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REDACTED FOR CONFIDENTIALITY
EXHIBIT 10.5
Dated this 4th day of July, 1997
Among
CHARTERED SILICON PARTNERS PTE LTD,
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
And
HEWLETT-PACKARD COMPANY
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ASSURED SUPPLY AND DEMAND AGREEMENT 64-225
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The Company - CSM - HP Confidential
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ASSURED SUPPLY AND DEMAND AGREEMENT 64-225
CONTENTS
CLAUSE HEADING PAGE
------ ------- ----
--- DEFINITIONS AND INTERPRETATION 2
1. THE COMPANY WAFER SUPPLY COMMITMENT 3
2. HP WAFER PURCHASE COMMITMENT 6
3. CSM BRIDGE SUPPLY COMMITMENT 8
4. LIQUIDATED DAMAGES 9
5. TERM AND TERMINATION 11
6. FORCE MAJEURE 12
7. WARRANTY AND INDEMNITY 13
8. CONFIDENTIALITY 14
9. OZONE DEPLETING SUBSTANCES AND UNITED NATIONS
CONVENTION ON CONTRACTS 15
10. PROSCRIBED COUNTRY LISTING(S) 15
11. NOTICES 15
12. WAIVER AND REMEDIES 16
13. SEVERANCE 17
14. GOVERNING LAW 17
15. DISPUTE RESOLUTION AND ARBITRATION 17
16. ENTIRE AGREEMENT 18
ANNEXES
ANNEX A: THE COMPANY WAFER SUPPLY COMMITMENT
HP WAFER PURCHASE COMMITMENT 20
ANNEX B: DEFECT DENSITY CEILING 23
ANNEX C: INFORMATION AND COMPATIBILITIES 25
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ASSURED SUPPLY AND DEMAND AGREEMENT 64-225
THIS ASSURED SUPPLY AND DEMAND AGREEMENT 00-000 ("xxx Agreement") is made the
4th day of July 1997 by and among:
(1) CHARTERED SILICON PARTNERS PTE LTD, a company incorporated in Singapore
with its registered office at 00 Xxxxxxxxx Xxxxxxxxxx Xxxx X, Xxxxxx 0,
Xxxxxxxxx 000000 (hereinafter referred to as the "Company");
(2) CHARTERED SEMICONDUCTOR MANUFACTURING LTD, a company incorporated in
Singapore with its registered office at 00 Xxxxxxxxx Xxxxxxxxxx Xxxx X,
Xxxxxx 0, Xxxxxxxxx 000000 (hereinafter referred to as "CSM"); and
(3) HEWLETT-PACKARD COMPANY, a company incorporated in California, U.S.A.
and having its principal place of business at 0000 Xxxxxxx Xxxxxx, Xxxx
Xxxx, Xxxxxxxxxx, X.X.X. 00000 (hereinafter referred to as "HP").
The Company, CSM and HP are sometimes collectively referred to herein as
"Parties" and individually referred to herein as a "Party."
WHEREAS:
(A) CSM, Hewlett-Packard Europe B.V., a subsidiary of HP ("HP Europe"), and
EDB Investments Pte Ltd ("EDBI") have entered into a Joint Venture
Agreement dated 13 March, 1997 (the "JV Agreement") pursuant to which
they have agreed, among other things, to establish the Company, a joint
venture dedicated to the independent foundry business.
(B) CSM, HP Europe and EDBI intend that the Company be engaged primarily in
the business of the development, manufacture, assembly, marketing and
sale of semiconductor wafers. The Company intends to establish one or
more wafer fabrication facilities (the "Company Fab").
(C) CSM is engaged primarily in the business of the development,
manufacture, assembly, marketing and sale of semiconductor wafers, with
its wafer fabrication facilities (the "CSM Fab").
(D) HP desires to have access to certain wafer manufacturing capacity and
the Company and CSM desire to provide such wafer manufacturing capacity
to HP on the terms and conditions of this Agreement.
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IT IS HEREBY AGREED as follows:-
DEFINITIONS AND INTERPRETATION
Definitions
In this Agreement, unless the subject or context otherwise requires, the
following words and expressions shall have the following meanings respectively
ascribed to them:
"Bridge Supply Commitment" has the meaning ascribed thereto in Clause 3.1;
"Company Layer Capacity" shall have the meaning ascribed thereto in Annex A
hereto;
"Company Percentage Commitment" shall have the meaning ascribed thereto in Annex
A hereto;
"Company Wafer Supply Commitment" shall have the meaning ascribed thereto in
Clause 1.1;
"HP Average Layers" shall mean the average number of mask layers calculated
every calendar quarter based on the HP Forecast;
"HP Equity Holding" shall mean the percentage of the outstanding shares of the
Company owned by HP Europe or its Permitted Transferees (as defined in the JV
Agreement), as the case may be;
"HP Forecast" shall have the meaning ascribed thereto in Clause 2.2;
"HP Option Shares" shall mean those shares that HP Europe has the right to
purchase from EDBI as defined in the Option Agreement dated the date hereof
among EDBI, CSM and HP Europe (the "Option Agreement");
"HP Percentage Commitment" shall have the meaning ascribed thereto in Annex A
hereto;
"HP Purchase Order(s)" shall mean orders placed by HP to the Company for Wafers;
such orders shall state Wafer quantities, process flow to be used, required
delivery dates ex-Works, and shipping instructions, and may state product part
numbers;
"HP Wafer Purchase Commitment" shall have the meaning ascribed thereto in Clause
2.1;
"Management Committee" has the meaning ascribed thereto in the JV Agreement;
"Market Price" shall have the meaning ascribed thereto in Clause 1.4;
"Substitute Loading" has the meaning ascribed thereto in Clause 2.5;
"Technology Committee" has the meaning ascribed thereto in the JV Agreement;
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"Wafer(s)" shall mean 8-inch equivalent semiconductor wafers manufactured in the
Company Fab or the CSM Fab. The Parties hereto shall mutually determine
appropriate conversion factors for any non 8-inch wafers.
Interpretation
Any reference in this Agreement to:
-- "Clauses" or "Annexes" are to the clauses of and the Annexes to this
Agreement;
-- The headings are for convenience only and shall not affect the interpretation
of this Agreement.
Unless the context otherwise requires or permits, references to the singular
number shall include references to the plural number and vice versa; references
to natural persons shall include bodies corporate and vice versa; and words
denoting any gender shall include all genders.
1. THE COMPANY WAFER SUPPLY COMMITMENT
1.1 In consideration for the HP Wafer Purchase Commitment, the Company will
make available to HP wafer manufacturing capacity for semiconductor
wafers during the term of this Agreement (the "Company Wafer Supply
Commitment"). The Company Wafer Supply Commitment shall be expressed as
a quantity of Wafers and shall be determined in accordance with Annex A
hereto. The general principle governing the Company Wafer Supply
Commitment is that the Company shall make available to HP a percentage
of the total available capacity in the Company Fab which percentage
shall be adjusted in accordance with adjustments to the HP Equity
Holding. The Company Wafer Supply Commitment shall be in respect of
products and processes as specified in manufacturing agreements to be
entered into between the Company and HP (and CSM, as appropriate) from
time-to-time (the "Manufacturing Agreements").
1.2 Every quarter, the Company, HP and CSM shall determine the Company Wafer
Supply Commitment using the process set forth in Annex A. At such time,
the Company and HP shall also determine which technologies are available
in the Company Fab and HP's order mix among such available technologies.
The Company shall maintain a record of the then current Company Wafer
Supply Commitment, as determined from time-to-time in accordance with
Annex A, and shall maintain archive copies of the previous Company Wafer
Supply Commitments.
1.3 Unless otherwise expressly provided in this Agreement, the sale of
Wafers by the Company to HP under this Agreement shall be governed by
the terms and conditions (including qualification specifications and
reliability monitoring specifications) of the Manufacturing Agreements.
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
1.4 (a) Every quarter, the Company and HP shall agree on the price of
Wafers to be purchased and sold under this Agreement. The price
of Wafers supplied to HP shall be ****
For purposes of this Agreement, ****
(b) Price Increases: Notwithstanding sub-Clause (a) above, after the
price of Wafers to HP is determined in accordance with sub-Clause
(a) above, the price of Wafers on new HP Purchase Orders placed
may be increased by the Company ******
*********************************, provided that such increased
price is in accordance with sub-Clause (a) above.
(c) The parties acknowledge that ******************************
described in Clause 1.4(a)(i) is available to HP for so long as
****
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(d) The Company shall maintain a record of the then current Wafer
prices, as determined from time-to-time in accordance with this
Clause 1.4, and shall maintain archive copies of the previous
Wafer prices.
1.5 Defect Density
(a) Yields and Pricing. The Company and HP agree that the pricing
specified in Clause 1.4 shall be subject to adjustment in the
event that the Company fails to meet the applicable defect
density ceilings or part yield minimums specified for a given
process and part produced for HP. The process for determining
defect density ceilings is set forth in Annex B.
(b) Yield Prediction. The Company, CSM and HP agree that defect
density goals, derived in a form compatible with HP's yield
modeling are important in order to predict yields on released and
yet-to-be-released parts. The Company, CSM and HP will mutually
agree on these goals for all processes produced by the Company
and used by HP. This will be done in the form of a rolling, half
annual, forecast, extending out 2 years of defect density for
each process used by HP. The forecast will be set and reviewed
twice in each year (approximately once every six months) with due
consideration of data and experience of CSM, HP and the Company.
It will be recommended by the Management Committee, approved by
the General Manager of the Company and a record will be kept by
the Company with copies to HP, CSM and the Company. The form and
definition of defect density compatible with HP's yield modeling
shall be described in the then current "Die per Wafer Conversion
Procedure," HP Document No. A-5964-2929-1.
1.6 In the event that the Company gives written notice to HP that the
Company has available additional wafer manufacturing capacity in excess
of the Company Wafer Supply Commitment, HP shall inform the Company of
its acceptance of such additional capacity by written notice within five
working days from the date of the Company's notice, failing which the
Company's offer of such additional capacity shall lapse upon the expiry
of the said period. Such additional wafer manufacturing capacity shall
be made available at the prices specified in Clause 1.4 but shall not be
included in calculating either the Company Wafer Supply Commitment or
the HP Wafer Purchase Commitment or subject to the forecasting
limitations set forth in Clause 2.2. Other terms and conditions of the
supply and purchase of such additional wafer manufacturing capacity
shall be mutually agreed between the Parties.
1.7 To facilitate the use by HP of capacity made available by the Company,
the Company shall provide HP with information which is similar in type,
level of detail and timeliness to that HP uses to plan and manage its
business. This information shall be in a form such that it can be
utilized by and is accessible to HP systems. A description of the
compatibilities and type of information required is given in Annex C.
For the avoidance
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
of doubt, the Parties agree that the Company shall not be obligated to
purchase systems which are identical or similar to HP systems.
2. HP WAFER PURCHASE COMMITMENT
2.1 HP agrees to place HP Purchase Orders with the Company for certain
semiconductor Wafers during the term of this Agreement (the "HP Wafer
Purchase Commitment"). The HP Wafer Purchase Commitment shall be
expressed as a quantity of Wafers and shall be determined in accordance
with Annex A hereto. Similar to the Company Wafer Supply Commitment, the
general principle governing the HP Wafer Purchase Commitment is that HP
shall place HP Purchase Orders with the Company for a minimum percentage
of the total available capacity in the Company Fab which percentage
shall be adjusted in accordance with adjustments to the HP Equity
Holding. At the time when the Company determines the Company Wafer
Supply Commitment in accordance with Annex A, the Company and HP shall
also determine the HP Wafer Purchase Commitment as set forth in Annex A.
The HP Wafer Purchase Commitment shall be in respect of products and
processes as specified in the Manufacturing Agreements.
In the event that any of the Company's processes fails to meet and
maintain the written quality specifications as agreed upon by the
Company and HP in the Manufacturing Agreements or any such process
cannot be qualified by the agreed date of qualification set forth in the
relevant Manufacturing Agreement (an "Unqualified Process"), and the
Company is unable to rectify such failure within a period of
************ from such failure or from the agreed date of qualification,
as the case may be, then (i) the HP Wafer Purchase Commitment shall be
reduced by the number of Wafers forecast in the HP Forecast to be
manufactured using the Unqualified Process until such time as the
Unqualified Process is qualified, and (ii) the Company and HP shall meet
in good faith to discuss and determine the appropriate level for the HP
Wafer Purchase Commitment.
2.2 Every *****, HP will provide to the Company a rolling ******** forecast
for HP's ******* Wafer purchases (the "HP Forecast"). The first
********** shall be backed by HP Purchase Orders. On a ******* basis, HP
may modify the HP Forecast in accordance with the following table:
****
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
An example demonstrating potential forecast modification follows.
****
2.3 (a) Subject to Clause 2.2, the Company shall confirm HP Purchase
Orders so long as the aggregate HP Purchase Orders for each
calendar quarter does not exceed the Company Wafer Supply
Commitment for such quarter. The Company shall confirm the HP
Purchase Order requested delivery date or such other delivery
date as the Company and HP shall agree upon (the "Acknowledged
Delivery Date").
(b) HP may specify or change the part number of Wafers ordered
pursuant to HP Purchase Orders no later than ************ prior
to said part number's physical lot start. The Company will have a
goal of reducing the *********** period for specifying part
numbers for lot start to *********.
2.4 In the event that the Company fails to deliver against such confirmed HP
Purchase Orders by the Acknowledged Delivery Date, the Company shall
rectify such failure within ** **** of the Acknowledged Delivery Date.
In the event that the Company fails to deliver such HP Purchase Orders
within ******* of the Acknowledged Delivery Date, the Company shall have
a further cure period of ****** from said ****** (the "Further Cure
Period"). If the Company fails to deliver the HP Purchase Orders during
the Further Cure Period, HP shall have the right to terminate this
Agreement and/or to hold the Company in technical default of this
Agreement. HP shall be entitled to waive the Company's breach of its
obligation under this Clause 2.4 on a case-by-case basis.
During the Further Cure Period, the HP Wafer Purchase Commitment shall
be ******** and shall not be reinstated until such delinquent HP
Purchase Orders are delivered (the "Cure Date") and provided that all HP
Purchase Orders placed subsequently to such delinquent HP Purchase
Orders with an Acknowledged Delivery Date on or prior to the Cure Date
have been delivered.
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
2.5 Fab Source Flexibility:
(a) HP, the Company and CSM may from time-to-time determine and agree
that it will be more advantageous to load all or part of the HP
Purchase Orders in a CSM Fab rather than the Company Fab
("Substitute Loading"). In this case, the Technology Committee
will make a recommendation for approval by the General Manager.
In that event, such Substitute Loading shall be included in
determining the HP Wafer Purchase Commitment and the Company
Wafer Supply Commitment as if such HP Purchase Order was actually
loaded in the Company Fab. Substitute Loading shall be distinct
from and shall not be considered the Bridge Supply Commitment as
defined in Clause 3. CSM shall make Substitute Loading available
to the Company for the benefit of HP on the terms and conditions
set forth in this Agreement except that references to the
"Company Fab" shall refer to the "CSM Fab" to the extent
appropriate.
(b) Notwithstanding sub-Clause (a), the price of Wafers supplied by
CSM to the Company under Substitute Loading shall be ****
3. CSM BRIDGE SUPPLY COMMITMENT
3.1 CSM hereby agrees to provide bridge wafer manufacturing capacity (the
"Bridge Supply Commitment") to the Company for the benefit of HP in the
event the Company, for whatever reason, fails or is unable to comply
with the Company Wafer Supply Commitment during the period (the "Bridge
Period") beginning with the Company's first planned production Wafer out
to HP (as set forth in the Company Business Plan as defined in the JV
Agreement) and ending on the earlier of: (i) ********* from the
Company's first pilot line commercial production shipment or **********
from the first production out from the Company Fab, whichever is later,
and (ii) termination of the term of this Agreement.
3.2 CSM hereby agrees to provide such Bridge Supply Commitment to the
Company for the benefit of HP in a maximum amount of *******************
****************************************************** during the Bridge
Period on the same terms and conditions as the Company has offered to HP
hereunder, including but not limited to the terms and conditions set
forth in Clauses 1, 2.2 to 2.5, 4 and Annex A. For purposes of this
Clause 3, such Clauses shall be interpreted to read "CSM" in place of
"the Company" and "CSM Fab" in place of "the Company Fab" to the extent
appropriate.
3.3 Notwithstanding Clause 3.2, the price of Wafers supplied by CSM to the
Company to satisfy the Bridge Supply Commitment shall be ***************
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
***********************************************************************
**************************************************************.
4. LIQUIDATED DAMAGES
4.1 The parties acknowledge that they intend to work together to establish
and ramp the Company Fab. Accordingly, the provisions of this Clause 4
for the payment of liquidated damages shall not be effective in respect
of the Company Wafer Supply Commitment, the Bridge Supply Commitment,
the HP Wafer Purchase Commitment and HP's compliance with its monthly HP
Forecast commitments until such time as the Company Fab has produced and
shipped at least ***** Wafers out per month (the "Initial Ramp Period").
4.2 (a) In the event that the monthly HP Purchase Orders (i) for any
********** calendar months or (ii) averaged over the previous
******* month period, are less than *** of the HP Forecast for
such month the Company shall be entitled to collect from HP
liquidated damages calculated based on the shortfall from *****
of the HP Forecast for such period (the "HP Damages Period"),
based on *************************************************** for
the HP Damages Period.
(b) The formula for calculation of such liquidated damages shall be
as follows:
****
4.3 (a) Notwithstanding Clause 4.2, in the event that HP's Purchase
Orders for ****** ************* are less than the HP Wafer
Purchase Commitment for such *************, then the Company
shall be entitled to collect from HP liquidated damages
calculated based on the shortfall from **** of the HP Wafer
Purchase Commitment for such quarter,****************************
****************************************************************.
(b) The formula for calculation of such liquidated damages shall be
as follows:
****
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
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are filed separately with the Securities and Exchange Commission
****
4.4 Notwithstanding the foregoing, for any given shortfall event the Company
shall only be entitled to collect liquidated damages from HP under
either Clause 4.2 or 4.3.
4.5 (a) In the event that the Company fails to deliver at least *** of
the confirmed HP Purchase Orders (i) for any ****************
calendar months or (ii) averaged over the previous ******* month
period, HP shall be entitled to collect from the Company
liquidated damages calculated based on the shortfall from **** of
the HP Purchase Orders for such period (the "Company Damages
Period"), based on *********************************************
***************************************************************.
(b) The formula for calculation of such liquidated damages shall be
as follows: ****
4.6 The Company, HP and CSM (to the extent applicable) agree and acknowledge
that the amount payable as liquidated damages pursuant to Clauses 4.2,
4.3 and 4.5 is a genuine pre-estimate of the loss which would be
suffered by the non-defaulting Party as a consequence of the failure of
the defaulting Party to fulfill its respective obligations under Clauses
1, 2 and 3 (to the extent applicable) of this Agreement.
4.7 The Company, CSM and HP each agree that their respective liability, in
the Company's and CSM's case to fulfill the Company Wafer Supply
Commitment and Bridge Supply Commitment under Clauses 1 and 3,
respectively, and in HP's case to fulfill the HP Wafer Purchase
Commitment and monthly HP Forecast commitment under Clause 2, shall be
limited to the liability expressly specified in Clause 4 and that no
Party shall be liable for any indirect, special or consequential damages
even if such Party had or should have had any knowledge, actual or
constructive, of the possibility of such damages.
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
5. TERM AND TERMINATION
5.1 This Agreement shall continue for so long as the JV Agreement is
effective unless earlier terminated in writing in accordance with this
Clause 5. Notwithstanding the foregoing, if CSM or HP Europe sells or
otherwise transfers (other than to a Permitted Transferee, as such term
is defined in the JV Agreement) all of its shares in the Company, then
this Agreement will terminate as to CSM or HP, respectively. This
Agreement may be earlier terminated in the following events:
(a) At the option of the Company, in the event that the HP Purchase
Order(s) is in aggregate less than *** of the HP Wafer Purchase
Commitment for any ************ calendar months commencing after
the Initial Ramp Period;
(b) At the option of HP, in the event that:
(i) the Company or CSM fails to deliver to HP in aggregate at
least **** of the HP Purchase Order(s) for any
************** calendar months commencing after the
Initial Ramp Period; or
(ii) any of the Company's processes fails to meet and maintain
the written quality specifications as specified by HP in
the Manufacturing Agreements or any such process cannot be
qualified by HP, and the Company is unable to rectify such
failure within a period of **** months from the agreed
date of qualification; or
(iii) the Company or CSM is in breach under Clause 2.4;
(c) At the option of the Company or CSM, in any of the following
events:
(i) the inability of HP to pay its debts in the normal course
of business; or
(ii) HP ceasing or threatening to cease wholly or substantially
to carry on its business, otherwise than for the purpose
of a reconstruction or amalgamation without insolvency; or
(iii) any encumbrancer taking possession of or a receiver,
manager, trustee or judicial manager being appointed over
the whole or any substantial part of the undertaking,
property or assets of HP; or
(iv) the making of an order by a court of competent
jurisdiction or the passing of a resolution for the
winding-up of HP or any company controlling HP, otherwise
than for the purpose of a reconstruction or amalgamation
without insolvency;
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(d) At the option of HP, in any of the following events:
(i) the inability of the Company or CSM to pay its debts in
the normal course of business; or
(ii) the Company or CSM ceasing or threatening to cease wholly
or substantially to carry on its business, otherwise than
for the purpose of a reconstruction or amalgamation
without insolvency; or
(iii) any encumbrancer taking possession of or a receiver,
manager, trustee or judicial manager being appointed over
the whole or any substantial part of the undertaking,
property or assets of the Company or CSM; or
(iv) the making of an order by a court of competent
jurisdiction or the passing of a resolution for the
winding-up of the Company or CSM or any company
controlling the Company or CSM, otherwise than for the
purpose of a reconstruction or amalgamation without
insolvency;
(e) upon the mutual agreement of the Parties.
5.2 Termination of the Agreement pursuant to Clause 5.1 shall take effect
immediately upon receipt of a written notice, issued in accordance with
Clause 11, to that effect by the Party terminating the Agreement to the
other Parties. The termination of this Agreement howsoever caused shall
be without prejudice to any obligations or rights of any Party which
have accrued prior to such termination and shall not affect any
provision of this Agreement which is expressly or by implication
provided to come into effect on or to continue in effect after such
termination.
6. FORCE MAJEURE
6.1 The Company's and CSM's obligations to provide the Company Wafer Supply
Commitment and the Bridge Supply Commitment, respectively, and HP's
obligation to place HP Purchase Orders in accordance with the terms of
this Agreement shall be suspended upon the occurrence of a force majeure
event such as act of God, flood, earthquake, fire, explosion, act of
government, war, civil commotion, insurrection, embargo, riots,
lockouts, labor disputes affecting the Company, CSM or HP as the case
may be, for such period as such force majeure event may subsist. Upon
the occurrence of a force majeure event, the affected Party shall notify
the other Parties in writing of the same and shall by subsequent written
notice after the cessation of such force majeure event inform the other
Parties of the date on which that Party's obligation under this
Agreement shall be reinstated.
6.2 Notwithstanding anything in this Clause 6, upon the occurrence of a
force majeure event affecting any Party, which force majeure event
continues for a period exceeding six
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consecutive months without a prospect of a cure of such event, the other
Parties shall have the option, in their sole discretion, to terminate
this Agreement with respect to such Party. Such termination shall take
effect immediately upon the written notice to that effect from the other
Party or Parties to the Party affected by the force majeure event.
7. WARRANTY AND INDEMNITY
7.1 HP warrants that it has the right or will obtain the right to use and
license the use of any design provided by HP and processes provided by
HP pursuant to this Agreement and hereby grants to each of the Company
and CSM the right only to use such design and processes for the
performance of their respective obligations under this Agreement and any
applicable Manufacturing Agreements.
7.2 (a) HP shall indemnify the Company and hold the Company harmless
against any and all direct losses, liabilities, damages or
expenses (including direct losses suffered by the Company and any
reasonable attorneys fees, whether or not a legal proceeding is
commenced) resulting from any claim against the Company based
upon an actual or alleged infringement of a third party's patent,
mask work right, copyright, trade secrets or other intellectual
property right by intellectual property provided by HP hereunder
which arise from the Company's supply of Wafers to HP pursuant to
this Agreement.
(b) The Company shall indemnify HP and hold HP harmless against any
and all direct losses, liabilities, damages or expenses
(including direct losses suffered by HP and any reasonable
attorneys fees, whether or not a legal proceeding is commenced)
resulting from a claim against HP based upon an actual or alleged
infringement of a third party's patent, mask work right,
copyright, trade secrets or other intellectual property right
arising from the use of any material, techniques or process
provided by the Company in the performance of its obligations
under this Agreement.
7.3 (a) HP shall indemnify CSM and hold CSM harmless against any and all
direct losses, liabilities, damages or expenses (including direct
losses suffered by CSM and any reasonable attorneys fees, whether
or not a legal proceeding is commenced) resulting from any claim
against CSM based upon an actual or alleged infringement of a
third party's patent, mask work right, copyright, trade secrets
or other intellectual property right by intellectual property
provided by HP hereunder which arise from CSM's supply of Wafers
to HP pursuant to this Agreement.
(b) CSM shall indemnify HP and hold HP harmless against any and all
direct losses, liabilities, damages or expenses (including direct
losses suffered by HP and any reasonable attorneys fees, whether
or not a legal proceeding is commenced) resulting from a claim
against HP based upon an actual or alleged infringement of a
third party's patent, mask work right, copyright, trade secrets
or other intellectual
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property right arising from the use of any material, techniques
or process provided by CSM in the performance of its obligations
under this Agreement.
7.4 (a) An indemnifying Party shall not have any liability under this
Clause 7 unless it is promptly notified in writing of each notice
and communication regarding such claim and is offered (at the
indemnifying Party's expense) the authority, information and
assistance necessary to present a defense and sole control of the
defense.
(b) The indemnified Party may, at its expense, participate in the
defense of such claim and in all negotiations for its settlement
or compromise.
(c) Notwithstanding the foregoing, (i) the Parties shall act in good
faith and (ii) no settlement of any claim may be agreed to
without the written consent of all the Parties affected, which
consent shall not be unreasonably withheld. The Party controlling
the defense shall deliver, or cause to be delivered, to the other
affected Parties copies of all correspondence, pleadings,
motions, briefs, appeals or other written statements relating to
or submitted in connection with the defense of any claim, and
timely notices of any hearing or other court proceeding relating
to such claim.
7.5 The foregoing states each Party's entire liability and obligation
(express, implied, statutory or otherwise) with respect to intellectual
property infringement or claims therefor regarding any of the products
or technology manufactured or sold pursuant to this Agreement and any
applicable Manufacturing Agreement.
8. CONFIDENTIALITY
8.1 All Confidential Information shall be kept confidential by the recipient
unless or until the recipient can reasonably demonstrate that any such
Confidential Information is, or part of it is or becomes, in the public
domain through no fault of its own, or can be demonstrated to be already
known by the recipient or is independently developed by the recipient;
or becomes known to the recipient from a source other than the discloser
without breach of this Agreement by the recipient and otherwise not in
violation of the discloser's rights; or is disclosed pursuant to the
order or requirement of a court, administrative agency, or other
government body, provided that the recipient shall provide prompt
advance notice thereof to enable the discloser to seek a protective
order or otherwise prevent such disclosure; whereupon to the extent that
it is in the public domain or is required to be disclosed by law this
obligation shall cease. For the purposes of this Agreement,
"Confidential Information" shall mean all communications among the
Parties, and all information and other materials supplied to or received
by any of them from any other Party in connection with the performance
of this Agreement which is marked confidential with an appropriate
legend, marking, stamp or other obvious written identification by the
disclosing Party.
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8.2 Each Party shall take all reasonable steps to minimize the risk of
disclosure of Confidential Information, by ensuring that only such of
their employees and directors whose duties will require them to possess
any of such information shall have access thereto and shall be
instructed to treat the same as confidential.
8.3 Except as otherwise expressly set out in Clause 8.1, the obligation
contained in this Clause shall endure, even after the termination of
this Agreement, for a period of seven years from the date of receipt of
the Confidential Information.
8.4 A recipient shall be limited in its use of Confidential Information of
the other Parties to the fulfillment of the recipient's obligations
under this Agreement.
8.5 Confidential Information is disclosed "as-is" and no warranty is made by
the discloser regarding its applicability, sufficiency or accuracy.
8.6 No rights or licenses in Confidential Information are granted to the
recipient by implication or estoppel except as expressly granted in this
Agreement.
9 OZONE DEPLETING SUBSTANCES AND UNITED NATIONS CONVENTION ON CONTRACTS
9.1 The Company and CSM hereby warrant, certify, represent and agree that
neither any of the products nor any components of any products to be
provided pursuant to this Agreement, will contain or will be
manufactured contrary to the written provisions of the Montreal Protocol
on Substances that Deplete the Ozone Layer as adjusted and amended by
the second meeting of the parties in London 27-29 June 1990.
9.2 The parties hereby specifically exclude the application of the United
Nations Convention on Contracts for the International Sale of Goods to
this Agreement.
10 PROSCRIBED COUNTRY LISTING(S)
All Parties shall adhere to relevant U.S. and Singapore laws,
regulations, and rules relating to the export of technical data and
products derived therefrom and shall not export or re-export any
technical data or products derived therefrom to any proscribed country
listed in such relevant U.S. or Singapore laws, unless properly
authorized.
11. NOTICES
All notices, demands or other communications required or permitted to be
given or made hereunder shall be in writing and delivered personally or
sent by prepaid registered post (by air-mail if to or from an address
outside Singapore) with recorded delivery, or by facsimile
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transmission (provided that the receipt of such facsimile transmission
is confirmed by the dispatch of a hard copy of the facsimile sent
immediately thereafter by prepaid registered post) addressed to the
intended recipient thereof at its address or at its facsimile number set
out in this Agreement (or to such other address or facsimile number as a
party to this Agreement may from time to time duly notify the others in
writing). Any such notice, demand or communication shall be deemed to
have been duly served, if given or made by facsimile, immediately at the
time of dispatch (provided that the receipt of such facsimile
transmission is confirmed by the dispatch of a hard copy of the
facsimile sent immediately thereafter by prepaid registered post) or, if
given or made by letter, immediately if delivered personally or 48 hours
after posting or, if given or made by air-mail, ten days after posting
and in proving the same it shall be sufficient to show that personal
delivery was made or that the envelope containing such notice was duly
addressed, stamped and posted. The address and facsimile numbers of the
parties for the purpose of this Agreement are:
CHARTERED SILICON PARTNERS PTE LTD
00 Xxxxxxxxx Xxxxxxxxxx Xxxx X
Xxxxxx 0
Xxxxxxxxx 000000
Facsimile no: (00) 000 0000
Attn: Legal Department
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
00 Xxxxxxxxx Xxxxxxxxxx Xxxx X
Xxxxxx 0
Xxxxxxxxx 000000
Facsimile no: (00) 000 0000
Attn: Legal Department
HEWLETT-PACKARD COMPANY
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
XXX
Facsimile no: (01) (000) 000-0000
Attn: General Manager, Integrated Circuit Business Division
12. WAIVER AND REMEDIES
12.1 No delay or neglect on the part of any Party in enforcing against any
other Party any term or condition of this Agreement or in exercising any
right or remedy under this Agreement shall either be or be deemed to be
a waiver or in any way prejudice any right or remedy of that Party under
this Agreement except to the extent that such delay or neglect causes
actual prejudice to the defending Party.
12.2 No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise
available at law, in equity, by statute or otherwise
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and each and every other remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter
existing at law, in equity, by statute or otherwise. The election of any
one or more of such remedies by any of the Parties hereto shall not
constitute a waiver by such Party of the right to pursue any other
available remedy.
13. SEVERANCE
If any provision or part of this Agreement is rendered void, illegal or
unenforceable in any respect under any enactment or rule of law, the
validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of Singapore.
15. DISPUTE RESOLUTION AND ARBITRATION
15.1 In case any dispute or difference shall arise among the Parties as to
the construction of this Agreement or as to any matter or thing of
whatsoever nature arising hereunder or in connection herewith, including
any question regarding its existence, validity or termination, such
dispute or difference shall be submitted to a committee comprised of one
senior manager from each of the Parties to the dispute, such senior
managers being in the case of:
Company: the General Manager
CSM: the President
HP: the General Manager of Integrated Circuit Business
Division or its successor division.
If such senior managers are unable to resolve such dispute, it shall be
submitted to a committee comprised of one senior officer from each of
the Parties to the dispute, such senior officers being in the case of:
Company: the General Manager
CSM: the Chairman of the Board of CSM
HP: the General Manager of the Components Group or its
successor group.
15.2 If such senior officers are unable to resolve the dispute, it shall be
submitted to a single arbitrator to be appointed by the parties in
dispute or, failing agreement within 14 days after any Party has given
to the other Parties in dispute a written request to concur in the
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appointment of an arbitrator, a single arbitrator to be appointed on the
request of any Party by the Chairman of the Singapore International
Arbitration Centre ("SIAC") and such submission shall be a submission to
arbitration in accordance with the Rules of the SIAC as presently in
force by which the Parties in dispute agree to be so bound. The place of
arbitration shall be Singapore and the arbitration shall be conducted
wholly in the English language.
16 ENTIRE AGREEMENT
16.1 This Agreement, the Annexes hereto and all applicable Manufacturing
Agreements, all as amended from time-to-time, constitute the entire
agreement among the Company, CSM and HP with respect to the subject
matter hereof and shall supersede all previous agreements and
undertakings among the Parties. In the event of any inconsistency
between the terms and conditions of this Agreement and those of any
applicable Manufacturing Agreement, the terms and conditions of this
Agreement shall prevail as among the Parties.
16.2 The following Annexes are hereby deemed a part of this Agreement and
incorporated herein by reference. The term "Agreement" includes the
following Annexes :
Annex A The Company Wafer Supply Commitment
HP Wafer Purchase Commitment
Annex B Defect Density Ceiling
Annex C Information and Compatibilities
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IN WITNESS WHEREOF the Parties hereunto have entered into this Agreement as of
the date first written above.
Signed by Xxxx Xxxxxxx Xxxxxxx, )
General Manager )
CHARTERED SILICON PARTNERS )
PTE LTD ) /s/ Xxxx Xxxxxxx Xxxxxxx
in the presence of : -------------------------
/s/ Xxxxxx Hon
---------------------------------------
Name: Xxxxxx Hon, Senior Manager Legal
Signed by Tan Xxxx Xxxx, President & CEO )
CHARTERED SEMICONDUCTOR )
MANUFACTURING LTD )
in the presence of : ) /s/ Tan Xxxx Xxxx
-------------------------
/s/ Xxxxxx Hon
---------------------------------------
Name: Xxxxxx Hon, Senior Manager Legal
Signed by Xxxx X. Xxxxx, General Manager, )
Integrated Circuit Business Division )
HEWLETT-PACKARD COMPANY )
in the presence of : ) /s/ Xxxx X. Xxxxx
--------------------------
/s/ Xxxxxxxxx Xxxx
---------------------------------------
Name: Xxxxxxxxx Xxxx
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
ANNEX A
THE COMPANY WAFER SUPPLY COMMITMENT
HP WAFER PURCHASE COMMITMENT
The Company Wafer Supply Commitment is calculated as a number of Wafers
available per quarter to HP. The HP Wafer Purchase Commitment is calculated as a
number of Wafers to be purchased per quarter from the Company.
Summary
The process for determining the Company Wafer Supply Commitment and the HP Wafer
Purchase Commitment shall be as follows:
1. Determine the Company Layer Capacity (as defined below).
2. Determine the Company Percentage Commitment (as defined below) and HP
Percentage Commitment (as defined below).
3. Calculate the Company Wafer Supply Commitment and the HP Wafer Purchase
Commitment.
Determining the Company Layer Capacity
Every quarter, the Company, HP and CSM shall agree upon the total planned output
capacity of the Company Fab in mask layers (the "Company Layer Capacity") for
the following ****** ******. The Company Layer Capacity may be determined by
****.
Determining the Company Percentage Commitment and HP Percentage Commitment
The Company commitment to make available to HP certain Wafers and HP's
commitment to purchase a minimum number of Wafers can each be expressed as a
percentage of the Company Layer Capacity (the "Company Percentage Commitment and
the "HP Percentage Commitment," respectively) which is based upon the HP Equity
Holding in the Company. These Percentage Commitments shall be (i) increased in
the event HP Europe increases the HP Equity Holding by purchasing the HP Option
Shares (as defined in the Option Agreement) from EDBI, and (ii) decreased in the
event HP Europe sells or transfers (other than to a Permitted Transferee, as
such term is defined in the JV Agreement) part of its shares in the Company .
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
Initially, based on an *********************, the Company Percentage Commitment
shall be 50% and the HP Percentage Commitment shall ******. The Company
Percentage Commitment and HP Percentage Commitment will increase ***************
********************************************************************************
********************************************************************************
*************************************************************************.
The Company Percentage Commitment and the HP Percentage Commitment will decrease
upon ****.
The following chart is intended to illustrate the principles outlined above:
HP Equity Holding The Company Percentage HP Percentage Commitment
Commitment
****
In the event the HP Equity Holding decreases below *****************, the
Parties will meet in good faith to determine appropriate levels of the Company
Percentage Commitment and HP Percentage Commitment. Notwithstanding the
foregoing, in the event that **************************************************
*************************************, then the Company Percentage and the HP
Percentage Commitment shall be **.
Company Wafer Supply Commitment and HP Wafer Purchase Commitment
The Company Wafer Supply Commitment and HP Wafer Purchase Commitment shall be
expressed in Wafers purchased per quarter. The Company Wafer Supply Commitment
and HP Wafer Purchase Commitment shall be calculated during the last month of
every quarter for the third quarter following such month. That is, if the last
month of a given quarter is considered Month 0, then the Company Wafer Supply
Commitment and HP Wafer Purchase Commitment shall be calculated for the quarter
beginning with Month Seven (7).
The "Company Wafer Supply Commitment" shall be calculated by multiplying the
then current Company Percentage Commitment by the Company Layer Capacity and
dividing by the HP Average Layers:
Company Wafer
Supply Commitment = Company Layer Capacity X Company Percentage Commitment
------------------------------------------------------
HP Average Layers
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
The "HP Wafer Purchase Commitment" shall be calculated by multiplying the then
current HP Percentage Commitment by the Company Layer Capacity and dividing by
the HP Average Layers:
HP Wafer
Purchase Commitment = Company Layer Capacity X HP Percentage Commitment
-------------------------------------------------
HP Average Layers
The following example is intended to illustrate the definitions above:
Assuming:
The Company Layer Capacity = *******
HP Average Layers = **
HP Percentage Commitment = ***
The Company Percentage Commitment = ***
Then:
The Company Wafer Supply Commitment = ****
HP Wafer Purchase Commitment = ****
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
ANNEX B
DEFECT DENSITY CEILING
(REFERENCE CLAUSE 1.5)
ESTABLISHMENT OF DEFECT DENSITY CEILINGS OR PART YIELD MINIMUMS
A defect density ceiling or alternately a part yield minimum, (or both) will be
mutually agreed upon by the Company and HP for each part produced by the Company
for HP. The Company guarantees that the Wafers produced for this Agreement, and
thereby where pricing has been established, shall have part yields which are the
lower of those achieved on the last *** consecutively processed wafers within
the preceding ******************) by (a) HP in manufacturing the part in HP
internal fabs (b) that achieved by the Company in its fabs or (c) that achieved
by CSM in its fabs. The part minimum yield "Y(simple, minimum)" should be set
and reviewed when pricing is set and reviewed. A copy of the agreed upon minimum
yield for parts should be kept and distributed along with agreed upon pricing.
Yield loss due to part marginality within agreed upon parametric acceptance
criteria is the responsibility of HP.
METHODOLOGY FOR ESTABLISHING A PART YIELD MINIMUM:
The HP test methodology on parts bins yield results into Simple Yield and
Survival Yield. Simple Yield is calculated based on die that have passed
continuity tests (shorts and opens), nominal functional, and post stress* tests.
Simple yield is the yield used to establish the part yield. This is denoted as
"Y(simple)". For reference, Survival Yield is calculated based on the number of
die passing additional margin tests and parametric tests. Margin tests include
all high and low voltage functional and high and low frequency functional tests.
Parametric tests include all circuit level parametric tests as well as static
current tests.
*Post stress tests identify fallout caused by the application of stress voltages
to the IC power supply and input levels Post stress fallout is classified as a
reliability concern with wafer fabrication and, as such, is owned by the
Company.
ADMINISTRATION OF PART YIELD MINIMUMS
After each ********** of production (or after *** wafers if less than *** Wafers
are produced within ********), a calculation for the Company production
shipments Y(simple) is made. This is calculated as the average of all production
shipments during this ******* period and denoted as "Y(simple, actual)".
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REDACTED CONFIDENTIAL TREATMENT REQUESTED
The asterisked portions of this document have been omitted and
are filed separately with the Securities and Exchange Commission
If Y(simple, actual) is less than Y(simple) established as the minimum
"Y(simple, minimum)," then the Company issues a credit to HP. This calculation
is repeated each ********** based on that *********** production shipments. The
credit is calculated as follows:
Credit = Wafer Price times number of Wafers produced
times [1-Y(simple, actual)/Y(simple, ceiling)].
It is the responsibility of the Company to produce and report the calculations
and implications above to HP.
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ANNEX C
INFORMATION AND COMPATIBILITIES
The information and compatibilities required by HP to utilize the Company source
of supply as if it were one of HP's wholly-owned fabs is given in, but not
limited to, the examples below:
1. Ability to electronically deliver and receive forecasts, orders, process and
part mixes of HP demand and of Company supply.
2. Work-In-Progress quantities along the defined material flow managed by the
Company. This should be as real time as permitted by dispositioning
procedures between steps in the flow. This includes any line yield losses
(quantity out of a step divided by quantity starting the step).
3. Collect parametric data using the test structures and testing algorithms as
defined in the License and Technology Transfer Agreement dated the date
hereof among the Company, CSM and HP on a specified number of sites on each
wafer processed. The data is to be compatible with and loaded onto an
appropriate HP system upon completion and disposition of each processed lot.
4. Collect functional test data using specified testing algorithms for each
Wafer yielded after parametric test. The data is to be compatible with and
loaded onto an appropriate HP system upon completion and disposition of each
processed lot.
5. Traceability of equipment used and document versions dictating processes
employed.
6. The ability to directly ship Wafers, including appropriate yield information
for the next production step, which have been functionally tested and
dispositioned to points determined by HP.
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