in the turnaround times indicated below:
Assembly Assembly and Test
-------- -----------------
50% 4.0 Days 8.0 Days
98% 7.0 Days 14.0 Days
b) The Turnaround Time shall mean the elapsed number of calendar days
from the date of the Die or assembled unit shipment arrives at the
Airport of Assembler's manufacturing location, or date the die is
requested to be built, whichever is later, and the date assembled
and/or tested Devices are shipped out of the same Airport.
Turn-around Time shall include Sundays and Holidays at Assembler's
location.
8. YIELD
a) Assembler shall use its best efforts to meet the Assembly / Test
Yields defined in Section Four of the Second Schedule.
b) Assembly yield shall be measured by acceptable assembled Devices
shipped versus the number of good die the Assembler received and
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shall be assessed over a thirty (30) day time period on a per
package and per lead count basis. Should the yield performance fall
five percent (5%) below that specified in Section Four of the Second
Schedule, Assembler shall submit a specific explanation to Fairchild
for review and the cost of indemnification shall be mutually
determined and agreed upon between Fairchild and Assembler on a case
to case basis, unless otherwise specified in Section Four of the
Second Schedule.
c) Should the yield performance fall below minimum contract yield that
is specified in Section Four of the Second Schedule on a lot to lot
basis, Assembler shall notify Fairchild immediately. A specific
explanation in the standard report format shall be submitted to
Fairchild for review within the next seven (7) days.
d) For assembly of untested Devices only, Fairchild will perform "First
Test" testing on the Devices received from the Assembler at
Fairchild's test location and will report the test results to
Assembler on a weekly basis, or as and when the need arises, to
assist Assembler in monitoring its assembly performance.
e) Assembler shall calculate yield variance as defined by Attachment A
of the Second Schedule Section Four every period (per Fairchild
Fiscal Year Calendar). Yields may be adjusted each quarter if
mutually agreed to by both assembler and Fairchild. A reclaim
process shall be implemented by Assembler to reduce the amount of
negative variance claimed against Fairchild for E2PROM products. The
reclaim procedure shall be as defined in Attachment B of the Second
Schedule Section Four attached herein.
f) Yield variance claims by the Assembler shall be as defined of the
Second Schedule, Attachment A and are subject to the concurrence and
approval of Fairchild.
g) Fairchild reserves the right to reprocess finished goods in an
effort to maximize utilization of its inventories. Procedures and
pricing of reprocessed materials is defined in the Second Schedule
Section Four, under Attachment C.
h) Fairchild shall have the right to terminate this Agreement should
Assembler be unable to meet agreed upon yield levels within ninety
(90) days of notification from Fairchild.
9. PROVISION OF DIE
a) Fairchild shall sell die and/or assembled units to Assembler for
assembly and/or test work as long as Assembler remains on buy-sell
agreement with Fairchild.
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b) Assembler shall not use uncommitted die for assembly prior to
receiving specific loading instructions from Fairchild or its
designated receiving location.
10. SHIPMENT
a) All shipments of die and material to and from FSC and Assembler
shall be under FOB shipping point terms. FSC and Assembler agree
that freight an handling costs shall be covered per First Schedule
Attachment B.
b) All shipments of assembled and/or tested Devices from Assembler to a
Fairchild location specified in Section 5 of the Second Schedule
will be on FOB term. If Assembler is paying freight on behalf of
Fairchild then manual billing should be done on a monthly basis.
c) Assembler is required to use the freight forwarder specified by
Fairchild for shipment of assembled Devices. Assembler shall ensure
that all export controls and licenses are in place between
Assembler's location and Fairchild's regional warehouses and
shipments made directly to Fairchild's customers per Fairchild's
instructions.
d) FSC shall be responsible for freight and transportation costs plus
handling charges from FSC's plants or the plants of FSC's
subcontractor (from where the dies, consigned equipment or material
are shipped) to the Bangkok International Airport or other port of
entry. Assembler shall be responsible for any inland transportation
costs within Thailand after clearing Thai customs, plus any handling
charges, from the Bangkok International Airport or other port of
entry to Assembler's plant.
11. ACCEPTANCE
a) Fairchild's acceptance or rejection of assembled and/or tested
Devices shall be based on the Specifications. Fairchild shall have
the right to reject isolated lots or groups of lots assembled and/or
tested Devices at its incoming or designated receiving location.
b) Fairchild will notify Assembler of any rejection that exceeds AQL
Limits per Specifications and reject samples shall be promptly
shipped to Assembler for verification upon Assembler's request.
c) Assembler shall have fourteen (14) days to reply to Fairchild's
notification and upon agreeing that the rejection is caused by
assembly workmanship deficiency the rejected lots if reworkable
shall be returned to Assembler for rework and Assembler will pay all
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associated freight costs. If rejected lots are non-reworkable,
Fairchild is entitled at a minimum, to debit Assembler's account the
dollar amount in the Assembler's original invoice for the defective
assembled Devices, unless otherwise specified in Section Four of the
Second Schedule.
d) Fairchild shall have the right, at its expense, to employ one or
more inspectors, or professional or technical personnel or its
designees, with access to Assembler's facility to inspect the
processes, materials and Fairchild's Devices and to perform quality
audit. The quality Inspector is authorized to shutdown, in his or
her sole reasonable discretion, the Assembler's manufacturing
activities for Fairchild, upon discovering any discrepancies against
the Specifications.
12. CHANGE OF SPECIFICATIONS
a) Assembler shall advise Fairchild in writing at least fourteen (14)
days prior to making any proposed changes with respect to direct
materials, suppliers, manufacturing processes and/or assembly
location. Fairchild reserves the right in its absolute discretion to
accept or reject such proposed changes. Upon obtaining the
conceptual acceptance of the proposed changes from Fairchild,
Assembler shall perform and provide the relevant reliability data
and/or build qualification lots per Fairchild's requests at
Assembler's expense. Proposed changes shall be implemented on a
cut-off date mutually determined by both parties upon obtaining
final approval from Fairchild.
b) Assembler agrees to use its best efforts to implement all reasonable
proposals for improvement of specifications suggested by Fairchild.
c) Assembler shall use its best efforts to participate in quality and
yield enhancement programs as suggested by Fairchild.
d) Assembler shall not be required to implement any change where the
cost is shown to exceed the benefit anticipated unless mutually
agreed to by both parties.
13. MANUFACTURING DATA
a) Assembler shall provide the manufacturing data necessary as agreed
to between Assembler and Fairchild. It shall include the amount at
die and package level of Assembler's diebank, WIP, and stagnant
inventories. Assembler shall be able to provide Fairchild on a
weekly basis, a summary of shipping activity and die receipts.
Assembler shall also provide Fairchild weekly reports regarding
assembly and test yields, as well as cycletimes for both assembly
only and assembled / tested products at the package level. Assembler
shall also provide
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Fairchild with any other information Fairchild reasonably requests.
The format for stated data shall be as mutually determined between
Assembler and Fairchild.
b) Wherever possible, Assembler agrees to allow Fairchild to establish
a computer-link with the Assembler's computer system to enable quick
access to data related to Fairchild's Devices only.
c) Assembler shall provide period-end inventory records to FSC. Data to
include all die, raw materials, and tested / untested assembled
products sold to assembler in anticipation of finished goods
receipt. Inventories shall include al stagnant inventories, such as
engineering holds and binstock. Inventories shall include materials
(assembled, untested) received from other subcontractors on behalf
of FSC, and be so designated. Details of the inventory shall be at
the chip / package level as required. FSC reserves the right to
audit such reports, as deemed necessary.
14. MANUFACTURING LOT
a) Assembler shall ensure that no manufacturing lot shall consist of
more than one die lot. At Assembler's discretion, large die lots can
be broken down into smaller manufacturing lots.
b) Assembler shall assign a unique manufacturing lot number to each
assembly lot to maintain tractability. The lot number shall appear
on the Lot Traveller together with Fairchild's Device code.
15. REJECTED DIE & REJECTED ASSEMBLED UNITS
Fairchild may at its discretion, request all rejected die and rejected
assembled and/or tested Devices be returned by the Assembler, or otherwise
to destroyed by the Assembler. Such destruction, if desired, shall be
witnessed by Fairchild personnel or alternatively, Fairchild may request
the Assembler to issue a letter of assurance to that effect. Fairchild
shall pay for freight for such returns.
16. U.S. EXPORT / IMPORT LAWS
Assembler shall comply with all applicable U.S. Import and Export Laws and
Regulations. Assembler shall meet such requirements, like Country of Origin
marking on each package as requested by Fairchild, in order to ensure full
compliance with such Laws. The provisions of this Section 16 shall survive
the termination of this Agreement and continue indefinitely.
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17. WARRANTY
a) The assembled and/or tested Devices sold by Assembler to Fairchild
shall be in good condition, free of defects in material and
workmanship (except with regard to die supplied by Fairchild to
which Assembler warrants only workmanship) for a period of twelve
(12) months after the date of acceptance by Fairchild.
b) In the event of assembled and/or tested Device failure proven by way
of failure analysis to have been caused by defects in workmanship,
Assembler shall, issue credit for at a minimum, the dollars amount
of the assemblers original invoice of the relevant Devices to
Fairchild, or assemble similar Devices for Fairchild at no charge.
c) Assembler shall have no obligation under any warranty set forth
above in the event that;
// the Devices have failed as a result of normal wear and tear,
catastrophe or fault or negligence of Fairchild or its
customers;
// the Devices have been modified by Fairchild or its customers in
a way which affects the performance of the Devices;
// the Devices have not been stored, maintained, or used by
Fairchild or its customers in accordance with Fairchild's
standard operating and/or maintenance instructions.
18. INSURANCE
Fairchild will be responsible for insurance coverage for all consigned
materials and equipment in-transit to Assembler and in-house with
Assembler.
19. INDEMNIFICATION
Fairchild shall at its cost and expense defend any claim or action brought
against the Assembler based upon a claim that any Device assembled
hereunder by Assembler for Fairchild in accordance with the Fairchild's
specifications, infringes any U.S., Japanese, or European Union patent,
copyright, trade secret or other intellectual property right, and Fairchild
will pay any settlements entered into on behalf of, or damages awarded
against Assembler, provided that Fairchild is given full control of such
defense and settlement, Assembler provides all reasonable assistance in
connection therewith as requested by Fairchild, at Fairchild's cost and
expense and Assembler provides written notice to Fairchild within a
reasonable time after becoming aware of such claim or action.
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20. TERMINATION AND DEFAULT
a) Default by Assembler: the occurrence of any of the following events,
if not cured within the periods set forth herein, shall be an Event
of Default by the Assembler hereunder: (1) Assembler fails to make
any payment due to Fairchild hereunder within fourteen (14) days of
its due date, or ten (10) days after receipt of notice of
non-payment from Fairchild, whichever is later; (2) Assembler,
without the consent of Fairchild, removes, sells, transfers, or
encumbers (voluntarily or involuntarily) any of the Fairchild
Equipment detailed in Attachment A, as identified by Section Five of
the First Schedule, or attempts to do any of the foregoing; (3)
Assembler fails to perform any of its remaining obligations
hereunder including, without limitation, the failure to meet the
Assembly/Test Yields set forth in Section Four of the Second
Schedule, or the continuing breach of any of the representations of
warranties of Assembler hereunder if not cured within ten (10) days
after receipt of notice of non-compliance from Fairchild; (4)
Assembler is in default under the terms of any indebtedness for
borrowed money when due (whether at maturity or otherwise) or fails
to perform any material covenant or condition on its part which
failure causes the acceleration of such indebtedness; (5) Assembler
sells, leases, or disposes of any portion of its assets, which in
Fairchild's reasonable judgment could adversely affect Assembler's
performance hereunder, except when such action occurs in the normal
course of its business, or the loss, the uninsured destruction, or
the attachment of such assets; (6) Assembler ceases doing business
as a going concern, makes an assignment for the benefit of
creditors, admits in writing its inability to pay its debts as they
become due, files a petition of bankruptcy, is declared bankrupt,
becomes insolvent, goes into liquidation or receivership, or loses
legal control of its business; (7) Assembler merges or consolidates
with any other entity, which in Fairchild's judgment could adversely
affect Assembler's performance hereunder, or makes a material change
in the senior management of the Assembler; (8) Fairchild reasonably
believes that the Assembler will not in the future be able to meet
each and every one of its material obligations under this Agreement;
or (9) there shall occur a material adverse change in the financial
or business condition of the Assembler.
b) Default by Fairchild: the occurrence of any of the following shall
be an Event of Default by Fairchild hereunder: (1) Fairchild fails
to perform any of its obligations hereunder, and such failure
continues for a period of 30 days after Fairchild's receipt of
written notice of such failure; or (2) Fairchild ceases doing
business as a going concern, makes an assignment for the benefit of
its creditors, admits in writing its inability to pay its debts as
they become due, files a petition as to its bankruptcy, is declared
bankrupt, becomes insolvent, goes into liquidation or receivership,
or loses legal control of its business
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c) Termination:
1) upon the occurrence of an Event of Default which is not cured
within any applicable cure or grace period, set forth below, or
thirty days (30) of receipt of written notice, if no cure or
grace period is mentioned, the non-defaulting party shall have
the right to immediately terminate this Agreement by providing
written notice to the defaulting party, which notice shall be
effective upon dispatch; and
2) Fairchild shall have the right to terminate this Agreement at
any time without cause (subject to its obligations under
subsections (d) and (e) of this Section) by providing 90 days
prior written notice of its intentions to terminate to
Assembler.
d) Termination shall not release either party from the obligation to
make payment of all amounts then due and payable.
e) In the event of termination, Assembler shall return all die at
contract price, materials, equipment and technical documents that
Fairchild has previously provided to Assembler. Fairchild shall also
be obligated to buy back all work-in-progress (WIP) at Assembler's
cost, and all assembled and tested devices in Assembler's stock at
contracted prices, provided that said WIP and devices are assembled
in accordance with the Specifications.
21. ENTIRE AGREEMENT
a) The Schedules referred to and attached to this Agreement are hereby
incorporated and by this reference made a part hereof. This
Agreement, and the Schedules, hereto, embody the entire
understanding of the parties as it relates to the subject matter
hereof.
b) The relevant sections of the Schedules, whenever necessary, shall be
updated to include any changes and additional new business plans
agreed between the parties. The revised Schedules signed by the duly
authorized officers of the respective parties, shall become the
addendum of the original Schedules and by this reference made a part
hereof.
c) This Agreement supersedes any prior agreements or understanding
between the parties with respect to such subject matter.
d) No amendment or modification of this Agreement shall be valid and
binding upon the parties unless signed by the duly authorized
officers or representatives of the respective parties.
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e) This agreement shall be renegotiated upon such time as FSC and
Assembler mutually agree to change from buy-resell arrangement to an
agreement of consignment. The new agreement shall supersede all
prior agreements, inclusive of the Agreement herein.
22. WAIVER
Should any party fail to enforce any provision of this Agreement or to
exercise or waive any right in respect hereto, such failure or waiver shall
not be constructed as constituting a waiver or a continuing waiver of its
rights to enforce such provisions or right or any other provision or right.
23. AGENCY
a) The relationship of the parties under this Agreement shall be as
independent contractors.
b) Nothing contained herein or done in pursuance of this Agreement
shall constitute the parties as entering upon a joint venture or
partnership, or shall constitute either party being an employee of
the other party for any purpose or in any sense whatsoever.
24. INVALIDITY
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. In the event of such
partial invalidity, the parties shall seek in good faith to agree on
replacing any such legally invalid provision with provisions which in
effect will, from an economic viewpoint, most nearly or fairly approach the
effect of the invalid provision.
25. COUNTERPARTS
This Agreement may be executed simultaneously in several duplicate
originals in the English Language, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
26. JURISDICTION
The Agreement shall be governed by, and interpreted and construed in
accordance with the Laws of the Country specified in Section Three of the
First Schedule, where the relevant Fairchild Location or Product Division
resides.
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27. CONFIDENTIALITY
a) For the purposes of this Agreement, "Confidential Information" shall
mean all proprietary information relating to the subject matter of
this Agreement which is disclosed by one of the parties to the other
in written, graphic and/or computer data form and originally
designated in writing by the disclosing party as "Confidentiality
Information" or by words of similar import, or if disclosed orally
is designated as "Confidential Information" at such time and is
summarized and confirmed in writing within thirty (30) days after
oral disclosure that such orally disclosed information is
"Confidential Information"
b) Each party acknowledges and agrees that all Confidential Information
identified as such is confidential or proprietary to the disclosing
party. Each party agrees not to use any such Confidential
Information during the term of the Agreement and for an additional
period of three (3) years for any purpose other than as permitted or
required for performance by such party hereunder. Each party further
agrees not to disclose or provide any of such Confidential
Information to any third party and to take all necessary measures to
prevent such disclosure using the same standard of care if normally
uses in protecting its own trade secrets and proprietary
information.
c) Notwithstanding any other provision of this Agreement, no
information received by a party hereunder shall be Confidential
Information if said information is:
// published or otherwise made available to the public other than
by a breach of this Agreement;
// furnished to a party by an independent third party without
restriction on its dissemination;
// approved for released in writing by the party designating said
information as Confidential Information;
// known to or independently developed by the party receiving
Confidential Information hereunder who have had no access to
the said Confidential Information;
// disclosed to a third party by the party transferring said
information hereunder without restricting its subsequent
disclosure and use by the third party.
d) Disclosure of any Confidential Information by a party hereto shall
not be precluded if such disclosure is in response to a valid order
of a court
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or other government body, provided that the receiving party promptly
notifies the other party of such order and makes a good faith
effort, at the expense of the party which originally disclosed the
information, to obtain a protective order requiring the Confidential
Information so disclosed be kept in confidence and used only for the
purpose for which such order was issued.
28. ARBITRATION
This Agreement shall be concluded in the United States and governed by, and
construed in accordance with, the laws of the United States. The Parties
shall use their best efforts to settle by way of amicable negotiations any
differences which may occur between them in connection with this Agreement.
If the Parties fail to reach such an amicable settlement, either party may
submit such differences to arbitration, which shall have sole jurisdiction
and shall take place in accordance with the following minimum set of rules:
a) The rules of the International Chamber of Commerce (ICC) shall
apply.
b) The arbitration shall be held by a single arbitrator mutually
acceptable to both Parties. If the Parties cannot agree on a single
arbitrator, each Party shall identify one independent individual who
shall to appoint a single arbitrator.
c) The decision of the arbitrator shall be considered as a final and
binding resolution of the disagreement and may be entered as
judgement in any court of competent jurisdiction.
d) The arbitration shall be held in a mutually agreeable location.
29. FINANCIAL REPORTING
a) Through Fairchild's Fiscal Year 2000, Assembler agrees to provide
Fairchild upon request, and in any event not less than quarterly,
all current financial information prepared for Assembler's
management or its lenders related to Assembler's current liabilities
and current assets together with cashflow predictions and other
information related to or reasonably necessary to assess Assembler's
financial ability to perform its obligations hereunder. In addition,
Assembler shall provide quarterly income and expense statements, as
well as quarterly balance sheets, to the extent not otherwise
provided. All such information shall be prepared in accordance with
generally accepted accounting principles. Statements shall indicate
the financial condition of Assembler, together with any other
financial information which
16
Fairchild may reasonably request, subject to any restrictions set
forth elsewhere herein.
b) Within sixty (60) days of Assembler's fiscal year end, Assembler
shall provide to Fairchild Assembler's year end audited financial
statements prepared by an accounting firm reasonably acceptable to
Fairchild. In addition, Assembler shall provide Fairchild , upon
reasonable request, additional financial information related to or
reasonably necessary to assess Assembler's financial ability to
perform its obligations hereunder.
c) All information received by Fairchild pursuant to this Paragraph
shall be held in the strictest confidence by Fairchild. All such
information shall be reviewed and evaluated only by (i) the
individuals holding the following positions: FSC's Chief Financial
Officer, Chief Legal Officer, Controller and any member of their
immediate staffs; (ii) FSC Memory Division's Controller and Chief
Logistics Officer and their immediate staffs and (iii) any FSC
managers directly responsible for the administration of this
Agreement and (iv) those FSC personnel specifically directed by any
of the foregoing individuals to review or assess Assembler's
financial ability to perform its obligations hereunder. All
information received by Fairchild pursuant to this Paragraph shall
be reviewed and evaluated only for the purpose of assessing
Assembler's financial ability to perform its obligations hereunder,
and used for no other purpose.
30. THIRD-PARTY VENDOR ACTIVITY
FSC agrees to reimburse for third-party vendor work when mutually agreed
upon in advance. FSC agrees to pay original invoice plus 10% premium for
related assemblers activities. Assembler agrees to provide FSC original
quotation for approval, copy of original invoice plus calculations of
premium.
31. WAIVER BY ASSEMBLER
To the fullest extent permitted by applicable law, Assembler waives any
right to sue Fairchild for specific performance of this Agreement. Upon
occurrence of the Event of Default by Fairchild hereunder, which Event of
Default is not cured within any applicable grace period, Assembler's sole
remedy shall be to terminate this Agreement and to recover, whether by
arbitration or by legal action, any amounts owed by Fairchild to Assembler
hereunder.
32. ASSIGNMENT
This Agreement may not be assigned by either party hereto without the prior
written consent of the non-assigning party. Notwithstanding the foregoing,
17
Fairchild may assign its rights and obligations under this Agreement
without the consent of the Assembler to any Fairchild subsidiary or
affiliate.
\\
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the
day, month and year first above written.
SIGNED by said Assembler: In the presence of:
- -------------------------------- ----------------------------------
Name: Thavisak Thangsupanich Name: Terence Chua
Title: Chief Executive Officer Title: Director of Business Development
Date: April ___, 1998 Date: April ___, 1998
- --------------------------------
Name: Udom Udompanyavit
Title: President
Date: April ___, 1998
SIGNED by In the presence of:
Fairchild Semiconductor, Inc.
- --------------------------------
Name: Daniel E. Boxer Name:
Title: Chief Administrative Officer Title:
Date: April ___, 1998 Date: April ___, 1998
18
FIRST SCHEDULE
- --------------------------------------------------------------------------------
SECTION ONE: DAY / MONTH / YEAR OF THIS AGREEMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1st day of April, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECTION TWO: NAME AND DESCRIPTION OF THE ASSEMBLER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Company Name: NS Electronics Bangkok (1993) Ltd.
---------------------------------
Address: 40/10 Soi Lasalle
-----------------
Sukhumvit 105, Bangna
---------------------
Bangkok 10260
-------------
Country: Thailand
--------
- --------------------------------------------------------------------------------
SECTION THREE: FAIRCHILD SEMICONDUCTOR, INC.
- --------------------------------------------------------------------------------
Location Name: Fairchild Semiconductor, Inc.
-----------------------------
Address: 333 Western Avenue
------------------
South Portland
--------------
Maine 04106
-----------
U.S.A.
------
- --------------------------------------------------------------------------------
SECTION FOUR: TERM OF AGREEMENT
- --------------------------------------------------------------------------------
Effective Date: April 1, 1998 Expiration Date: May 30, 2000
- --------------------------------------------------------------------------------
SECTION FIVE: MATERIALS / EQUIPMENT CONSIGNED BY FAIRCHILD
- --------------------------------------------------------------------------------
See Attachment A for list of equipment owned by FSC.
- --------------------------------------------------------------------------------
19
ATTACHMENT A
EQUIPMENT OWNED BY "FSC" *
Equipment Tag #
Tritemp SN1 1547523
Tritemp SN2 1547592
Tritemp SN3 1547593
Tritemp SN4 1547618
Tritemp SN5 1547619
Tritemp SN6 1550853
Tritemp SN7 1550893
Tritemp SN8 1550899
Tritemp SN11 1550902
Tritemp SN13 1553148
Tritemp SN14 1555777
Tritemp SN17 1555774
Tritemp SN18 1555776
Tritemp SN12 1550903
Tritemp SN19 1557828
Tritemp SN24 n/a
Tritemp Bench Tester SN1 1547594
Tritemp Bench Tester SN2 1547595
Tritemp Bench Tester SN3 n/a
Memex Testers (7)
PC Pentium 6X86-166 Set (2) n/a
Laserjet 6L Printer n/a
Sun Sparc 5 (1) n/a
*Equipment in place at NSEB as of November 24, 1997
(to be physically verified by FSC during the week of October 13, 1997)
20
ATTACHMENT B
Freight and Handling Costs
Product Ship From Ship To Paid By
- ------- --------- -------- -------
die, raw materials for assembly FSC Assembler Assembler
die, raw materials, consigned equip Subcontractor Assembler FSC
Consigned equipment FSC Assembler FCS
Assembled, tested devices Assembler FSC FSC
Finished Goods, reprocessing FSC/RCW whses Assembler FSC
Finished Goods, QA Return FSC/RCW whses Assembler Assembler
Finished Goods, customer QA return Customer,FSC Assembler Assembler
Note 1: FSC shall be deemed any site specifically owned and operated by
said company or any subcontractor's wafer fabrication site used by FSC
in the manufacturing of die.
Note 2: Subcontractor shall be deemed any assembly and test manufacturing
site not owes and operator by FSC.
Note 3: Should any customer return be deemed invalid or should such
return have been generated by fault of FSC, then FSC agrees to reimburse
Assembler for freight costs incurred
21
SECOND SCHEDULE
- --------------------------------------------------------------------------------
SECTION FOUR: YIELDS
- --------------------------------------------------------------------------------
Standard Yields Remarks
- --------------- -------
Assembly Cum Yield is to be: PDIP 8 LD 99.3% SOIC 8/14 LD 99.3%
-TQFP 48/64 LD 99% PDIP 18/28/32 LD 99% PLCC 32/52 LD 99%
CERDIP 24/28 LD 98.5% 32LD 98.2% 40LD 97% TSSOP 8/14/16 LD 99%
TSOP 28/32 LD 99%
First Test Yield:
Per pricing agreement
Final Test Yield:
Per pricing agreement, see attachments A, B
- --------------------------------------------------------------------------------
SECTION FIVE: SHIPMENT SENT TO
- --------------------------------------------------------------------------------
1) Products:
Attention of:
Company Name:
Address:
Phone / Fax Contact Numbers:
2) Products:
Attention of:
Company Name:
Address:
Phone / Fax Contact Numbers:
- --------------------------------------------------------------------------------
SECTION SIX: MANUFACTURING DATA
- --------------------------------------------------------------------------------
See Attachment 13
- --------------------------------------------------------------------------------
22
SECOND SCHEDULE
---------------
- --------------------------------------------------------------------------------
SECTION ONE: DEVICE VOLUME FORECAST
- --------------------------------------------------------------------------------
Package Lead Product Volume Forecast
- ------- ---- ------- ---------------
Type Type Type Pd Pd Pd Pd
---- ---- ---- -- -- -- --
Assembly
- --------
Per Period 8 assembly forecast that is to be submitted by FSC each
financial period, covering the following packages
SOIC TSOP SOT23
M_DIP TSSOP TQFP
PLCC CER-DIP
Final Test
Per 8 period packout forecast to be submitted by FSC each financial period
- --------------------------------------------------------------------------------
SECTION TWO: PRICES
- --------------------------------------------------------------------------------
Package Lead Unit Pricings Remarks
- ------- ---- ------------- -------
Type Type
---- ----
Per pricing Agreement
- --------------------------------------------------------------------------------
Payment Term:
Net 30 Days
- --------------------------------------------------------------------------------
23
Attachment A of second schedule
Yield Variance Computation Methodology
--------------------------------------
(refer to Clause 8E)
-------------------
1 Yield Variance shall be computed by Process flow by NSPN.
2 Engineering Database System shall be used for Yield Variance computation.
3 Yield Variance shall be calculated on prime processing (B Type) Only.
4 The Formula for Yield Variance calculations are as follows:
a) Yield Variance in (1/ "Actual Yield" - 1/Contract Yield)
favor of Assembler= X "pack-out Qty"
X (Untested Package Cost + Final Test Cost).
b) Yield Variance in (1/ "Actual Yield" - 1/Contract Yield)
favor of National= X "pack-out Qty"
X Untested Package Cost.
Notes:
"Actual Yield" shall mean the cumulative of all the yields for the prime
operations for each NSPN according to the respective Manufacturing Flow and
with the yields FIXED for the workmanship related operations as shown
below:
Operation Fixed Yield
--------- -----------
Burn-In 100%
Tape & Reel 100%
FOI 99.65%
Pack 100%
"Pack-out Qty" shall mean the pack-out quantity for the prime (B-type
processing) lots only excluding the reclaim (C-type processing) lots and
engineering (R-type processing) lots.
Untested Package Cost is the TC13x Assembly Cost in Contract Price List.
Assembler shall be responsible to ensure the correlation of Yield Variance
Report quantities to Engineering Database Report and R563 LOTS Report
quantities at all inventory points.
24
Attachment B of second schedule
Reclaim Procedure For E2PROM Products
(refer to Clause 8E)
1. The fallous (reclaimable rejects) for the following listed devices shall be
reclaimed:
Technology Device Operation Stored Bin
CS100 NM24C*EM8/EN Tritemp Every Bin except Bin 6
NM24C*LEM8/LEN Tritemp Every Bin except Bin 6
NM24C*EM8/EN Tritemp Every Bin except Bin 6
NM93C*TEM8 Tritemp Every Bin except Bin 6
NM93C*AEM8/AEN Tritemp Every Bin except Bin 6
NM93C*LM8/LN/TLM8 Tritemp Every Bin except Bin 6
NM93C*LEM8/LEN/TLEM8 Tritemp Every Bin except Bin 6
NM93C*LM8/LN 2HT1 Bin 5
NM93C*LEM8/LEN 2HT1 Bin 5
NM25C*OEM8/EN 2HT1 Bin 5
CS160 NM93C*LZEM8/LZEN/LZM8/TLZEM8 1HT1/2HT1 Bin 3& Bin 5
NM93CS*LZEM8/LZEN/LZM8/TLZEM8 1HT1/2HT1 Bin 3& Bin 5
("*"= the numeric that refers to a specific device type)
2. The identified fallouts above mentioned shall be transfered to EB3299
inventory bucket and a report generated at each period end.
3. Assembler shall be responsible to batch the fallouts for transfer from
EB3299 to FA 6 (Function Area 6) of LOTS System which is designed for
Reclaim processings, or other mutually agreed locale, upon elimination of
LOTS system.
4. Assembler shall calculate the Reclaim gain in favor of National on a
periodic basis using below Formula or an alternative later agreed between
the Assembler and National.
Reclaim Gain in favor of National= "Reclaim Pack-out Qty" x Tested Package
Cost - (Reclaim Pack-out Qty" / "Reclaim Cum Yld" x Final Test Cost)
5. NSEB will be responsible for minimum quantities of reclaimed mat'ls to be
retested at 30K day average. This minimum quantities include the reprocess
mat'ls which require black ink and remarked. The minimum number is
changeable when both parties agree.
Notes:
"Reclaim Pack-out Qty" shall mean the pack-out quantity of the reclaimed
lots under C-type processing per Engineering Database Report.
"Reclaim Cum Yield" shall mean the cumulative of all the yields for the
operations the reclaimed lots have undergone. Tested Package Cost is the
TC11x Finished Goods Cost in Contract Price List.
6. Assembler shall be responsible to ensure the correlation of Reclaim
Report's quantities by NSPN to Engineering Database Report and R563 LOTS
Report quantities at all inventory points.
25