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EXHIBIT 10.16
CONFIDENTIAL TREATMENT REQUESTED
*PORTIONS DENOTED WITH AN ASTERISK HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
SEMICONDUCTOR MANUFACTURING FOUNDRY AGREEMENT
This Agreement is made and entered into this 24th day of October, 2000 by and
between Xicor, Inc., a corporation established and existing under the laws of
California, USA and having its principal office at 0000 Xxxxxxx Xxxxx, Xxxxxxxx,
XX 00000 XXX (hereinafter called "Xicor"); and Standard MEMS, Inc., a
corporation organized under the laws of Delaware ("Foundry") and having its
principal office at 0 Xxx Xxxxxxx Xxxxxxxxx Xxxx, Xxxxxxxxxx, XX, 00000 and as
of the Effective Date (as defined below) will operate a semiconductor
fabrication facility located at 000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx
(hereinafter called "Facility").
WHEREAS XICOR, designs and markets integrated circuit products, and desires to
obtain an additional manufacturing source for certain of its products, and
WHEREAS FOUNDRY, manufactures integrated circuits at Facility and other
facilities and possesses wafer fabrication facilities suitable for manufacturing
the Xicor products, and
WHEREAS XICOR, desires to entrust Foundry with the manufacture of certain
integrated circuit products; and
WHEREAS FOUNDRY, desires to manufacture and supply these products to Xicor and
is willing to undertake to manufacture and to deliver such product to Xicor, and
WHEREAS XICOR, commits to purchase a minimum quantity of these products from
Foundry,
NOW, THEREFORE, in consideration of the above premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1.0 DEFINITIONS:
1.1 "Wafer[s]" shall mean 150 mm epitaxial silicon wafers carrying dice
designed by Xicor and built by Foundry according to Xicor's C3 and C5
process flows, or a generally similar process flow, through pad mask and
parametric test that meet the Specifications as per Appendices C and D.
1.2 "Device[s]" shall mean individual die of Xicor designed integrated
circuits in Wafer form.
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1.3 "Specifications" shall mean the parametric, electrical, reliability,
quality, yield and endurance specifications for each Wafer and Device type
as set forth in Appendices B, C and D.
1.4 "Good Device[s]" shall mean individual Devices that meet the
Specifications.
1.5 "Foundry Process" shall mean Xicor's C3 and C5 processes licensed to
Foundry under the terms of this Agreement, and/or such other processes or
successor processes, qualified by Xicor in accordance with Appendices C
and D, or as modified and approved thereafter in accordance with Paragraph
3.5 of this Agreement, that produce Wafers and Devices that meet the
Specifications.
1.6 "Design[s]" shall mean all Xicor integrated circuit designs for
systems, circuits and pattern layouts and mask works concerning the Wafers
and Devices contained thereon.
1.7 "Proprietary Information" shall mean (i) this Agreement, including all
appendices, exhibits, attachments and any technical specifications,
prices, schedules, specifications and the like negotiated in
implementation of this Agreement, and (ii) any information including, but
not limited to, technical information, database tapes, specifications,
test tapes, masks and supporting documentation provided either orally, in
writing or in machine readable format and masks or reticles generated by
or for Foundry using Xicor's database tapes, provided that all such
information is marked "Confidential" or similarly, or, if oral, identified
as proprietary within 30 days following the time of disclosure.
Notwithstanding the foregoing, Proprietary Information does not include
information generally available to the public, information independently
developed or known by the receiving Party without reference to information
disclosed hereunder, provided that the receiving Party can demonstrate
such independent development or knowledge by substantial documentation,
information rightfully received from a third party without confidentiality
obligations, information authorized in writing for release by the
disclosing Party hereunder, or information required to be disclosed
pursuant to law or governmental regulation provided that the disclosing
Party gives reasonable notice to the other party prior to any such
disclosure.
1.8 "Yield" shall mean the ratio of the number of Good Devices to the
total Devices on a particular Wafer.
1.9 "Substrates" shall mean 150 mm silicon epitaxial substrates as per the
specification in Appendix C.
1.10 "Effective Date" shall mean the Closing Date, as defined in the Asset
Purchase Agreement entered into by and between XICOR and Standard MEMS as
of October 24, 2000.
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1.11 "Forecast" shall mean a six (6) month rolling forecast of Xicor's
delivery requirements for Wafers by Device type.
1.12 "Order[s]" shall mean Xicor purchase orders or purchase order
releases for specific Wafers by device types, quantities and delivery
dates.
1.13 "Risk Starts" shall mean any new product Wafers by device type
ordered by Xicor prior to full and complete qualification of such new
product at Foundry.
1.14 "Process Change" shall mean any change to the Foundry Process in
process chemicals, gases, chemical or physical structures or impurities
embedded in the silicon or in layers above silicon, cross-sections,
surface properties, physical or chemical environment which the wafer
encounter during processing or storage, photolithographic and electrically
charged processes and any other change which could impact the yield,
quality, reliability, performance, physical structure and /or appearance
of Wafers and Devices.
2.0 PRODUCTION CAPACITY AND PURCHASE GUARANTEE:
2.1 Foundry agrees to provide capacity for and manufacture, and Xicor
agrees to purchase the quantity of Wafers per month/year specified in
Appendix B under the terms and conditions set forth herein. It is agreed
and understood by the parties that the capacity and wafer guarantee
contained in Appendix B is a minimum requirement only; actual Orders
placed by Xicor if accepted by Foundry, may exceed these minimum
requirements. If Xicor fails to purchase the minimum quantity of Wafers
specified in Appendix B, it will pay the amounts due for such unpurchased
Wafers (i.e., take or pay).
2.2 Foundry hereby assumes responsibility for the manufacture of Wafers by
Device types based on the Designs, and manufactured to the Specifications,
utilizing the Foundry Process. Foundry will produce Wafers and Devices to
fill Xicor's accepted orders, as further outlined below.
2.3 Orders shall be provided by Xicor to Foundry as follows:
2.3.1 Xicor shall provide Orders to Foundry for Wafers by device
type. Orders placed by Xicor will be open purchase orders or
releases for fixed quantities of Wafers by Device type based upon
the Xicor forecast. Foundry shall accept all Orders within minimum
guaranteed quantities. Quantities in excess of the guaranteed
quantities in Appendix B may be accepted at Foundry's sole
discretion. Foundry shall use reasonable commercial efforts to
fulfill accepted Orders within the lead times outlined in Appendix
A.
2.3.2 On the twentieth (20th) day of each month Xicor will provide
Foundry a Forecast. The first two months of the Forecast shall be
firm and supported by released Orders. All subsequent months shall
be for planning purposes only and,
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CONFIDENTIAL TREATMENT REQUESTED
except for the guaranteed quantities specified in Appendix B, in no
way represent a firm commitment to purchase Wafers by Xicor.
2.4 Defective Wafers or Devices: When a Wafer manufactured by Foundry
fails to meet the Yield Specifications, or a Device manufactured by
Foundry fails to meet the Device Specifications, Xicor and Foundry will
work together to investigate and determine the root cause of the defect.
The party which is found to be responsible for causing such failures will,
at its own cost and responsibility, remove such cause or causes with
minimum delay. If the root cause of the defect can not be determined, or
if the parties cannot agree as to which party is responsible for such
failures, the parties agree to act in good faith to reach an equitable
resolution acceptable to both parties.
2.5 Partial Shipments. Xicor will accept deliveries of Wafers made in
timely installments from Foundry. Any partial shipments will be invoiced
as made, and payments therefor are subject to the terms of payment noted
below.
2.6 Quantity Variance. If the monthly quantity shipped by Foundry of each
Wafer ordered by Xicor is within +/- 5 percent of the quantity ordered,
such quantity shall constitute compliance with Xicor's order. Over
shipments may be accepted at Xicor's discretion, in which case the
respective quantity of such over shipment may be subtracted from the
following months' quantity. Any under shipment may, at Xicor's discretion,
be added to the following months, Order.
2.7 Modifications. If Xicor determines that modifications to the
Specifications are required, including modifications to mask tooling,
process or testing, Foundry agrees to make reasonable modifications within
a reasonable period of time after notification in writing by Xicor
provided that the parties agree to adjustment to price and delivery
schedule if warranted by such modifications, as well as charges for
retooling costs.
2.8 Substitutions. Xicor may, at Xicor's sole discretion, add or
substitute Wafers by Device type as long as the Wafer and Device type
utilizes a Foundry Process, or similar Foundry Process mutually agreed
upon by Xicor and Foundry, provided that the agreed upon quantities of
Wafers by Device type required by Xicor do not exceed those determined
pursuant to Paragraph 2.3 and 2.6 except with the consent of Foundry. Such
Wafer and Device types are those which can be manufactured using the same
process and in accordance with the same qualification plan as Wafers by
Device type currently manufactured by Foundry under this Agreement.
2.9 Parametric Failure. If a Device fails to meet the agreed upon
parametric specifications, Xicor may request Foundry to stop production.
If Foundry is unable to correct such failures within a reasonable time,
Xicor may cancel those portions of particular Orders affected by such
failure at no charge to Xicor. Xicor will notify Foundry in writing of its
intention to suspend or cancel such Orders and will include any
substantiating data. Any order cancelled under the terms of this provision
2.9 shall
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CONFIDENTIAL TREATMENT REQUESTED
reduce Xicor's Wafer purchase quantity guarantee in Appendix B by an
amount equal to the quantity of wafers cancelled.
2.10 Reports and Reviews: Foundry shall provide Xicor with a weekly
delivery report. The details and format of such Reports shall be as agreed
upon by the parties. To enable Xicor to track process control, Foundry
shall also provide weekly data summarizing the DC parametric measurements
for Foundry Process. In addition, the parties agree to meet quarterly or
more frequently if agreed by the parties to discuss and resolve issues
that may, from time to time, arise and to review Foundry performance.
Foundry also agrees to provide Xicor with such data and/or reports
required by Xicor to enable Xicor to maintain their qualification to
ISO9001 and QS 9000 quality standards.
2.11 Order Cancellation
2.11.1 If Xicor cancels an Order that is firm pursuant to Section
2.3.2, Xicor agrees to pay Foundry an amount equal to the full price
per wafer for each Wafer cancelled up to the amount of the wafer
purchase guarantee quantity as per Appendix B. For any Wafers
cancelled in excess of the wafer purchase guarantee quantity Xicor
shall pay a cancellation charge per Wafer equal to:
(number of mask steps completed)
R.W.C + [ ------------------------------ x (Wafer price - R.W.C.)]
(total number of mask steps)
Where R.W.C = raw wafer cost
Notwithstanding the above, if the parties mutually agree to
reschedule the Order, no claim shall arise unless the Order as
rescheduled is canceled. Claims for the canceling of rescheduled
Orders shall also be governed as set forth above on the date of
rescheduling.
2.11.2 If Foundry fails to deliver Wafers and Devices as covered by
an Order placed hereunder by Xicor, which failure is not corrected
within sixty (60) days after written notice thereof, Xicor may
cancel those portions of the Order affected by such failure to
deliver. If such failure is not corrected within the above sixty-day
period and is not excused pursuant to Paragraph 19.0, Xicor shall
have the right to procure substitute goods ("cover") as provided by
the California Uniform Commercial Code, Section 2712. The foregoing
shall not affect any other right or remedy available to Xicor. If
Xicor continues to maintain or place Orders after such default,
Xicor's actions shall not constitute a waiver nor affect Xicor's
remedies for such default. Orders cancelled under this provision
shall reduce the Wafer purchase guarantee quantity in Appendix B by
an amount equal to the quantity of Wafers cancelled.
3.0 PROCESS TECHNOLOGY:
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CONFIDENTIAL TREATMENT REQUESTED
3.1 Xicor hereby licenses to Foundry the Xicor C3 and C5 process flows,
process parameters, design rules and other relevant technology identified
in Appendix C to enable Wafers and Devices to be manufactured by Foundry
solely for Xicor. Notwithstanding the foregoing, nothing in this Agreement
shall be construed to limit Foundry's right to use or otherwise exploit
steps, processes procedures, technologies, or techniques (whether or not
incorporated into the Foundry Process) that are generic, commonly known or
used in the industry, or are known to or developed by Foundry independent
of the processes, materials, or know how received hereunder. In addition,
Xicor agrees to enter into a Transitional Services Agreement, hereby
incorporated by reference, whereby Xicor will provide certain services
relating to the operation of the fabrication facility for a negotiated
fee.
3.2 Foundry will run the Foundry Process pursuant to this Agreement, or
any process which substantially similar to the Foundry Process, solely for
the purpose of manufacturing Wafers and Devices for Xicor. All Wafers and
Devices produced by Foundry for Xicor shall be based on the Designs, and
be manufactured to the Specifications as per Appendices C and D utilizing
the Foundry Process.
3.3 Foundry will either (i) provide Xicor with a list of Foundry's
acceptable mask vendors, in which case Xicor will select and provide one
of the mask vendors, as mutually agreed, with Device database tapes in GDS
II format, or (ii) Xicor will provide Foundry with Device database tapes
in GDS II format and Foundry may procure masks. All such database tapes,
whether or not marked as confidential as per paragraph 1.7, constitute
confidential Proprietary Information of the highest level. No such
database tapes will be provided to any third party mask vendor unless and
until a written agreement by the mask vendor is executed protecting Xicor
Proprietary Information from unauthorized disclosure. Foundry will provide
the mask vendor with mask alignment and test structure database, and
oversee merging of device and mask alignment databases by the mask vendor.
Xicor will bear the cost of original mask sets, subject to its advance
approval of the cost. The cost of subsequent mask layers or sets that are
required due to abuse or other damage by Foundry will be the
responsibility of Foundry. The cost of reticle changes required due to
process or design changes requested by Xicor will be the responsibility of
Xicor. The cost for reticle changes requested by Foundry for process
improvement or yield enhancements shall be the responsibility of Foundry.
Upon termination of this Agreement all mask sets shall be destroyed or
returned to Xicor. Foundry will provide written certification of such
return or destruction, and Xicor will provide a written receipt for
returned mask sets.
3.4 For new product introduced by Xicor, Xicor may request that Foundry
provide a mutually agreed quantity of Risk Starts. Foundry will provide
these Risk Starts to Xicor at the prices determined pursuant to Appendix
B. Risk Starts shall apply to the Wafer guarantee purchase quantity per
Appendix B. Xicor will pay for all the Wafers started in the Facility
against all Risk Start Orders. The criterion of yield specifications will
not apply to Risk Start Wafers that substantially conform to the C3 and/or
C5 processes, and
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the criteria of parametric, electrical, reliability, quality and endurance
specifications will apply to Risk Start Wafers that substantially conform
to the C3 and/or C5 processes.
3.5 Prior to making any Process Change, Foundry agrees to consult with
Xicor concerning the reasons for and likely effect of the Process Change.
Foundry will not implement any such Process Change without Xicor's prior
written approval, which will not be unreasonably withheld or delayed.
Xicor agrees to qualify the metallurgy change from Molybdenum to Aluminum
for all C3 and C5 processes as soon as Foundry is able to offer
qualification wafers for this purpose. Notwithstanding the foregoing, if
an emergency situation warrants a temporary Process Change, Foundry will
notify Xicor within 48 hours of identification of the emergency situation.
In that case Foundry shall provide to Xicor details relating to the
emergency situation including problem identification, proposed emergency
Process Change, expected results, expected duration of the Process Change
and probable ramifications if the emergency Process Change is not
approved. Xicor shall provide approval/disapproval, via fax, within
forty-eight (48) hours of receipt of Foundry notification. Unless the
emergency Process Change is approved by Xicor as a permanent Process
Change, the process will, within the specified time authorization in the
emergency process change notification, but in no case greater than one (1)
week, revert back to the original process which was in effect prior to the
emergency Process Change. Foundry may extend the time period for such
reversion to the original process with Xicor's prior approval, which shall
not be unreasonably withheld or delayed.
4.0 FORECAST AND ORDER COMMITMENT:
4.1 On the twentieth (20th) day of each calendar month, Xicor shall
provide to Foundry a Forecast per Paragraph 2.3.2. The Forecast shall be
used by Xicor to advise Foundry of the Wafer volumes by Device types
required by Xicor. The first two months of the each Forecast will be
detailed by week. The remaining months will be detailed by month. Foundry
will provide Xicor with a response in the form of a confirmation in
writing to each Forecast by the last working day of each calendar month.
The response shall contain a commitment schedule for all Wafers and
Devices for the first two month period.
4.2 Upon receipt of the commitment schedule, Xicor shall either accept or
reject the response within three (3) working days. If the committed Wafer
and Device quantities are acceptable to Xicor, Xicor will provide Foundry
with Orders to support the agreed upon Wafers and Devices. If the
committed Wafer and/or Device quantities are unacceptable to Xicor, both
parties agree to negotiate in good faith until an acceptable resolution is
reached. The production schedule agreed to by the parties, based on the
Forecast and Foundry's response, shall be dated, in written form, signed
by the parties and shall represent a binding commitment for all firm
Orders. Signature by facsimile is acceptable as proof of execution.
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CONFIDENTIAL TREATMENT REQUESTED
4.3 Each Order shall obligate Xicor to purchase the Wafers and Devices per
Order. Xicor also agrees to limit the extent of change to each subsequent
Forecast for future months based on the portion of the previous month's
Orders that were above the minimum quantity as follows: not more than
+30%/-15% for the third month, +50%/-30% for the fourth month, +75% / -50%
for the fifth month and +90% / -50% for the sixth month.
4.4 Foundry will provide Xicor with actual weekly Wafer by Device
completions and weekly Wafer by Device shipment reports to be received at
Xicor no later than 12:00 noon on Wednesday for the previous week's Wafer
and Device activity.
4.5 In case Yields drop below the minimum Yield rate as per Appendix B,
Foundry will use best efforts to expeditiously make up for the missing
Wafer and/or Device deliveries at Foundry's expense.
5.0 YIELD, RELIABILITY AND QUALITY:
5.1 Xicor shall have the right to test, monitor or sample any and all
Wafers and Devices to ensure adherence to the Specifications contained in
Appendices C and D. Any Wafer or Device failing to meet such
Specifications within the warranty period set forth in Section 9.1 may be
returned to Foundry in accordance with the procedure outlined below in
Paragraph 5.2. In addition, Xicor may stop accepting any or all further
shipments of affected Wafer and Devices without penalty, provided that
Xicor and Foundry will meet to develop a mutually agreeable plan for
determining and eliminating the root cause creating the non-adherence.
5.2 Xicor shall conduct an analysis of any Wafers and Devices that fail to
meet the Specifications contained in Appendices C and D. If the results of
the failure analysis indicate to Xicor that the cause of such failure was
the responsibility of Foundry, then Xicor shall provide Foundry with
written notification of the failure and a copy of the failure analysis
report. Upon completion of Foundry's internal investigation, but no later
than thirty (30) days after receipt of written notification, if Foundry's
investigation confirms Xicor's claim, Foundry shall provide Xicor with a
Return Material Authorization (RMA) and Xicor may return the failed Wafers
and Devices to Foundry. All costs associated with the return of such
defective Wafers or Devices, including but not limited to transportation,
customs, duties or any other such cost, shall be the sole responsibility
of Foundry. Failure to return or give written notice of rejection of the
Wafers or Devices within one (1) year after receipt of the Wafers or
Devices by Xicor shall be considered to be an acceptance of the Wafers or
Devices by Xicor.
5.3 The price per Wafer (Appendix B) is based on an agreed upon Yield per
Device type contained in Appendix B. Should the actual average Yield, as
reported for all Wafers of the same Device type and delivered exceed the
target yield by 5% or drop below the target yield by 5% as per Appendix B,
the price per Wafer will be adjusted upward or downward as per the formula
in Appendix B.
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6.0 PRICES, PAYMENTS AND TAXES:
6.1 All prices, payments or charges pursuant to this Agreement shall be
made in US dollars. Agreed upon prices for Wafers are listed in Appendix
B.
6.2 All prices are FOB Facility. Title to, and risk of loss of, Wafers and
Devices shall transfer to Xicor upon release to the carrier. Xicor agrees
to provide Foundry with an appropriate tax exemption certificate if
appropriate.
6.3 Payment terms shall be net thirty (30) days from receipt of a valid
invoice by Xicor. Foundry shall not send such invoices until Foundry has
shipped to Xicor the associated Wafers and Devices.
6.4 Xicor shall have the right to either; (a) offset the cost on any
future invoice, or (b) obtain a credit from Foundry for any Wafer returned
to Foundry under Paragraph 5.1 which has previously been invoiced and paid
by Xicor.
6.5 Each party shall be solely responsible for any and all taxes, levies
or any other type of charges imposed upon them by their respective
sovereign governments.
6.6 During the course of this Agreement each party shall bear its own
costs and expenses. Expenses shall mean such expenses as engineering
materials, fab costs, transportation and hotel expenses associated with
travel and any other expenses required by the parties to meet their
obligations under this Agreement.
7.0 ON-SITE INSPECTION: Xicor representatives may visit and tour the areas of
the Facility where the Foundry Process is run, during normal working hours upon
Foundry's approval, not to be unreasonably withheld or delayed, and Foundry may
accompany Xicor on all such visits. Foundry shall keep electrical test records,
process run cards, equipment usage status and Q/A results concerning the Wafers
and Devices for three (3) years after such data is issued, and Xicor
representatives shall be entitled to review such materials during such visits.
8.0 PROPRIETARY INFORMATION:
8.1 Both Foundry and Xicor agree that Proprietary Information of the other will
remain the property of the disclosing party and will be used by them solely for
the purpose of manufacturing Wafers and Devices hereunder. Such Proprietary
Information shall be maintained by each party in confidence and to a degree
equal to or higher than the parties maintain their own proprietary information
of a similar nature. The parties agree that they will not disclose any Propriety
Information to any third party without the prior written permission of the
disclosing party and further agree that such Propriety Information will not be
maintained on any internal computer network that is unsecured and can be
accessed via the internet or any other outside computing system. The parties
agree that all of their respective employees and consultants shall be subject to
non-
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CONFIDENTIAL TREATMENT REQUESTED
disclosure agreements no less protective of Proprietary Information than
the provisions of this Agreement prior to such employees and consultants
being allowed access to Proprietary Information.
8.2 Upon termination or expiration of this Agreement for whatever reason,
the receiving party must (i) return to the other party the original and
all copies of any Proprietary Information of the disclosing party, or (ii)
destroy the originals and all copies of any Proprietary Information and
provide certification of such destruction to the disclosing party, and
(iii) at the disclosing party's request, have one of its officers certify
in writing that it will not make any further disclosure or use of such
Proprietary Information and specifically will not manufacture or have
manufactured for it any product incorporating such Proprietary
Information.
8.3 These confidentiality provisions as to any item of Proprietary
Information shall survive the termination of this Agreement for a period
of five (5) years from the date of termination of this Agreement.
8.4 Notwithstanding Section 10.1, If Foundry and Xicor jointly develop any
process modifications, each party grants to the other party the
non-exclusive right to use such process modifications. The parties further
agree that if such jointly developed process modifications are patentable,
and both parties wish to pursue such patent, the parties shall equally
share the cost of filing such patent and the parties shall become
co-owners of such patents. If only one party wishes to pursue such patent,
then the pursuing party shall bear all costs and the non-pursuing party
shall be granted a non-exclusive, royalty free license for such patent.
9.0 WARRANTY OF FOUNDRY AND ACCEPTANCE:
9.1 Foundry warrants that Wafers and Devices delivered hereunder will
meet the mutually agreed Specifications and shall be free from
material defects in material and workmanship under normal use and
service for a period of one year from the date of receipt from
Foundry's facility. If, during such one year period (i) Foundry is
notified with reasonable promptness in writing upon discovery of any
defect in the Wafers and Devices, including a reasonably detailed
description of such defect; (ii) and when physically available such
Wafers and Devices are returned to Foundry's facility,
transportation prepaid; and (iii) Foundry's reasonable examination
of such Wafers and Devices discloses that such Wafers and Devices
are defective and such defects are not caused by accident, abuse,
misuse, neglect, improper installation, repair or alteration not
authorized by Xicor, improper testing or use contrary to any
reasonable instructions issued by Xicor, then within a reasonable
time Foundry shall, as mutually agreed, either repair, replace, or
credit Xicor for such Wafers and Devices. Foundry shall reimburse
Xicor for the return transportation charges paid by Xicor for such
Wafers and Devices. Foundry shall return any Wafers and Devices
repaired or replaced under this warranty to Xicor transportation
prepaid. If replacement of any Wafer and/or
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CONFIDENTIAL TREATMENT REQUESTED
Device is not practical, then Foundry shall issue a credit to Xicor
for the price paid by Xicor for the defective Wafers. The
performance of this warranty does not extend the warranty period
applicable to the Wafers and Devices originally delivered.
9.2 FOUNDRY MAKES, AND XICOR RECEIVES, NO REPRESENTATIONS, WARRANTIES OR
CONDITIONS (EXPRESSED, IMPLIED, STATUTORY OR OTHERWISE), OTHER THAN
AS EXPRESSLY SET FORTH IN THIS SECTION 9, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR ANY PARTICULAR PURPOSE AND THEIR EQUIVALENTS UNDER THE LAWS OF
ANY JURISDICTION.
9.3 Foundry shall promptly advise Xicor whenever Foundry has reason to
believe that Wafer and/or Devices may not conform to the applicable
Specifications.
10.0 NON-COMPETITION / REPRESENTATIONS AND WARRANTIES OF XICOR:
10.1 Foundry specifically agrees that it will not at any time use for its
own purposes, or any other purpose other than those specified by this
Agreement, any Xicor Proprietary Information unless specifically evidenced
by a separate technology licensing agreement properly executed by Xicor.
Xicor specifically agrees that it will not at any time use for its own
purposes, or any other purpose other than those specified by this
Agreement, any Proprietary Information of Foundry unless specifically
evidenced by a separate technology licensing agreement properly executed
by Foundry.
10.2 Xicor warrants that the Foundry Process, Wafers, Devices and Designs
or any parts thereof do not infringe on any United States or other country
patent, copyright, trade secret, trademark or other intellectual property
right.
11.0 INDEMNIFICATION AND LIMITATION OF LIABILITY:
11.1 Xicor agrees, at its own expense, to defend or at its option to
settle, any claim, suit or proceeding brought against Foundry on the issue
of infringement of any United States or other country patent, copyright,
trade secret, trademark, or other intellectual property right with respect
to the Foundry Process, Wafers, Devices or Designs or any parts thereof
subject to the limitations hereinafter set forth. Xicor shall have sole
control of any such action or settlement negotiations, provided that Xicor
shall not, without the consent of Foundry, enter into any settlement or
agree to any disposition that imposes an obligation on Foundry that is not
wholly discharged or dischargeable by Xicor, or imposes any conditions or
obligations on Foundry other than the payment of monies that are readily
measurable for purposes of determining the monetary indemnification or
reimbursement obligations of Xicor. Xicor agrees to pay, subject to the
limitations hereinafter set forth, any final judgment or settlement
entered against Foundry or its
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customer (as well as attorneys' fees and other expenses) on such issues in
any such suit or proceeding defended by Xicor. Foundry agrees that Xicor
shall be relieved of the foregoing obligations unless Foundry notifies
Xicor promptly in writing of such claim, suit or proceeding and gives
Xicor authority to proceed as contemplated herein, and, at Xicor's expense
(except for the value of the time of Foundry's employees), gives Xicor all
reasonable information and assistance to settle and/or defend any such
claim, suit or proceeding. Xicor shall not be liable for any costs or
expenses incurred by Foundry without Xicor's prior written authorization.
Foundry shall at all times have the option to participate in any matter or
litigation through counsel of its own selection and at its own expense.
11.2 The foregoing provisions of this Article state the entire liability
and obligations of the indemnifying party and the exclusive remedy of the
indemnified party, with respect to a breach of representations and
warranties in Section 10 and any alleged infringement of patent,
copyright, trade secret, trademark or other intellectual property right by
the Wafer, process, or any part thereof.
11.3 IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL,
INDIRECT, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES IN ANY MANNER ARISING
OUT OF THIS AGREEMENT, EVEN IF A PARTY HAS BEEN ADVISED IN ADVANCE OF THE
POSSIBILITY OF SUCH DAMAGES.
12.0 TERM:
12.1 This Agreement shall come into force on the Effective Date and shall
remain in force for a period of five (5) years from the Effective Date
unless terminated in accordance with Paragraph 16 below.
12.2 This Agreement may be renewed for an additional period under terms
and conditions agreeable to both parties hereof.
13.0 EXPORT CONTROLS: Foundry will not export, re-export, transship, or
transmit, directly or indirectly, (collectively "Export"), any data, designs,
programs, hardware, or technical information of any kind acquired hereunder, or
any direct product thereof to any country to which such Export is limited, or
prohibited by the United States Government or any law, regulation, agency or
executive order thereof, including without limitation, the Export Administration
Regulations of the US Department of Commerce. This Agreement is subject to
compliance with all applicable export and import laws and regulations and the
parties agree to cooperate in complying therewith. Foundry agrees to indemnify
Xicor for any fees, fines or penalties imposed on Xicor by the United States
Government as a result of Foundry's breach or violation of this provision. If
requested, Xicor shall provide Foundry with information regarding the Export
Administration Regulations of the U.S. Department of Commerce.
12
13
CONFIDENTIAL TREATMENT REQUESTED
14.0 PUBLICITY: Foundry acknowledges that Xicor will publicly announce this
Agreement and its contents as a result of obligations imposed under the
regulations of the United States Securities and Exchange Commission regarding
financial and other disclosures. Xicor will use commercially reasonable efforts
to seek confidential treatment of pricing terms of the Agreement, although it
can not assure Foundry that it will succeed in its efforts. No other public
announcements concerning this Agreement will be made by either party without the
prior written consent of the other which will not be unreasonably withheld.
15.0 NON-DISCLOSURE OF TERMS AND CONDITIONS: Neither party shall, without first
obtaining the written consent of the other party, disclose the terms, conditions
or subject matter of this Agreement, unless, in the good faith judgment of the
disclosing party, such disclosure is: (i) in response to a valid court order, in
which case the party making the disclosure pursuant to the valid court order
shall first have informed the other party and made reasonable efforts to obtain
a protective order requiring that the information or document so disclosed be
used only for the purpose for which the order was issued, or (ii) as may be
otherwise required by law, rules or government regulations or other governmental
body of the United States or any political subdivisions thereof; provided that
the disclosing party requests confidential treatment of sensitive information by
the appropriate governmental agency, or (iii) necessary to establish the parties
rights under this Agreement.
16.0 TERMINATION:
16.1 Either party may terminate this Agreement for a material default of
any of the terms and conditions of this Agreement by the other party,
provided proper notice of default is given and the defaulting party is
provided with sixty (60) days after receipt of the notice to correct the
defaulting condition.
16.2 Either party may terminate this Agreement without cause upon
providing the other party with six (6) months written notice thereof, but
neither party may terminate this agreement without cause prior to October
24, 2002. The parties further agree that each party shall have the right
to terminate this Agreement by giving written notice of termination to the
other party at any time on or after the filing by the other party of a
petition in bankruptcy or insolvency.
17.0. SURVIVAL OF PROVISIONS: The provisions of Paragraphs 8, 9, 10, 11, 13, 14,
15, 17, 23, 24, 25, 26 and 27 shall survive the termination or expiration of
this Agreement.
18.0. SEVERABILITY: If any provision of this Agreement, or the application
hereof to any situation or circumstance, shall be invalid or unenforceable, the
remainder of this Agreement or the application of such provision to situations
or circumstances other than those as to which it is invalid or unenforceable,
shall be intact; and each remaining provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by applicable law. In the event
of such partial invalidity the parties shall seek in good faith to agree on
replacing any such legally invalid provisions with provisions, which, in effect,
will, from an economic viewpoint, most nearly and fairly approach the effect of
the invalid provision.
13
14
CONFIDENTIAL TREATMENT REQUESTED
19.0. FORCE MAJEURE: Neither of the parties shall be liable in any manner for
failure or delay in the fulfillment of all or any part of this Agreement
directly or indirectly owing to Acts of God, governmental orders or
restrictions, war, threat of war, war-like conditions, hostilities, sanctions,
mobilization, blockade, embargo, detention, revolution, riot, looting, strike,
lockout, plague, fire, flood, earthquake or any other cause or other
circumstances beyond the affected party's control. Each of the parties shall
take all reasonable steps to minimize the effect of force majeure upon it until
such effect of force majeure has abated. Notice of any occurrence of force
majeure affecting either party shall be given to the other party as soon as
possible together with evidence thereof and the expected duration of the period
for which performance hereunder shall be delayed.
20.0. ASSIGNMENT OR TRANSFER: This Agreement, and all rights and obligations
hereunder, shall not be assigned by a party hereto to any third party or parties
without a prior written consent of the others party hereto; provided, however,
that no such prior written consent shall be required for any assignment of this
Agreement in its entirety by one of the parties to a successor-in-interest of
such party as a result of any merger or consolidation involving such party or a
sale by such party of substantially all of its assets, provided, that such
successor shall promptly agree in writing to be bound by all of the terms and
conditions of this Agreement, or any modifications hereof.
21.0. RELATIONSHIP OF THE PARTIES: The parties to this Agreement have the
relaTionship of independent contractors. Nothing herein shall be construed to
create any form of agency relationship or to authorize either party to bind the
other in any matter.
22.0 NOTICES: Any notices hereunder shall be given in writing by registered or
certified mail at the respective addresses listed below or at another address
which is specified by written notice.
If to Xicor: If to Foundry:
Xicor, Inc. Standard MEMS, Inc.
0000 Xxxxxxx Xxxxx 3 New England Executive Park
Xxxxxxxx, XX 00000, XXX Xxxxxxxxxx, XX 00000
Attn: Director of Contracts Attn: Xxxxxxxx X. Xxxxx III
cc: Chief Financial Officer President and Chief Executive
Officer
23.0 GOVERNING LAW: This Agreement shall be governed by the laws of the State of
California.
24.0 DISPUTE RESOLUTION: In the event of any dispute, claim or question arising
out of this Agreement or breach hereof, the parties hereto shall use their best
efforts to settle such dispute, claim, question or difference. To this effect
they shall mutually consult and negotiate in good faith and understanding to
reach a just and equitable solution with sincerity. In the event that the
dispute, controversy or difference is not so settled in the above manner within
three (3) months, then the matter shall be finally settled by arbitration. Such
arbitration shall be conducted
14
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CONFIDENTIAL TREATMENT REQUESTED
in Santa Clara, California, in accordance with the American Arbitration
Association Commercial Rules and Supplementary Procedures for Large Complex
Disputes. In any such arbitration, Xicor will appoint one arbitrator, Foundry
will appoint one arbitrator, and the two arbitrators appointed will select a
third arbitrator. Either party hereto may object to any arbitrator who is an
employee of or affiliated with any competitor of either party hereto. The
decision of the three arbitrators shall be final and binding and may be entered
as a judgment by a court of competent jurisdiction. Each side shall bear half
the cost of the arbitration.
25.0 TITLES: The titles of all Paragraphs contained in this Agreement are for
interpretation convenience and reference only and shall not in any way affect
the interpretation hereof.
26.0 ENTIRE AGREEMENT: This Agreement supersedes all documents or arrangements
in respect to the subject matter hereof, including any Letter of Intent
previously concluded by the parties, and evidences the entire Agreement of the
parties hereto. This Agreement cannot be changed, modified or supplemented
except in writing signed by the duly authorized officer or representative of
each of the parties hereto.
27.0 THIS AGREEMENT CONTROLS: The terms and conditions of this Agreement shall
control all sales of Wafers and Devices hereunder, and any additional or
different terms or conditions in either party's purchase order, Orders,
responses to Orders, acknowledgment, or similar document shall be of no effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, each of which shall be considered as an original, by their
respective duly authorized representatives as of the date first above written.
XICOR, INC. STANDARD MEMS, INC.
By: /s/ Xxxxx Xxxx By: /s/ Xxxxxxxx X. Xxxxx III
--------------------------------- ------------------------------------
Name: Xxxxx Xxxx Name: Xxxxxxxx X. Xxxxx III
Title: Acting President Title: President and Chief
Executive Officer
15
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CONFIDENTIAL TREATMENT REQUESTED
APPENDIX A
LEAD-TIMES
C5 CYCLE TIME
The Mean Cycle Time for product processing and distribution shall be *
days for the C5.6 products. At least * % of the C5.6 wafers shipped by
Foundry to Xicor will have a Wafer Fab cycle time of * business days or
less.
C3 CYCLE TIME
The Mean Cycle Time for product processing and distribution shall be *
days for the C3 products. At least * % of the C3 wafers shipped by Foundry
to Xicor will have a Wafer Fab cycle time of * business days or less.
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
B-16A-1
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CONFIDENTIAL TREATMENT REQUESTED
APPENDIX B
PRICING AND QUANTITY
B1: WAFER PRICING: (INCLUDING RAW WAFER COSTS)
C-3 C-5
----------- ------------
Year 1 $ * $ *
Year 2 $ * $ *
Year 3 to be determined
B2: WAFER PRICE ADJUSTMENTS FOR SORT YIELD:
TIMING: Once every 6 months. These calculations are inspired by two
things:
1. Yield improvements made by Foundry are to be rewarded with better wafer
price,
2. Yield improvements made are to be shared by the two companies.
CALCULATION: Every 6 months, Xicor will calculate the actual yield
percentage and compares to the target as set forth in Table 1.
Table 1: Starting "target" wafer sort yield percentages for Xicor products
to be used for price calculations.
C5 C3
------------ ---------------- ------------ ----------------
Wafer Sort Yield Wafer Sort Yield
Density Percentages Product Percentages
------------ ----------------- ------------ ----------------
64K * % 24C04B * %
32K * % 24C44 * %
16K * % 24C45 * %
256K * % 9241 * %
X9CMME * %
9315 * %
- If the average wafer yield percentage of the total number of wafers
shipped in the previous 6 months is within + or - 5% of target, the wafer
price for the next 6 months stays the same.
- If the actual wafer yield percentage is different by greater than + or -
5% of target, the difference will be shared equally by Xicor and Foundry
and a new wafer price will be established for the next 6 month period
based on the following example:
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
B-1
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CONFIDENTIAL TREATMENT REQUESTED
APPENDIX B (CONT.)
Table 2: Examples of wafer price calculations in year one for a C3 Xicor part
manufactured by the Foundry based on an * % target wafer sort yield.
Current Actual % Target % (DELTA) % Wafer Price For
Wafer Price Wafer Sort Yield Wafer Sort Yield Wafer Sort Yield Next Six Months
----------- ---------------- ---------------- ---------------- ---------------
$ * * % * % * % $ *
$ * * % * % * % $ *
$ * * % * % * % $ *
- Minimum yield for each Product or Product type is * % of the target yield.
Wafers that yield below this minimum yield percentage will be scrapped and
Xicor will not pay for these Wafers.
B3: WAFER PURCHASE QUANTITY AND CAPACITY GUARANTEE
Year 1: Capacity guarantee and minimum purchase quantity of * wafers (C3
or C5 mix at Xicor's choice)
* wafers per month (take or pay)
Year 2: Capacity guarantee of * wafers and minimum purchase quantity of
* wafers (C3 or C5 mix at Xicor's choice)
* wafers per month (take or pay); Xicor may order up to an
additional * wafers per quarter which, if ordered during the first
30 days of the quarter, Foundry shall manufacture and sell
Year 3+: Quantity (C3 or C5 mix at Xicor's choice) to be negotiated
annually Minimum 6 months notice of termination, but no earlier
than the end of year 2.
* Portions denoted with an asterisk have been omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment.
B-2
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CONFIDENTIAL TREATMENT REQUESTED
APPENDIX C
C3 AND C5 PROCESS SPECIFICATIONS
The following Xicor specifications govern all the wafer manufacturing and
electrical testing of Xicor specific C3 and C5 processes.
'
PHOTO LITHOGRAPHY SPECIFICATIONS:
Spec. Number Title
------------ -----
04040100 SVG SPRAY DEVELOP TRACK OPERATION SPEC.
04040102 SVG SPIN TRACK OPERATION SPECIFICATION
04040104A GCA WFR STEPPER OPERATING PROCEDURE
04040105 GCA WFR STEPPER: FOCUS WFR REQMTS.
04040108 ASM EXPOSURE AND FOCUS TABLE
04040109 ASM STEPPER OPERATING PROCEDURE
04040111A YES BAKE/PRIME PROCEDURE
04040114 QUAESTOR Q5: CD MEASURE
04040113 GCA 8500 STEP/ENERGY (Eo) MONITOR
04040180 CONTACT ANGLE PROCEDURE
04040200 RETICLE INVENTORY CONTROL
04040205 AUTOMATED RETICLE STORAGE SYSTEM PROCEDURE SPEC
04040402 DEV INSP: GCA/ASM STEPPER-EXP WAFER
040405 HARDBAKE PROCD. FOR OVEN-VWR MODEL 1601
040422 WFR FAB PROD MASK/RETICLE SET SPEC
040423 RETICLE HANDLING PROCEDURE
040428 GCA WAFER STEPPER JOB SETUP
040430 RESIST SPIN-GCA WAFERTRAC 1006
040431 SPRAY DEVELOP: GCA WAFERTRAC
040432 S-800 SEM CROSS-SECTION SPEC
040435 SCP BATCH DEVELOP OPERATION PROCEDURE
040437 OPAL CD SEM
040438 OPAL 78301 CD SEM-. MEASUREMENT PARAM.
0405001 PHOTORESIST BATCH QUALIFICATION
0405002 BOLD BATCH DEVELOPER QUALIFICATION
040611A RESIST THICKNESS MONITOR
C-1
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APPENDIX C (CONT.)
DIFFUSION SPECIFICATIONS:
Spec. Number Title
------------ -----
040200 MODEL 7351 XXXXX FURNACE PROC
040201 SC-1 CLEANING PROCEDURE
04020200 XXXXX FURNACE LOGSHEETS
04020901 DIFFUSION PRECLEAN SPEC
04021000A HF DIP AND ETCHBACK PROCEDURES
04021301 MDC/CSM PLOTTER 1 & 2: CV MONITORING
040217A NITRIDE STRIP SPECIFICATION
0402624 SIX INCH DIFFUSION OPERATION
0402625A SIX INCH DIFFUSION PROCESS
0402625B FURNACE PROGRAMS
0402625C DIFFUSION SUMMARY TABLES
0402626 DIFFUSION EQUIPMENT QUALIFICATION
0402627 OPTI - PROBE 2600 OPERATION PROCEDURE
040318 THICKNESS MEASURE: PROMETRIX F-F-500
041210 MATRONIX AUTO LOADER OPERATIONI
00-W-0007 STARTING MATERIAL SPECIFICATIONS
00-W-0006 STARTING MATERIAL SPECIFICATIONS
C-2
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APPENDIX C (CONT.)
ETCH (DRY AND WET) SPECIFICATIONS:
Spec. Number Title
------------ -----
040327 TENCOR P1 LONG SCAN PROFILER
040406A HARD BAKE PROC
04040600 RECIRCULATING SULFURIC ACID STATION
04040601 SIX INCH WET ETCH
04040602 SIX INCH OX/MT RIE 831018330
04040603 UV FUSION BAKE
04040701A RESIST STRIP: NON MT LAYERS
04040703A RESIST STRIP MT & PAD MASK
04040705 SINGLE WAFER MXP+ OXIDE ETCHER: APPLIED MATERIALS P5000
04040801A OXIDE WET ETCH PROC
04040803 POLY OXIDE ETCH
04040804A RESIST S/D/B POLY ETCH GASONICS
04040805 FORTREND F-6000 TRANSFER MACHINE OPERATING PROCEDURE
04040901A POLYSILICON WET ETCH PROC
04041002A WET METAL ETCH PROC
04041006 PROBERONICS TRANSFER ARM FLASH DIP
040411A PAD ETCH PROC
04041302 Fl: GCA STEPPER ALIGNED WAFERS
04041601 JSM-848 CORNER CONTACT VERIFICATION
00000000 PLASMA RESIST/POLY/NITIRDE XXXXXX - XXX 4400
04042110 AMERIMADE ROBOTIC TRANSFER ARM FOR POLY STRINGERS
04042111 XXX RAINBOW 4400 ETCH RECIPES, LOGSHEETS, RUN CHARTS, TEST
WAFER/SPI CARDS
040612 P3.0/C3.0/C5 IN-LINE POLY TO POLY
C-3
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APPENDIX C (CONT.)
THIN FILMS SPECIFICATIONS:
Spec. Number Title
------------ ------
040301 01 A ION IMPLANTATION OPER: VARIAN 350D
040301 01 B ION IMPLANTATION MINISPEC
0403016 OUTSIDE VENDOR IMPLANTATION PROCED
040302A DEPOSITED GLASS PROCESSES
040302B DEPOSITED GLASS PROCESSES MINISPEC
04030302B PRE-SPUTTER DIP MINISPEC
04030303A VARIAN 3290 SPUTTER SYSTEM
04030305 METAL SPUTTER-MRC ECLIPSE/ECL360
040311A WAFER LASER IDENTIFICATION (L.I.S.)
040312 FIRST SPECTROMETER OPERATION
040313A THERMA-PROBE OPERATING SPEC
040317A PROMETRIX RS50/E RESIST MONIT PROC
040320 ION IMPLANT XXXXX NV-6200A
040321 AMP 5000 OPERATION
040329 AMP 5000 RECIPES
040331 IMPLANT SUMMARY TABLES
040332 IONICS STRESS GAUGE
040333 ENDURA METAI SPUTTER
040334 CVD 5000 TUNGSTEN DEP/ETCH
04040501 BAKING PROCEDURE FOR AMS TRAYS - VWR MODEL 1602
04040704A INITIAL LASER SCRIBE RESIST STRIP
040601 IMPLANTER MONITOR PROCEDURE
C-4
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APPENDIX C (CONT.)
E-TEST SPECIFICATIONS:
Spec. Number Title
------------ -----
040701A E-TEST OPER: ACCUTEST 3000/3600
040701 B ELECTRICAL PARAMETER TEST OPER MINI
040703 ELEC PARAM TEST XXXX XXXXXXXX SI 50
040705 XXXXXX & XXXX 0000 XXX PROBER OPER
040706 PROC FOR MEASURING R-TOTAL E:2POT
040707 ELEC. PARAM. TEST EVAL. PROCEDURE
040708 ELEC. PARAM. TEST OPER. SPEC XXXXXXXX
040709 ELEC. PARA. TEST OPERATIONAL
040710 KLA 1007 AUTOMATIC PROBER
04071001 ACCUTEST/XXXXXXXX TEST PARANA CALIB
C-5
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APPENDIX D
RELIABILITY AND FOUNDRY MONITORING SPECIFICATIONS
06020110 QUALITY AND RELIABILITY SPECIFICATIONS 1
06020101 QUALITY AND RELIABILITY SPECIFICATIONS 2
06020101 QUALITY AND RELIABILITY SPECIFICATIONS 3
06020311 QUALITY AND RELIABILITY SPECIFICATIONS 4
06020324 QUALITY AND RELIABILITY SPECIFICATIONS 5
06020116 WAFER FOUNDRY QUALIFICATION AND MONITORING
D-1
