EXHIBIT 10.17
AGREEMENT
BETWEEN
TAIWAN SEMICONDUCTOR MANUFACTURING
COMPANY, LTD.
AND
QUICKLOGIC CORPORATION
JULY 21, 1997
TABLE OF CONTENTS
1. DEFINITIONS............................................................... 4
2. VOLUME COMMITMENT......................................................... 6
3. OBLIGATION TO TAKE OR PAY FEE............................................. 7
4. FAILURE TO PURCHASE THE TAKE OR PAY CAPACITY.............................. 8
5. PRICING................................................................... 8
6. ROYALTIES................................................................. 9
7. SUPPLY.................................................................... 9
8. SHIPMENT.................................................................. 11
9. ACCEPTANCE................................................................ 12
10. ON-SITE INSPECTION AND VENDOR INFORMATION................................ 12
11. WARRANTY................................................................. 12
12. TECHNOLOGY OWNERSHIP [AND LICENSE GRANT]................................. 13
13. CONFIDENTIALITY.......................................................... 16
14. EXPORT CONTROL........................................................... 17
15. INTELLECTUAL PROPERTY INDEMNITY.......................................... 18
16. PROCESS DEVELOPMENT...................................................... 19
17. SORT, ASSEMBLY AND TEST.................................................. 20
18. TERM AND TERMINATION..................................................... 20
19. RECORDS AND AUDITS....................................................... 21
20. BOARD APPROVAL........................................................... 21
21. ASSIGNMENT............................................................... 21
22. LIMITATION OF LIABILITY.................................................. 21
23. NOTICE................................................................... 22
24. GOVERNING LAW AND ARBITRATION............................................ 22
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
2
25. FORCE MAJEURE............................................................ 23
26. NON-PUBLICITY............................................................ 23
27. ENTIRE AGREEMENT......................................................... 23
3
MANUFACTURING AGREEMENT
THIS AGREEMENT IS ENTERED INTO, EFFECTIVE JULY 21, 1997 (THE
"EFFECTIVE DATE"), BY AND BETWEEN TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.,
A COMPANY DULY INCORPORATED UNDER THE LAWS OF THE REPUBLIC OF CHINA, HAVING ITS
PRINCIPAL XXXXX XX XXXXXXXX XX XX. 000, XXXX XXXXXX XXX, SCIENCE BASED
INDUSTRIAL PARK, HSIN-CHU, TAIWAN, R.O.C. ("TSMC"), AND QUICKLOGIC CORPORATION
("QUICKLOGIC") A COMPANY DULY INCORPORATED UNDER THE LAWS OF CALIFORNIA HAVING
ITS PRINCIPAL PLACE OF BUSINESS AT 0000 XXXXXXX XXXXX, XXXXXXXXX, XX 00000-0000.
RECITALS
QUICKLOGIC HAS CONCEIVED OF A TECHNOLOGY KNOWN AS QUICKLOGIC'S
VIALINK(R) TECHNOLOGY FOR PROGRAMMABLE INTEGRATED CIRCUITS, AND WISHES TO HAVE
TSMC ASSIST QUICKLOGIC IN TRANSFERRING ANDOR DEVELOPING A PRODUCTION PROCESS FOR
SUCH TECHNOLOGY AND DESIRES THAT TSMC BE A MANUFACTURING SOURCE FOR INTEGRATED
CIRCUITS USING SUCH TECHNOLOGY OR SUCH OTHER PROCESSES AS MAY BE MUTUALLY AGREED
BETWEEN THE PARTIES.
TSMC IS IN THE BUSINESS OF MANUFACTURING INTEGRATED CIRCUITS, AND
WISHES TO ASSIST QUICKLOGIC WITH THE TRANSFER ANDOR DEVELOPMENT OF A PRODUCTION
PROCESS FOR QUICKLOGIC'S VIALINK(R) TECHNOLOGY AND FURTHER DESIRES TO BE A
MANUFACTURER OF SUCH INTEGRATED CIRCUITS USING SUCH TECHNOLOGY FOR QUICKLOGIC OR
SUCH OTHER PROCESSES AS MAY BE MUTUALLY AGREED BETWEEN THE PARTIES.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
CONDITIONS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
(a) "PROCESS" SHALL MEAN THE PRODUCTION PROCESS DEVELOPED BY TSMC WITH
ASSISTANCE FROM QUICKLOGIC TO PRODUCE INTEGRATED CIRCUITS USING
QUICKLOGIC'S METAL TO METAL AMORPHOUS SILICON ANTIFUSE VIALINK(R)
TECHNOLOGY, OR SUCH PROCESS OR SUCCESSOR PROCESS AS MAY BE MUTUALLY
ACCEPTABLE. THE PROCESS SHALL BE USED TO MANUFACTURE THE PRODUCTS
DEFINED BELOW.
(b) "PRODUCTS" USED IN THIS AGREEMENT SHALL MEAN THOSE INTEGRATED CIRCUITS
DESIGNED BY QUICKLOGIC AND MANUFACTURED FOR QUICKLOGIC BY TSMC UNDER
THIS
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AGREEMENT. THE PRODUCTS ARE TO BE SOLD IN THE FORM OF UNPROBED WAFERS,
PROBED WAFERS, DIE, OR TESTED PACKAGED DIE, SUCH FORM TO BE THE CHOICE
OF QUICKLOGIC.
(c) "TSMC COMMITTED CAPACITY" USED IN THIS AGREEMENT SHALL MEAN THE
CAPACITY THAT TSMC AGREES TO SUPPLY TO QUICKLOGIC IN ANY CALENDAR YEAR
AS SET FORTH IN EXHIBIT A.
(d) "QUICKLOGIC COMMITTED CAPACITY" USED IN THIS AGREEMENT SHALL MEAN THE
MINIMUM CAPACITY THAT QUICKLOGIC AGREES TO PURCHASE FROM TSMC PURSUANT
TO THIS AGREEMENT IN ANY CALENDAR YEAR. THE QUICKLOGIC COMMITTED
CAPACITY SHALL BE THE PERCENTAGE OF THE TSMC COMMITTED CAPACITY AS SET
FORTH IN EXHIBIT A.
(e) "TAKE OR PAY CAPACITY" USED IN THIS AGREEMENT SHALL MEAN THAT PART OF
THE QUICKLOGIC COMMITTED CAPACITY FORECASTED AS SPECIFIED IN SECTION 2
(e) FOR A GIVEN QUARTER IN ANY CALENDAR YEAR. THE AGGREGATE OF THE
FOUR QUARTERS OF TAKE OR PAY CAPACITY IN ANY CALENDAR YEAR SHALL BE
EQUAL TO THE QUICKLOGIC COMMITTED CAPACITY FOR THAT YEAR; FOR THE
PURPOSES OF THIS AGREEMENT THIS SHALL MEAN THAT THE FORECASTED TAKE OR
PAY CAPACITY FOR THE FOURTH QUARTER OF ANY CALENDAR YEAR SHALL EQUAL
THE QUICKLOGIC COMMITTED CAPACITY FOR THAT YEAR LESS THE SUM OF THE
PREVIOUS QUARTERS TAKE OR PAY CAPACITY FOR SUCH YEAR.
(f) "TAKE OR PAY FEE" USED IN THIS AGREEMENT SHALL MEAN THE FEE PAID TO
TSMC FOR THE DIFFERENCE BETWEEN THE TAKE OR PAY CAPACITY AND THE
ACTUAL CAPACITY PURCHASED IN ANY GIVEN QUARTER, PURSUANT TO SECTIONS 2
AND 3 BELOW.
(g) "DATE OF QUALIFICATION" USED IN THIS AGREEMENT SHALL MEAN THE DATE OF
COMPLETION OF FULL QUALIFICATION OF THE FIRST QUICKLOGIC PRODUCT. FULL
QUALIFICATION AT THE EFFECTIVE DATE IS DEFINED AS PASSING ALL TESTS IN
THE FOLLOWING TABLE. THERE MAY BE SOME ADJUSTMENTS MADE BY QUICKLOGIC
TO THE TEST CONDITION OR CRITERIA CONSIDERING THAT THIS IS
QUICKLOGIC'S FIRST 3.3V PRODUCT WITH 5V TOLERANT IOS.
[ * ]
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
5
(g) "VIALINK TECHNOLOGY" USED IN THIS AGREEMENT SHALL MEAN THE METAL-TO-
METAL AMORPHOUS SILICON ANTIFUSE PROCESS DEVELOPED FOR AND BY
QUICKLOGIC IN TSMC'S FAB 4 ON A 0.35um FEATURE SIZE PROCESS AS USED TO
MANUFACTURE THE PRODUCTS.
2. VOLUME COMMITMENT
(a) QUICKLOGIC AGREES TO PURCHASE FROM TSMC NOT LESS THAN [*] OF THE TOTAL
NUMBER OF WAFERS IN ANY CALENDAR YEAR PURCHASED FROM ALL ITS FOUNDRY
SOURCES, EXCLUDING (i) WAFERS PURCHASED FROM CYPRESS SEMICONDUCTOR,
(ii) WAFERS WHICH DO NOT INCORPORATE AN ANTIFUSE, (iii) WAFERS FOR
WHICH ANY QUICKLOGIC CUSTOMER DEMANDS IN WRITING AN ALTERNATIVE
FOUNDRY SOURCE, (iv) ANY OTHER SOURCE OF WAFERS THAT QUICKLOGIC AND
TSMC MUTUALLY AGREE TO EXCLUDE FROM THIS CALCULATION. QUICKLOGIC AND
TSMC WILL MAKE A GOOD FAITH EFFORT TO MAINTAIN QUICKLOGIC'S ANTIFUSE
WAFER VOLUME AS BEING [*] OR GREATER AS PROVIDED BY TSMC. "WAFERS"
USED IN THIS PARAGRAPH 2(a) REFER TO 8" WAFERS OR EQUIVALENT NUMBER OF
OTHER SIZES OF WAFERS.
(b) QUICKLOGIC AGREES TO PURCHASE FROM TSMC THE QUICKLOGIC COMMITTED
CAPACITY, AND SUBJECT TO THE PAYMENT OF THE TAKE OR PAY FEE BY
QUICKLOGIC UNDER SECTION 3 BELOW, TSMC AGREES TO PROVIDE TO QUICKLOGIC
THE TSMC COMMITTED CAPACITY, AS SET FORTH IN EXHIBIT A.
(c) QUICKLOGIC WILL PROVIDE ANNUALLY, BY OCTOBER 31, A FORECAST OF THE
TOTAL NUMBER OF WAFERS THAT QUICKLOGIC EXPECTS TO PURCHASE FROM TSMC
FOR [*] OR FOR THE REMAINING TERM OF THE AGREEMENT, SUCH FORECAST
BEING FOR ONE (1) YEAR PERIODS COMMENCING ON JANUARY 1 OF THE NEXT
CALENDAR YEAR. THE FIRST CALENDAR YEAR OF EACH SUCH FORECAST IS THE
QUICKLOGIC COMMITTED CAPACITY. QUICKLOGIC WILL MAKE A FIRM COMMITMENT
TO PURCHASE THE NUMBER OF WAFERS FOR [*] EXCEPTING ANY FORECAST PRIOR
TO THE DATE OF QUALIFICATION. FOR THE YEAR IN WHICH THE DATE OF
QUALIFICATION OCCURS, THE QUICKLOGIC COMMITTED CAPACITY, FOR THE
PURPOSE OF DETERMINING THE TAKE OR PAY CAPACITY SHALL MEAN THE
AGGREGATE OF THAT VOLUME OF WAFERS FORECAST, [*] PURSUANT TO PARAGRAPH
2(e), FOLLOWING THE DATE OF QUALIFICATION. THE TAKE OR PAY FEE SHALL
NOT BE APPLIED TO ANY QUARTER PRECEDING AND INCLUDING THE DATE OF
QUALIFICATION.
(d) QUICKLOGIC WILL PROVIDE TSMC A [*] FORECAST COMMENCING ON THE CALENDAR
QUARTER FOLLOWING THE DATE OF QUALIFICATION. SUCH FORECAST SHALL BE
BINDING FOR THE PURPOSES OF DETERMINING THE DATE OF [*].
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
6
(e) ON OR BEFORE THE LAST DAY OF EACH CALENDAR QUARTER QUICKLOGIC AGREES
TO PROVIDE TO TSMC A FORECAST BY TECHNOLOGY OF THE TAKE OR PAY
CAPACITY FOR THE NEXT [*] THAT QUICKLOGIC WILL
PURCHASE OF THE QUICKLOGIC COMMITTED CAPACITY. THE FIRST BINDING SUCH
FORECAST SHALL BE PROVIDED FOR THE QUARTER FOLLOWING THE DATE OF
QUALIFICATION. THE FORECAST FOR THE TAKE OR PAY CAPACITY FOR THE FIRST
QUARTER SHALL THEREAFTER BE BINDING (I.E. QUICKLOGIC AGREES TO
PURCHASE [*] FOR THE SHIPMENT IN THE FIRST
QUARTER OF THE FORECAST). THE FORECAST FOR THE SECOND QUARTER TAKE OR
PAY CAPACITY SHALL BE BINDING WITHIN A DEVIATION NOT TO EXCEED PLUS OR
MINUS [*] OF THE NUMBER OF WAFERS FORECAST, PROVIDING
THAT THE ABOVE FORECASTS SHALL NOT BE LESS THAN THE QUICKLOGIC
COMMITTED CAPACITY IN ANY CALENDAR YEAR.
(f) ALL FORECASTS MUST BE BASED ON WAFERS OUT OF FAB AND MUST INCLUDE
QUANTITIES OF WAFERS FROM PREVIOUS FORECASTS THAT ARE CURRENTLY IN
PROCESS.
(g) TSMC AGREES TO SHIP, AND QUICKLOGIC AGREES TO ACCEPT, WAFERS OUT AT A
LINEAR WEEKLY RATE IN ANY QUARTER UNLESS SPECIFICALLY AGREED OTHERWISE
BY MUTUAL NEGOTIATION.
3. OBLIGATION TO TAKE OR PAY FEE
(a) QUICKLOGIC AGREES TO PAY TO TSMC THE TAKE OR PAY FEE AS SET FORTH IN
THIS SECTION 3 AND ILLUSTRATED IN EXHIBIT B, EXCEPT AS PROVIDED IN
PARAGRAPH 7(c) BELOW. THE TAKE OR PAY FEE FOR ANY CALENDAR QUARTER,
ONCE PAID, SHALL BE NON-REFUNDABLE FOR ANY CAUSE NOR SHALL IT BE
CREDITED AGAINST ANY PAYMENTS DUE IN ANY SUBSEQUENT CALENDAR
QUARTER(S) EXCEPT AS PROVIDED IN PARAGRAPH 3(b) AND 4 BELOW.
(b) IF, IN ANY CALENDAR QUARTER, QUICKLOGIC IS REQUIRED TO PAY A TAKE OR
PAY FEE AND IN THE NEXT SUBSEQUENT CALENDAR QUARTER QUICKLOGIC EXCEEDS
THE TAKE OR PAY CAPACITY THEN THAT TAKE OR PAY FEE WILL BE CREDITED
AGAINST SUCH NEXT SUBSEQUENT CALENDAR QUARTER FOR THE COST OF THOSE
ACTUAL WAFERS PURCHASED IN EXCESS OF THE TAKE OR PAY CAPACITY, ON A
PER WAFER BASIS, AT A RATE OF [*] PERCENT [*] OF THE PER WAFER TAKE OR
PAY FEE.
(c) THE TAKE OR PAY FEE FOR ANY CALENDAR QUARTER WILL BE BASED ON THE
SHORTFALL IN NUMBERS OF WAFERS BETWEEN THE TAKE OR PAY CAPACITY AND
THE ACTUAL PURCHASED CAPACITY MULTIPLIED BY [*] OF THE AVERAGE
PURCHASE PRICE OF WAFERS PURCHASED BY QUICKLOGIC FROM TSMC UNDER THIS
AGREEMENT IN THAT QUARTER (AS SHOWN IN EXHIBIT B), PROVIDED THAT THE
TOTAL NUMBER OF WAFERS PURCHASED EXCEEDS [*] OF THE QUICKLOGIC
COMMITTED CAPACITY. IF THE NUMBER OF WAFERS FALLS BELOW [*] OF THE
QUICKLOGIC COMMITTED CAPACITY THE TAKE OR PAY FEE WAFER PRICE WILL BE
BASED ON [*] OF THE AVERAGE
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
7
PRICE OF WAFERS PURCHASED UNDER THIS AGREEMENT IN THE LAST QUARTER IN
WHICH THE TOTAL NUMBER OF WAFERS PURCHASED EXCEEDED [*] OF THE
QUICKLOGIC COMMITTED CAPACITY.
(d) UNLESS OTHERWISE AGREED UPON BY THE PARTIES, PAYMENTS SHALL BE DUE
THIRTY (30) DAYS AFTER THE DATE OF TSMC'S INVOICE. ANY PAYMENT MADE
UNDER THIS AGREEMENT SHALL BE IN U.S. DOLLARS.
4. FAILURE TO PURCHASE THE TAKE OR PAY CAPACITY
IF IN ANY CALENDAR QUARTER, FOR ANY REASON, QUICKLOGIC DOES NOT INTEND
TO USE OR PURCHASE ALL OR A PORTION OF THE TAKE OR PAY CAPACITY FOR
THAT CALENDAR QUARTER, QUICKLOGIC SHALL PROMPTLY NOTIFY TSMC OF SUCH
IN WRITING. QUICKLOGIC SHALL REMAIN LIABLE FOR THE TAKE OR PAY FEE (AS
ILLUSTRATED IN EXHIBIT B) FOR THE REMAINING TERM OF THIS AGREEMENT
UNDER SECTION 3 ABOVE. TSMC IS ENTITLED TO SELL OR USE ANY SUCH UNUSED
CAPACITY FOR SUCH CALENDAR QUARTER. IF TSMC SELLS SUCH UNUSED
CAPACITY, VERIFIED BY THIRD PARTY AUDIT AS PER SECTION 19, QUICKLOGIC
WILL RECEIVE [*] REIMBURSEMENT, PER WAFER USED BY TSMC, OF THE TAKE OR
PAY FEE PAID FOR THAT QUARTER PURSUANT TO PARAGRAPH 3(b) ABOVE.
5. PRICING
(a) PROVIDED THAT QUICKLOGIC PURCHASES FROM TSMC NOT LESS THAN [*] PERCENT
[*] OF THE TOTAL NUMBER OF WAFERS IN ANY CALENDAR YEAR PURCHASED FROM
ALL QUICKLOGIC'S FOUNDRY SOURCES, EXCLUDING SOURCES AS STATED IN
PARAGRAPH 2(a) AND EXCLUDING WAFERS OBTAINED FROM SOURCES AS A RESULT
OF TSMC'S FAILURE TO DELIVER AS DEFINED IN PARAGRAPH 7(a), QUICKLOGIC
WILL RECEIVE [*] FOR THE PRODUCTS. THIS SHALL BE INTERPRETED AS
FOLLOWS: QUICKLOGIC PRICING SHALL BE IN THE [*] OF PRICES FOR WAFERS
SOLD TO TSMC CUSTOMERS FOR THE SAME TSMC FAB, FOR SIMILAR QUANTITIES
AND LIKE TECHNOLOGY, [*]. SUCH PRICING MAY BE VERIFIED BY QUICKLOGIC
THOUGH A THIRD PARTY AUDIT AS PER SECTION 19. [*].
(b) THE PARTIES SHALL NEGOTIATE IN GOOD FAITH EACH YEAR PRICES FOR THE
QUICKLOGIC COMMITTED CAPACITY OF THE FOLLOWING YEAR, AND IF NO
AGREEMENT IS REACHED BY THE PARTIES BEFORE OCTOBER EACH YEAR, THE
PARTIES AGREE TO SUBMIT THE DISPUTE TO THE BINDING ARBITRATION
PURSUANT TO SECTION 24 BELOW, AND UNDER SUCH CIRCUMSTANCES,
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
8
NEITHER PARTY SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT UNDER
SECTION 18 BELOW.
(c) THE PRICES QUOTED IN THIS AGREEMENT ARE BASED UPON THE NEW TAIWAN
DOLLARUS DOLLAR CLOSING EXCHANGE RATE ACCORDING TO THE BANK OF TAIPEI
AT THE EFFECTIVE DATE. IF THE CLOSING EXCHANGE RATE AT THE DATE OF
SHIPMENT EXCEEDS PLUS OR MINUS 5% THE QUOTED EXCHANGE RATE AT THE
EFFECTIVE DATE, THE EXCHANGE RATE WILL BE RE-QUOTED TO THIS VALUE. ANY
PAYMENT MADE UNDER THIS AGREEMENT SHALL BE MADE IN U.S. DOLLARS.
(d) TSMC AGREES TO OFFER DIE PRICING QUOTATIONS AFTER [*] PRODUCTION
WAFERS HAVE BEEN PROCESSED FOR EACH PRODUCT. THE DIE PRICING WILL BE
BASED ON CURRENT YIELDS, YIELD TRENDS AND YIELD IMPROVEMENT PLANS THAT
ARE IN ACCORDANCE WITH TSMC'S INTERNAL YIELD IMPROVEMENT PLANS.
6. ROYALTIES
IN CONSIDERATION OF THE [*] AGREES TO PAY ROYALTIES IN THE AMOUNT OF
[*] OF THE GROSS REVENUE BASED ON THE [*] MAY CHANGE THIS ROYALTY
AMOUNT AND [*] NOT LESS THAN ONE HUNDRED AND TWENTY (120) DAYS NOTICE
IN WRITING PRIOR TO IMPLEMENTING SUCH CHANGE. IF [*] DOES NOT AGREE
WITH SUCH CHANGE, THE PARTIES AGREE TO SUBMIT THE DISPUTE TO BINDING
ARBITRATION PURSUANT TO SECTION 24 BELOW, AND UNDER SUCH
CIRCUMSTANCES, NEITHER PARTY SHALL HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT UNDER SECTION 18 BELOW OR TO TERMINATE THE EXISTING ROYALTY
PAYMENT UNDER THIS SECTION 6.
(a) REPORTING AND PAYMENT FOR THE PURPOSE OF REPORTING ON AND PAYING THE
ROYALTIES UNDER THIS SECTION 6, [*] A WRITTEN REPORT STATING THE TOTAL
GROSS REVENUE BASED ON [*] DURING THE PERIOD ENDING DECEMBER 31 OF
EACH YEAR. SUCH REVENUES CAN BE VERIFIED BY A THIRD PARTY AUDIT AS PER
SECTION 19. EACH SUCH REPORT SHALL BE GIVEN WITHIN SIXTY (60) DAYS
FOLLOWING THE END OF THE CALENDAR YEAR, AND SHALL BE ACCOMPANIED BY A
CHECK IN FULL PAYMENT OF ALL ROYALTIES DUE FOR SUCH PERIOD.
7. SUPPLY
(a) QUICKLOGIC RESERVES THE RIGHT TO OBTAIN AN ALTERNATIVE SOURCE ("SECOND
SOURCE"), FOR UP TO A MAXIMUM OF [*] OF ITS TOTAL NUMBER OF WAFERS
FROM
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
9
ALL ITS FOUNDRY SOURCES EXCLUDING SOURCES AS STATED IN PARAGRAPH 2(a)
IN ANY ONE YEAR. IN THE EVENT THAT TSMC FAILS TO MEET THE TSMC
COMMITTED CAPACITY OR QUICKLOGIC'S MARKET REQUIREMENTS DEFINED AS (i)
MARKET CAPACITY, (ii) PRODUCT QUALITY AS PER EXHIBIT E AND F OR (iii)
AVERAGE PRODUCT YIELDS AS PER TSMC'S PREDICTED YIELD MODEL FOR ANY
PRODUCT, THEN QUICKLOGIC SHALL HAVE THE RIGHT TO SECOND SOURCE THE
PRODUCTS WITHOUT REGARD TO QUANTITY LIMITATIONS UNTIL SUCH TIME AS
TSMC CAN SUPPLY SUCH COMMITTED CAPACITY OR SUCH QUICKLOGIC MARKET
REQUIREMENTS.
(b) IF TSMC IS AWARE OF ANY REASON THAT WILL CAUSE A DELAY IN MEETING ITS
COMMITMENT TO SUPPLY PRODUCTS TO QUICKLOGIC, TSMC SHALL BE REQUIRED TO
IMMEDIATELY NOTIFY QUICKLOGIC IN WRITING.
(c) IF TSMC FAILS TO DELIVER PRODUCTS ORDERED BY QUICKLOGIC WITHIN THE
TSMC COMMITTED CAPACITY, INCLUDING A FAILURE TO DELIVER DUE TO LOW
PRODUCT OR PROCESS YIELDS, AND SUCH FAILURE TO DELIVER RESULTS IN A
FAILURE BY QUICKLOGIC TO TAKE DELIVERY OF THE TAKE OR PAY CAPACITY,
THEN QUICKLOGIC SHALL NOT BE LIABLE FOR THE TAKE OR PAY FEE FOR ANY
SHORTFALL IN PRODUCTS RESULTING FROM TSMC'S FAILURE TO DELIVER.
(d) IF TSMC FAILS TO MEET ITS DELIVERY DATES ON TWO OR MORE SUCCESSIVE
DELIVERIES BY MORE THAN FOURTEEN (14) DAYS, A SENIOR OFFICER OF
QUICKLOGIC WILL DISCUSS THE CAUSE OF THE DELAY WITH THE PRESIDENT OF
TSMC, USA AND DISCUSS THE MEANS TO CORRECT THE FAILURES AND TSMC SHALL
TAKE SPECIFIC STEPS TO PREVENT SIMILAR EVENTS IN THE FUTURE, THUS
ENSURING THAT TSMC MEETS ITS COMMITMENTS. IF THE CORRECTIVE ACTION HAS
NOT REMEDIED THE DELAYS IN DELIVERY WITHIN SIXTY (60) CALENDAR DAYS,
THE PRESIDENT OF QUICKLOGIC SHALL CALL THE PRESIDENT OF TSMC, LTD.,
TAIWAN AND TSMC SHALL USE ITS BEST EFFORTS TO REMEDY THE FAILURE TO
MEET ITS COMMITMENTS IN THE SHORTEST POSSIBLE TIME. FAILURE OF TSMC TO
USE ITS BEST EFFORTS AT SUCH TIME WILL CONSTITUTE A BREACH OF
CONTRACT.
(e) QUICKLOGIC SHALL PLACE PURCHASE ORDERS ("PURCHASE ORDERS") FOR SUCH
QUANTITIES OF THE WAFERS AS AND WHEN IT REQUIRES. THE PURCHASE ORDERS
SHALL BE OPEN PURCHASE ORDERS FOR A FIXED QUANTITY OF THE WAFERS, AND
SHALL NORMALLY COVER A [*] PERIOD COMMENCING ONE QUARTER AFTER THE
PLACEMENT OF THE PURCHASE ORDER. QUICKLOGIC SHALL ISSUE RELEASE ORDERS
FOR QUANTITIES AND MIX OF PRODUCTS AS AND WHEN IT REQUIRES, AGAINST
THIS PURCHASE ORDER. SUCH PURCHASE ORDERS CONSTITUTE FIRM PURCHASE
OBLIGATIONS ON THE PART OF QUICKLOGIC AND SHALL ONLY BE FINAL SUBJECT
TO ACCEPTANCE BY TSMC. TSMC MAY ACCEPT THE PURCHASE ORDER EITHER BY
WRITTEN ACKNOWLEDGMENT OR BY SHIPMENT OF THE PRODUCTS ORDERED. ANY
SUCH WRITTEN ACKNOWLEDGMENT OR SHIPMENT BY TSMC MAY VARY THE TERMS OF
PURCHASE ORDERS CONSISTENT WITH THE TERMS AND CONDITIONS OF THIS
AGREEMENT. NOTWITHSTANDING THE ABOVE, THE AVERAGE CYCLE TIME PER
MASKING STEP FOR QUICKLOGIC PRODUCTS SHALL BE AT LEAST AS SHORT AS
THOSE PRODUCTS SUPPLIED TO OTHER
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
10
TSMC CUSTOMERS USING SIMILAR DEVICE GEOMETRY IN SIMILAR VOLUMES FROM
THE SAME TSMC FAB.
(f) IF QUICKLOGIC NOTIFIES TSMC IN WRITING THAT MODIFICATIONS TO THE
QUALITY AND RELIABILITY SPECIFICATIONS IN EXHIBIT F ARE REQUIRED,
INCLUDING MODIFICATIONS TO MASK TOOLING OR TESTING, TSMC SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO MAKE SUCH MODIFICATIONS WITHIN A
REASONABLE PERIOD OF TIME AFTER SUCH QUICKLOGIC NOTIFICATION, PROVIDED
THAT ANY ADJUSTMENTS IN PRICE, PRODUCTION, SHIPMENT SCHEDULE, AND ANY
OTHER TERMS AND CONDITIONS OF THIS AGREEMENT SHALL MEET WITH TSMC
APPROVAL PRIOR TO THE MAKING OF SUCH MODIFICATIONS. IT IS UNDERSTOOD
THAT ALL COSTS INCURRED AS A RESULT OF MAKING SUCH MODIFICATIONS
(INCLUDING RETOOLING COST) SHALL BE BORNE BY QUICKLOGIC.
(g) QUICKLOGIC MAY, FROM TIME TO TIME, CHANGE THE MIX OF PRODUCTS, OR ADD
OR SUBSTITUTE SIMILAR TYPES OF PRODUCTS, MADE USING THE PROCESS, AND
TSMC SHALL USE REASONABLE EFFORTS TO PRODUCE SUCH PRODUCTS AS
REQUESTED. ALL COSTS INCURRED AS A RESULT OF ADDITIONAL TYPES OF
PRODUCTS SHALL BE BORNE BY QUICKLOGIC. THE PRICES FOR ANY ADDITIONAL
TYPES OF PRODUCTS WHICH HAD NOT BEEN PREVIOUSLY QUOTED SHALL BE
NEGOTIATED BY THE PARTIES.
8. SHIPMENT
(a) UNLESS OTHERWISE AGREED TO BETWEEN THE PARTIES, TSMC SHALL SHIP THE
PRODUCTS TO QUICKLOGIC IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF
THE INCOTERMS 1990 EXW (EX WORKS TSMC'S HSIN-CHU FACTORY), THE OUTLINE
OF WHICH IS SET FORTH IN EXHIBIT C. TITLE AND RISK OF LOSS SHALL PASS
TO QUICKLOGIC UPON SHIPMENT. TSMC SHALL PACKAGE THE PRODUCTS FOR
SECURE SHIPMENT ACCORDING TO GOOD MANUFACTURING PRACTICES WITH
CONSIDERATION OF THE METHOD OF SHIPMENT CHOSEN. THE DATE OF THE XXXX
OF LADING OR OTHER RECEIPT ISSUED BY THE CARRIER SHALL BE CONCLUSIVE
PROOF OF THE DATE AND FACT OF SHIPMENT OF PRODUCTS.
(b) PARTIAL SHIPMENTS OF PRODUCTS ARE ALLOWED, SO LONG AS FULL SHIPMENT OF
THE APPROPRIATE QUANTITIES ARE MADE BY THE SHIPMENT DATES SPECIFIED IN
THE RESPECTIVE PURCHASE ORDERS. SUCH PARTIAL SHIPMENTS MAY BE INVOICED
INDIVIDUALLY OR IN COMBINATION WITH ALL THE OTHER PARTIAL SHIPMENTS
MADE UNDER THE SAME PURCHASE ORDERS.
(c) ANY SHIPMENT OF PRODUCTS MADE WITHIN SEVEN (7) DAYS BEFORE OR AFTER
THE SHIPMENT DATE(S) SPECIFIED IN THE PURCHASE ORDERS SHALL CONSTITUTE
TIMELY SHIPMENT.
11
9. ACCEPTANCE
(a) QUICKLOGIC SHALL RECEIVE ALL CONFORMING TENDERS OF THE PRODUCTS
SHIPPED UNDER THIS AGREEMENT, AND SHALL NOTIFY TSMC IN WRITING, WITHIN
FORTY FIVE (45) DAYS FOLLOWING THE SHIPMENT OF ANY PRODUCTS, AS TO
EITHER ACCEPTANCE OR REJECTION THEREOF. IF NO NOTIFICATION INDICATING
REJECTION IS RECEIVED BY TSMC WITHIN THE ABOVE TIME PERIOD, THEN SUCH
PRODUCTS SHALL BE DEEMED ACCEPTED.
(b) QUICKLOGIC MAY INSPECT THE PRODUCTS AND CARRY OUT TESTING, PRIOR TO
ACCEPTANCE THEREOF, AT ITS OWN FACILITIES. THE INSPECTION AND TESTING
SHALL BE PERFORMED PURSUANT TO THE METHODS SET FORTH IN EXHIBIT D.
10. ON-SITE INSPECTION AND VENDOR INFORMATION
(a) QUICKLOGIC AND TSMC WILL HOLD A QUALITY AUDIT ONCE PER YEAR AT A TIME
AND PLACE TO BE MUTUALLY AGREED UPON BY THE PARTIES.
(b) EXCEPT AS NEEDED FOR PROCESS DEVELOPMENT AND YIELD ENHANCEMENT, AT A
FREQUENCY OF NO MORE THAN ONCE A YEAR, QUICKLOGIC MAY SEND ITS
REPRESENTATIVES TO INSPECT TSMC'S PRODUCTION FACILITIES INVOLVED IN
THE MANUFACTURE OF THE PRODUCTS DURING NORMAL WORKING HOURS, BY GIVING
A REASONABLE PRIOR WRITTEN NOTICE TO TSMC.
(c) UPON QUICKLOGIC'S WRITTEN REQUEST, TSMC WILL PROVIDE QUICKLOGIC WITH
PROCESS CONTROL INFORMATION AS SET FORTH IN EXHIBIT E, INCLUDING BUT
NOT LIMITED TO: PROCESS AND ELECTRICAL TEST YIELD RESULTS, CURRENT
PROCESS SPECIFICATIONS, CALIBRATION SCHEDULES AND LOGS FOR EQUIPMENT,
ENVIRONMENTAL MONITOR INFORMATION FOR AIR, GASES AND DI WATER,
DOCUMENTATION OF OPERATOR QUALIFICATION AND TRAINING, DOCUMENTATION OF
TRACEABILITY THROUGH TSMC OPERATION, AND TSMC PROCESS VERIFICATION
INFORMATION.
11. WARRANTY
(a) TSMC WARRANTS THAT THE PRODUCTS DELIVERED HEREUNDER SHALL MEET THE
QUALITY AND RELIABILITY SPECIFICATIONS AS SET FORTH IN EXHIBIT F AND
SHALL BE FREE FROM DEFECTS IN MATERIAL AND WORKMANSHIP UNDER NORMAL
USE FOR A PERIOD OF ONE (1) YEAR FROM THE DATE OF SHIPMENT. IF, DURING
THE ONE (1) YEAR PERIOD: (i) TSMC IS NOTIFIED PROMPTLY IN WRITING UPON
DISCOVERY OF ANY DEFECT IN THE PRODUCTS, INCLUDING A DETAILED
DESCRIPTION OF THE ALLEGED DEFECT; (ii) SUCH PRODUCTS ARE RETURNED TO
TSMC, F.O.B. TSMC HSIN-CHU (INCOTERMS 1990) AS SET FORTH IN EXHIBIT C;
AND (iii) TSMC'S EXAMINATION OF SUCH PRODUCTS REVEALS THAT SUCH
PRODUCTS ARE INDEED DEFECTIVE AND NOT CAUSED BY ACCIDENT, ABUSE,
MISUSE, NEGLECT, IMPROPER
12
INSTALLATION OR PACKAGING, REPAIR OR ALTERATION BY SOMEONE OTHER THAN
TSMC, OR IMPROPER TESTING OR USE CONTRARY TO ANY INSTRUCTIONS GIVEN BY
TSMC, THEN TSMC SHALL, AT ITS OPTION, EITHER REPAIR, REPLACE, OR
CREDIT QUICKLOGIC FOR SUCH DEFECTIVE PRODUCTS. TSMC SHALL RETURN ANY
PRODUCTS REPAIRED OR REPLACED UNDER THIS WARRANTY TO QUICKLOGIC
TRANSPORTATION PREPAID, AND SHALL REIMBURSE QUICKLOGIC FOR THE
TRANSPORTATION CHARGES PAID BY QUICKLOGIC FOR RETURNING SUCH DEFECTIVE
PRODUCTS TO TSMC. THE PERFORMANCE OF THIS WARRANTY SHALL NOT ACT TO
EXTEND THE ONE (1) YEAR WARRANTY PERIOD FOR ANY PRODUCTS REPAIRED OR
REPLACED BEYOND THAT PERIOD APPLICABLE TO SUCH PRODUCTS AS ORIGINALLY
DELIVERED.
(b) THE FOREGOING CONSTITUTES TSMC'S EXCLUSIVE LIABILITY, AND QUICKLOGIC'S
EXCLUSIVE REMEDY FOR ANY BREACH OF WARRANTY UNDER THIS AGREEMENT,
INCLUDING ANY NON-CONFORMITY OF THE PRODUCTS WITH THE QUALITY AND
RELIABILITY SPECIFICATIONS, AND ANY DEFECTS IN MATERIAL OR WORKMANSHIP
OF THE PRODUCTS. THE WARRANTY SET FORTH IN THIS SECTION 11 IS THE ONLY
WARRANTY THAT APPLIES TO THE PRODUCTS MANUFACTURED BY TSMC HEREUNDER.
NO WARRANTY CLAIMS MAY BE MADE TO TSMC FOR THE PRODUCTS, EXCEPT BY
QUICKLOGIC, IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
THE FOREGOING WARRANTY SHALL BE EXCLUSIVE AND IN LIEU OF ANY AND ALL
OTHER WARRANTIES: EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT
LIMITED TO, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
(c) NOTWITHSTANDING THE PROVISIONS OF SUBSECTION 11(a) ABOVE, PRIOR TO ANY
RETURN OF ALLEGEDLY DEFECTIVE PRODUCTS BY QUICKLOGIC PURSUANT TO
SUBSECTION 11(a), QUICKLOGIC SHALL FIRST AFFORD TSMC THE OPPORTUNITY,
UPON TSMC'S REQUEST, TO INSPECT THE ALLEGEDLY DEFECTIVE PRODUCTS AT
QUICKLOGIC'S FACILITIES. IF TSMC THEREBY DETERMINES THAT THE ALLEGEDLY
DEFECTIVE PRODUCTS ARE DEFECTIVE OR NON-CONFORMING WITH THE QUALITY
AND RELIABILITY SPECIFICATIONS, OR THAT SUCH ALLEGED DEFECTS ARE
CAUSED BY DEFECTS IN MATERIAL OR WORKMANSHIP OF TSMC, THEN QUICKLOGIC
SHALL BE ENTITLED TO REPAIR, REPLACEMENT OR CREDIT UNDER THIS
SUBSECTION.
12. TECHNOLOGY OWNERSHIP AND LICENSE GRANT
(a) QUICKLOGIC SHALL RETAIN OWNERSHIP OF ALL PRODUCTS, DESIGNS, PROCESS
TECHNOLOGY EXCLUDING TSMC STANDARD PROCESSES, VIALINK TECHNOLOGY,
VIALINK TEST LINE STRUCTURES OR OTHER INFORMATION AND MATERIALS,
INCLUDING ALL MATERIAL AND INFORMATION INCLUDED WITHIN ANY
MANUFACTURING PACKAGE, PROVIDED TO TSMC FOR THE PURPOSE OF
MANUFACTURING THE PRODUCTS. QUICKLOGIC AGREES THAT THE MASK ANDOR THE
PROCESS TEST LINES DEVELOPED BY TSMC FOR MANUFACTURING THE PRODUCTS
ARE INTELLECTUAL PROPERTY OF TSMC, AND CANNOT BE USED BY QUICKLOGIC OR
ANY THIRD
13
PARTY FOR ANY REASON WITHOUT TSMC'S PRIOR WRITTEN CONSENT. QUICKLOGIC
FURTHER AGREES THAT THE INTELLECTUAL PROPERTY PERTAINING TO [*]
DEVELOPED BY TSMC FOR MANUFACTURING THE PRODUCTS ARE INTELLECTUAL
PROPERTY OF TSMC AND CANNOT BE USED BY QUICKLOGIC OR ANY THIRD PARTY
FOR ANY REASON WITHOUT TSMC'S PRIOR WRITTEN CONSENT.
(b) [*] INTO THE PRODUCTS UNDER THIS AGREEMENT AND INTO [*] SOLD TO
OTHER THIRD PARTIES, IN THE [*], IN ACCORDANCE WITH THE TERMS IN
SECTION 12(c) OF THIS AGREEMENT.
(c) [*], A NON-EXCLUSIVE, NON-TRANSFERABLE, WORLD-WIDE, ROYALTY BEARING
LICENSE, WITHOUT RIGHT TO SUBLICENSE, TO MAKE AND OFFER FOR SALE
[*]; PROVIDED, HOWEVER, THAT ALL THIRD PARTIES WHO PURCHASE SUCH [*]
MUST ENTER INTO A WRITTEN AGREEMENT WITH TSMC REPRESENTING THAT THE
[*] WILL BE USED SUBJECT TO IN THE FOLLOWING RESTRICTIONS (i) THE [*]
WILL NOT BE USED ON [*] WITH THE PRODUCTS ON PRODUCTS LISTED IN THE
QUICKLOGIC [*] AVAILABLE TO THE PUBLIC AT THE TIME THAT [*], (ii) [*]
WILL NOT BE USED TO [*] WHICH IS DEFINED AS [*], (iii) [*] WILL NOT BE
USED TO [*]. SUCH WRITTEN AGREEMENTS WILL REMAIN CONFIDENTIAL TO TSMC
UNLESS QUICKLOGIC ASSERTS THAT THERE IS A VIOLATION OF SUCH AN
AGREEMENT BETWEEN TSMC AND A THIRD PARTY AND AT SUCH TIME [*] WILL
[*]. TSMC AGREES THAT ALL SALES UNDER THIS PARAGRAPH 12 (c) TO SUCH
THIRD PARTIES SHALL BE SUBJECT TO THE RESTRICTIONS UNDER THIS
PARAGRAPH 12 (c).
(d) THE [*] UNDER PARAGRAPH 12(c)(ii) AND PARAGRAPH 12(c)(iii) WILL
EXPIRE TWO (2) YEARS AFTER [*] PURCHASES THE TOTAL QUANTITY OF
WAFERS FORECASTED FOR THE [*], SUCH FORECAST WILL BE MADE [*] THE
END OF THE QUARTER IN WHICH THE DATE OF QUALIFICATION OCCURS. IF
QUICKLOGIC FAILS TO PURCHASE THE FORECASTED QUANTITY OF WAFERS AS
DESCRIBED IN THE PRECEDING SENTENCE, [*] 12(c)(ii) AND PARAGRAPH
12(c)(iii) WILL EXPIRE [*] AFTER THE DATE OF QUALIFICATION. THE
RESTRICTIONS UNDER PARAGRAPH 12(c)(i) WHICH [*] IS IN FORCE FOR THE
FULL TERM OF THE LICENSE TO [*]. [*] HAS THE RIGHT TO REMOVE THE
RESTRICTIONS FOR [*]. THE RESTRICTIONS UNDER PARAGRAPHS 12(c)(ii)
AND 12(c)(iii) DO NOT APPLY TO [*] WHICH
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
14
DO NOT [*] UNDER SECTION 12 (I.E., PRODUCTS THAT ARE USED ONLY FOR
[*].
(e) QUICKLOGIC OWNS AND SHALL RETAIN ALL RIGHT, TITLE AND INTEREST IN THE
VIALINK TECHNOLOGY AND ANY MODIFICATIONS JOINTLY DEVELOPED BY TSMC AND
QUICKLOGIC OR MODIFICATIONS SOLELY DEVELOPED BY QUICKLOGIC THERETO,
INCLUDING WITHOUT LIMITATION ALL COPYRIGHTS, PATENTS, TRADE SECRETS
AND OTHER INTELLECTUAL PROPERTY RIGHTS THEREIN. TSMC AND QUICKLOGIC
AGREE THAT PROCESS STEP MODIFICATIONS TO THE VIALINK TECHNOLOGY THAT
WERE SOLELY DEVELOPED BY TMSC WILL BE JOINTLY OWNED BY TSMC AND
QUICKLOGIC. TSMC CAN USE SUCH MODIFICATIONS BEYOND THE EXPIRATION OF
THE AGREEMENT EXCEPT FOR USE WITH ANY ANTIFUSE PROCESS. ANY
MODIFICATIONS TO THE VIALINK TECHNOLOGY MADE BY TSMC REQUIRE THE PRIOR
WRITTEN APPROVAL OF QUICKLOGIC. QUICKLOGIC SHALL NOT CLAIM OWNERSHIP
RIGHTS IN ANY OTHER METAL-TO-METAL AMORPHOUS SILICON ANTIFUSE THAT WAS
INDEPENDENTLY DEVELOPED BY TSMC WITHOUT ANY USE OF THE CONFIDENTIAL
INFORMATION (AS DEFINED BELOW) AND BY EMPLOYEES OR OTHER AGENTS WHO
HAVE NOT BEEN EXPOSED TO THE CONFIDENTIAL INFORMATION, PROVIDED THAT
TSMC CAN DEMONSTRATE SUCH INDEPENDENT DEVELOPMENT BY DOCUMENTED
EVIDENCE PREPARED CONTEMPORANEOUSLY WITH SUCH INDEPENDENT DEVELOPMENT.
(f) TSMC SHALL RETAIN OWNERSHIP OF ALL OF ITS PROCESSES AND OTHER
INFORMATION AND MATERIALS UTILIZED BY TSMC IN THE MANUFACTURE OF
PRODUCTS FOR QUICKLOGIC HEREUNDER. TO THE EXTENT TSMC PROVIDES ANY
SUCH MATERIAL OR INFORMATION TO QUICKLOGIC, QUICKLOGIC MAY ONLY USE
SUCH INFORMATION TO DESIGN, DEVELOP AND MANUFACTURE ITS PRODUCTS.
(g) THE LICENSE GRANTED IN THIS SECTION 12 IS LIMITED TO [*] AND WILL
EXPIRE AT THE TERMINATION OR EXPIRATION OF THIS AGREEMENT EXCEPT FOR
[*] BEFORE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT. UPON
TERMINATION OR EXPIRATION OF THIS AGREEMENT. [*]FOR OTHER PROCESSES
ARE SUBJECT TO NEGOTIATIONS.
(h) QUICKLOGIC WILL ALLOW PROCESS TECHNOLOGY IMPROVEMENTS LEARNED FROM THE
VIALINK TECHNOLOGY DEVELOPMENT TO BE USED WITH TMSC'S STANDARD
PROCESSES AS LONG AS THE IMPROVEMENTS ARE NOT USED WITH ANY PROCESS
THAT FORMS AN ANTIFUSE.
(i) NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS CONFIRMING
BY IMPLICATION, ESTOPPEL OR OTHERWISE UPON EITHER PARTY ANY LICENSE OR
OTHER RIGHT EXCEPT AS EXPLICITLY PROVIDED HEREUNDER.
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
15
13. CONFIDENTIALITY
(a) QUICKLOGIC AND TSMC MUST BOTH APPROVE ANY CONFIDENTIAL INFORMATION,
SUCH AS DESIGN RULES AND ELECTRICAL SPECIFICATIONS PRIOR TO [*]. NO
CONFIDENTIAL INFORMATION, INCLUDING BUT NOT LIMITED TO THE
SPECIFICATIONS FOR THE VIALINK TECHNOLOGY, SHALL BE DISCLOSED TO ANY
THIRD PARTY [*].
(b) AS USED IN THIS SECTION 13, THE TERM CONFIDENTIAL INFORMATION SHALL
MEAN ANY INFORMATION DISCLOSED BY ONE PARTY TO THE OTHER PURSUANT TO
THIS AGREEMENT WHICH IS IN WRITTEN, GRAPHIC, MACHINE READABLE OR OTHER
TANGIBLE FORM AND IS MARKED "CONFIDENTIAL", "PROPRIETARY" OR IN SOME
OTHER MANNER TO INDICATE ITS CONFIDENTIAL NATURE. CONFIDENTIAL
INFORMATION MAY ALSO INCLUDE ORAL INFORMATION DISCLOSED BY ONE PARTY
TO THE OTHER PURSUANT TO THIS AGREEMENT, PROVIDED THAT SUCH
INFORMATION IS DESIGNATED AS CONFIDENTIAL AT THE TIME OF DISCLOSURE
AND REDUCED TO A WRITTEN SUMMARY BY THE DISCLOSING PARTY, WITHIN
THIRTY (30) DAYS AFTER ITS ORAL DISCLOSURE, WHICH IS MARKED IN A
MANNER TO INDICATE ITS CONFIDENTIAL NATURE AND DELIVERED TO THE
RECEIVING PARTY. NOTWITHSTANDING ANY FAILURE TO SO IDENTIFY IT,
HOWEVER, ALL MATERIALS CONTAINED WITHIN A MANUFACTURING PACKAGE,
INCLUDING BUT NOT LIMITED TO PROCESS FLOW, DESIGN RULES, ELECTRICAL
TARGETS, TEST STRUCTURES, TEST ALGORITHM, SHALL BE DEEMED CONFIDENTIAL
INFORMATION HEREUNDER.
(c) EACH PARTY SHALL TREAT AS CONFIDENTIAL ALL CONFIDENTIAL INFORMATION OF
THE OTHER PARTY, SHALL NOT USE SUCH CONFIDENTIAL INFORMATION EXCEPT AS
EXPRESSLY SET FORTH HEREIN OR OTHERWISE AUTHORIZED IN WRITING, SHALL
IMPLEMENT REASONABLE PROCEDURES TO PROHIBIT THE DISCLOSURE,
UNAUTHORIZED DUPLICATION, MISUSE OR REMOVAL OF THE OTHER PARTY'S
CONFIDENTIAL INFORMATION AND SHALL NOT DISCLOSE SUCH CONFIDENTIAL
INFORMATION TO ANY THIRD PARTY EXCEPT AS MAY BE NECESSARY AND REQUIRED
IN CONNECTION WITH THE RIGHTS AND OBLIGATIONS OF SUCH PARTY UNDER THIS
AGREEMENT, AND SUBJECT TO CONFIDENTIALITY OBLIGATIONS AT LEAST AS
PROTECTIVE AS THOSE SET FORTH HEREIN. WITHOUT LIMITING THE FOREGOING,
EACH OF THE PARTIES SHALL USE AT LEAST THE SAME PROCEDURES AND DEGREE
OF CARE WHICH IT USES TO PREVENT THE DISCLOSURE OF ITS OWN
CONFIDENTIAL INFORMATION OF LIKE IMPORTANCE TO PREVENT THE DISCLOSURE
OF CONFIDENTIAL INFORMATION DISCLOSED TO IT BY THE OTHER PARTY UNDER
THIS AGREEMENT, BUT IN NO EVENT LESS THAN REASONABLE CARE.
(d) NOTWITHSTANDING THE ABOVE, NEITHER PARTY SHALL HAVE LIABILITY TO THE
OTHER WITH REGARD TO ANY CONFIDENTIAL INFORMATION OF THE OTHER WHICH:
(i) WAS GENERALLY KNOWN AND AVAILABLE IN THE PUBLIC DOMAIN AT
THE TIME IT WAS DISCLOSED OR BECOMES GENERALLY KNOWN AND
AVAILABLE IN THE PUBLIC DOMAIN THROUGH NO FAULT OF THE
RECEIVER;
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
16
(ii) WAS KNOWN TO THE RECEIVER AT THE TIME OF DISCLOSURE AS
SHOWN BY THE FILES OF THE RECEIVER IN EXISTENCE AT THE
TIME OF DISCLOSURE;
(iii) IS DISCLOSED WITH THE PRIOR WRITTEN APPROVAL OF THE
DISCLOSER;
(iv) WAS INDEPENDENTLY DEVELOPED BY THE RECEIVER WITHOUT ANY
USE OF THE CONFIDENTIAL INFORMATION AND BY EMPLOYEES OR
OTHER AGENTS OF THE RECEIVER WHO HAVE NOT BEEN EXPOSED TO
THE CONFIDENTIAL INFORMATION, PROVIDED THAT THE RECEIVER
CAN DEMONSTRATE SUCH INDEPENDENT DEVELOPMENT BY DOCUMENTED
EVIDENCE PREPARED CONTEMPORANEOUSLY WITH SUCH INDEPENDENT
DEVELOPMENT;
(v) BECOMES KNOWN TO THE RECEIVER FROM A SOURCE OTHER THAN THE
DISCLOSER WITHOUT BREACH OF THIS AGREEMENT BY THE RECEIVER
AND OTHERWISE NOT IN VIOLATION OF THE DISCLOSER'S RIGHTS;
OR
(vi) IS DISCLOSED PURSUANT TO THE ORDER OR REQUIREMENT OF A
COURT, ADMINISTRATIVE AGENCY, OR OTHER GOVERNMENTAL BODY;
PROVIDED, THAT THE RECEIVER SHALL PROVIDE PROMPT, ADVANCED
NOTICE THEREOF TO ENABLE THE DISCLOSER TO SEEK A
PROTECTIVE ORDER OR OTHERWISE PREVENT SUCH DISCLOSURE.
(e) EACH PARTY AGREES THAT IT HAS OR THAT IT SHALL OBTAIN THE EXECUTION OF
PROPRIETARY NON-DISCLOSURE AGREEMENTS WITH ITS EMPLOYEES, AGENTS AND
CONSULTANTS REGARDING USE AND DISCLOSURE OF CONFIDENTIAL INFORMATION
AND SHALL IDENTIFY THE OTHER PARTY'S CONFIDENTIAL INFORMATION AS
BEING PROTECTED UNDER SUCH AGREEMENT, SHALL DILIGENTLY ENFORCE SUCH
AGREEMENTS WITH RESPECT TO THE OTHER PARTY'S CONFIDENTIAL INFORMATION,
AND SHALL BE RESPONSIBLE FOR THE ACTIONS OF SUCH EMPLOYEES, AGENTS AND
CONSULTANTS IN THIS RESPECT.
(f) IF EITHER PARTY BREACHES ANY OF ITS OBLIGATIONS WITH RESPECT TO
CONFIDENTIALITY AND UNAUTHORIZED USE OF CONFIDENTIAL INFORMATION
HEREUNDER, THE OTHER PARTY SHALL BE ENTITLED TO EQUITABLE RELIEF TO
PROTECT ITS INTEREST THEREIN, INCLUDING BUT NOT LIMITED TO INJUNCTIVE
RELIEF, AS WELL AS MONEY DAMAGES.
14. EXPORT CONTROL
TSMC AND QUICKLOGIC ARE SUBJECT TO NATIONAL EXPORT CONTROL REGULATIONS
OF THE REPUBLIC OF CHINA AND THE EXPORT ADMINISTRATION REGULATIONS OF
THE UNITED STATES OF AMERICA. TSMC AND QUICKLOGIC WILL TAKE ALL
APPROPRIATE MEASURES NOT TO VIOLATE THESE REGULATIONS AND WILL KEEP
THE OTHER PARTY FULLY HARMLESS FROM ALL DAMAGES ARISING OUT OF OR IN
CONNECTION WITH ANY VIOLATION. UPON EITHER PARTY'S REQUEST, THE OTHER
PARTY SHALL EXECUTE ANY AND ALL DOCUMENTS PROVIDED BY THE
17
REQUESTING PARTY TO FACILITATE THE SHIPMENT OF THE PRODUCTS IN
COMPLIANCE WITH THE EXPORT CONTROL REGULATIONS.
15. INTELLECTUAL PROPERTY INDEMNITY
(a) SUBJECT TO SUBSECTION 15(b) BELOW, TSMC SHALL, AT ITS EXPENSE AND AT
QUICKLOGIC'S REQUEST, DEFEND ANY CLAIM OR SUIT BROUGHT AGAINST
QUICKLOGIC, TO THE EXTENT THAT SUCH CLAIM ASSERTS THAT THE PROCESS,
EXCLUDING THOSE PARTS OF THE VIALINK TECHNOLOGY USED IN THE PROCESS
THAT WERE PROVIDED TO TSMC BY QUICKLOGIC AND THAT ARE NOT IN USE
WITHIN TSMC ON A PROCESS OTHER THAN THE PROCESS, INFRINGES ANY PATENT,
COPYRIGHT, TRADE SECRET OR OTHER PROPRIETARY RIGHTS OF A THIRD PARTY,
AND TSMC SHALL INDEMNIFY AND HOLD QUICKLOGIC HARMLESS FROM AND AGAINST
ANY COSTS, DAMAGES AND FEES REASONABLY INCURRED BY QUICKLOGIC,
INCLUDING BUT NOT LIMITED TO, ATTORNEY'S FEES THAT ARE ATTRIBUTABLE
TO SUCH CLAIM OR SUIT, PROVIDED THAT: (i) QUICKLOGIC GIVES TSMC
REASONABLY PROMPT NOTICE IN WRITING OF ANY SUCH CLAIM OR SUIT, AND
PERMITS TSMC, THROUGH COUNSEL OF ITS CHOICE, TO ANSWER THE CHARGE OF
INFRINGEMENT AND DEFEND SUCH CLAIM OR SUIT; (ii) QUICKLOGIC PROVIDES
TSMC INFORMATION, ASSISTANCE AND AUTHORITY, AT TSMC'S EXPENSE, TO
ENABLE TSMC TO DEFEND SUCH SUIT OR CLAIM; (iii) TSMC SHALL NOT BE
RESPONSIBLE FOR ANY SETTLEMENT MADE BY QUICKLOGIC WITHOUT TSMC'S
WRITTEN PERMISSION. IN NO EVENT SHALL ANY LIABILITY OF TSMC UNDER THIS
SECTION 15 EXCEED THE TOTAL AMOUNT OF MONEY RECEIVED BY TSMC FROM
QUICKLOGIC AS A RESULT OF THIS AGREEMENT OR [*], WHICH EVER
IS LESS.
(b) SUBJECT TO SUBSECTION 15(a) ABOVE, QUICKLOGIC SHALL, AT ITS EXPENSE
AND AT TSMC'S REQUEST, DEFEND ANY CLAIM OR SUIT BROUGHT AGAINST
TSMC, TO THE EXTENT THAT IT ASSERTS THAT THE VIALINK TECHNOLOGY,
EXCLUDING STEPS OF THE VIALINK TECHNOLOGY THAT WERE NOT PROVIDED TO
TSMC BY QUICKLOGIC AND THAT ARE IN USE WITHIN TSMC ON A PROCESS OTHER
THAN THE PROCESS, SOLELY WITH RESPECT TO THE PRODUCTS, AS PROVIDED BY
QUICKLOGIC PURSUANT TO THIS AGREEMENT INFRINGES ANY PATENT, COPYRIGHT,
TRADE SECRET OR OTHER PROPRIETARY RIGHTS OF A THIRD PARTY AS A RESULT
OF SALE OF PRODUCTS BY TSMC TO QUICKLOGIC, AND QUICKLOGIC SHALL
INDEMNIFY AND HOLD TSMC HARMLESS FROM AND AGAINST ANY COSTS, DAMAGES
AND FEES REASONABLY INCURRED BY TSMC, INCLUDING BUT NOT LIMITED TO,
ATTORNEY'S FEES THAT ARE ATTRIBUTABLE TO SUCH CLAIM OR SUIT,
PROVIDED THAT: (i) TSMC GIVES QUICKLOGIC REASONABLY PROMPT NOTICE IN
WRITING OF ANY SUCH CLAIM OR SUIT, AND PERMITS QUICKLOGIC, THROUGH
COUNSEL OF ITS CHOICE, TO ANSWER THE CHARGE OF INFRINGEMENT AND DEFEND
SUCH CLAIM OR SUIT; (ii) TSMC PROVIDES QUICKLOGIC INFORMATION,
ASSISTANCE AND AUTHORITY, AT QUICKLOGIC'S EXPENSE, TO ENABLE
QUICKLOGIC TO DEFEND SUCH SUIT OR CLAIM; (iii) QUICKLOGIC SHALL NOT BE
RESPONSIBLE FOR ANY SETTLEMENT MADE BY TSMC WITHOUT QUICKLOGIC'S
WRITTEN PERMISSION. IN NO EVENT SHALL ANY LIABILITY OF QUICKLOGIC
UNDER THIS SECTION 15 EXCEED THE TOTAL AMOUNT OF
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
18
MONEY ACTUALLY PAID BY QUICKLOGIC TO TSMC AS A RESULT OF THIS
AGREEMENT OR [*], WHICH EVER IS LESS.
(c) THE FOREGOING STATES THE ENTIRE LIABILITY AND EXCLUSIVE REMEDIES OF
TSMC AND QUICKLOGIC FOR THIRD PARTY CLAIMS RELATING TO THE PRODUCTS,
THE PROCESS AND THE PRODUCTION OF THE PRODUCTS FURNISHED HEREUNDER.
16. PROCESS DEVELOPMENT
(a) QUICKLOGIC WILL PAY UNDER NORMAL COMMERCIAL TERMS FOR ALL MASK TOOLING
COSTS FOR THE PRODUCTS AND TEST CHIP(S) OF THE PROCESS EXCEPT FOR
REPLACEMENT OF TOOLING DAMAGED THROUGH NEGLIGENCE OF TSMC.
(b) THE PARTIES MAY MUTUALLY AGREE TO MIGRATE THE PROCESS TO SMALLER
GEOMETRIES BASED ON COMMERCIAL VIABILITY. BOTH PARTIES WILL NEGOTIATE
IN GOOD FAITH THE TERMS AND CONDITIONS OF THE DEVELOPMENT, PRODUCTION
AND ANY LICENSING OF SMALLER DEVICE GEOMETRY PROCESSES.
(c) TSMC WILL PAY THE COSTS FOR DEVELOPMENT WAFERS UP TO [*] LOOP TEST
WAFERS AND [*] FULL RUN WAFERS. BEYOND THESE AMOUNTS QUICKLOGIC AND
TSMC WILL SHARE THE COST OF THE DEVELOPMENT AS SHOWN BELOW. FURTHER
IT IS AGREED THAT THE PRICE FOR LOOP TEST WAFERS SHALL NOT EXCEED
[*] OF THE PRICE FOR FULL RUN WAFERS AND THAT THE PRICE FOR SUCH
LOOP TEST WAFERS SHALL BE PRICED CONSISTENT WITH THE TOTAL NUMBER OF
PROCESS MASKING STEPS. FULL RUN WAFERS AND QUALIFICATION WAFERS WILL
BE PRICED THE SAME AS THE PRODUCT WAFERS. FULL RUN WAFERS ARE
DEFINED AS WAFERS USED TO DEVELOP THE PROCESS THAT RECEIVE THE
ENTIRE PROCESS FLOW EXCLUDING WAFERS STARTED AFTER THE DATE OF
QUALIFICATION OR WAFERS FROM WHICH A PRODUCT IS SHIPPED TO ANY
QUICKLOGIC CUSTOMER.
QUICKLOGIC TSMC
LOOP TEST [*] [*]
FULL RUN WAFERS [*] [*]
TEST WAFERS [*] [*]
QUAL WAFERS [*] [*]
MASKS, INCLUDING FRAMING [*] [*]
FOUNDRY MACHINERY AND [*] [*]
MODIFICATIONS [*] [*]
(d) QUARTERLY PROCESS DEVELOPMENT REVIEWS WILL BE HELD AT MUTUALLY AGREED
LOCATION AND TIME.
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
19
17. SORT, ASSEMBLY AND TEST
(a) IT IS THE INTENT OF BOTH TSMC AND QUICKLOGIC THAT WAFER SORT FOR THE
PRODUCTS WILL BE ESTABLISHED AT THE LOCATION OF WAFER FABRICATION AT
COMPETITIVE PRICES. IT IS QUICKLOGIC'S DESIRE TO PURCHASE SORTED
WAFERS FOR THE PRODUCTS ONCE SORT HAS BEEN ESTABLISHED. QUICKLOGIC
WILL PROVIDE REASONABLE TECHNICAL ASSISTANCE TO ACHIEVE THIS GOAL. THE
TEST PLATFORM AND TEST FIXTURES WILL BE MUTUALLY AGREEABLE. COSTS
ASSOCIATED WITH WAFER SORT HARDWARE WILL BE NEGOTIATED BETWEEN
QUICKLOGIC, TSMC AND TSMC'S SUBCONTRACTORS. ONCE ESTABLISHED, ALL
WAFER SORT PROGRAM CHANGES MUST BE APPROVED BY QUICKLOGIC.
(b) IT IS ALSO THE INTENT OF BOTH PARTIES FOR TSMC TO PROVIDE TO
QUICKLOGIC ASSEMBLY AND FINAL TEST SERVICES FOR THE PRODUCTS AT
COMPETITIVE PRICES. TO ACHIEVE THIS GOAL, QUICKLOGIC WILL PROVIDE
REASONABLE TECHNICAL ASSISTANCE TO BRING UP AND INTEGRATE ASSEMBLY AND
FINAL TEST AT MUTUALLY AGREED LOCATION(S). TSMC WILL ASSIST QUICKLOGIC
TO GAIN ACCESS TO ALL TOOLING AND SUBSTRATES THAT ARE AVAILABLE TO
TSMC. ONCE ESTABLISHED, ALL ASSEMBLY AND FINAL TEST CHANGES MUST BE
APPROVED BY QUICKLOGIC.
(c) ALL SORT, ASSEMBLY AND TEST PROGRAMS SHALL BE MUTUALLY AGREED BETWEEN
THE PARTIES.
18. TERM AND TERMINATION
(a) THE TERM OF THIS AGREEMENT SHALL COMMENCE FROM THE EFFECTIVE DATE AND
CONTINUE FOR A PERIOD OF THREE (3) YEARS, RENEWABLE ANNUALLY AS A
ROLLING THREE (3) YEAR AGREEMENT WITHIN FOUR (4) WEEKS PRIOR TO THE
ANNIVERSARY OF THE EFFECTIVE DATE.
(b) THIS AGREEMENT MAY BE TERMINATED BY EITHER PARTY IF THE OTHER PARTY:
(i) BREACHES ANY MATERIAL PROVISION OF THIS AGREEMENT AND DOES NOT
CURE OR REMEDY SUCH BREACH WITHIN THIRTY (30) DAYS OF NOTICE OF
BREACH; (ii) BECOMES THE SUBJECT OF A VOLUNTARY OR INVOLUNTARY
PETITION IN BANKRUPTCY OR ANY PROCEEDING RELATING TO INSOLVENCY,
RECEIVERSHIP, LIQUIDATION, OR COMPOSITION FOR THE BENEFIT OF CREDITORS
IF SUCH PETITION OR PROCEEDING IS NOT DISMISSED WITH PREJUDICE WITHIN
SIXTY (60) DAYS AFTER FILING. IF QUICKLOGIC IS THE BREACHING PARTY
UNDER THIS PROVISION, THEN TSMC SHALL BE ENTITLED (i) TO STOP OR
SUSPEND THE PRODUCTION OF THE PRODUCTS UPON GIVING NOTICE TO
QUICKLOGIC, AND (ii) TO THE PAYMENT OF THE PRODUCT PRICES FOR ALL
FINISHED PRODUCTS AND WORK-IN-PROCESS (PARTIALLY FINISHED PRODUCTS)
WHICH ARE IDENTIFIABLE TO THIS AGREEMENT, WITHOUT PREJUDICE TO DAMAGES
THAT MAY BE CLAIMED BY TSMC UNDER APPLICABLE LAW.
(c) IN ADDITION TO SECTION 11 ABOVE, THE PROVISIONS UNDER SECTIONS 6,
12(a), 12(e), 12(f), 12(i), 13, 14, 15, 19, 21, 22, 23, 24, 26 AND 27
SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT.
20
19. RECORDS AND AUDITS
TSMC SHALL KEEP FULL, CLEAR, AND ACCURATE RECORDS WITH RESPECT TO THE
(i) TAKE OR PAY CAPACITY SUBJECT TO THE TAKE OR PAY FEE UNDER SECTION
4, (ii) [*] (iii) WAFER PRICING UNDER SECTION 5. QUICKLOGIC SHALL HAVE
THE RIGHT, AT A FREQUENCY OF NOT MORE THAN TWICE EACH YEAR, THROUGH
THE EMPLOYMENT OF A CERTIFIED PUBLIC ACCOUNTANT TO BE MUTUALLY AGREED
UPON BETWEEN THE PARTIES, TO EXAMINE AND AUDIT AT REASONABLE TIMES AND
AT QUICKLOGIC'S EXPENSE, ALL SUCH RECORDS AND SUCH OTHER RECORDS AND
ACCOUNTS OF TSMC AS MAY UNDER RECOGNIZED ACCOUNTING PRACTICES CONTAIN
INFORMATION BEARING UPON THE AMOUNT OF TAKE OR PAY CAPACITY, [*] OR
WAFER PRICING UNDER THIS AGREEMENT. PROMPT ADJUSTMENT SHALL BE MADE BY
TSMC TO COMPENSATE FOR ANY ERRORS OR OMISSIONS DISCLOSED BY SUCH
EXAMINATION OR AUDIT.
20. BOARD APPROVAL
QUICKLOGIC SHALL OBTAIN THE APPROVAL BY ITS BOARD OF DIRECTORS OF THIS
AGREEMENT, AND SUBMIT TO TSMC, AT THE TIME OF EXECUTING THIS
AGREEMENT, AN AUTHENTIC COPY OF ITS BOARD RESOLUTION AUTHORIZING THE
REPRESENTATIVE DESIGNATED BELOW TO EXECUTE THIS AGREEMENT.
21. ASSIGNMENT
NEITHER PARTY SHALL DELEGATE ANY OBLIGATIONS UNDER THIS AGREEMENT OR
ASSIGN THIS AGREEMENT OR ANY INTEREST OR RIGHTS HEREUNDER WITHOUT THE
PRIOR WRITTEN CONSENT OF THE OTHER, EXCEPT THAT QUICKLOGIC'S RIGHTS
AND INTEREST UNDER THIS AGREEMENT MAY BE ASSIGNED TO AN ENTITY INTO
WHICH QUICKLOGIC HAS MERGED OR THAT HAS OTHERWISE SUCCEEDED TO ALL OR
SUBSTANTIALLY ALL OF QUICKLOGIC'S BUSINESS AND ASSETS BY MERGER,
REORGANIZATION OR OTHERWISE, AND WHICH HAS ASSUMED IN WRITING OR BY
OPERATION OF LAW THE TERMS AND CONDITIONS OF THIS AGREEMENT.
22. LIMITATION OF LIABILITY
EXCEPT FOR TSMC'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 15 OR
BREACH OF THE CONFIDENTIALITY PROVISION UNDER SECTION 13, IN NO EVENT
SHALL TSMC BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF PROFITS AND LOSS OF USE)
RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH TSMC PERFORMANCE
OR FAILURE TO PERFORM UNDER THIS AGREEMENT, OR RESULTING
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
21
FROM, ARISING OUT OF OR IN CONNECTION WITH TSMC'S PRODUCTION,
SUPPLY, ANDOR SALE OF THE PRODUCTS OR ANY PART THEREOF, WHETHER DUE
TO A BREACH OF CONTRACT, BREACH OF WARRANTY, TORT, OR NEGLIGENCE OF
TSMC, OR OTHERWISE.
23. NOTICE
ALL NOTICES REQUIRED OR PERMITTED TO BE SENT BY EITHER PARTY TO THE
OTHER PARTY UNDER THIS AGREEMENT SHALL BE SENT BY REGISTERED MAIL
POSTAGE PREPAID, OR BY PERSONAL DELIVERY, OR BY FAX. ANY NOTICE GIVEN
BY FAX SHALL BE FOLLOWED BY A CONFIRMATION COPY WITHIN TEN (10) DAYS.
UNLESS CHANGED BY WRITTEN NOTICE GIVEN BY EITHER PARTY TO THE OTHER,
THE ADDRESSES AND FAX NUMBERS OF THE RESPECTIVE PARTIES SHALL BE AS
FOLLOWS:
TO TSMC:
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
ATTN: XX. X. X. XXXX
XX. 000, XXXX XXXXXX 0
SCIENCE BASED INDUSTRIAL PARK
HSIN-CHU, TAIWAN
REPUBLIC OF CHINA FAX: 000-00-000000
TO QUICKLOGIC:
QUICKLOGIC CORPORATION
ATTN: XXXXX XXXXXX
0000 XXXXXXX XXXXX
XXXXXXXXX, XX 00000-0000
XXX
FAX: (000) 000-0000
24. GOVERNING LAW AND ARBITRATION
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA.
(b) EACH PARTY WILL MAKE BEST EFFORTS TO RESOLVE AMICABLY ANY DISPUTES OR
CLAIMS UNDER THIS AGREEMENT AMONG THE PARTIES. IN THE EVENT THAT A
RESOLUTION IS NOT REACHED AMONG THE PARTIES WITHIN THIRTY (30) DAYS
AFTER WRITTEN NOTICE BY ANY PARTY OF THE DISPUTE OR CLAIM, THE DISPUTE
OR CLAIM SHALL BE FINALLY SETTLED BY BINDING ARBITRATION
22
IN SAN XXXX IN THE STATE OF CALIFORNIA UNDER THE THEN CURRENT AMERICAN
ARBITRATION ASSOCIATION RULES BY THREE (3) ARBITRATORS APPOINTED IN
ACCORDANCE WITH SUCH RULES. THE ARBITRATION PROCEEDING SHALL BE
CONDUCTED IN ENGLISH. JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR
MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.
25. FORCE MAJEURE
NEITHER PARTY SHALL BE RESPONSIBLE FOR ANY DELAY OR FAILURE TO PERFORM
UNDER THIS AGREEMENT IF SUCH DELAY OR FAILURE IS CAUSED BY UNFORESEEN
CIRCUMSTANCES, OR DUE TO CAUSES BEYOND ITS CONTROL, INCLUDING, BUT NOT
LIMITED TO: ACTS OF GOD, WAR, RIOT, EMBARGOES, LABOR STOPPAGES, ACTS
OF CIVIL AND MILITARY AUTHORITIES, FIRE, FLOODS, EARTHQUAKES OR
ACCIDENTS.
26. NON-PUBLICITY
NO PUBLICITY OR INFORMATION REGARDING THE EXISTENCE OR CONTENTS OF
THIS AGREEMENT SHALL BE GIVEN OR RELEASED BY EITHER PARTY WITHOUT THE
PRIOR WRITTEN CONSENT OF THE OTHER PARTY.
27. ENTIRE AGREEMENT
THIS AGREEMENT AND ATTACHED EXHIBITS A-F CONSTITUTE THE ENTIRE
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDES AND REPLACES ALL PRIOR OR CONTEMPORANEOUS
UNDERSTANDINGS, AGREEMENTS, DEALINGS, AND NEGOTIATIONS, ORAL OR
WRITTEN, REGARDING THE SUBJECT MATTER. ANY TERMS AND CONDITIONS LISTED
IN THE PURCHASE ORDERS PLACED BY QUICKLOGIC UNDER THIS AGREEMENT SHALL
NOT CONSTITUTE PART OF THIS AGREEMENT, NOR AFFECT OR REVISE THE TERMS
AND CONDITIONS OF THIS AGREEMENT, EVEN IN CASES SUCH PURCHASE ORDERS
ARE SIGNED AND RETURNED BY TSMC, UNLESS BOTH PARTIES EXPRESSLY AGREE
IN WRITING TO INCLUDE ANY SUCH TERMS OR CONDITIONS IN THE AGREEMENT.
NO MODIFICATION, ALTERATION OR AMENDMENT OF THIS AGREEMENT SHALL BE
EFFECTIVE UNLESS IN WRITING AND SIGNED BY BOTH PARTIES. NO WAIVER OF
ANY BREACH OR FAILURE BY EITHER PARTY TO ENFORCE ANY PROVISION OF THIS
AGREEMENT SHALL BE DEEMED A WAIVER OF ANY OTHER OR SUBSEQUENT BREACH
OR A WAIVER OF FUTURE ENFORCEMENT OF THAT OR ANY OTHER PROVISION.
23
IN WITNESS WHEREOF THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE
DULY EXECUTED IN DUPLICATE ON THEIR BEHALF BY THEIR DULY AUTHORIZED
OFFICERS AND REPRESENTATIVES ON THE DATE GIVEN ABOVE.
TAIWAN SEMICONDUCTOR QUICKLOGIC CORPORATION
MANUFACTURING COMPANY, LTD.
/s/ XXXXXX XXXXX /s/ E. XXXXXX XXXX
------------------------------ ----------------------------
SIGNATURE SIGNATURE
XXXXXX XXXXX E. XXXXXX XXXX
------------------------------ ----------------------------
CHAIRMAN & PRESIDENT PRESIDENT & CEO
JULY 21, 1997 21 JULY 1997
------------------------------ ----------------------------
DATE DATE
24
28. LIST OF EXHIBITS
A QUICKLOGICTSMC GOOD FAITH COMMITTED CAPACITY
B TAKE OR PAY FEE
C INCOTERMS
D INSPECTION AND ACCEPTANCE TESTING METHODS
E PROCESS CONTROL INFORMATION
F QUALITY AND RELIABILITY SPECIFICATIONS
25
EXHIBIT A
QUICKLOGICTSMC
GOOD FAITH COMMITTED CAPACITY
UNIT: 8" WAFER
---------------------------------------------------------------------
1998 1999 2000
---- ---- ----
---------------------------------------------------------------------
TSMC COMMITTED CAPACITY [*] [*] [*]
---------------------------------------------------------------------
% OF TSMC COMMITTED CAPACITY [*] [*] [*]
---------------------------------------------------------------------
---------------------------------------------------------------------
QUICKLOGIC COMMITTED CAPACITY [*] [*] [*]
(% X TSMC COMMITTED CAPACITY)
---------------------------------------------------------------------
THE ABOVE GOOD FAITH QUICKLOGIC COMMITTED CAPACITY IS SUBJECT TO MODIFICATION
PER PARAGRAPH 2(c). THE TSMC COMMITTED CAPACITY SHALL BE MODIFIED IN ACCORDANCE
WITH THE PERCENTAGES IN THE TABLE ABOVE
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
26
EXHIBIT B
TAKE OR PAY FEE
YEAR TAKE OR PAY TAKE OR PAY FEE DUE DATE
CAPACITY (UNIT: US$)
------------------------------------------------------------------------
1998 K $ WAFERS PURCHASED
$ WAFERS NOT PURCHASED QUARTERLY
1999 K TO BE NEGOTIATED QUARTERLY
2000 K TO BE NEGOTIATED QUARTERLY
ILLUSTRATION OF FORMULA
FOR TAKE OR PAY FEE
EXAMPLE: TAKE OR PAY CAPACITY = 1000 WAFERS
NUMBER OF WAFERS PURCHASED = X = 600
AVERAGE PRICE OF WAFER = [*]
TOP FEE PER WAFER NOT PURCHASED = Y = [*]
PURCHASE PRICE TAKE OR PAY FEE TOTAL PAYMENT DUE
------------------------------------------------------------------------
[*] [*] [*]
* AN ASTERISK INDICATES CONFIDENTIAL MATERIAL THAT HAS BEEN OMITTED FROM THIS
DOCUMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
27
EXHIBIT C
INCOTERMS
OUTLINE OF INCOTERMS 1990
CHAPTER CONTENTS
------- --------
EXW.............................EX WORKS
FCA.............................FREE CARRIER
FAS.............................FREE ALONGSIDE SHIP
FOB.............................FREE ON BOARD
CAR.............................COST AND FREIGHT
CIF.............................COST, INSURANCE AND FREIGHT
CPT.............................CARRIAGE PAID TO
CIP.............................CARRIAGE AND INSURANCE PAID TO
DAF.............................DELIVERED AT FRONTIER
DES.............................DELIVERED ES SHIP
DEQ.............................DELIVERED EX QUAY (DUTY PAID)
DDU.............................DELIVERED DUTY UNPAID
DDP.............................DELIVERED DUTY PAID
28
EXHIBIT D
INSPECTION AND ACCEPTANCE TESTING METHODS
THE FOLLOWING SPECIFICATIONS DESCRIBE THE REQUIREMENTS AND THE MINIMUM
CONFORMANCE STANDARD FOR TSMC MANUFACTURED PRODUCTS. THE SPECIFICATIONS LISTED
BELOW APPLY TO ALL PRODUCTS MANUFACTURED BY TSMC.
1. TSMC DOCUMENT AG-3100-7101 OUTGOING QA PROCEDURE
2. TSMC PCM DATA
3. TSMC FUNCTIONAL TEST DATA (IF APPLICABLE)
THE ABOVE SPECIFICATIONS IDENTIFY THE ELECTRICAL CRITERIA, MINIMUM YIELD
CRITERIA, VISUAL CRITERIA, AND STRUCTURAL AND MECHANICAL STANDARDS THAT ALL TSMC
MANUFACTURED PRODUCTS ARE REQUIRED TO MEET.
29
EXHIBIT E
PROCESS CONTROL INFORMATION
1. PCM SPECIFICATION
2. PCM DATA
3. PCM SPC DATA
4. FUNCTIONAL TEST YIELD DATA
5. IN LINE PROCESS MONITOR DATA
6. IN LINE PROCESS MONITOR SPC DATA
7. FAB PROCESS DEVIATION DISPOSITION PROCEDURE
8. EQUIPMENT CALIBRATION SCHEDULES AND LOGS
9. ENVIRONMENTAL MONITOR DATA FOR AIR, GASES AND DI WATER
10. PROCESS CHANGE NOTICES
30
EXHIBIT F
QUALITY AND RELIABILITY SPECIFICATIONS
SPECIFICATION NAME SPECIFICATION NUMBER
------------------ --------------------
SPECIFICATION CONTROL SYSTEM AG-3100-0101
POLICY OF PROCESS MATERIAL QUALITY
ASSURANCE AG-3100-1001
CALIBRATION SYSTEM AG-3100-3102
OUTGOING QA PROCEDURE AG-3100-7101
MASK (RETICLE) INCOMING
INSPECTION AG-3102-0403
GATE OXIDE BV MONITOR OI AG-3110-2701
METAL STEP COVERAGE OI AG-3110-4100
METAL INTEGRITY OI AG-3111-1601
FAB IV SHUTDOWN, DEVIATION,
RECOVER NOTICE & PROCEDURE BG-3100-7501
RELIABILITY VT STABILITY TEST
PROCEDURE BG-3100-5011
RELIABILITY HOT CARRIER TEST
PROCEDURE BG-3120-0002
ENGINEERING CHANGE PROCEDURE AG-3100-0106
31
