REVENUE SIDE LETTER
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN DELETED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
March 11, 1997
Xxxxxxxxx Semiconductor Corporation
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx, XX 00000
Attn: Xx. Xxxx X. Xxxx
President and CEO
Re: Asset Purchase Agreement, dated March 11, 1997, by and between National
Semiconductor Corporation ("National") and Xxxxxxxxx Semiconductor
Corporation ("Fairchild")
Gentlemen and Ladies:
This will confirm our agreement that during the first [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] months following the close of the above-referenced Asset Purchase
Agreement, National shall purchase from Xxxxxxxxx a minimum of [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] in goods and services (the "Revenue Commitment") under the following
agreements to be entered into by National and Xxxxxxxxx at the close of the
Asset Purchase Agreement: the Foundry Services Agreement, Assembly Services
Agreement and Mil/Aero Wafer and Services Agreement (collectively, the
"Operating Agreements").
To assure Xxxxxxxxx of a consistent revenue stream, National agrees that
it will manage the Revenue Commitment by purchasing from Xxxxxxxxx goods and
services in at least the amounts of [CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] in Fiscal Year
[CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION], [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION] in fiscal year [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] and [CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] in Fiscal Year [CONFIDENTIAL INFORMATION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]. While
purchases for the purchases for the remaining [CONFIDENTIAL INFORMATION OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] of the Revenue
Commitment may be made by National at any time during the [CONFIDENTIAL
INFORMATION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] period, National shall work with
Xxxxxxxxx to avoid bottlenecks in Xxxxxxxxx'x capacity. National and Xxxxxxxxx
will periodically review the forecasts submitted under the Operating Agreements
in order to ensure that National is on schedule to satisfy both its annual
minimum revenue guarantee and its obligations under the Revenue Commitment as a
whole. If those forecasts indicate that National will not meet such obligations,
the parties shall meet to adjust the volumes and/or pricing in one or more of
the Operating Agreements until such obligations are satisfied. If the parties
cannot reach agreement on such adjustments, National shall pay Xxxxxxxxx a sum
equal to the shortfall in the profit that Xxxxxxxxx would have earned and the
fixed costs that it would have recovered if National had purchased sufficient
goods and services sufficient to satisfy the minimum annual revenue guarantee,
or as the case may be, the Revenue Commitment as a whole.
One year after the close of the Asset Purchase Agreement, and every six
(6) months thereafter, the parties will meet to review Xxxxxxxxx'x recovery of
the fixed costs of its FM 6001 6-inch fab. Exhibit M of the Foundry Services
Agreement lists that portion of those fixed costs which National is expected to
cover by means of purchases thereunder. If such purchases are insufficient to
cover National's share of those costs for any fiscal year, National may credit
against the shortfall the fixed cost coverage of purchases made during that
fiscal year in excess of forecast volumes for Xxxxxxxxx'x other wafer fabs
and/or under the other Operating Agreements, it being understood that Xxxxxxxxx
is obligated to provide capacity to National only as set forth in the Operating
Agreements. Should such additional purchases during that fiscal year be
insufficient to cover National's share of the fixed costs, National shall pay
Xxxxxxxxx a sum equal to such remaining shortfall promptly after the end of the
fiscal year. Notwithstanding the foregoing, National shall not be required to
make up any shortfall to the extent that Xxxxxxxxx'x own use of the FM 6001 fab
is greater than that set forth in Exhibit M of the Foundry Services Agreement.
National will be relieved of its obligations hereunder to the extent it is
unable to meet the Revenue Commitment as a result of Xxxxxxxxx'x inability to
provide National with capacity as guaranteed under the Operating Agreements,
provided National has complied with the forecast and order requirements of such
Operating Agreements.
Please confirm you agreement to the above by signing and returning a copy
to the undersigned.
Very truly yours,
NATIONAL SEMICONDUCTOR CORPORATION
/s/
BY: XXXXXX XXXXXXX
Executive Vice President &
Chief Financial Officer
The foregoing is hereby agreed to and accepted by:
XXXXXXXXX SEMICONDUCTOR CORPORATION
/s/
BY: XXXXXX X. XXXXXX
Executive Vice President
and Chief Financial Officer
