Exhibit 10.2
*OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
UNITED MICROELECTRONICS CORPORATION
Xx. 00 Xxxxxxxxxx Xxxx X
Xxxxxxx Xxxxx Xxxxxxxxxx Xxxx
Xxxx Xxx Xxxx, Xxxxxx, X.X.X.
telephone (035) 782-258; facsimile (035) 774-767
September 13, 1995
WRITTEN ASSURANCES RE: FOUNDRY VENTURE AGREEMENT
At the suggestion of several venturers, UMC is pleased to confirm in
writing the following points concerning the Foundry Venture Agreement and the
Foundry Capacity Agreement. Where these commitments require the consent of
FabVen, UMC will exercise its influence and commit best faith efforts to secure
that consent.
1. ALL VENTURERS ARE OFFERED EQUAL TERMS
As stated in the Foundry Venture Agreement, the terms of investment and of
wafer purchases to each Venturer under the Foundry Venture Agreement and under
the Foundry Capacity Agreement are the same, except for the percentages of
ownership and capacity rights of each Venturer [capacity rights for Venturers
are equal to * times the percentage of ownership]; provided however that
Venturers who commit to a minimum of * will have the right to appoint a
representative to a seat on the board of directors for the initial three year
term.
2. ACCESS TO BOARD MEETINGS & BOARD MEMBERS
Subject to the obligations of Confidentiality imposed under the Foundry
Venture Agreement, the Foundry Capacity Agreement, and/or the Technology
Transfer and License Agreement ("Venture Agreements"), and to the requirements
of law, each Venturer will be given reasonable notice of meetings of the board
of directors of FabVen, and the opportunity to have a representative attend such
meetings and communicate at such meetings with the board members in connection
with matters concerning FabVen.
3. MEMBERSHIP ON FABVEN BOARD--FIRST THREE YEARS AND BEYOND
The board of directors of FabVen will be comprised of seven members. Of
these seven members, * will be appointed by UMC for an initial three year
term, * will be appointed by the R.O.C. financial institutions which invest in
FabVen for an initial three year term, and the other * board members will be
appointed for an initial three year term by the Venturers other than UMC under
procedures to be mutually agreed upon by such Xxxxxxxxx, provided that any
Venturer who holds at least * of the shares of FabVen will be entitled to
appoint * of such other * board members. After the initial three year term,
the board will be elected by the shareholders pursuant to R.O.C. law in the
manner provided in the bylaws.
4. STRATEGIC ACTIONS SUBJECT TO SPECIAL BOARD APPROVALS
Subject to the other requirements of the law, and for so long as the
Venturer involved remains in compliance with all payment obligations under the
Foundry Venture Agreement and such Venturer retains at least * of the
ownership percentage in FabVen as listed in Paragraph 4.1 of the Foundry Venture
Agreement, all board actions directly deciding strategic technical issues
[including without limitation, the type of process technology (such as that used
in the manufacture of *) to be
-1-
* OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
developed, implemented and/or offered by FabVen, the amendment of the Technical
Transfer and License Agreement, and/or the transfer or licensing of technology
developed by FabVen to others (except as contemplated under the Technology
Transfer and License Agreement)] shall not be effective unless and until
approved by at least * of the board members designated by the Venturers other
than UMC, and (ii) all board actions authorizing liquidation of FabVen, merger
of FabVen, sale of all or substantially all of FabVen or of FabVen's assets,
and/or the offering of any equity (except pursuant to a public offering of
FabVen shares on a recognized securities exchange) shall not be effective
unless and until approved by * board members designated by the non-UMC
Venturers under the terms of the Foundry Venture Agreement.
5. NO UNAUTHORIZED CHANGES TO TECHNOLOGY ROADMAP
For so long as the Venturer involved remains in compliance with all payment
obligations under the Foundry Venture Agreement and such Venturer retains at
least one half of the ownership percentage as listed in Paragraph 4.1 of the
Foundry Venture Agreement, FabVen shall not make any material changes to the
Technology Road Map as shown in Attachment A which affect such Venturer's
existing and/or planned production without the consent of that Venturer.
6. CONDITIONAL "PUT" RIGHT
To the extent that FabVen fails (i) to qualify silicon manufactured with
* processes each having a minimum of * feature sizes under a test vehicle to
be agreed upon by FabVen, UMC and a majority of the Venturers other than UMC
(including without limitation, a test vehicle from a Venturer, provided that
such qualification under a test vehicle from a Venturer is commercially
reasonable and within industry standards) ("First Qualification") on or
before the end of December 31, 1998, and/or (ii) to achieve the ability to
manufacture a minimum of * wafer outs per month for such * process and *
wafer outs per month for such * process on or before December 31, 1998 for
reasons attributable to UMC, FabVen and/or the Licensed Processes, the
Venturers (one or more of them) will have the option to sell their shares
(and their corresponding rights to capacity in FabVen) to UMC for the total
amount they paid for such shares by sending written demand to UMC as follows:
(a) No such demand shall be effective unless it is made on or before April
1, 1999; and
(b) Within ninety days of such written demand from the Venturer involved,
UMC will buy the shares (and capacity rights) involved, and/or arrange another
buyer willing to purchase such shares (and capacity rights) under the terms and
conditions as stated in this heading.
7. RELEASE OF SHARE TRANSFER RESTRICTION IF NO PUBLIC OFFERING
To the extent that FabVen does not offer its shares in a public offering on
a recognized securities exchange on or before December 31, 2006, and
notwithstanding anything to the contrary, each Venturer other than UMC will have
the right to transfer its entire right and interests in FabVen as follows:
(a) The Venturer wishing to transfer ("Transferring Venturer") shall send
the other Venturers (including UMC) written notice of its intention to transfer,
stating in such notice the general terms and payment contemplated by such
Transferring Venturer;
-2-
* OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
(b) Within thirty days (the "Transfer Notice Period") of such notice, any
one or more such other Venturers may send a written offer to purchase such
Transferring Venturer's interest under terms to be stated in the written offer
[for purposes of this Paragraph, each other Venturer making such an offer shall
be referred to as the "Offering Venturer"];
(c) If no other Venturer makes such an offer within the Transfer Notice
Period, then, subject to subpart (g) below, the Transferring Venturer shall be
allowed to transfer its entire interest and ownership in FabVen to other
purchasers.
(d) If any Offering Venturer makes such an offer within the Transfer
Notice Period, the Transferring Venturer and the Offering Venturer will
negotiate in good faith concerning each such offer for not less than thirty days
(the "Transfer Negotiation Period").
(e) If by the end of the Transfer Negotiation Period and despite such
negotiations, the Transferring Venturer has not reached agreement with the
Offering Venturer(s) for sale of the Transferring Venturer's interest, then,
subject to this Paragraph (and all of its subparts), the Transferring Venturer
shall be allowed to transfer its entire interest and ownership in FabVen to
other purchasers.
(f) Notwithstanding anything to the contrary, no Transferring Venturer
shall be allowed to accept from any third party any offer with price and terms,
taken together, which are less favorable than last offered in writing by an
Offering Venturer during the Transfer Notice and/or Transfer Negotiation
Periods, unless such Transferring Venturer first offers the same price terms to
such Offering Venturer in writing, and allows such Offering Venturer ten
business days to accept or reject such price and terms.
(g) Except as permitted in paragraph 4.1(f) of the Foundry Venture
Agreement and/or in Paragraph 15 of this Written Assurance, no Venturer may
transfer its interest or right in FabVen under this paragraph or otherwise in
any manner to any competitor of UMC or to any entity in the business of
fabricating integrated circuits except under terms (i) in which such Venturer
first relinquishes and releases all rights to FabVen capacity and to designate
membership on the FabVen board of directors under this and any and all other
agreements, and (ii) in which such entity and/or competitor expressly consents
in writing that they have no such interest or right to such capacity and/or
designation.
8. TECHNOLOGY TRANSFER AND LICENSE CONDITION TO FIRST PAYMENT
Notwithstanding anything to the contrary, the execution of the Technology
Transfer and License Agreement in the form presented to the Venturers as of
September 15, 1995 shall be a condition precedent to any payment of investment
amounts pursuant to the Foundry Venture Agreement.
9. CLARIFICATION OF * CONDITION TO THIRD INSTALLMENT
Notwithstanding anything to the contrary, the milestone for the third
investment payment milestone shall be on or before * as that phrase is
generally understood and interpreted in the industry.
-3-
* OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
10. USE OF INVESTMENT MONIES
Unless otherwise agreed by each Venturer, FabVen will use all funds
invested by the Venturers pursuant to paragraph 4.1(b) of the Foundry Venture
Agreement solely as outlined in and consistent with the FabVen Business Plan.
11. RIGHTS OF FIRST REFUSAL ON SUBSEQUENT OFFERINGS
FabVen will provide the Venturers with notice reasonable under the
circumstances in order to enable them to exercise their rights of first refusal
in connection with equity offerings pursuant to paragraph 4.1(g) of the Foundry
Venture Agreement.
12. VESTING OF TECHNICAL SHARES
UMC's technical shares will not vest under paragraph 4.1(d) of the Foundry
Venture Agreement until FabVen produces wafers with the * process (as
that phrase is defined in general industry usage) with sufficient yield to be
recognized as "production ready" within general industry usage.
13. AUDIT RIGHTS
The specific wording of the provisions contemplated under paragraph 4.2 of
the Foundry Venture Agreement with respect audit rights and financial
information will be as stated by Price Waterhouse, with their commitment to
prepare the reports as promptly as possible under the circumstances. The exact
language for the audit rights will be modeled on whatever Price Waterhouse and
the other accountants agree upon in connection with the joint venture announced
with UMC, Alliance and S3. Currently, it is contemplated that the financials
will be prepared in a manner consistent with that imposed on U.S. public
companies for minority interests.
14. TERMS FOR RIGHTS OF FIRST REFUSAL UNDER PARAGRAPH 4.1(f)(iv)
The rights of first refusal under Paragraph 4.1(f)(iv) of the Foundry
Venture Agreement are intended to extend to and benefit all other eligible
Venturers. To avoid any ambiguity, 4.1(f)(iv)(cc) and 4.1(f)(iv)(dd) are to be
interpreted as follows:
(cc) if any such eligible other Venturer elects not to exercise any
portion or all of such right of first refusal within 30 days of the
independent appraisal, such portion of such right of first refusal will
be subject to exercise by the other eligible other Venturers in
proportion to their then existing shareholdings in FabVen, and the
shares involved will be subject to a right of such other eligible other
Venturers to purchase on the same terms as outlined above; and
(dd) if any such other eligible other Venturer does not commit to
purchase such shares within 60 days of the independent appraisal, all
rights under this Paragraph 4.1(f)(iv) will expire as to such
unpurchased shares.
15. TRANSFERS OF SHARES AFTER PUBLIC OFFERING
Nothing in Paragraph 6.2(c)(i) of the Foundry Venture Agreement or
elsewhere shall prohibit a Venturer from offering and/or selling its shares in
FabVen on the public market to a competitor of UMC, provided however that such
competitor must relinquish all rights to representation and access to Board
information under the Foundry Venture Agreement and under this Written
Assurance, and provided that the restrictions of Paragraph 6.2(c)(ii) of the
-4-
* OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
Foundry Venture Agreement and of Paragraph 7 of this Written Assurance shall
still apply, and provided further that the other restrictions concerning
transfers of capacity and reductions in capacity on a proportional basis with
reductions in ownership will also apply.
16. TRANSFERS OF CAPACITY AMONGST VENTURERS
Notwithstanding anything to the contrary, the Venturers in Module D may
each transfer their respective capacities (whether or not previously forecast)
as stated in Paragraph 2.1 of the Foundry Capacity Agreement to and between one
another by written notice to FabVen and the other Venturers, provided that such
written notice must state the capacity amounts so transferred and the months in
which such transfer will apply and provided that FabVen's consent (which must
not be unreasonably withheld) shall be required for a transfer of quantities
previously committed under Paragraph 2.3(b) of the Foundry Capacity Agreement.
To the extent that FabVen receives such written notices * or more days
prior to the beginning of each month in which such capacity is to be
transferred, such capacity will be treated as if allocated to the Venturer to
whom it has been transferred for all purposes for the period of the transfer
involved, including, without limitation, for purposes of forecasts, commitments,
and the right of FabVen to commit to others any capacity unexercised by the
Venturers.
17. * WARRANTY
The warranty period as stated in Paragraph 5.1 of the Foundry Capacity
Agreement, and the claim period as stated in Paragraph 5.3 of the Foundry
Capacity Agreement shall each be *.
18. CLARIFICATION OF PARAGRAPH 5.4 OF THE FOUNDRY CAPACITY AGREEMENT
The limitations of paragraph 5.4 of the Foundry Capacity Agreement are
intended to limit the remedies under the Warranty provisions, Section 5 of the
Foundry Capacity Agreement. Thus, the Paragraph will be understood and
interpreted as follows:
THIS PARAGRAPH 5.4 STATES THE ONLY AND EXCLUSIVE REMEDY FOR ANY AND ALL CLAIMS
MADE AGAINST FABVEN UNDER THIS SECTION 5 OF THIS FOUNDRY CAPACITY AGREEMENT.
19. CONFIRMATION OF "COVER" REMEDY
To the extent an intentional breach by FabVen of its obligations concerning
wafer start and/or delivery under the Foundry Capacity Agreement results in a
delay of more than * days in delivery of Wafers to a Venturer, then,
notwithstanding anything to the contrary, at the election of the Venturer,
FabVen will compensate such Venturer for reasonable damages of such Venturer in
securing substitute or cover Wafers for those involved in the breach, subject to
the limitation stated below. In addition, to the extent that FabVen breaches
its warranties under Section 5 of the Foundry Capacity Agreement, and fails, for
reasons attributable to a breach by FabVen or the Licensed Process to correct
such breach after two successive attempts to do so, then, at the election of the
Venturer, FabVen will compensate such Venturer for reasonable damages of such
Venturer in securing substitute or cover Wafers for those involved in the
breach, subject to the limitation stated below. Notwithstanding anything to the
contrary, for purposes of this commitment in Paragraph 19 of this Written
Assurance, the recoverable substitute and/or cover damages shall be (i) the
reasonable and necessary costs to replace mask sets for the products involved,
together with (ii) the difference between (aa) the price which the Venturer
would have paid for the Wafers had FabVen fully performed (the "contract
price"), and (bb) all direct and reasonable costs (up to a maximum of * of
the contract price) incurred by the Venturer in securing substitutes and/or
cover.
-5-
* OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
20. LEASE TERM AND LEASEHOLD IMPROVEMENTS
Notwithstanding anything to the contrary under any local real estate or
other law, custom or practice, UMC will consider all investments, improvements
and fixtures purchased by FabVen to be the property of FabVen, and UMC will not
request higher rents under the lease of Module D as a result of any such
investment, improvement and/or fixture. In addition, at the request of XxxXxx,
UMC will negotiate in good faith with FabVen over additional extensions of the
lease term beyond the fifteen year period contemplated under the Foundry Venture
Agreement, and, to the extent that UMC retains the underlying right to do so,
UMC will renew the lease to FabVen for the land of Module D for subsequent five
year terms continuing until the term (or partial term) ending *.
Without limiting the terms of the Foundry Venture Agreement, the lease rate for
the land for Module D will be proportional to the amount paid by UMC to the Park
Administration for the respective square footage involved, plus a reasonable
amount to cover overhead directly related to the lease (not to exceed * of the
rate for the respective share).
21. CONTINUED ASSISTANCE BY UMC
Notwithstanding anything to the contrary, UMC will continue to provide
technical assistance to FabVen with respect to the Licensed Processes to the
extent and for the period reasonably necessary to permit each Venturer to
qualify its products on each Licensed Process which is suitable for the
production of such products. In addition, UMC will make good faith efforts to
improve and develop UMC technology so as to enable UMC to provide that
technology to be provided to FabVen by UMC as shown in the Technology RoadMap.
22. CHOICE OF LAW--NO "HIDDEN" MEANINGS
To the extent any aspect of Taiwan law purports to alter the express
meaning of any term of the Technology Transfer and License Agreement, such term
will not be governed by Taiwan law, but instead will be governed by California
law so as to give effect to the express intention of the parties as stated in
that agreement.
23. CONFIRMATION OF SCOPE OF LICENSE
All licenses granted and/or to be granted under the Technology Transfer and
License Agreement are intended to include rights to import, to offer to sell,
and to otherwise dispose of Wafers, Die and product made using the Wafers made,
together with all other rights stated.
24. NO KNOWN INFRINGEMENTS--UMC
UMC represents and warrants to the Venturers and to FabVen that UMC has no
actual knowledge that the Licensed Process (as defined in the Technology
Transfer and License Agreement) infringes any Patent Claims (as defined below).
25. NO KNOWN INFRINGEMENTS--FABVEN
FabVen represents to each of the Venturers that, to its or UMC's actual
knowledge as of August 29, 1995, the technology, processes, masks and other
information transferred or licensed to FabVen under the Technology Transfer and
License Agreement or otherwise used in the manufacture of products pursuant to
the terms of this Foundry Venture Agreement and/or the Venture Agreements will
not infringe any valid patent rights enforceable under R.O.C. and/or U.S. law
("Patent Claims"), provided however that "Patent Claims" shall not include
claims arising out of and/or in connection with patents licensed to UMC by third
parties as of
-6-
*OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT REQUEST FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
August 29, 1995. FabVen shall indemnify and hold harmless each of the Venturers
from and against any such Patent Claims (i) to the extent arising out of a
breach of this representation, and/or (ii) to the extent and proportional to any
claim that such Venturer is liable as a direct and/or indirect result (aa) of
its execution of this Foundry Venture Agreement or any of the Venture
Agreements, and/or (bb) of its investment in FabVen and/or any actions under
such agreements on any agency, express or implied partnership or joint venture,
respondent superior, piercing the corporate veil, conspiracy or other legal
theory whereby liability is asserted against such Venturer for or on account of
actions of FabVen. Under no circumstances shall FabVen have any obligation
under this Paragraph with respect to any Venturer who conspires and/or
cooperates, other than pursuant to process of law, with the person raising the
Patent Claim for which indemnity is sought, with respect to such Patent Claim.
Notwithstanding anything to the contrary, and except for breaches of the
representation of FabVen in the first sentence of this Paragraph, FabVen will
not indemnify or hold any Venturer harmless from or against any Patent Claim to
the extent arising out of the manufacture for such Venturer and/or the purchase,
use and/or sale of products by that Venturer, provided however that with respect
to such Patent Claims the Venturer shall be entitled to the same replace or
refund remedy as is set forth in Paragraph 5.4 of the Foundry Capacity Agreement
with respect to defectively manufactured product, provided however that unless
otherwise agreed, replacement product shall not satisfy FabVen's obligations
under this Paragraph 25 unless that replacement is non-infringing.
26. CLARIFICATION OF PURPOSE
As is clear from the documents involved, FabVen shall be in the business of
fabricating integrated circuits and developing related processes and know-how.
In doing so, XxxXxx will sell Wafers to the Venturers and others as described in
more detail in the Foundry Capacity Agreements.
27. CONFIRMATION OF COMMITMENTS BY XXXXXX
XxxXxx will undertake its reasonable best efforts to implement the
Technology Road Map attached to the Foundry Venture Agreement as Attachment
A, to achieve the goals described in the FabCo Business Plan, and to achieve
the * wafer out minimums with respect to each of the * processes described in
Paragraph 6 above. In addition, and subject to the terms of this Foundry
Venture Agreement, the Foundry Capacity Agreement and the Technology Transfer
and License Agreement, FabVen will cooperate with each Venturer in a
commercially reasonable manner to qualify products of such Venturer under the
processes involved.
28. LIMITED DISCOVERY IN CONNECTION WITH ARBITRATION
Notwithstanding anything to the contrary in the Foundry Venture Agreement,
the arbitrators will have the power to require discovery in connection with any
dispute within their jurisdiction pursuant to the Federal Rules of Civil
Procedure to the extent they find such discovery necessary to achieve a fair and
equitable result, and subject to reasonable orders from the arbitrators to
minimize the burdens involved and to focus the discovery on those areas
necessary. All reasonable costs of such discovery (including attorneys' fees)
incurred by a party which prevails in the arbitration in connection with the
issue involved in the discovery will be recoverable by that party against the
party which requested the discovery.
-7-
29. CONFIRMATION OF OBLIGATIONS CONCERNING PROPRIETARY PROCESSES
Without limiting the obligations under the confidentiality provisions of
the Foundry Venture Agreement, and at the written request of a Venturer, FabVen
will treat as confidential all processes provided by a Venturer which are
designated by that Venturer as "Confidential" under the Foundry Venture
Agreement, and, without the written consent of the Venturer which provided the
process, FabVen shall not use or otherwise disclose any such process for any
purpose other than the fabrication of Wafers for such Venturer.
30. RATIFICATION BY FABVEN
UMC shall exert best faith efforts to have FabVen ratify in writing the
commitments and obligations under this Written Assurance which apply to FabVen.
31. APPROPRIATE PUBLIC OFFERING ROADMAP
Promptly upon incorporation of FabVen, the parties will use reasonable best
efforts to pursue discussions with mutually acceptable investment bankers or
other appropriate people to attempt to establish the appropriate roadmap to an
initial public offering.
32. APPROPRIATE RESOLUTION MECHANISM FOR DISPUTES
Promptly upon incorporation of FabVen, the parties will use reasonable best
efforts to discuss and evaluate dispute and conflict resolution mechanisms and
procedures in an attempt to anticipate and hopefully resolve matters.
We request that each Venturer countersign this Written Assurance below to
signify their approval and assent to its terms, and to confirm that we each will
hold this Written Assurance as an integral and material part of our Foundry
Venture Agreements.
Yours sincerely,
Xxxx Xxxxx, President
AGREED ON BEHALF OF Lattice Semiconductor Corporation
---------------------------------------------
Name of Venturer
As of September 13, 1995
/S/Xxxxxx Xxxx
-------------------------------
Authorized signature
RATIFIED BY FABVEN _________________________________________________
Authorized signature
-8-
