EXHIBIT 10.8
DATED 26 JUNE 2002
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SUPPLY AGREEMENT
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SUPPLY AGREEMENT
This Agreement is made and entered into the 26th day of June 2002.
BETWEEN
STMicroelectronics, N.V., a Dutch Corporation, having its registered office at
Strawinskylaan 1725, Tower B - 17th floor, 1077 XX Amsterdam, The Netherlands,
acting for the purpose of this Agreement through its Swiss branch, ICC - Bloc A,
Route de Pre-Bois 20, 1215 Xxxxxx 00, Xxxxxxxxxxx ("Purchaser")
AND
AMI Semiconductor Belgium BVBA, a Belgian company, having its registered office
at Xxxxxxxxxx 00, X-0000 Xxxxxxxxxx, Xxxxxxx ("Supplier")
WHEREAS, Pursuant to the terms and conditions of a Business Purchase Agreement
(the "BPA"), dated 8 May, 2002 among Purchaser, Supplier, and AMI Semiconductor
Inc. ("AMI"), Purchaser and Alcatel Microelectronics N.V., a Belgian company
("AME"), are contemporaneously with the execution and delivery of this Agreement
selling to Supplier the Mixed Signal Business (the "MSB" as defined in the BPA)
of AME;
WHEREAS, as an enticement for Supplier and AMI to enter into the BPA, Supplier
and AMI have requested that Purchaser load the manufacturing site located in
Oudenaarde acquired by Supplier under the terms of the BPA by placing with
Supplier a certain amount, in Value (as defined below), of purchase orders for
Products (as defined herein) over the Initial Term (as defined herein) of this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties agree as follows.
1 DEFINITIONS
Unless the provisions of this Agreement otherwise provide, the
following capitalised terms when used in this Agreement shall have the
meaning set out below.
1.1 "Affiliate(s)" of a party means a Person owning or controlling a party,
or under the same ownership or control as a party, or owned or
controlled by a party, but only so long as such ownership or control
exists. Ownership or control shall exist through the direct or
indirect: (i) ownership of more than 50% of the Equity Interests and of
the
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Equity Interests generally entitled to vote on matters submitted to
holders of Equity Interests, or (ii) the right by any other means to
elect or appoint a majority of directors, or Persons performing similar
functions.
1.2 "Agreement" shall mean this Supply Agreement, together with all
schedules attached hereto, as the same may be amended from time to
time, as permitted herein.
1.3 "AMI" shall mean AMI Semiconductor Inc., a Delaware corporation.
1.4 "Blanket Purchase Order" shall mean a purchase order to which
requirements for Products shall be added on a weekly basis by means of
Weekly Forecasts in accordance with Section 5.1.
1.5 "Business Day" shall mean any day on which banks are generally open for
business in London, Brussels, Paris and New York.
1.6 "Completion Date" shall have the meaning ascribed to it in the BPA.
1.7 "Contract Periods" shall mean the First Contract Period, the Second
Contract Period, the Third Contract Period, the Fourth Contract Period,
the Fifth Contract Period, the Sixth Contract Period, the Seventh
Contract Period and the Eighth Contract Period, collectively, each of
which being a Contract Period.
1.8 "Cycle Time" shall have the meaning set forth on Schedule 5 hereof.
1.9 "Designs" shall mean all designs, test tapes, data base tapes, data,
information and technical and other expertise belonging to Purchaser
and/or its Subsidiaries relating to the manufacture of Products and
which are required by Supplier to enable Supplier to set up its
manufacturing process and to manufacture the Products.
1.10 "Die Form" shall mean a Product in a preliminary stage of manufacturing
which consists of a slice or slices of silicon upon which integrated
circuits have been electrically tested and which may or may not have
been cut into individual integrated circuits or dice.
1.11 "Effective Date" shall mean the Completion Date as defined in the BPA.
1.12 "Eighth Contract Period" shall mean the three (3) month period
beginning on the calendar day immediately following the last day of the
Seventh Contract Period.
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1.13 "Equity Interests" shall mean capital stock, share capital, ordinary or
preference shares, common or preferred stock, general or limited
partnership interests, limited liability company interests or any other
interests in any Person entitling the holder thereof to share in the
profits or liquidation value of a Person.
1.14 "Fifth Contract Period" shall mean the three (3) month period beginning
on the calendar day immediately following the last day of the Fourth
Contract Period.
1.15 "Finished Form" shall mean a Product that has been wafer tested,
packaged, final tested, and is in a form ready for shipment.
1.16 "First Contract Period" shall mean the three (3) month period beginning
on the Effective Date.
1.17 "Foundry" shall mean the facility located at Oudenaarde, Belgium being
acquired by Supplier pursuant to the BPA, or, as may be mutually agreed
in writing by the parties on a case-by-case basis (i.e., for each given
Product), any other facility operated by or for AMI or any of its
Subsidiaries.
1.18 "Fourth Contract Period" shall mean the three (3) month period
beginning on the calendar day immediately following the last day of the
Third Contract Period.
1.19 "Hot Lot" shall mean Lots ordered with a Hot Lot Cycle Time, as defined
on Schedule 5.
1.20 "Lot" shall mean a single batch of wafers.
1.21 "Initial Term" shall mean the period commencing on the Effective Date
and ending on the second anniversary of the Effective Date, which, for
the avoidance of doubt shall be the last day of the Eighth Contract
Period.
1.22 "Make Whole Amount" shall mean an amount equal to the applicable
Shortfall Amount minus the variable costs which would have been
incurred if Purchaser had ordered that amount of Products equal to the
Shortfall Amount; provided that, such variable costs shall be computed
as if Purchaser had ordered Products in the same proportion among the
different types of Products as were actually purchased by Purchaser
hereunder during the Contract Period in which the Shortfall Amount
occurred and the immediately prior Contract Period (or prior to the
commencement of the Second Contract Period since the Effective Date) or
if no Products were purchased during such Contract Periods
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variable costs shall be calculated as if Purchaser had ordered Products
in the proportion of the most recent Forecast. For purposes of this
definition "variable costs" shall be the amount for each Product
(excluding First Products, as defined below) to be agreed by the
parties in good faith and based on a case-by-case detailed analysis of
the actual cost structure of each given Product. With respect to the
First Products, "variable costs" shall be replaced by an amount equal
to twenty percent (20%) of the price for the applicable First Product.
The parties acknowledge that this replacement amount does not
necessarily reflect the variable costs of such First Products. "First
Products" shall mean those Products listed in Schedule 1 as of the
Effective Date and known as:
MTC20164-1-TQ100A-C-TR
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR
J454-1-TQ100A-I-TR
1.23 "Manufacturing Window" shall mean the lesser of: (i) Cycle Time plus an
additional two (2) weeks, and (ii) thirteen (13) weeks.
1.24 "Maximum Amount" shall mean, with respect to each of the following
Contract Periods, the following maximum amounts that Purchaser may
order, and which Supplier must agree to deliver within any of the
following periods:
During the First Semester Period Euros 16,000,000
During the Second Semester Period Euros 15,000,000
During the Third Semester Period Euros 17,000,000
During the Fourth Semester Period Euros 22,000,000
1.25 "Minimum Amount" shall mean the following cumulative minimum amounts
(up to Euros 50,000,000) which Purchaser must order, and which Supplier
shall deliver within any of the following periods:
From the Effective Date through and including Euros 3,250,000
the last day of the First Contract Period
From the Effective Date through and including Euros 7,000,000
the last day of the Second Contract Period
From the Effective Date through and including Euros 9,700,000
the last day of the Third Contract Period
From the Effective Date through and including Euros 16,000,000
the last day of the Fourth Contract Period
From the Effective Date through and including Euros 19,600,000
the last day of the Fifth Contract Period
From the Effective Date through and including Euros 28,000,000
the last day of the Sixth Contract Period
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From the Effective Date through and including Euros 34,600,000
the last day of the Seventh Contract Period
From the Effective Date through and including Euros 50,000,000
the last day of the Eighth Contract Period
1.26 "Person" shall include individuals, corporations, companies,
partnerships, trusts, limited liability companies and other entities.
1.27 "Products" shall mean (i) those products as listed on Schedule 1 hereto
(including the Contract Periods and the prices set out therein), and
(ii) any other products, either in Finished Form, Die Form or Wafer
Form (which may include, among others, ST Telecom ASICs or AME power
management integrated circuits for GSM chipset) as may be agreed in
good faith by the parties hereto, such agreement to be evidenced by an
amendment to Schedule 1 hereto signed by the parties hereto which
identifies such new product, its price, variable costs and any
variation in the terms hereof with respect to such new product;
provided, however, that the aforementioned terms shall be defined for
each specific product for the relevant Semester Periods.
For the avoidance of doubt, the parties agree that in respect of the
possible extension of products listed on Schedule 1 for additional
Semester Periods, the parties undertake to negotiate in good faith to
reach an agreement on the terms, and in particular the price. Unless
the parties reach a mutual agreement on the price, there shall be no
automatic extension of the terms relating to the previous Semester
Periods.
1.28 "Requirement" shall mean the order by Purchaser of Products, which
Supplier shall deliver prior to the expiration of the Initial Term for
an aggregate Value to Supplier of at least Euros 50,000,000 (fifty
million Euros) pursuant to and under the terms and conditions of this
Agreement.
1.29 "Second Contract Period" shall mean the three (3) month period
beginning on the calendar day immediately following the last day of the
First Contract Period.
1.30 "Seventh Contract Period" shall mean the three (3) month period
beginning on the calendar day immediately following the last day of the
Sixth Contract Period.
1.31 "Semester Period" shall mean any six (6) month period made up of the
First Contract Period plus the Second Contract Period, or the Third
Contract Period plus the Fourth Contract Period, or the Fifth Contract
Period plus the Sixth Contract Period, or the Seventh Contract Period
plus the Eighth Contract Period.
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1.32 "Shortfall Amount" shall mean the difference between the applicable
Minimum Amount and the cumulative Value of Products actually ordered by
Purchaser for delivery within the applicable Contract Period pursuant
to and under the terms and conditions of this Agreement from the
Effective Date to the last day of the applicable Contract Period.
1.33 "Sixth Contract Period" shall mean the three (3) month period beginning
on the calendar day immediately following the last day of the Fifth
Contract Period.
1.34 "ST Telecom ASICs" means telecom ASICs currently manufactured and
supplied by Purchaser as of the date hereof.
1.35 "Subsidiary" as to any party hereto shall mean any Person in which such
party owns directly or indirectly more than fifty percent (50%) of the
Equity Interests and more than fifty percent (50%) of the Equity
Interests which are generally entitled to vote on matters submitted to
holders of Equity Interests.
1.36 "Third Contract Period" shall mean the three (3) month period beginning
on the calendar day immediately following the last day of the Second
Contract Period.
1.37 "Value" shall mean the price of the relevant Product as reflected on
Schedule 1; provided that, if the parties agree to amend Schedule 1 to
add as a new product any wafer or die which is not in Finished Form,
Value as to such wafer or die shall be the price of such wafer or die
as reflected on Schedule 1, as the same may be amended, plus the
packaging costs which Supplier would have paid to an outsourced
subcontractor to convert the wafer or die into Finished Form.
1.38 "Wafer Form" shall mean a Product in a preliminary stage of
manufacturing, which consists of a slice or slices of silicon upon
which integrated circuits have been manufactured but not electrically
tested.
2 AGREEMENT TO SUPPLY AND VOLUME COMMITMENTS
2.1 During the Initial Term, Supplier agrees to sell, on an exclusive
basis, to Purchaser, and Purchaser agrees to order and, subject to the
terms and conditions herein, to purchase from Supplier, Products in
Value equal to the Requirement in accordance with the applicable
Minimum and Maximum Amounts. The Products shall be in accordance with
Purchaser's specifications as further provided in accordance with
Section 7 of this Agreement. Purchaser shall not place Supplier's brand
on any of its products. The Supplier may, for a transition period equal
to the longer of (i) four (4) weeks following
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the Effective Date or (ii) four (4) weeks following the date of the
first purchase order delivered pursuant to this Agreement, deliver
Products bearing its predecessor's (i.e. AME's) brand and trademarks
which are held in inventory on the Effective Date and Purchaser shall
be entitled to sell such Products using such brand and trademarks. In
no event shall Purchaser acquire any rights under this Agreement to any
patent, trademark, service xxxx or other intellectual property right of
Supplier.
2.2 Purchaser will place purchase orders with Supplier for Products which
Supplier must agree to deliver during each Contract Period for a Value
of no less than the applicable Minimum Amount and, unless otherwise
agreed, for no more than the applicable Maximum Amount for such
Semester Period. Upon the parties reaching agreement to amend Schedule
1 and to add additional products thereto, Purchaser and Supplier may
agree to negotiate in good faith appropriate adjustments to the Maximum
Amount for any remaining Semester Periods in light of the addition of
such products to the definition of Products.
2.3 Wafer manufacturing of any Products purchased by Purchaser shall at all
times be manufactured by Supplier in the Foundry. It is agreed among
the parties that, in the event the parties agree in writing that any
Products be manufactured for Purchaser in facilities other than the
facility located at Oudenaarde, Belgium being acquired by Supplier
pursuant to the BPA, any Value of such Products sold to Purchaser
pursuant to and in accordance with the terms and conditions of this
Agreement will be counted towards fulfilling the Requirement.
2.4 Purchaser will deliver a GDSII tape to Supplier for any new product
which is agreed to be added to Schedule 1 by amendment after the
Effective Date (unless such new product is already manufactured in the
facility located at Oudenaarde, Belgium being acquired by Supplier
pursuant to the BPA). Supplier will augment the database with
Supplier's frame data and contract an appropriate mask shop (to be
determined by both parties) to acquire reticles. Supplier will invoice
the cost of frame generation, the reticles and probe wafer to Purchaser
upon delivery of the purchase order to the mask shop. Supplier will
rebate back to Purchaser 100% of the mask making cost of any Product
taped out with Supplier upon shipment of 1000 wafers of the Product
taped out.
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3 FAILURE TO PURCHASE OR SUPPLY AGREED AMOUNTS
3.1 In the event that Purchaser believes it will be unable to purchase
Products, in aggregate Value equal to the Requirement or, for any
applicable Contract Period, the associated Minimum Amount, Supplier
will commit to supply, and Purchaser will agree to purchase, in
substitution thereof, other agreed upon products manufacturable by
Supplier for prices and on terms and planning to be agreed upon by the
Purchaser and Supplier. Upon reaching such agreement (as evidenced by
an amendment to Schedule 1 in accordance with the provisions in section
1.27), Supplier shall use all commercially reasonable efforts to
industrialise within the agreed planning such agreed new Products and
to provide adequate support and engineering resources for a
qualification process which is conducted as expeditiously as is
commercially reasonable.
3.2 In the event that Purchaser does not order and take delivery, for any
reason other than the fault of Supplier, of a Value at least equal to
the applicable Minimum Amount by the last day of any Contract Period,
Purchaser will pay to Supplier the Make Whole Amount by wire transfer
of immediately available funds by no later than thirty (30) days after
the tenth day of the calendar month following the month in which the
Contract Period for which there was a Shortfall Amount ended.
Notwithstanding anything to the contrary herein, the payment of the
Make Whole Amount by Purchaser shall be Supplier's sole remedy and
Purchaser's sole liability in case of any such Shortfall Amount and the
payment of such Make Whole Amount on or before the date it is due under
this Section 3.2 shall fully relieve Purchaser from all obligations
with regards to such Shortfall Amount.
3.3 In the event that (i) Supplier is unable to supply Purchaser with any
Products which are ordered by Purchaser in accordance with the terms
and conditions of this Agreement or (ii) Supplier does not accept
purchase orders issued by Purchaser if required to so accept them in
accordance with the terms and conditions of this Agreement, then the
Value of undelivered Products or unaccepted orders which are within the
applicable Maximum Amount, or, as applicable, the accepted purchase
orders in excess of such Maximum Amount, for the relevant Semester
Period shall be deducted from the Requirement and the amount so
deducted will be applied over each of the remaining Contract Periods in
proportion to the respective Minimum Amounts of each remaining Contract
Period. An example of such apportionment is attached as Schedule 6. In
addition, a failure under
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any part of subclause (i) or (ii) of this Section 3.3 shall be deemed
material, and the Purchaser, acting reasonably, shall also have the
right to terminate the Agreement in accordance with Section 10.2 below.
4 PRICING AND PAYMENT TERMS
4.1 Pricing for Products will be as set forth on Schedule 1 hereto, as may
be amended from time to time to add additional products in accordance
with the terms of this Agreement, for aggregate orders pursuant to this
Agreement not exceeding Euros 50,000,000 in Products. Hot Lots for any
products which the parties agree to add to Schedule 1 by amendment
after the Effective Date shall be priced as follows: the first two
requests for Hot Lots shall be priced at the agreed upon price for the
applicable products (i.e., at no extra charge) and any subsequent Hot
Lots shall be priced at 20% above the applicable price for such
Product. In the event Purchaser requires Hot Lots for any of those
Products listed on Schedule 1 as of the Effective Date, such Hot Lots
will be priced at 20% above the applicable price for such Product.
Reasonable prices will be negotiated in good faith with respect to
special engineering services beyond the ordinary course of business.
4.2 All amounts payable under this Agreement will be payable in Euros,
thirty (30) days after the tenth day of the calendar month immediately
following the calendar month of the date of the invoice. Shipping terms
shall be on an Incoterms 2000 Ex Works (EXW - AMI Oudenaarde plant or
any other plant and shipping terms as may be agreed) basis. Transfer of
ownership to Purchaser will occur at delivery Ex Works.
5 FORECASTS, PURCHASE ORDERS AND DELIVERY
5.1 Purchaser shall prepare in good faith and provide to Supplier on the
first Business Day of each calendar month a non-binding rolling nine
(9) month forecast (the "Forecast") by process technology of expected
quantity requirements of Purchaser for Products. Supplier shall
maintain capacity to satisfy Purchaser's estimated quantity
requirements contained in the Forecasts; provided that, such estimated
quantity requirements are within the applicable Maximum Amounts for the
Semester Periods of such Forecast. In addition, Supplier shall use
commercially reasonable efforts to accept orders above the Maximum
Amounts but shall not be obligated to do so. Based on the Forecast, on
a weekly basis Purchaser will provide a thirteen (13) week rolling
forecast (the "Weekly Forecast") by Product. This Weekly Forecast will
represent Purchaser's quantity requirements for Products for such
thirteen week period which must be within the
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applicable Maximum Amounts. Purchaser shall be deemed to have made and
Supplier shall be deemed to have accepted purchase orders for Products
identified in the Weekly Forecast the delivery of which can be
accomplished no earlier than a Manufacturing Window commencing on the
date of such Weekly Forecast is provided to Supplier.
5.2 Purchaser shall order Products hereunder by means of a Blanket Purchase
Order placed on a weekly basis in accordance with Section 5.1 above.
The minimum order Value per Blanket Purchase Order must be at least
Euros 25,000 (excluding engineering samples). Blanket Purchase Orders
shall be acknowledged by Supplier within two (2) Business Days of
receipt of the Blanket Purchase Order. Once accepted by Supplier in
accordance with Section 5.1 above, purchase orders shall be firm and
non-cancellable; provided that, Purchaser may cancel an accepted
purchase order if Purchaser reimburses Supplier for those costs set
forth in Schedule 4 and associated with the work in progress related to
such cancelled accepted purchase order and any such amount actually
reimbursed to Supplier shall be counted towards the fulfilment of the
Requirement.
5.3 In the event of any conflict between the terms or provisions of any
accepted purchase order or any document provided by Supplier (x) to
confirm acceptance of an order or (y) with the delivery of Products,
and this Agreement, the terms of this Agreement shall prevail.
5.4 Delivery of Products shall be in accordance with the applicable
accepted purchase order (which must comply with the requirements of
Section 5.2 hereof). In case of any late delivery of Products by
Supplier, Purchaser shall be entitled to cancel, in whole or in part,
the relevant undelivered Products with no liability of Purchaser
towards Supplier, and the Value of such cancelled undelivered Products
shall be deducted from the Requirement, Euro for Euro, and the amount
so deducted will be applied over each of the remaining Contract Periods
in proportion to the respective Minimum Amounts of such remaining
Contract Periods in accordance with the principles set forth in
Schedule 6 hereto. For the purposes of this Section 5.4, delivery shall
be late if delivery has not occurred prior to ten (10) calendar days
(provided however that, during a transition period of four (4) months
following the Effective Date, such delivery shall be late if delivery
has not occurred prior to sixteen (16) calendar days) after the agreed
upon delivery date (which delivery date shall be no earlier than the
end of the Manufacturing Window).
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6 ACCEPTANCE OF ORDERS
6.1 If Supplier delivers Products which do not conform with the accepted
purchase order, Purchaser shall be entitled to reject the
non-conforming delivery within thirty (30) calendar days of delivery.
If Purchaser fails to notify Supplier in accordance with this Section 6
of any non-conforming delivery within said thirty (30) days the
Products will be deemed accepted.
6.2 Complaints of defects shall be made to Supplier in writing providing
sufficient detail of the nature of the non-conformance of such rejected
delivery. Inspection of alleged defects and returns shall be conducted
in accordance with agreed procedures attached as Schedule 2 hereto.
6.3 The Products shall be deemed to be accepted if the Products are used
and mixed with goods supplied from other suppliers or with other
substances or such Products have been modified.
6.4 Supplier will provide Purchaser with all applicable test programs,
reliability data, test and reasonable assistance and information that
it may reasonably require in performing acceptance tests.
6.5 All rejected Products will be returned to Supplier at Supplier's risk
and expense with Purchaser's written statement of rejection which must
describe in sufficient detail the nature of the non-conformance of such
rejected delivery. For the avoidance of doubt, the Value of any
rejected Products under Section 6.1 shall be applied against the
Requirement.
7 PRODUCT SPECIFICATIONS AND QUALITY STANDARDS
7.1 During the term of this Agreement, Supplier shall manufacture and
deliver to Purchaser Products in accordance with the applicable agreed
specifications of Purchaser, such specifications for each Product
listed on Schedule 1 having been provided to Supplier prior to the date
of this Agreement and are attached to this Agreement as Schedule 3.
Prior to the addition of any product to Schedule 1 by amendment,
Supplier shall review the specifications for each new product prior to
agreeing to add such new product to Schedule 1.
7.2 If either party wishes to amend the specification of a Product,
including, but not limited to, modifying the mask tooling, processing
or testing, it shall issue an engineering change notice ("ECN") to the
other party in writing detailing the amendment to the
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specification required. Where an ECN is issued by Purchaser, Supplier
shall amend the specification in accordance with the ECN at the sole
cost of Purchaser. The amended specification shall apply to all
Products to which the specification apply after the date of
implementation of the ECN by Supplier. Where an ECN issued by Supplier
will or may affect yield, performance reliability or qualification
status of Products, Supplier shall not implement such ECN until it has
received Purchaser's written consent to the implementation of the ECN.
Upon issue of any ECN by Purchaser, the parties shall negotiate in good
faith an amendment to the price for such Product to reflect the Product
as modified, such new price to be recorded in an amendment to Schedule
1 hereto.
7.3 Supplier will manufacture Products in accordance with Purchaser's
quality and reliability specifications attached hereto as Schedule 2;
provided, however, that the parties agree that for a limited transition
period of two (2) months following the Effective Date the quality and
reliability specifications in effect on the Effective Date at the
facility located at Oudenaarde acquired by Purchaser under the BPA will
be applicable in lieu of Purchaser's quality and reliability
specifications.
7.4 Supplier shall notify Purchaser as soon as practicable, and in any
event not later than one (1) Business Day, after becoming aware of any
event that will materially affect quality or delivery.
8 PRODUCT WARRANTY AND SUPPLIER OBLIGATIONS
8.1 Supplier will warrant that the Products delivered to Purchaser by
Supplier hereunder will meet the quality and reliability specifications
required by this Agreement, and that the Products will be free from
defects in material and workmanship for two (2) years from the date of
delivery. If during the warranty period the Products are defective,
Supplier shall be responsible for and shall promptly, at Purchaser's
election, either (x) supply replacement Products or (y) refund
Purchaser the price paid by Purchaser for the defective Products. The
foregoing warranty shall apply to any replacement Products. The
Products claimed to be defective shall be returned to Supplier at
Supplier's cost and expenses. For the avoidance of doubt, the Value
corresponding to any refund for defective Products made under this
Section 8.1 shall not be required to be re-ordered to fulfil the
Requirement.
8.2 The warranties contained in this Section 8 are in lieu of any and all
other warranties, expressed and/or implied, including but not limited
to any implied warranties of merchantability, fitness for a particular
purpose, and non-infringement. Without
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limiting the generality of the foregoing, Supplier does not warrant (x)
the design of any Product or (y) that the Products will operate or
perform in the combinations that Purchaser may select or use.
8.3 Supplier shall on a daily basis transmit information regarding work in
progress for Purchaser to an FTP site agreed between the parties in the
format and terminology currently existing in Supplier's information
systems without any obligation of Supplier to adapt such information to
Purchaser's format or terminology. For purposes of the foregoing,
Supplier shall provide to Purchaser sufficient information in order to
enable Purchaser to understand the file content (e.g., such information
to include, without limitation, the file format, record lay out, and
data definition). Further, as soon as practicable after the Effective
Date, Supplier and Purchaser will work out in good faith the way to
transfer such information through medium and format in line with
applicable standards of the industry; provided that, the foregoing
shall not be deemed to obligate the Supplier to expend any amount to
effect or sustain such changes.
8.4 Supplier shall not, without Purchaser's prior written consent, sell
Products to any person other than Purchaser or Purchaser's
Subsidiaries. Supplier shall keep records of all production control
information and summaries of production monitors for all Products for
warranty and/or audit purposes for a period of twenty-four (24) months
from the date of delivery of Products. At the request of Purchaser,
Supplier shall forward a copy of such data to Purchaser. Supplier shall
not deliver to Purchaser any Products coming from any wafer with a
yield less than the scrap limit value as defined in Schedule 2 hereto.
8.5 Together with each delivery of Products to Purchaser, Supplier shall
provide process control monitor data (i.e., "PCM" or control parametric
test) as well as the relevant quality data defined in Schedule 2
hereto.
9 INTELLECTUAL PROPERTY
9.1 Subject to Section 11 below, Supplier shall indemnify and hold
Purchaser, its Affiliates and its/their respective directors and
officers (hereafter referred as "Purchaser Indemnities") harmless and
shall pay all damages, costs and reasonable attorneys' fees relating to
its/their defence resulting from any suit, claim, demand, action by a
third party against Purchaser Indemnities based upon an allegation that
the process used by Supplier to manufacture the Products infringes the
intellectual property rights of a third party ("Purchaser Infringement
Claim"); provided that (i) Purchaser gives written notice
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to Supplier within thirty (30) calendar days of notice of such
Purchaser Infringement Claim and (ii) Purchaser allows Supplier at its
expense through attorneys of its own choice, to exclusively defend or
control the defence of any Purchaser Infringement Claim; and Purchaser
assists Supplier in all reasonable aspects in such investigation and
defence, and is reimbursed by Supplier for all the reasonable costs
incurred in collaborating in such investigation and defence.
9.2 Supplier shall have no obligation hereunder for any Purchaser
Infringement Claim which results from: (a) the combination by Purchaser
of the Product with other products if such infringement would not have
arisen but for the combination; (b) the modification of the Product by
parties other than Supplier; (c) the Design; (d) Purchaser's
intellectual property rights embedded in the Product except to the
extent the infringement is caused by the modification made by Supplier
of Purchaser's intellectual property rights and (e) the ST Technology
(as this term is defined in that certain Transfer and License Agreement
executed the same date herewith between Purchaser and Supplier)
licensed by the Supplier from the Purchaser pursuant to such Transfer
and License Agreement.
9.3 Subject to Section 11 below, Purchaser shall indemnify and hold
Supplier, its Affiliates and its/their respective directors and
officers (hereafter referred as "Supplier Indemnities") harmless and
shall pay all damages, costs and reasonable attorneys' fees relating to
its/their defence resulting from any suit, claim, demand, action by a
third party against Supplier Indemnities based upon an allegation that
Purchaser's intellectual property rights embedded in a Product or the
Designs infringes the intellectual property rights of a third party
("Supplier Infringement Claim"); provided that: (i) Supplier gives
written notice to Purchaser within thirty (30) calendar days of notice
of such Supplier Infringement Claim; and (ii) Supplier allows Purchaser
at its expense through attorneys of its own choice, to exclusively
defend or control the defence of any Supplier Infringement Claim; and
Supplier assists Purchaser in all reasonable aspects in such
investigation and defence, and is reimbursed by Purchaser for all the
reasonable costs incurred in collaborating in such investigation and
defence.
9.4 Sections 9.1 and 9.3 state the entire liability of Supplier and
Purchaser and the exclusive remedy of Supplier and Purchaser with
respect to any and all infringement claims. Except as expressly stated
in this Section, all warranties of non-infringement of any intellectual
property rights are hereby disclaimed by each party.
9.5 All intellectual property rights in and to the Designs belong to
Purchaser.
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9.6 All intellectual property rights in and to any masks generated by
Supplier under this Agreement from Purchaser's databases shall belong
to Purchaser.
9.7 All intellectual property rights in and to improvements or
modifications made by Supplier to test tapes and Designs shall belong
to Purchaser.
9.8 Purchaser grants to Supplier a non-exclusive, irrevocable, license to
use the Designs and Purchaser's Confidential Information (as defined
below) to manufacture, and sell the Products exclusively for Purchaser.
10 TERM AND TERMINATION
10.1 The term of this Agreement shall be the Initial Term unless terminated
earlier in accordance with the provisions of this Section 10.
10.2 In the event of any material breach of a material provision (other than
late delivery of any Product, for which the sole remedy of Purchaser is
specified in Section 5.4 above) by any party hereto, which is not cured
within thirty (30) days of the non-breaching party delivering notice
thereof to the breaching party (such notice specifically identifying
the breach), the non-breaching party shall have, without prejudice to
its other rights or remedies, the right either to terminate this
Agreement or to terminate any accepted purchase order. Further, unless
otherwise specifically agreed in writing between the parties, in the
event that Supplier is not able or not willing to manufacture Products
(in whole or in part) out of its facility located at Oudenaarde,
Belgium (i.e., that facility being acquired by Supplier pursuant to the
BPA), Purchaser shall have the right, without prejudice to its other
rights or remedies, to terminate this Agreement.
10.3 In the event this Agreement shall be terminated by Purchaser pursuant
to Section 10.2 the purchase orders issued by Purchaser and accepted by
Supplier before the effective date of termination will be fulfilled by
Supplier in accordance with the relevant terms and conditions of this
Agreement. If only an accepted purchase order is terminated, only such
accepted purchase order shall be terminated and not the entire
Agreement.
10.4 Notwithstanding any other provision contained in this Agreement to the
contrary, upon the purchase by Purchaser of the Requirement and full,
final and indefeasible payment therefore having been received by
Supplier, this Agreement shall automatically terminate and the purchase
obligations of Purchaser and the supply obligations of Supplier
hereunder shall automatically terminate; provided that, such
termination shall not affect any rights or remedies that a party may
have prior to said termination.
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10.5 Upon termination or expiration of this Agreement the provisions of
Sections 1, 8, 9, 10, 11, 13, 14, 16, 17, 18, 20, 21 and 23 shall
survive any such termination.
11 LIMITATION OF LIABILITY
11.1 Except with respect to Section 13, to the maximum extent permitted by
applicable law, under no circumstances and under no legal theory
whether in tort (including negligence) contract or otherwise shall any
party be liable to the other party for any special, indirect,
incidental or consequential damages (including, without limitation,
lost profits) incurred by the other party hereto resulting from or
arising out of or in connection with an accepted purchase order, a
delivery hereunder or this Agreement even if the other party has been
informed of the possibility of these damages. Notwithstanding the
foregoing, the total liability of the Supplier hereunder shall not
exceed Euros 50,000,000.
12 FORCE MAJEURE
12.1 Supplier and Purchaser shall not be liable for the non-performance of
any of their obligations hereunder, if and to the extent only that such
non-performance is caused by an event of force majeure, which means
acts of God, war, war-like condition, embargoes, riots, strikes and
other unforeseen events beyond their reasonable control and which
cannot be prevented; provided that, no general change in Purchaser's
financial condition or results of operations or in general economic
conditions nor a reduction of Purchaser's customers' orders shall be a
force majeure event for Purchaser. To the extent possible, in the event
that such failure or delay occurs, the affected party shall notify in
writing the other party of the occurrence thereof as soon as possible
and the parties shall discuss the best way to resolve the event of
force majeure.
12.2 Delivery of all affected Products shall be made on a revised delivery
date (to be mutually agreed upon), that shall, at least, take into
account the delay incurred.
12.3 By reason solely of force majeure neither Supplier nor Purchaser shall
have any claim for relief or other damages (including, without
limitation, by operation of Section 5.4) against the other party in
respect of such delay in performance or non-performance and the
obligations under this Agreement of each of Supplier and Purchaser
shall be suspended for the duration of such force majeure.
13 CONFIDENTIALITY
13.1 During the term of this Agreement, either party may disclose
Confidential Information to the other one. In such case, the following
provisions shall apply. Confidential Information means the terms of
this Agreement, the Designs, as well as any proprietary
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information and data of either party, contained in written or tangible
form, which is marked with "Internal Use Only", "Proprietary",
"Confidential", or with other similar words. One party's ("Disclosing
Party") Confidential Information shall also include its confidential
information and data orally disclosed to the other party ("Receiving
Party") if: a reasonable summary of the same is reduced to a writing
and marked with "Proprietary", "Confidential", or with other similar
words and the writing is delivered to the Receiving Party within thirty
(30) days of the first disclosure to the Receiving Party. However,
Confidential Information shall not include any data or information
which:
13.1.1 is or becomes publicly available through no fault of the Receiving
Party;
13.1.2 is already in the rightful possession of the Receiving Party prior to
its receipt of such data or information;
13.1.3 is independently developed by the Receiving Party;
13.1.4 is rightfully obtained by the Receiving Party from a third party or in
the public domain;
13.1.5 is disclosed with the written consent of the Disclosing Party; or
13.1.6 is disclosed pursuant to a valid order or other legal compulsion of a
court or other government body; provided, however, that Receiving Party
shall, to the extent possible: (i) prior to such disclosure promptly
notify Disclosing Party of the requirement and give Disclosing Party
the opportunity to object; (ii) upon disclosure inform the body to
which the Confidential Information is disclosed of its confidential
status and shall seek to obtain confidential treatment of such
Confidential Information by such body; and (iii) disclose only such
Confidential Information as is strictly required by such order.
13.2 Each party undertakes to use the same degree of care as it uses with
respect its own information of a similar nature to avoid disclosing the
Confidential Information received from the other party unless the
Disclosing Party previously consented in writing to such disclosure.
Notwithstanding the foregoing, the Receiving Party shall, during the
term of this Agreement, and for a period of three (3) years from the
termination or expiration of this Agreement, hold all Confidential
Information of the Disclosing Party received, in confidence.
13.3 The parties shall not use the Confidential Information for purposes
other than for the purpose of this Agreement.
- 18 -
13.4 Either party may disclose any Confidential Information to its and its
Affiliates' employees having the reasonable need for access to such
Confidential Information in connection with or during the performance
of this Agreement or their employment responsibilities and the parties
shall ensure that such employees comply with the provisions of this
Section.
13.5 Upon termination or expiration of this Agreement, either party shall
return to the other party all Confidential Information, whether in
written, documentary or other form, as well as computer programs,
software and technical drawings other than any Confidential Information
that is required to be retained under applicable law or which is
necessary to defend against or prosecute any claim hereunder.
13.6 Neither party shall in any manner disclose to third parties, advertise
or publish the fact it has entered into or the terms of this Agreement
except by the express written consent of the other party.
13.7 Notwithstanding the foregoing, either party may disclose the fact of
entering into this Agreement and its terms (i) to its advisors or to
any Person providing it with finance, subject to such Person agreeing
to keep such information confidential, or (ii) in any prospectus,
offering memorandum or other similar document.
14 GOVERNING LAW
14.1 This Agreement shall be governed and construed in accordance with the
laws of the Republic of France, without giving effect to the conflict
of laws rules thereof.
14.2 Any dispute arising out of this Agreement shall be conducted in
accordance with clauses 27.2 through 27.10, inclusive, of the BPA.
15 INDEPENDENT CONTRACTORS
15.1 The relationship of the parties is that of independent contractors, and
no party will incur any debts or make any commitments for the other
party. Nothing in this Agreement is intended to create or will be
construed as creating between the parties the relationship of joint
venturers, co-partners, employer/ employee or principal and agent.
16 ENTIRE AGREEMENT; AMENDMENT
16.1 This Agreement is the entire understanding between the parties with
respect to the subject matter hereof and supersedes any prior
contracts, agreements or understandings (oral or written) of the
parties (including the term sheet attached to the Letter of Intent
dated April 15, 2002 between Purchaser and AMI) with respect to the
subject matter
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hereof. No part of this Agreement may be amended, altered or otherwise
modified unless done so in a writing duly executed by all the parties
to this Agreement.
17 NOTICES
17.1 Unless otherwise indicated differently, all legal notices, requests,
information or demands which any party may desire or may be required to
give to the other party under this Agreement, shall be in writing and
in the English language and shall be personally delivered or sent via
telecopy, internationally recognised courier service (such as Federal
Express or DHL) or first class certified registered mail, postage
prepaid return receipt requested, and sent to the party at its address
appearing below or such other address as either party shall
subsequently inform the other party by written notice given as
described above:
17.1.1 If to Purchaser:
STMicroelectronics
ICC Bloc A
Route de Pre-Bois 20
1215 Xxxxxx 00
Xxxxxxxxxxx
Phone:
Fax: x00 00 000 0000
Attention: General Counsel
17.1.2 If to Supplier:
AMI Semiconductor Belgium XXXX
Xxxxxxxxxx 00
X-0000 Xxxxxxxxxx
Xxxxxxx
Phone: 0.000.000.0000
Phone:
Fax:
Attention: Chief Financial Officer
With copy to:
Dechert
2 Xxxxxxxxx' Xxx
- 00 -
Xxxxxx XX0X 0XX
Phone: 00.000.000.0000
Fax: 00.000.000.0000
Attention: Xxxxx X. XxXxxx, Esq.
17.1.3 If to AMI:
AMI Semiconductor Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
XXX Phone: 0.000.000.0000
Fax: 0.000.000.0000
Attention: Chief Financial Officer
With a required copy to:
Dechert
0 Xxxxxxxxx' Xxx
Xxxxxx XX0X 0XX
Phone: 00.000.000.0000
Fax: 00.000.000.0000
Attention: Xxxxx X. XxXxxx, Esq.
17.2 For Technical Information and information relative to purchase orders
each party agrees to nominate the following representatives to monitor
the evolution of the Agreement and to receive information and
communications other than legal notices:
For Supplier:
Name: Xxxxx Xxxxxxx
Title: Director of European Operations
Address: Xxxxxxxxxxxxx Xx 000000 Hallbergmoof, Germany
Phone: x00 000 000 0000
Fax: x00 000 000 0000
E-mail: xxxxxxxxxxxx@xxxx.xxx
For Purchaser:
Xxx Xxxxxx / Xxxx-Xxxxxx Crest
Wafer Foundry Organization
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STMicroelectronics, 00 xxx Xxxxx Xxxxxxxx, 00000 Xxxxxxxx, Xxxxxx
Phone: + 000 000 00 000
Fax: + 000 000 00 000
E-mail: xxx.xxxxxx@xx.xxx
17.3 All notices, requests, information or demands so given shall be deemed
effective upon receipt or, if mailed, upon receipt or the expiration of
the third day following the date of mailing, whichever occurs first,
except that any notice of change in address shall be effective only
upon receipt by the party to whom the notice is addressed.
18 SEVERABILITY
18.1 In the event any provision of this Agreement conflicts with the law
under which this Agreement is to be construed, such provision shall be
deleted from the Agreement, and the Agreement shall be construed to
give effect to the remaining provisions thereof.
19 ASSIGNMENT
19.1 No party may assign this Agreement without the prior written consent of
the other party hereto; provided that, Supplier may (x) assign the
right to any payment obligation ("cession de creance") under this
Agreement to any Person providing Supplier or any of its Affiliates
with financing in connection with the transaction contemplated by the
BPA or (y) assign this Agreement to any Person who acquires
substantially all of the assets and business of Supplier. This
Agreement is binding upon and will inure to the benefit of the
respective parties hereto and their respective successors and permitted
assigns.
20 WAIVER
20.1 A waiver of any term, provision or condition of, or consent granted
under, this Agreement shall be effective only if given in writing and
signed by the waiving or consenting party and then only in the instance
and for the purpose for which it is given.
21 GUARANTY
21.1 In consideration for and to induce Purchaser to enter into this
Agreement, AMI hereby guarantees to Purchaser the payment of all
amounts due from Supplier to Purchaser, if any, and the performance of
all other obligations of Supplier, whether now existing or hereafter
arising, pursuant to this Agreement.
- 22 -
22 COUNTERPARTS
22.1 This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the
same agreement.
23 SUBSIDIARIES
23.1 Supplier acknowledges that Purchaser conducts its business in whole or
in part through its Subsidiaries. Accordingly, Supplier agrees that the
rights and benefit granted by Supplier through this Agreement shall
inure to Purchaser and Purchaser's Subsidiaries and that Purchaser's
Subsidiaries shall be entitled to order Products and Supplier shall be
permitted to sell Products to Purchaser's Subsidiaries to the same
extent as Purchaser and such orders shall be counted towards the
fulfilment of the Requirement.
- 23 -
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first
above written.
STMicroelectronics, N.V.
By:
Name:
Title:
AMI Semiconductor Belgium BVBA
By:
Name:
Title:
AMI Semiconductor Inc. (to acknowledge and accept the terms of Section 21 of
this Agreement)
By:
Name:
Title:
- 24 -
SCHEDULE 1
PART A
PRICE PER FINISHED, PACKAGED, TESTED AND PACKED PRODUCTS
During the First and the Second Contract Period
AFE PART NUMBER PRICE PER AFE PRODUCTS
--------------- ----------------------
MTC20164-1-TQ100A-C-TR 2.42 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR 2.42 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR 3.40 EURO
J454-1-TQ100A-I-TR
PBMB-1-MB100C-U-TP 1.65 EURO
MTC20154-1-TQ64A-C-TP 1.40 EURO
During the Third and Fourth Contract Period
AFE PART NUMBER PRICE PER AFE PRODUCTS
--------------- ----------------------
MTC20164-1-TQ100A-C-TR 2.15 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR 2.15 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR 3.30 EURO
J454-1-TQ100A-I-TR
During the Fifth and Sixth Contract Period
AFE PART NUMBER PRICE PER AFE PRODUCTS
--------------- ----------------------
MTC20164-1-TQ100A-C-TR 2.10 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR 2.10 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR 3.20 EURO
J454-1-TQ100A-I-TR
During the Seventh and Eighth Contract Period
AFE PART NUMBER PRICE PER AFE PRODUCTS
--------------- ----------------------
MTC20164-1-TQ100A-C-TR 2.05 EURO
MTC20164-1-TQ100A-C-TP
MTC20174-1-TQ100A-C-TR 2.05 EURO
MTC20174-1-TQ100A-C-TP
MTC20454-1-TQ100A-I-TR 3.10 EURO
J454-1-TQ100A-I-TR
The above Schedule 1 is effective as of the Effective Date. It may be amended
and/or supplemented from time to time by mutual agreement between the parties
and in accordance with the provisions set forth in this Agreement.
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PART B
PRODUCTS IN DIE FORM ONLY
During the Third and Fourth Contract Period
PRODUCT MAXIMUM PRICE
------- -------------
PBMB-1 1.20 EURO
MTC20154-1 1.25 EURO
The above Schedule 1 is effective as of the Effective Date. It may be amended
and/or supplemented from time to time by mutual agreement between the parties
and in accordance with the provisions set forth in this Agreement.
- 26 -
SCHEDULE 2
PURCHASER'S QUALITY AND RELIABILITY SPECIFICATIONS
(TO BE PROVIDED IN DUE COURSE TOGETHER WITH AGREED VARIATIONS)
SPECIFICATION DESCRIPTIVE TITLE
------------- -----------------
7178219 silicon foundry general requirements
0076604 (262) process qualification and release to production
0080526 (313) definition and management of non conforming lots in front-end
operations
7177610 visual inspection at wafer fab and EWS outgoing
0115373 acceptance rules at parametric test
7326076 customer action request and return of defective material for silicon
foundries
0018694 site code definition and product marking
0072304 Laser marking of flatted or notched silicon wafers
7183955 collective wafer packing
7377224(*) wafer scrap limit and defectivity for silicon foundries
0076719 (213) subcon qualification and audit
0073560 (261) mixing prevention
0076600 (255) Calibration
0076616 (243) Traceability
0091650 (2510) E.S.D
0107363 (2616) definition and management of non conforming lots in back-end
operations
0076595 (242) electrical testing of finished products
0063181 electrical testing transfer
0019155 QC gate acceptance criteria
0046953 QFP IPC & final product V&M criteria
0018968 packing acceptance
0031932 Tape & reel
0033575 damp-proof packing for smd
0103700 TPA testing low yield limits
0044316 Non standard packing
- 27 -
SCHEDULE 3
PRODUCT SPECIFICATIONS
- 28 -
SCHEDULE 4
CANCELLATION COSTS (SECTION 5.2)
Cancellation costs - calculation formula:
Cancellation costs referred to in section 5.2 of this Agreement, shall be
calculated as follows:
CF = ([CS divided by TS] x [P - R]) + R
And, for the purposes of the foregoing:
"CF" means the cancellation costs payable by Purchaser
"CS" means the number of completed manufacturing steps as the date of
cancellation
"TS" means the total number of manufacturing steps required to produce the wafer
had not been any cancellation
"P" means the agreed purchase price of the wafer
"R" means the raw wafer cost incurred by Supplier
- 29 -
SCHEDULE 5
CYCLE TIME
(1). As of the Effective Date, the Cycle Time shall be as follows:
For Products in Wafer Form:
2 day per mask layer standard lots
1.3 day per mask layer for hot lots
For Products in Finished Form: 12 weeks.
(2). Supplier agrees to work in good faith to improve the Cycle Time described
in paragraph 1 above.
(3). The parties shall meet on a quarterly basis, or more often as may be
mutually agreed, to evaluate the performances and to develop mutually acceptable
objectives for the continuous improvement of the Cycle Time.
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SCHEDULE 6
EXAMPLE OF APPORTIONMENT OF REDUCTION OF REQUIREMENT UNDER SECTION 3.3
If, during the Sixth Contract Period, Supplier is unable to supply or did not
accept purchase orders issued by Purchaser for Euros 10,000,000 (in Value) of
Products which were ordered by Purchaser in accordance with the terms and
conditions of this Agreement, such amount will be deducted over the Seventh
Contract Period and the Eighth Contract Period Minimum Amount as follows:
1. Minimum Amount for the Seventh Contract Period is reduced by Euros
3,000,000
Computed as follows: 10,000,000 x [34.6 - 28]/[50-28]
2. Minimum Amount for the Eighth Contract Period is reduced by Euros
7,000,000
Computed as follows: 10,000,000 x [50-34.6]/[50-28]
- 31 -
