EXHIBIT 4.42
****CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
AGREEMENT
This Foundry Agreement (the "Agreement") is entered into this 12 day of May,
2004 (the "Execution Date") among Siliconix incorporated, a Delaware, USA
corporation having its principal place of business at 0000 Xxxxxxxxxx Xxxx,
Xxxxx Xxxxx, XX 00000 XXX ("Siliconix"), Siliconix Technology C.V., a
Netherlands limited partnership, having an office at 00 Xxxxxxxx Xxxxxx 00,
#00-00, Xxxxxx Xxxxxxxx, Xxxxxxxxx 000000 ("STCV"), and Tower Semiconductor
Limited, an Israeli company, having its principal place of business at Ramat
Gavriel Industrial Zone, XX Xxx 000, Xxxxxx Xxxxxx 00000, Xxxxxx ("Tower").
RECITALS
WHEREAS, Siliconix desires to license, on a non-exclusive basis, to Tower
the know-how for certain of its manufacturing processes and have certain
products it has designed manufactured by Tower solely for sale to STCV; and
WHEREAS, upon the license of Siliconix's know-how, and subject to the other
terms of this Agreement, Tower will have the capability of manufacturing STCV's
products and has agreed to supply to STCV certain fabricated silicon wafers;
THEREFORE, in consideration of the foregoing and covenants contained below,
the parties agree as follows:
Section 1. Definitions
1.1 "Acceptance Criteria" shall mean the specifications for the
Products manufactured by Tower set forth in Exhibit 1.1 and to be performed
by Tower.
1.2 "Affiliate" means an entity Controlling, Controlled by, or under
common Control with, a party. "Control" means owning more than 50% of the
equity of the entity.
1.3 "Defect" shall mean a failure to conform to the Acceptance
Criteria.
1.4 "Die Yield" shall mean the percent of die on a Wafer which do not
have Defects.
1.5 "Epi Wafer" shall mean 150mm silicon "P" Channel or "N" Channel
substrate with the appropriate epitaxial layer. Epitaxy is a process of
producing a thin layer of single crystal material upon the surface of a
single crystal substrate.
1.6 "Fab 1" shall mean Tower's six-inch wafer fabrication facility
located at its corporate headquarters in Xxxxxx Haemek, including the
parcel of land as set forth on Exhibit 1.6, and all equipment and other
assets used now or in the future for operation of the facility or
production of Products and other products.
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****CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
1.7 "Fab Yield" shall mean the percent of Wafers used initially in the
production process which result in containing, at the end of the production
process, a Die Yield of at least ****.
1.8 "Historical Yield" shall be Die Yield or Fab Yield, as applicable,
based upon Siliconix historical data (by Product) of the latest six-months
for the production of at least 1,000 wafers. Yield data for each Product
shall be provided to Tower by Siliconix prior to the commencement of
manufacturing and shall be updated on a quarterly basis during the term of
this Agreement.
1.9 "Product(s)" shall mean STCV's ****, which it requests Tower to
manufacture, utilizing "Siliconix Process," at Fab 1 and provide in Wafer
form with an average of **** photo mask steps.
1.10 "Proprietary Information" shall mean information that the
disclosing party considers to be proprietary and/or confidential, including
but not limited to, trade secrets, discoveries, ideas, concepts, know-how,
software, techniques, designs, specifications, drawings, diagrams, data,
computer programs, business activities and operations, reports, studies,
lists of customers, current and future business plans, financial
information, other technical and business information, and Siliconix or
STCV suppliers and vendors.
1.11 "Qualification" shall mean the approval by Siliconix that Fab 1
is qualified to produce Products in accordance with the criteria set forth
in Exhibit 1.1.
1.12 "Ramp-Up Period" shall mean the period commencing at the start of
manufacture of a particular Product at Siliconix, and ending when a steady
state of Fab Yield and Die Yield has been established for such product,
taking into account that the ramp-up period will in the typical case
decrease for follow-on products with comparable characteristics.
1.13 "Ramp-Up Yield" shall be the Historical Yield of Siliconix (by
Product) during the Ramp-up Period.
1.14 "Release to Production" shall mean a written notice by Siliconix
to Tower that the Product is production worthy using the applicable
Siliconix Process and Tower Process.
1.15 "Secured Creditors" shall mean Bank Hapoalim B.M,. Bank Leumi
Le-Israel B.M. and the Investment Center of the Israel Ministry of Industry
and Trade and any other creditors of Tower, which receive a security
interest or a pledge of, Fab 1 (or any assets thereof) in the future, other
than by operation of law or with respect to the purchase of equipment or
materials which has not been fully paid for by Tower.
1.16 "Siliconix Process" shall mean Siliconix's proprietary ****
processes, all derivatives thereof and recipes, manufacturing, fabrication,
test techniques, design rules and simulation models, and all related
improvements and technical information required, in conjunction with the
Tower Process, to manufacture a Product.
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1.17 "Tower Process" shall mean Tower's proprietary processes and
recipes, manufacturing, fabrication, assembly and test techniques, design
rules and simulation models, and all related improvements to Tower's
Process used by Tower and required, in conjunction with the Siliconix
Process, to manufacture a Product.
1.18 "Wafer(s)" shall mean 150mm single crystal silicon wafers
containing the Products.
Section 2. Technology License.
The parties shall license each other, but the licensee may not sublicense
to third parties, with all technical information that the other party reasonably
requires to develop Products based upon the Siliconix Process and the Tower
Process, as applicable including but not be limited to: (a) process flow
outline; (b) process parameter specifications; (c) electric parameter
specifications; (d) quality control monitor flow; (e) technical information
relating to improvements, enhancements and modifications made by such party
which reduce the cost and/or maintain the compatibility of the Siliconix Process
between Tower and Siliconix; and (f) other information as shall be mutually
agreed upon by both parties. Both parties shall allocate a team of experienced
professionals, as necessary, for the performance of their responsibilities
pursuant to the terms of the Agreement and assist the other party to achieve
process compatibility and reasonable expertise with respect to the Siliconix
Process. Such professionals shall be located at Fab 1 as agreed by the parties.
Section 3. Wafer Capacity; Manufacturing and Purchase Commitment.
3.1 Manufacturing. Upon receipt of STCV's purchase orders, and
following Siliconix's notices to Tower that Qualification and Release to
Production have been met, Tower agrees to manufacture and sell Products,
and STCV agrees to purchase such Products from Tower, subject to the
Products passing the Acceptance Criteria, on the terms and conditions set
forth herein. Siliconix will provide Tower with Epi Wafers free of charge
and in quantities sufficient for Qualification and for Tower to meet the
Monthly Minimum Wafer Purchase Requirement.
Tower undertakes that it will not sell, transfer or provide the
Products or Wafers, or any Proprietary Information included therein, to any
entity other than STCV. This obligation shall survive any termination of
this Agreement for any reason.
3.2 Capacity and Purchase Commitment. Tower shall reserve for,
allocate to, and manufacture for STCV during the Term (as defined below)
the aggregate number of Wafers agreed between the parties (the "Full
Agreement Amount"), and STCV hereby agrees to purchase the Full Agreement
Amount at the prices set forth in Section 4, subject to STCV's right, set
forth in Section 3.3, to reduce the number of Wafers purchased in any
month, and further provided that the Products contained on the Wafers pass
the Acceptance Criteria. Tower is to manufacture the Wafers, and STCV is to
purchase the Wafers, according to the following timetable: during each of
the one year periods set forth below Tower shall reserve for, allocate to,
and manufacture for, STCV, and STCV shall purchase, the following number of
Wafers (the "Monthly Minimum Wafer Purchase Requirement"), subject to
STCV's right, set forth Section 3.3, to reduce the number of Wafers
purchased in any month (provided that in any case STCV shall be obligated
to purchase the Full Agreement Amount) and further provided that the
Products contained on the Wafers pass the Acceptance Criteria: (a) ****
Wafer outs during the initial twelve (12) month period following Release to
Production, (b) **** Wafer outs per month during the twelve (12) month
period thereafter, and (c) **** Wafer outs per month thereafter.
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****CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
3.3 At any time following the third anniversary of the Release to
Production, STCV may reduce, on one or more occasions, the Monthly Minimum
Wafer Purchase Requirement by providing Tower with ****advance written
notice of such reduction (for clarity, the notice may be given by Siliconix
****. In such case, Tower shall only be required to reserve for and
allocate the reduced Monthly Minimum Wafer Purchase Requirement to
Siliconix (the "Monthly Reduced Level"), and further provided however, that
Siliconix shall in any case be obligated to purchase the Full Agreement
Amount. Tower shall use its best efforts to mitigate the effect of such
reduction on Fab 1 manufacturing volume.
Notwithstanding the foregoing, if Siliconix shall have reduced the Monthly
Minimum Wafer Purchase Requirement to a Monthly Reduced Level, it shall be
entitled to provide Tower with 90 days prior written notice of its desire to
increase its level of purchase of Wafers from the Monthly Reduced Level
(provided that such request shall not require Tower to produce more than ****
wafer outs per month) (the "Monthly Increased Level Capacity"). Notwithstanding
anything else in this Agreement (including statements that Siliconix is
obligated to purchase the Full Agreement Amount), if Tower is unable or
unwilling to provide such Monthly Increased Level Capacity at any time after the
end of such 90 day period, Siliconix's obligation to purchase the Full Agreement
Amount shall be reduced by the difference between the total Monthly Increased
Level Capacity and the total number of wafer outs provided by Tower during the
period which Tower is unable or unwilling to provide the Monthly Increased Level
Capacity to STCV. To the extent the Full Agreement Amount was adjusted pursuant
to this paragraph, Tower shall credit STCV with the Adjusted Prepayment Credit
for each wafer delivered in the future such that the Prepayment shall be fully
returned to STCV during the Term. The "Adjusted Prepayment Credit" shall be
calculated as follows: the remainder of the Prepayment divided by a number equal
to the Full Agreement Amount minus the sum of the total quantity of Wafers
previously delivered and the cumulative quantity not reestablished.
Section 4. Prices, Payments and Taxes.
4.1 PRICE. The price for Wafers is as agreed to between the parties
(the "Per Wafer Price"); provided, however, that in the event the Monthly
Minimum Wafer Purchase Requirement is reduced in accordance with the
procedure set forth in Section 3.3, the price for Wafers shall thereafter
be increased to cover Tower's costs relating to the decrease in the Monthly
Minimum Wafer Purchase Requirement which, despite Tower's best efforts,
cannot be reduced on a going forward basis as a result of such reduction.
The determination of whether such costs, if any, can be reduced will be
made on an objective basis by an independent third party agreeable to the
parties. Such increased price shall be Tower's sole and exclusive damages
for a reduction in the Monthly Minimum Wafer Purchase Requirement provided,
however, that Siliconix shall still be obligated to purchase the Full
Agreement Amount as may be reduced pursuant to the second paragraph of
Section 3.3. Tower shall provide any documentation that STCV reasonably
requests to support such increased costs and to demonstrate Tower's efforts
to reduce costs as the result of the reduced demand.
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****CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
4.2 EPI WAFERS. The Per Wafer Price takes into account the fact that
Siliconix will consign the necessary Epi Wafers to Tower, free of charge.
Should Tower's Fab Yield be less than **** of the Historical Yield (or the
Ramp Up Yield during the Ramp-up Period), then STCV shall supply the
additional Epi Wafers required at a price of **** per Epi Wafer. Should
Tower's Fab Yield exceed the Historical Yield (or the Ramp Up Yield during
the Ramp-up Period), then STCV shall grant Tower a credit in the amount of
**** for each Epi Wafer not required. Unless otherwise agreed in writing,
the price for Wafers shall be as stated in this Agreement for the Products
involved.
4.3 DIE YIELD. Die Yield shall be based upon Historical Yield or Tower
Yield by product. For mature products, the Die Yield shall be determined
based upon Tower's average Die Yield for the previous twelve (12) months
(the "Tower Yield") or the Historical Yield, whichever is greater. For
pricing purposes during the Ramp-Up Period no price adjustment will be made
for Wafers with Die Yield above ****. During the Ramp-Up period, Wafers
with Die Yield below **** may be shipped and invoiced to Siliconix but only
with Siliconix prior approval. After the Ramp-Up Period, in the event the
Die Yield is within a **** deviation of the higher of Historical Yield or
the Tower Yield (the "Base Yield"), the Price Per Wafer will remain
unchanged. For Products with an average Die Yield above or below the Base
Yield plus or minus ****, the price will be adjusted proportionally to the
variation. For pricing purposes Wafer pricing adjustments for Die Yield
shall be determined on a regular basis but not less than twice per year. In
the event the price is adjusted, a new calculation will be made as
aforesaid, no more than 3 months later. Siliconix will not accept wafers
with less than **** Die Yield.
4.4 PREPAYMENT. STCV agrees to prepay Tower twenty million United
States dollars (US$20,000,000) (the "Prepayment"). This amount, shall be
due and payable within 30 days from the Execution Date or upon receipt of
consents of the Secured Creditors required by Section 5.1 hereunder, which
ever is later. STCV shall only be obligated to pay the Prepayment amount
when it has received copies of all consents of the Secured Creditors.
Subject to receipt of consent from the Secured Creditors, Tower shall
maintain the Prepayment in a separate bank account (the "Prepayment Bank
Account"), may only use the Prepayment to purchase Equipment and pay for
other expenses in connection with Tower's performance of this Agreement and
Tower shall pledge that bank account to STCV to secure Tower's obligations
to purchase the Equipment hereunder. This pledge shall be registered in
accordance with the documents attached hereto in Exhibit 4.4 and shall
terminate when Fab 1 reaches capacity to produce for STCV **** Wafer starts
per month and any remaining amounts will belong to Tower and shall not be
subject to any restrictions. In consideration of the Prepayment, Tower
shall credit Siliconix the amount agreed to between the parties (the
"Prepayment Credit") towards the payment of each of the Wafers of the Full
Agreement Amount.
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4.5 PAYMENT TERMS. All payments shall be in United States dollars.
Invoices shall be sent to STCV at the address shown above no earlier than
delivery (Ex Works Fab 1 as set forth in Exhibit 8) of the Products.
Payments are due in full within 30 days after the end of the month in which
the invoice is issued. Payment does not constitute Wafer Acceptance.
Invoices shall be sent to STCV for (i) payment for Products delivered and
during the first 36 months of the Agreement, the difference between the
applicable Monthly Minimum Wafer Requirement and the Products ordered by
STCV for each month (as set forth in Exhibit 8), to the extent lower than
the applicable Monthly Minimum Wafer Requirement, and (ii) if applicable,
any additional amounts that STCV is required to pay Tower, inter alia, due
to Tower's increased costs which Tower, despite its best efforts, cannot
reduce, if STCV fails to purchase the greater of (a) the Monthly Minimum
Wafer Purchase Requirement and (b) the number of Wafers which it has
committed to for the following 3-month period pursuant to Section 2 of
Exhibit 8. The above minimum quantities of Wafers to be purchased shall be
reduced for any Products that fail to meet the Warranty, or during the
period in which the defects are being investigated pursuant to Section 8 of
Exhibit 8, and Tower was unable to supply adequate replacement Products
that meet the Warranty.
4.6 TAXES. Any tax burden (except on a party's taxable income and as
set forth below) with respect to the sale of the Products shall be split
equally between the parties. STCV undertakes that all Products will be
shipped outside of Israel and, upon request, will deliver all necessary
documentation in connection therewith to Tower. To the extent that any
Products are not shipped outside of Israel, the prices set forth herein are
non-inclusive of Israeli Value Added Tax, and any applicable Value Added
Tax will be borne solely by STCV.
Section 5. Order and No-Sale of Equipment.
5.1 EQUIPMENT ORDER. Upon receipt of the Prepayment and in order to
reach the Fab 1 wafer fabrication capacity required to meet the Monthly
Minimum Wafer Purchase Requirement as set forth in Section 3.2, Tower shall
place purchase orders for the equipment (the "Equipment") set forth in
Exhibit 5.1 attached hereto as soon as reasonably practicable, shall
prepare Fab 1 to accept and connect the Equipment to utilities and install
it appropriately, and shall diligently follow up with Equipment vendors to
receive and install the Equipment so that it may produce the Products
according to the timetable specified herein. The Equipment shall be pledged
to STCV as a first lien in accordance with the documents attached hereto as
Exhibit 4.4 to secure Tower's obligations under this Agreement, shall be
marked accordingly, and the Secured Creditors shall consent that the pledge
in the Equipment and Prepayment Bank Account is superior to their charges
which they now have or may in the future have on the Equipment and
Prepayment Bank Account. Under no circumstances may Tower provide a pledge
on the Equipment or Prepayment Bank Account that is superior or equal to
the pledge to STCV. This Agreement shall become effective and STCV's
obligations shall only commence when it has received written consents to
the pledge and the rights of first refusal set forth in Section 7 below
from all of Tower's Secured Creditors. Tower agrees to use its best efforts
to obtain the consents within 10 business days of the Execution Date.
5.2 EQUIPMENT NO-SALE. During the term of the Agreement, Tower shall
not sell or rent the Equipment without the prior written consent of STCV,
which may be given or withheld in STCV's sole discretion. No sale of the
Equipment shall relieve Tower of any of its obligations hereunder.
5.3 MAINTENANCE. Tower agrees that it will maintain the Equipment in
good working order, in accordance with manufacturer instructions.
5.4 INSURANCE. Tower agrees that it will insure the Equipment for its
full replacement value throughout the Term of the Agreement.
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Section 6. Term and Termination.
6.1 TERM. This Agreement shall remain in full force and effect until
the first to occur of (i) ten (10) years from Release to Production (the
"Term") or (ii) STCV has received and paid for the Full Agreement Amount,
unless earlier terminated in accordance with this Section 6. During the
final year of the initial term of this Agreement, if not terminated
previously and assuming no material breach by either party, the parties
shall negotiate in good faith an agreement for the purchase of additional
Wafers which shall be based on the principles set forth in this Agreement
(the "Follow-On Agreement").
6.2 TERMINATION FOR BREACH. If either party breaches any material term
or condition of this Agreement and following receipt of written notice of
the breach from the other party fails to cure such breach within thirty
(30) days, or sixty (60) days in the event such breach reasonably requires
more than (30) days to correct (specifically excluding any breach of an
obligation to pay money), provided the breaching party begins substantial
corrective action to remedy such breach and diligently pursues such action
after receiving notice of the breach, in addition to any other remedy
available to it by law, the other party shall have the right to terminate
this Agreement, on a written notice, at any time after the end of such
thirty (30) or sixty (60) day period, as applicable.
6.3 TERMINATION FOR INSOLVENCY. If either party becomes the subject of
a voluntary or involuntary petition in bankruptcy or of any proceeding
relating to insolvency, receivership, liquidation, or assignment for the
benefit of creditors, if that petition or proceeding is not dismissed with
prejudice within thirty (30) days after filing, the other party may
terminate this Agreement on thirty (30) days' written notice.
6.4 TERMINATION FOR CONVENIENCE.
6.4.1 Tower may in its sole and absolute discretion, at any time after
the second anniversary of the Release to Production, give notice of
termination of this Agreement for convenience (the "Termination Notice").
The termination date shall be twelve (12) months from the date of the
Termination Notice (the "Termination Effective Date").
6.4.2 If Tower terminates this Agreement for convenience, then
concurrently with the Termination Notice described in sub-Section 6.4.1,
Tower shall grant to Siliconix the right (which may be exercised by an
Affiliate of Siliconix) to (a) sublease the land and attached buildings
described on Exhibit 1.6 (collectively, the "LAND") for a period of up to
24 (twenty-four) years, but in any event only until October 29, 2032, at an
annual rent, paid quarterly, which shall reflect the book value (according
to the most recent balance sheet audited by the Sublessor's external
auditors) and (b) purchase from Tower the assets of Fab 1 (described in
Exhibit 6.4)) and all equipment and other assets used for the operation of
Fab 1 or the production of Products (the Land and other assets set forth
above shall be referred to herein as the "FAB 1 ASSETS") "as is", free and
clear of all encumbrances, liabilities, contracts and obligations of any
kind, for the then-current book value (excluding the Equipment, which is
transferred to Siliconix automatically pursuant to Section 6.6). Siliconix
shall have ninety (90) days from the date of the grant of the right to
elect to purchase and sub-lease the Fab 1 Assets. In the event that
Siliconix elects to exercise such right, Tower shall use its best efforts
to obtain all necessary consents and approvals for the purchase and
sub-lease of the Fab 1 Assets within 30 days from Siliconix's election to
purchase and sub-lease the Fab 1 Assets, and such transaction will be
consummated during the thirty (30) days immediately following the
Termination Effective Date. Tower agrees to use its best efforts to obtain
the consents of the Secured Creditors to this provision within 10 business
days of the Execution Date, and the parties understand that Siliconix has
no obligations under this Agreement until such consents are obtained. Tower
may not grant future security interests in the Fab 1 Assets until Tower
delivers to Siliconix the written consent of such future Secured Creditor
to the provisions of this Section. Any sale, transfer, lease or other
disposition of the Fab 1 Assets will be subject to Siliconix's rights
therein. The provision is in addition to any rights of first refusal which
Siliconix holds under Section 7 hereof.
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6.5 PLEDGE OF EQUIPMENT AND PREPAYMENT BANK ACCOUNT. Tower hereby
represents and warrants to Siliconix and STCV that the Secured Creditors
are its only secured creditors for Fab 1. In order to secure Tower's
compliance with the terms of this Agreement, Tower hereby grants to STCV a
specific lien security interest in all of the Equipment and the Prepayment
Bank Account. The consents of the Secured Creditors will be attached
hereto. The security interest in the Prepayment Bank Account will terminate
pursuant to Section 4.4. Tower agrees to record the pledge on the Equipment
and to send Siliconix and STCV a copy of the registration thereof at the
Companies Registrar within 14 days of the first date which by law a pledge
on the Equipment and Prepayment Bank Account may be registered. STCV may
exercise its security interest in the event of its termination of this
Agreement in accordance with the terms of Sections 6.2 or 6.3, and shall
have priority over any other creditor, including without limitation the
Secured Creditors. Upon the execution hereof, Tower shall provide an
opinion of its Israeli counsel to this effect. For the purposes of clarity,
Siliconix and STCV are aware that Tower has granted to Bank Hapoalim B.M.
and Bank Leumi Le-Israel B.M. a first ranking floating charge and has
granted the State of Israel a second ranking floating charge, inter alia,
over the Equipment, as well as over the proceeds of any sale, realization
or any other disposition of the Equipment, and Tower represents that such
Secured Creditors are or will be, promptly following the Execution Date,
fully aware of this Agreement and its terms. Tower may not grant future
security interests in the Equipment until Tower delivers to Siliconix and
STCV the written consent of such future Secured Creditor to the provisions
of this Section.
6.6 RETURN OF INFORMATION AND EQUIPMENT.
6.6.1 Upon expiration or termination of this Agreement for any reason,
(i) Tower shall immediately return all copies of Siliconix's Proprietary
Information, as certified by Tower's Fab 1 management member.
6.6.2 Tower will transfer ownership of the Equipment to Siliconix, in
the event:
(a) Siliconix has purchased the Full Agreement Amount as such
amount may be reduced pursuant to the second paragraph of Section
3.3., and, notwithstanding their good faith efforts to do so, the
parties are not able to successfully negotiate the Follow-On
Agreement;
(b) Tower terminates the Agreement for convenience under Section
6.4;
(c) Siliconix terminates the Agreement due to Tower's breach
pursuant to Section 6.2; or
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****CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
(d) Siliconix terminates the Agreement under Section 6.3.
6.6.3 Tower shall assist STCV in the de-installation and removal of
the Equipment from Fab 1. STCV shall bear the costs of the de-installation
and removal of the Equipment from Fab 1 upon expiration of this Agreement.
If Tower terminates prematurely for breach by STCV, STCV shall be
responsible for cost of de-installation and removal of equipment. Tower
shall bear the costs of the de-installation and removal of the Equipment
from Fab 1 if Tower terminates this Agreement prematurely for convenience
or if Siliconix or STCV terminates prematurely for Tower's breach or
insolvency.
6.7 EFFECT OF TERMINATION. All amounts due under this Agreement prior
to its termination or expiration shall be due, payable and paid in
accordance with the terms and conditions of this Agreement, notwithstanding
any termination or expiration of this Agreement. In addition, in the event
that Siliconix or STCV terminates this Agreement, Siliconix shall also be
required to pay for any Products ordered by STCV for which Tower has
commenced production in accordance with an accepted purchase order prior to
the termination of the Agreement, provided that Tower timely delivers such
Products to STCV. In the event that Tower terminates this Agreement, then
in addition to and without waiving any other remedy, Tower shall be
entitled to payment in full upon timely delivery of all completed Products
manufactured on behalf of STCV pursuant to its purchase orders.
6.8 SURVIVAL OF PROVISIONS. The rights and obligations of the parties
pursuant to Sections 4 (Prices, Payments and Taxes), 6.4 (Termination for
Convenience), 6.5 (Pledge of Equipment and Prepayment Bank Account), 6.6
(Return of Equipment), 6.7 (Effect of Termination), 7 (Fab 1 Right of First
Refusal), and 8 (Additional Terms and Conditions) of this Agreement and
Sections 7 (Proprietary Information), 8 (Warranty), 9 (Limitation of
Liability), 10.1 (Governing Law and Venue), and 10.8 (No Solicitation) of
Exhibit 8 shall survive the termination of this Agreement.
Section 7. Fab 1 Right of First Refusal.
Subject to Section 5.2, in the event that Tower receives a bona fide
proposal with respect to a sale, lease, sublease, transfer or other disposition
of all or any of the assets (including without limitation the land or the rights
therein, facility or equipment used for operation of the facility or production
of products or portions thereof) of Fab 1 (a "Sale"), Tower will notify
Siliconix of the fact that such proposal has been received, which notice shall
be delivered to Siliconix within three days and will include a copy of the terms
of the proposed Sale (the "Proposed Sale Notice"). Siliconix, or an Affiliate of
Siliconix, will have a right of first refusal to execute the Sale on the same
terms and conditions as contained in the Proposed Sale Notice (less amounts for
the Equipment) and will have a period of the greater of (a) **** days following
the date the Proposed Sale Notice was sent to Siliconix and (b) **** after the
production by Tower of all documents reasonably requested under Siliconix's due
diligence request in respect of said transaction, if said request is given by
Siliconix to Tower within five (5) business days after receipt by Siliconix of
the Proposed Sale Notice (such period to be referred to as the "Exercise
Period"), to notify Tower that it elects to exercise the right of first refusal
(the "Exercise Notice"). During the Exercise Period, Tower must provide
Siliconix full access to all of its documents, facilities and personnel as
requested, subject to standard confidentiality undertakings and during normal
local business hours. Tower agrees not to enter into a binding agreement, or to
have any discussions with any third party other than the party that made the
proposal, during the Exercise Period. In the event Siliconix or an Affiliate
provides Tower with an Exercise Notice during the Exercise Period, Tower will
use its best effort to consummate the Sale in accordance with the terms of the
Proposed Sale Notice (less amounts for the Equipment) within **** days from the
date of the Exercise Notice, subject only to further governmental approvals and
permits, which approvals and permits the parties shall use their good faith
efforts to obtain. Tower shall give Siliconix its full cooperation in the due
diligence process and in such other matters in respect of the Sale in order to
allow Siliconix the full benefit of its First Refusal Right hereunder. In the
event Siliconix does not provide Tower with an Exercise Notice during the
Exercise Period, then Tower will thereafter be free to enter into a definitive
agreement with the potential buyer at its sole discretion on the terms and
conditions specified in the Proposed Sale Notice (the "Alternative Sale"),
subject to any changes which are less advantageous to the third party. If the
buyer is a bona fide competitor of Siliconix then in such event Siliconix may
give notice of termination of this Agreement in its sole discretion without
recourse or penalty on a date specified, no less than 30 days from the date of
notice to Tower. Should no Alternative Sale be consummated within **** days
after the end of the Exercise Period, the first refusal right under this Section
shall be reinstated and the terms of this Section shall commence as if no
Proposed Sale Notice shall have been given.
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****CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
No change of ownership in Fab 1 shall be deemed to excuse Tower and its
successor in interest to Fab 1 from supplying Wafers to STCV pursuant hereto and
otherwise complying with the terms and conditions hereof.
Tower agrees that it will obtain and attach hereto, within **** days hereof, the
consent of all current Secured Creditors in the form attached hereto as Exhibit
7 to honor the above right of first refusal in the event of any bankruptcy,
insolvency, receivership or any other realization of their security interest and
that it may not grant any future security interests unless it obtains the
consent of such future potential secured creditors. The parties agree to make
this right of first refusal known, as shall be reasonably requested by
Siliconix.
Section 8. Additional Terms and Conditions.
Additional terms and conditions of this Agreement shall be as set forth in
Exhibit 8 and the other Exhibits attached hereto.
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Section 9. Guaranty.
Siliconix hereby unconditionally and irrevocably guarantees STCV's
performance of its obligations under this Agreement and any other agreement
between Tower and STCV, in strict accordance with their respective terms.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed in duplicate on their behalf by their duly authorized officers and
representatives on the date given above.
Tower Semiconductor Ltd. Siliconix incorporated
By: ____________________ By: _____________________
Title: ___________________ Title: ___________________,
subject to approval by Siliconix incorporated
Board of Directors
Siliconix Technology C.V.
By: Siliconix Semiconductor, Inc.,
General Partner
By: __________________________
Title: ________________________
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