WAFER SUPPLY AGREEMENT
This Wafer Supply Agreement (the "Agreement"), entered into as of March
15, 1999 (the "EFFECTIVE DATE"), is by and between Siemens Aktiengesellschaft
Semiconductor Group, a German corporation, with executive offices at
Xxxxxxxxxxxx 00, 00000 Xxxxxxxx, Xxxxxxx ("SIEMENS") and NeoMagic
International Corporation ("NMI"), a Cayman Island company, with offices c/o
Caledonian Bank & Trust Ltd, Ground Floor, Caledonian House, Xxxx Street,
P.O. Box 1043, Georgetown, Grand Cayman, B.W.I.
RECITALS
WHEREAS, NMI and its Associated Companies (as defined below) desire to
purchase from Siemens and Siemens desires to supply to NMI silicon wafers on the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
PART I
DEFINITIONS
1.1 "ASSOCIATED COMPANY(IES)" means a corporation or other entity:
(a) more than 50% of whose outstanding shares or securities
(representing the right to vote for the election of Directors or other managing
authorities) are, now or hereafter, owned or controlled, directly or indirectly,
by a party hereto;
(b) which does not have outstanding shares or securities, as may be
the case in a partnership, joint venture or unincorporated association, but more
than 50% of whose ownership interest representing the right to make the
decisions for such corporation, company or other entity is now or hereafter
controlled directly or indirectly by a party hereto;
(c) For the purposes of this Agreement, NeoMagic Corporation, a
California corporation with offices at 0000 Xxx Xxxxxx, Xxxxx Xxxxx, XX 00000,
shall be considered an Associated Company.
1.2 "FABRICATION CYCLE TIME" means the nominal period of time required to
manufacture the Products (as defined in Exhibit B), commencing upon wafer start
and ending on the day when Siemens first delivers the ordered quantity of
Products. The Fabrication Cycle Time for Prototype Production and Volume
Production shall be as set forth in Exhibit B. Fabrication Cycle Time does not
include local national holidays and other factory holidays.
1.3 "LEAD TIME" means the period of time from the placement of a
particular order of a Product until the date of first delivery of the ordered
quantity of the Product.
1.4 "LOGIC PORTION" means the Product excluding the Memory Module. For
the avoidance of doubt, "Logic Portion" includes the interface between the
Memory Module and the remainder of the Product.
1.5 "MEMORY MODULE" means the embedded DRAM including DRAM-specific
control and interface circuitry, test control logic, and voltage generators and
regulators.
1.6 "PROCESS" means the wafer manufacturing process(es) used by Siemens
as identified in Exhibit A and any other manufacturing processes included within
the scope of this Agreement in accordance with 3.2.
1.7 "PRODUCTS" means semiconductor chips containing memory, logic and
analog elements manufactured hereunder. The Parties may, from time to time,
agree to add other product(s) or other logic or design cores to the definition
and scope of products.
1.8 "PROTOTYPE PRODUCTION" has the meaning given in Section 0 .
1.9 "VOLUME PRODUCTION" has that meaning given in Section 3.9(b).
1.10 "WAFERS" means processed silicon wafers containing finished die for
the Products manufactured by Siemens and sold to NMI.
PART II
INTELLECTUAL PROPERTY RIGHTS
2.1 TECHNICAL INFORMATION. All intellectual property and related rights
in and to technical information of either party which is provided to the other
party in the course of the development of the Product(s) shall continue to
belong to such providing party.
2.2 PATENTS. All intellectual property and related rights in and to all
inventions made by NMI and patents resulting therefrom shall belong to NMI or
its Associated Companies. All intellectual property and related rights in and
to all inventions made by Siemens in the course of the development efforts and
patents resulting therefrom shall belong to Siemens. All intellectual property
and related rights in and to all inventions jointly made by NMI and Siemens in
the course of the development efforts and patents resulting therefrom shall be
jointly owned by NMI or its Associated Companies and Siemens and may be
exploited by a joint owner without accounting to the other party. The parties
shall confer with each other before filing any patent claiming a joint
invention.
2.3 PRODUCT RIGHTS; MASKWORKS. Notwithstanding Section 2.2 title to and
interest in all worldwide mask work rights for the product shall be owned by
NMI but limited to the use in Siemens manufacturing facilities only. NMI
shall have the right to approve all mask stepping Maps on the wafer to ensure
full optimization of silicon use for wafers, such approval not to be
unreasonably withheld. Subject to Siemens's mask work rights set forth
above, NMI shall retain ownership of the Products. Masks will be destroyed
after discontinuance of production. This Agreement shall not be construed as
granting or conferring any intellectual property rights of
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Siemens or NMI specified in PART II of this Agreement or with respect to the
Products except as explicitly specified herein.
2.4 PROCESS. Subject to Sections 2.1, 2.2 and 2.3 above, Siemens shall
own all intellectual property and related rights in and to the Process.
PART III
WAFER SUPPLY
3.1 WAFER MANUFACTURING. On the terms and conditions of this Agreement,
Siemens will: (i) manufacture processed Wafers; and (ii) sell processed Wafers
to NMI for its own account or as the agent for its Associated Companies.
Siemens will manufacture all Wafers at its Dresden manufacturing facility. If
Siemens desires to change the location at which it manufactures wafers, it will
inform NMI at least 6 months before the change. To ensure consistent quality of
manufactured Wafers, Siemens will provide NMI with a detailed transfer schedule
and samples from the planned new manufacturing site. If NMI raises reasonable
objections regarding the quality of such samples or other material issues,
including reliability or yield concerns, Siemens shall not change the location.
3.2 PROCESSES. Siemens shall manufacture the Wafers using the Process set
forth in Exhibit A. If Siemens moves to a new or different Process, Siemens
will provide reasonable notice to NMI and thereafter provide NMI with all
necessary information (except such information that is subject to
confidentiality agreements with third parties not Associated Companies)
regarding such new processes, in order that NMI can ensure that Siemens can
continue to manufacture wafers pursuant to this Agreement. In any event,
because Siemens considers NMI as a key account and preferred customer, during
the term of this Agreement Siemens shall provide as early access as possible to
newly developed processes.
3.3 DESIGN RULES. The design rules of the * process are specified in
the * (Mu)m Embedded DRAM Design Manual (Document Number *). NMI shall
adhere to such design rules, but NMI may make requests of Siemens to vary
from any applicable Siemens' design rules with respect to design of the
non-memory portion of the Product. Siemens shall not unreasonably withhold
its consent to such variance. However, if Siemens reasonably refuses such
request and NMI nonetheless varies from Xxxxxx'x design rules, Siemens shall
bear no responsibility for any Wafer failure (i.e. low yields or
quality/reliability targets or additional cost) due to such variance of the
design rules. NMI shall bear all costs caused by any additional development
work necessitated by such variances, provided that Siemens can demonstrate to
NMI that such additional costs are directly attributable to such variance.
Siemens has a right to reject such waivers if Siemens demonstrates jeopardy
to overall standard production process.
* confidential treatment requested
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3.4 Qualification and Quality Control.
(a) QUALIFICATION. NMI and Siemens will cooperate fully to qualify
jointly each Product for which Wafers will be manufactured hereunder
("Qualification"). Accordingly, the parties will cooperate to implement a
Qualification procedure pursuant to which the parties will agree on
parameters to monitor product quality and reliability. After qualification,
NMI will notify Siemens when Volume Production will commence.
(b) CHANGES. After Qualification of any Product, Siemens shall not
make any major and/or critical Process change which will impact the performance,
reliability or construction of the Products, without NMI's prior written
consent, which consent shall not be unreasonably withheld. Any such changes
shall be subject to reasonable criteria requested by NMI. Siemens shall notify
NMI in writing in advance of major Process changes, including but not limited to
any changes which may:
(i) degrade Product quality or reliability;
(ii) result in failure of the Product to meet NMI's
specifications;
(iii) substantially slow Process flows;
(iv) change Process control variables, ranges or method
(v) result in Product mask revisions or significant changes to
Wafer sort programs;
NMI shall provide the written consent within two weeks after notification
of change.
(c) PROBLEM NOTIFICATION. Siemens will notify NMI promptly upon
discovering major Process problems in its manufacturing lines that may affect
the delivery capability of Wafers or Wafer yields.
(d) Siemens shall use continual and commercially reasonable efforts
to improve the yield on all Wafers manufactured pursuant to this Agreement.
Without limiting the foregoing, Siemens shall use its commercially reasonable
efforts to maintain failure rates on wafer level at a rate at least as
successful as Siemens's then-current failure rate for production of commodity
DRAM products of the same process generation.
3.5 FORECASTS.
(a) TWELVE-MONTH ROLLING FORECASTS. Each month NMI will provide
Siemens a rolling forecast ("Forecast") of the number of Wafers, which NMI
intends to purchase during each of the next twelve (12) months. The Forecast
will be based on "Wafers out," i.e., on deliveries expected to be made by
Siemens each month. Siemens shall provide enough manufacturing capacity to
supply the forecasted wafers subject to the quantity adjustments as stated in
paragraph 3.4(d).
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(b) FORECAST ACKNOWLEDGMENT. Siemens will treat NMI as a Key Account
and therefore will apply best efforts to manufacture the number of wafers
indicated by each forecast. The Parties shall mutually agree on a committed
forecast.
(c) REQUIRED ORDERS. Purchases will be confirmed by firm purchase
orders placed at least twelve (12) weeks prior to the beginning of the month in
which shipment is expected. The parties shall jointly work together to reduce
the cycle time. In a normal product mode, NMI may order once a month on a
weekly basis and Siemens will deliver such orders as per the agreed-upon cycle
time. For example, if NMI submits a Forecast at the end of December, 1998, a
purchase order must be placed for April of 1999. The ramp-up-plan for the first
product shall be mutually agreed between NMI and Siemens.
(d) LIMITED QUANTITY ADJUSTMENTS.
(i) NMI may increase or decrease Forecast quantities for
the fifth and sixth calendar month following the date of the Forecast by no more
than * and for the seventh calendar month by no more than *. The accumulated
decrease or increase of the Forecast quantities within these three months will
be not more than * , except upon mutual agreement of the parties.
(ii) For example, if NMI submits a Forecast in December 1998
estimating Product purchases of * Wafers in each of May, June, and July of
1999, then the Forecast submitted in January 1999 may increase estimated Product
purchases for May and June up (or down) by a quantity of * Wafers (i.e., *)or
down (or up) by a quantity of * Wafers (i.e., *) for July.
(iii) NMI may increase or decrease the Forecasted quantities
for the eighth, ninth and tenth calendar months following the date of the
Forecast by up to * in the next month's Forecast.
(iv) Forecast quantities for the eleventh and twelfth months
following the date of the Forecast will be based on NMI's best estimate made in
good faith and may be revised up or down in the following monthly Forecast
according to changes in NMI's best estimates.
3.6 DEMAND. NMI shall not be under any obligation to purchase wafers
hereunder except as otherwise provided by Sections 3.5 or 3.7.
3.7 PURCHASE ORDER PROCESS. All purchases under this Agreement will be
initiated by authorized NMI orders. Purchase orders shall state unit quantities,
unit descriptions, requested delivery dates, prices and shipping instructions.
In the event of any conflict between a purchase order and this Agreement, this
Agreement shall control as to such conflict.
* confidential treatment requested
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3.8 ORDER ACKNOWLEDGMENT. Siemens agrees to accept all Product
purchase orders within the limits of the committed Forecast as defined in
3.5(b). Siemens will use diligent efforts to manufacture ordered Products in
excess of the Forecast, subject to its then existing third-party capacity
commitments. Siemens agrees to deliver a written acknowledgment of such
purchase order within five (5) working days after receipt of the purchase
order. Siemens's failure to deliver such an acknowledgement shall be
considered acceptance of such purchase order.
3.9 PROTOTYPE AND VOLUME PRODUCTION LOTS. NMI shall order Products in
either Prototype Production lots or Volume Production lots as follows:
PROTOTYPE LOTS. NMI may order Wafers in prototype lots ("Prototype
Production") whenever NMI: (i) seeks a Qualification in accordance with
Section 3.4(a); (ii) seeks to make any engineering changes, including without
limitation changes to improve Product functionality and Wafer yield; or (iii)
elects, at NMI's risk, to purchase Wafers in volume prior to Qualification.
If Siemens reasonably demonstrates to NMI that manufacture of the Prototype
Lot would (i) cause substantial and material adverse consequences to
Siemens's manufacturing process or equipment or (ii) would result in the
manufacture of an integrated circuit that would otherwise substantially harm
any equipment on which such circuit operated, Siemens will have the right to
reject purchase orders for such Prototype Lot, provided that if NMI
demonstrates that such resulting circuit would operate without adverse
consequences under different operating tolerances (such as through a
specification change or errata sheet), Siemens will nevertheless continue to
manufacture such Prototype Lot. In such case already existing purchase orders
for prototype production will be adapted mutually. The further procedure
regarding already started lots will be defined mutually. Prototype lots are
not covered via the forecast. NMI will place purchase orders for prototype
lots on a weekly basis. Feedback regarding the acceptance of such purchase
orders will be given within five working days from Siemens to NMI. The price
for prototype lots is defined in Exhibit D.
(i) A Prototype Production lot shall contain the number of
Wafers specified in Exhibit B. NMI may order multiple Prototype Production lots
of the same Wafer. NMI may require Siemens to hold Prototype Production at
"gate" or "contact" intermediate stages of production. NMI should not hold lots
longer than sixty (60) days in such an intermediate stage. During Prototype
Production, Siemens will provide "Vth" and "gate" length process splits (i.e.,
examine Wafers at a particular step in fabrication) in order for NMI to evaluate
variations within the specifications for each process.
(ii) Siemens will use its standard manufacturing procedures
for producing Prototype Lots. Notwithstanding the foregoing, NMI acknowledges
that (i) Wafers delivered from such Prototype Production are not quality
controlled and (ii) Siemens extends no warranty to Wafers from Prototype
Production. NMI shall indemnify, defend and hold Siemens harmless from any
product liability claim made by a third party against Siemens based on use of a
Wafer from a Prototype Lot.
(iii) SIEMENS EXPRESSLY DISCLAIMS EACH AND EVERY WARRANTY
REGARDING ANY WAFERS DELIVERED PURSUANT TO THIS SECTION
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3.90, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
(b) VOLUME PRODUCTION LOTS. Upon Qualification of any particular
Product, NMI may order that Product only in volume production lots ("Volume
Production"). A Volume Production lot shall contain the number of Wafers
specified in Exhibit B.
(c) CANCELLATION. NMI may cancel Product purchase order(s) or any
portions thereof for any reason by notifying Siemens in writing prior to the
scheduled delivery date on the purchase order(s), provided that NMI pays the
fees specified in this Section 3.9(c). Cancellation shall be effective upon
Siemens's receipt of the written cancellation notice from NMI, or upon the date
specified in such cancellation notice if later than the date of receipt.
Siemens shall cease all work on such canceled purchase order quantities in
accordance with the cancellation notice; provided that NMI shall pay a
cancellation charge calculated in the manner provided below ("Cancellation
Charge"). Siemens will invoice Cancellation Charges, if any, at the end of each
month, and NMI will pay the Cancellation Charge within forty-five (45) days
after receipt of invoice. The foregoing rights shall be Siemens's sole remedy
for any cancellation of a purchase order or failure to order quantities
specified in a Forecast. The Cancellation Charge shall be calculated as a
percentage of the Wafer price otherwise payable based upon the number of weeks
between the date NMI submits the cancellation notice and the delivery date of
the wafers as set forth in the then most current Report (as defined in
Section 3.10(b). Such rate is as follows:
0 - 1 weeks prior to * % of price due
delivery date
1-2 * %
3-4 * %
5-6 * %
7-8 * %
9-11 * %
12-13 * %
>13 * %
(d) At NMI's request, Siemens shall deliver all work-in-process to
NMI or destroy all such work-in-process and provide written certification of
destruction to NMI. Notwithstanding the foregoing, there shall not be any
cancellation change if NMI cancels an order before wafers are physically started
or the production time.
* confidential treatment requested
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3.10 Delivery and Shipping.
(a) DELIVERY COMMITMENTS. Siemens will deliver Wafers to the carrier
for shipment, (i) within three (3) days plus the Fabrication Cycle Time from the
date of purchase order for Prototype Production, and (ii) within one (1) week
plus the Fabrication Cycle Time from the date of purchase order for Volume
Production, unless NMI requests a longer period. Siemens will use reasonable
efforts to distribute the manufacture of Wafers evenly throughout each month
(i.e., start and complete Wafers linearly). Upon NMI's reasonable request,
Siemens will hold Products during their manufacture in accordance with terms to
be agreed upon by the parties. If Wafers are held by NMI during manufacture,
the foregoing delivery commitments will be extended by the number of days that
the Wafers are held.
(b) WORK-IN-PROCESS REPORTING. Siemens will provide NMI with work-
in-process reports ("Reports") on a periodic basis. Reports shall be sent to
NMI via facsimile or email. The Reports shall include information concerning:
(i) the type, quantity and Siemens lot number of Wafers at each stage of
production (by mask location); (ii) the remaining number of Wafers ready for
shipment; (iii) estimated delivery dates; and (iv) such other information as is
customary or useful for such Reports. The format and frequency of the Reports
will be determined by the development work as it is completed, provided that the
frequency shall be once per week.
(c) SHIPPING. All Wafers shall be delivered to NMI or its designated
assembly location and shall be suitably packed for shipment in Siemens's
standard containers, marked for shipment as specified in NMI's purchase order,
and delivered to a carrier or forwarding agent chosen by NMI. However, should
NMI fail to designate a carrier, forwarding agent or type of conveyance, Siemens
shall make such designation in conformance with its standard shipping practices.
Shipment will be "ex works (EXW) fabrication location" according to the
Incoterms 1990.
3.11 TEST AND INSPECTION.
(a) BY SIEMENS. Siemens will supply to NMI, with each Wafer
shipment, process control monitor ("PCM") test results and actual Wafer sort
data results. In addition and without limiting the foregoing, Siemens will
apply its standard outgoing visual inspection procedures and tests, provided
that such data will not be reported on a regular basis unless NMI so requests on
a specific lot.
(b) REPORTS. Siemens will supply NMI with reliability and
statistical quality data on the Siemens standard process, which is made for the
same product line, at regular intervals to be agreed upon but no less than once
a quarter. The format and the contents of these report(s) are to be mutually
agreed upon. Upon reasonable notice, Siemens will allow NMI on-site inspection
at reasonable intervals to ensure that Siemens follows the reliability and
testing procedures set forth in this Agreement.
(c) BY NMI. Wafers manufactured using the Process set forth in
Exhibit A shall be subject to incoming inspection, electrical testing and
reliability testing by NMI in accordance with the acceptance criteria set forth
in Exhibit C hereto. Wafers manufactured under other Processes (jointly defined
by the parties in accordance with Section 3.2) shall be subject to incoming
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inspection, electrical testing and reliability testing by NMI in accordance with
updated acceptance criteria which the parties agree to negotiate in good faith
promptly at or prior to the implementation of any such other Process. Wafers
meeting applicable initial acceptance criteria or updated acceptance criteria
will be deemed accepted by NMI, and NMI shall so notify Siemens.
(d) TEST FAILURE. If any Wafer or lot of Wafers fails incoming
inspection or test, and if test failure is caused by any defect in the Process
used by Siemens, any defect in the Memory Module provided by Siemens or any
other design core (if such core is provided by Siemens), NMI may reject such lot
or Wafer in writing as soon as possible but at least within thirty (30) days
after delivery and return such lot or Wafer to Siemens, at Siemens's expense,
for a full refund. NMI will explain the reasons for wishing to reject a lot,
and Siemens will be entitled to examine any lot that NMI wishes to reject. The
parties will seek in good faith to resolve any disagreement as to whether a lot
is conforming. For return shipment, NMI shall use reasonable commercial efforts
to use Siemens's original packing, but in any event shall use commercially
reasonable packaging, and supply all identifying shipping documents in order to
avoid any deterioration of the goods.
(e) LOW LINE YIELD ON VOLUME PRODUCTION. If the Yield, good
memory/wafer yield, which meets the inspection and test criteria, is less than
the valid lower limit as defined in 3.11 (f), and if NMI so requests, Siemens
will explain the reasons for the low line yield. Lots or Wafers with sort
yields below * may not be shipped unless NMI's prior approval is obtained.
(f) YIELD BASED ADJUSTMENTS. Wafer prices shall be adjusted if the
average Yield (as defined in Exhibit D) of Wafer Lots delivered in a given
calendar quarter is below the allowance range ("Allowance Range," as further
defined below). The basic post-fuse memory yield assumed for all calculations
shall be as defined in Exhibit D. The Allowance Range (as an average of all
delivered wafers in calendar quarter) which causes no wafer price adjustment
shall depend on the production volume as follows:
(i) There shall be no yield based adjustment for Wafer Outs
less than * Wafers per quarter during Ramp-up.
(ii) During the first quarter in which Wafer Out volume is
between * and * ( * ), the Allowance Range shall be the Lower Limit 1 as
specified in Exhibit D.
(iii) After the second production quarter when Wafer Outs are
greater than * , the Allowance Range shall be the Lower Limit 2 as specified in
Exhibit D.
(iv) Regardless of the foregoing, Siemens shall in all cases
use its usual high manufacturing standards consistent with the standards of
other semiconductor manufacturers.
(v) In addition to the foregoing, the parties shall work
together to achieve a consistent Process Defect Rate of less than * .
* confidential treatment requested
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(g) The price adjustment shall be determined according to an
adjusted Wafer value that is equal to the actual price adjusted by the
percentage change from the Established Standard Yield, subject to the
Allowance Range. For example, if the average Yield rate is * and the lower
limit of the Allowance Range is also * in the case of a Product with an
Established Standard Yield of * , there shall be no value adjustment; if the
average Yield rate is * for that Product and the current price is * , the
adjusted value shall be * x * = *. The Established Standard Yield will be
reviewed in every quarter and mutually agreed upon to apply for the following
three months. NMI shall have the option of obtaining a credit or prompt
refund of the amount of any adjustments.
(h) For the purposes of this Section 3.11, the following definitions
apply:
(i) "Wafer Lot" shall mean 25 Wafers; and
(ii) "Yield" shall mean electrically good memory dice
divided by the number of full die locations on the Wafer (i.e., excluding
locations which are not complete due to the curved edge of the Wafer so long
as Siemens uses best efforts to optimize the use and coverage of silicon on a
Wafer).
PART IV
COMPENSATION
4.1 PURCHASE PRICE. The price of the Wafers shall be determined from
time to time by agreement. The price shall be adjusted according to
Section 3.11(f). The fixed price for any quarter will be reviewed during the
last month of the previous quarter and mutually agreed to by the parties in good
faith. For example, the Q2 (April-June) price will be finalized by December
End. If an agreement cannot be reached in time, the current price will continue
to be used for the products already ordered in that time period. Wafer prices
are to be adjusted back to agreed prices for that period once the price
agreement is reached.
THIS IS NOT VALID FOR THE START UP PHASE WITH THE FIRST PRODUCT * AND THE AGREED
SPECIAL PRICES FOR *. The price agreement for * and the Forecast for * have to
be agreed on by the end of * the latest.
4.2 PAYMENT. Siemens may submit invoices for Wafers not earlier than the
date of Wafer shipment to NMI. Invoices shall be paid within * days after
receipt. Payment will be made by NMI or its agent. Payment shall be in United
States dollars unless otherwise agreed. For masks tooled by Siemens hereunder,
Siemens may submit mask tooling invoices with the first prototype lot.
TAXES. Because NMI intends to transport Wafers out of Germany, purchase prices
shall be inclusive of all taxes and customs duties, and Siemens shall pay and be
liable for all taxes and duties imposed by any taxing jurisdiction in Germany or
at the location of fabrication.
* confidential treatment requested
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PART V
WARRANTY AND DISCLAIMER; LIABILITY
5.1 WARRANTY. Siemens warrants that the Wafers manufactured hereunder
shall be free from defects or failures in material and workmanship for the
period of one (1) year from the date of shipment and shall conform to the
initial specifications set forth in Exhibit C ("Specifications") as may be
amended by the parties' mutual written agreement. Siemens will, at NMI's
option, promptly replace the defective Wafers or provide NMI with credit.
Siemens shall not be liable, and the above warranty does not extend to, defects
or failures in Wafers to the extent such defects or failures unavoidably result
from defects in the design of the Logic Portion or any other technology or
information provided from NMI to Siemens in writing hereunder.
5.2 NOTICE. Upon discovery of nonconforming Wafers by NMI, NMI shall
promptly notify Siemens in writing of the nature of the defects or failures in
detail, and on Siemens's request, shall return such non-conforming Wafers to
Siemens.
5.3 DISCLAIMERS. THE PRODUCT QUALITY WARRANTY SET FORTH ABOVE IS
EXCLUSIVE AND NO OTHER PRODUCT QUALITY WARRANTY, WHETHER WRITTEN OR ORAL, IS
EXPRESSED OR IMPLIED. SIEMENS SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.4 LIMITATION OF LIABILITY. Siemens assumes liability for any personal
injury for which it is found responsible without limitation. If found
responsible for property damages of NMI and/or its Associated Companies and/or
its or their direct customers, Siemens shall indemnify NMI and/or its Associated
Companies for expenses incurred for restoration of the damaged property up to a
maximum amount of U.S. * per damage event. Excluding damages that result from
a breach of PART II and Section 7.1, in no event will either party be liable for
indirect or consequential damages arising from interrupted operation, loss of
profits, loss of information and data, except in cases of gross negligence,
intent or in any cases where liability is mandatory at law.
PART VI
INTELLECTUAL PROPERTY INDEMNITY
6.1 INDEMNIFICATION BY NMI. NMI agrees to defend Siemens against any
third-party actions or claims arising out of the manufacture, use, sale, offer
for sale, or importation of Products and brought against Siemens to the extent
based upon a claim that the Logic Portion infringes any worldwide patent,
trademark or copyright, trade secret or similar intellectual property right of
any third party, and NMI agrees to purchase any work-in-process for Products and
to pay any settlement amounts or damages awarded against Siemens (including
reasonable attorneys fees and court costs) to the extent based upon such a
claim; provided that Siemens provides NMI (i) prompt notice thereof, (ii)
reasonable assistance in connection with the defense thereof (at NMI's expense
excluding Siemens employee expense), and (iii) full control of the defense and
settlement thereof. NMI shall not settle any such claim in a manner that has a
material adverse effect on Siemens
* confidential treatment requested
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without Siemens's prior written consent. NMI agrees to keep Siemens apprised
of the progress of any action or claims covered by this Section 6.1.
Notwithstanding the foregoing, NMI's obligation to indemnify Siemens under
this Section 6.1 shall not apply to any actions or claims described in
Section 6.2 below.
6.2 INDEMNIFICATION BY SIEMENS.
(a) Siemens agrees to defend NMI and/or its Associated Companies
against any third-party actions or claims arising out of the manufacture, use,
sale, offer for sale, or importation of Products and brought against NMI and/or
its Associated Companies to the extent based upon a claim that the use of any
Process used by Siemens or any technology or information provided by Siemens
under this Agreement (including but not limited to the Memory Module) infringes
or misappropriates (directly or indirectly, such as, without limitation, through
the sale or importation of a wafer manufactured by any such Process) any
worldwide patent, copyright, trade secret or other intellectual property right
of any third party, and agrees to pay any settlement amounts or damages awarded
against NMI and/or its Associated Companies (including reasonable attorneys fees
and court costs) to the extent based upon such a claim; provided that NMI and/or
its Associated Companies provides Siemens (i) reasonably prompt notice thereof,
(ii) reasonable assistance in connection with the defense thereof (at Siemens's
expense excluding NMI and/or Associated Company employee expense), and (iii)
allows Siemens full control of the defense and settlement thereof. Siemens
shall not settle any such claim in a manner that has a material adverse effect
on NMI without NMI's prior written consent. Siemens agrees to keep NMI and/or
its Associated Companies apprised of the progress of any action covered by this
Section 6.2.
(b) Siemens shall at all times have the right to: (i) obtain
appropriate licenses to, or (ii) modify the Process or Memory Module (as
applicable) provided that the resulting Product complies with the specifications
set forth in Exhibit C and subject to NMI's right to approve such changes in
advance, such pre-approval not to be unreasonably withheld. However, if an
action described in Section 6.2(a) is brought, NMI at its option may return to
Siemens all inventory and work-in-process for Products judged to be infringing
(whether by final judgment, preliminary injunction or other preliminary relief),
and Siemens shall refund any payments made to it by NMI for such Products.
(c) EXCLUSIONS. Siemens shall not be obligated to indemnify and hold
harmless NMI where the infringement is caused by: (i) the use of Products by NMI
and/or its Associated Companies in combination with other circuits components,
components, devices or products if both (x) the infringement would not have
occurred but for such combination and could have been avoided by a different
commercially viable combination and (y) such combination is not reasonably
necessary to use the Product for its intended purpose; (ii) use of the Products
by NMI and/or its Associated Companies in applications or environments for which
Products were not designed; or (iii) modifications to the Products by NMI and/or
its Associated Companies if such infringement would have been avoided absent
such modifications, unless such modifications were authorized by Siemens.
6.3 ENTIRE LIABILITY. THE FOREGOING STATES EACH PARTY'S ENTIRE LIABILITY
AND OBLIGATION (EXPRESS, STATUTORY, IMPLIED OR OTHERWISE) UNDER THIS AGREEMENT
WITH RESPECT TO INFRINGEMENT OF THIRD PARTY INTELLECTUAL
-12-
PROPERTY. IN NO EVENT SHALL EITHER PARTY'S ENTIRE LIABILITY PURSUANT TO THIS
PART VI ARISING OUT OF ANY INFRINGEMENT CLAIM EXCEED THE AMOUNT PAID OR
PAYABLE BY NMI HEREUNDER FOR THE PRODUCTS THAT ARE THE SUBJECT OF SUCH CLAIM.
PART VII
GENERAL PROVISIONS
7.1 CONFIDENTIALITY.
(a) CONFIDENTIAL INFORMATION. "Confidential Information" means any
technical data, trade secret, know-how, or other information disclosed by any
party (including the Associated Companies) hereunder, either directly or
indirectly, in writing, orally, by drawing or by inspections, and which shall be
marked by the disclosing party as "Confidential" or "Proprietary". If such
information is disclosed orally, through demonstration or by inspection, in
order to be deemed Confidential Information, it must be specifically designated
as being of a confidential nature at the time of disclosure and confirmed in
writing to be received by the receiving party within ten (10) days of such
disclosure.
(b) EXCLUSIONS. Notwithstanding the foregoing, Confidential
Information shall not include information which:
(i) is known to the receiving party at the time of
disclosure or becomes known to the receiving party without breach of this
Agreement;
(ii) is or becomes publicly known through no wrongful act of
the receiving party or any affiliate of the receiving party;
(iii) is rightfully received from a third party (excluding
the Associated Companies) without restriction on disclosure;
(iv) is independently developed by the receiving party or
any of its affiliates by persons who had no access to the information;
(v) is furnished to any third party by the disclosing party
without restriction on its disclosure; or
(vi) is approved for release upon a prior written consent of
the disclosing party.
(c) COMPELLED DISCLOSURE. Notwithstanding the foregoing, a receiving
party may disclose Confidential Information if such Confidential Information is
disclosed pursuant to judicial order, requirement of a governmental agency or by
operation of law; provided, however, that the receiving party shall provide
prior notice to the disclosing party and thereafter use reasonable commercial
efforts to assist the disclosing party in preventing or controlling such
compelled disclosure.
-13-
(d) NONDISCLOSURE. The receiving party agrees that it will not
disclose any Confidential Information to any third party except for the
Associated Companies that agree in writing to this PART VII and will not use
Confidential Information of the disclosing party for any purpose other than for
the performance of obligations under this Agreement. The receiving party
further agrees that Confidential Information shall remain the sole property of
the disclosing party and that it will take all reasonable precautions to prevent
any unauthorized disclosure of Confidential Information by its employees and
independent contractors. No license shall be granted by the disclosing party to
the receiving party with respect to Confidential Information disclosed hereunder
unless otherwise expressly provided herein. Each party will disclose the
other's Confidential Information only to those of its employees that have a need
to know and who are informed that such information is confidential.
(e) NONDISCLOSURE AGREEMENTS. Each party agrees that it (i) has or
that it shall obtain the execution of standard nondisclosure undertakings with
its employees, (ii) shall diligently enforce such agreements, and (iii) shall be
responsible for the actions of such employees in this respect.
(f) RETURN OF CONFIDENTIAL INFORMATION. After expiration or
termination of this Agreement upon the request of the disclosing party, the
receiving party will promptly return all Confidential Information furnished
hereunder and all copies thereof.
(g) PUBLICITY. The parties agree that all publicity and public
announcements concerning the formation and existence of this Agreement shall be
jointly planned and coordinated by and among the parties. Neither party shall
disclose any of the provisions of this Agreement, the existence of this
Agreement, nor that the parties are doing business with one another to any third
party without the prior written consent of the other party. NMI will be
responsible for all communications with NMI's customers concerning the subject
matter hereof, and Siemens agrees to forward to NMI any communications it
receives from NMI's customers. Notwithstanding the foregoing, any party may
disclose information concerning this Agreement as required by the rules, orders,
regulations, subpoenas or directives of a court, government or governmental
agency, after giving prior notice to the other parties and either party may
disclose this Agreement to its attorneys, accountants or like consultants that
have a need to know or to potential investors or potential acquiring companies.
(h) REMEDY FOR BREACH OF CONFIDENTIALITY. If a party breaches any of
its obligations with respect to confidentiality and unauthorized use of
Confidential Information hereunder, the non-breaching party shall be entitled to
equitable relief to protect its interest therein, including but not limited to
injunctive relief, as well as money damages.
7.2 TERM AND TERMINATION. This Agreement shall remain in force for five
(5) years from the time the first product is released to production by NMI
unless it is terminated earlier as provided in this Agreement. At the end of
five (5) years, this Agreement will be extended for another one (1) year under
the same terms and conditions provided herein unless notice of termination is
given by either party twelve (12) months prior to the expiration date.
Notwithstanding the foregoing, all existing orders and the provisions of PART V,
PART VI, and Sections 7.1 and 7.6 of PART VII shall survive any termination or
expiration of this Agreement.
-14-
(a) Subject to Section 7.2(b), either party may terminate this
Agreement with immediate effect, at its sole discretion, upon giving written
notice to the other party, in case:
(i) the other party defaults in the performance of any
material obligation hereunder, and if any such default is not corrected within
ninety (90) days after the defaulting party receives written notice of such
default from the non-defaulting party,
(ii) the business of the other party as a commercial
enterprise ceases, or
(iii) The other party files a petition in bankruptcy, or is
adjudicated bankrupt, or makes a general assignment for the benefit of
creditors, or becomes insolvent, or is otherwise unable to meet its business
obligations for a period of three (3) consecutive months.
(b) In the event that Siemens terminates this Agreement pursuant to
Section 7.2(a)(ii) or 7.2(a)(iii) above, Siemens agrees to supply Wafers, on the
terms and conditions hereof to NMI's customers upon request by such customers
and for the period that this Agreement would have otherwise been in effect
absent such termination. NMI agrees to provide Siemens with a list of such
customers reasonably prior to the occurrence of the events specified in Sections
7.2(a)(ii) or 7.2(a)(iii) above.
7.3 FORCE MAJEURE. The parties shall not be liable to one another for
failure to perform any part of this Agreement except for any payment obligation
when such failure is due to fire, flood, strikes, labor troubles or other
industrial disturbances, inevitable accidents, war (declared or undeclared),
embargoes, blockades, legal restrictions, governmental regulations or orders,
riots, insurrections, or any cause beyond the control of such party. However,
the party so prevented from performance shall use diligent efforts to resume
performance, and the parties shall proceed under this Agreement when the causes
of such nonperformance have ceased or have been eliminated.
7.4 ASSIGNMENT. Neither Party may assign this Agreement, delegate its
obligations or assign its rights thereunder without the prior written consent of
the other Party, which consent will not be unreasonably withheld.
Notwithstanding the foregoing and without consent of the other Party:
(a) Either Party may assign this Agreement, delegate its obligations
or assign its rights thereunder to an Affiliated Company. An "Affiliated
Company" is any corporation, company or other entity which: (i) is Controlled by
a Party hereto; (ii) Controls a Party hereto; or (iii) is under common control
with a Party hereto. For this purpose, "Control" means that more than fifty
percent (50%) of the controlled entity's outstanding shares or ownership
interest representing the right to make decisions for such entity are owned or
controlled, directly or indirectly, by the controlling entity; and
(b) Siemens may assign this Agreement, delegate its obligations or
assign its rights thereunder to a third party to whom all or substantially all
assets of Siemens Semiconductor Group or of the business unit performing this
Agreement are transferred.
Without limiting the foregoing, this Agreement shall be binding upon and
inure to the benefit of each Party's successors and permitted assigns.
-15-
7.5 GOVERNING LAW; DISPUTES. This Agreement will be interpreted and
enforced in accordance with the laws of Switzerland without reference to
conflicts of law principles. This Agreement shall not be governed by the 1980
U.N. Convention on Contracts for the International Sale of Goods. Each party
will use reasonable good faith efforts to settle any dispute arising out of this
Agreement. Should such efforts prove unsuccessful, any dispute or claim arising
out of or in relation to this Agreement, or the interpretation, making,
performance, breach or termination thereof, shall be finally settled by binding
arbitration under the Rules of Conciliation and Arbitration of the International
Chamber of Commerce as presently in force ("Rules") and by three (3) arbitrators
appointed in accordance with said Rules. Judgment on the award rendered may be
entered in any court having jurisdiction thereof. The place of arbitration
shall be in Zurich. Any monetary award shall be in U.S. dollars and the
arbitration shall be conducted in the English language.
7.6 EXPORT CONTROLS. Siemens and NMI acknowledge that they are each
subject to regulation by agencies of the U.S. and German Governments, including
the U.S. Department of Commerce, which prohibit export or diversion of certain
products and technology to certain countries. Any and all obligations of the
parties to provide technical information, technical assistance, any media in
which any of the foregoing is contained, training and related technical data
(collectively, "Data") shall be subject in all respect to such United States and
German laws and regulation as shall from time to time govern the license and
delivery of technology and products abroad by persons subject to the
jurisdiction of the United States, including the Export Administration Act of
1979, as amended, any successor legislation, and the Export Administration
Regulations issued by the Department of Commerce, International Trade
Administration, Bureau of Export Administration.
7.7 NOTICE. Any notice required or permitted to be given under this
Agreement shall be delivered (i) by hand, (ii) by registered or certified mail,
postage prepaid, return receipt requested, to the address of the other party
first set forth above, or to such other address as a party may designated by
written notice in accordance with this Section 7.7 by overnight courier, or
(iii) by electronic transmission with conforming letter mailed under the
conditions described in (ii). Notice so given shall be deemed effective when
received, or if not received by reason of fault of addressee, when delivered.
If to Siemens, to:
Siemens Aktiengesellschaft
Xxxxxxxxxxxx 00, 00000
Xxxxxxxx, Xxxxxxx
If to NMI, to:
Xxxxxxx Xxxxxxx
NeoMagic International Corporation
c/o Caledonian Bank & Trust Ltd.
Xxxxxx Xxxxx
Xxxxxxxxxx Xxxxx
Xxxx Xxxxxx
X.X. Xxx 0000
-16-
Georgetown, Grand Cayman, B.W.I.
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
7.8 RELATIONSHIP OF PARTIES. The relationship between NMI and Siemens
under this Agreement is that of independent contractors and neither shall be,
nor represent itself to be, the joint venturer, franchiser, franchisee, partner,
broker, employee, servant, agent, or representative of the other for any purpose
whatsoever. No party is granted any right or authority to assume or create any
obligation or responsibility, express or implied, on behalf of, or in the name
of, another party or to bind another in any matter or thing whatsoever.
7.9 WAIVER. Should any of the parties fail to exercise or enforce
any provision of this Agreement or to waive any rights in respect thereto, such
waiver or failure shall not be construed as constituting a continuing waiver or
a waiver of any other right.
7.10 SEVERABILITY. In the event that any provision or provisions of this
Agreement shall be held to be unenforceable, the parties shall renegotiate those
provisions in good faith to be valid, enforceable substitute provisions which
provisions shall reflect as closely as possible the intent of the original
provisions of this Agreement. If the parties fail to negotiate a substitute
provision, this Agreement will continue in full force and effect without said
provision and will be interpreted to reflect the original intent of the parties.
7.11 ENTIRE AGREEMENT. This Agreement, including the Exhibits referred
to herein, contains the entire understanding of the parties, and supersedes
any prior agreement between or among the parties with respect to its subject
matter. In case of any conflicts between this Agreement and any purchase
orders, acceptances, correspondence, memorandum, listing sheets and other
documents forming part of any order for Products, this Agreement shall
govern. This Agreement shall not be amended or modified except by written
instrument signed by the duly authorized representatives of the parties
hereto.
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized representatives or officers, effective as of the
Effective Date.
SIEMENS NEOMAGIC INTERNATIONAL
CORPORATION
By: /s/ Xxxxxx xxx Xxxxxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------------------- -----------------------------
Name: Xxxxxx xxx Xxxxxxxxx Name: Xxxxxxx Xxxxxxx
----------------------------------- ---------------------------
President, Memory Products Division CEO President
Title: Title:
----------------------------------- ---------------------------
-18-
EXHIBITS
--------
A - Initial Process(es)
B - Production Information
C - Acceptance Criteria
D - Average Yields
E - DRAM Memory Module Specifications
-19-
EXHIBIT A
INITIAL PROCESS(ES)
For the first Product (*) * Process will be used according to Siemens
Dresden * Document Nr.: * (*). *
* confidential treatment requested
-20-
EXHIBIT B
---------
PRODUCTION INFORMATION
FABRICATION CYCLE TIMES:
------------------------
PROTOTYPE (ACCELERATED):
* weeks from the fab start to the start of memory repair.
* weeks from M1 to memory repair.
* weeks for memory repair to wafer repair, test, and ship.
VOLUME: * weeks from the fab start to ship (lead time)
Target * weeks (cycle time)
WAFERS PER LOT: (nominal at wafer start)
PROTOTYPE: *
VOLUME: *
* confidential treatment requested
-21-
EXHIBIT C
---------
Acceptance Criteria
For wafer shipment Siemens Dresden Document " * Wafer
Acceptance Documentation":
No. * shall be followed.
Reliability Goals:
The goal for early failure rate (EFR) of tested good * memory cores
shall be the same as for Siemens commodity DRAM (64 M SDRAM) at the same
production step i.e. * .
EFR goal value for 64 M SDRAM in * micron is * dpm (February 1999)
cumulated over 365 days normalized to * junction temperature and
external supply voltage * Volt after component test. For long term
failure rate of the embedded DRAM core, the goal is * FITS @ T(junction)
= * Celsius.
* confidential treatment requested
EXHIBIT D
---------
-22-
LEADPRODUCT * :
-----------------
------------------------------------------------------------------------------
Product Technology EDRAM Average Lower Limit Lower Limit
Memory Size Memory 1 2
Yield 1)
------------------------------------------------------------------------------
* * * * * *
------------------------------------------------------------------------------
1) Average Memory Yield means average agreed post fuse yield (average of all
wafers out in a calendar quarter)
PRICES *) :
------------------------------------------------------------------------------
Quarter 3 Calendar Year Quarter 4 Calendar Year
1999 1999
------------------------------------------------------------------------------
Production Wafer **) * *
------------------------------------------------------------------------------
Prototype Wafer
Price Multiplication
Factor (based on one
Production Wafer):
- w/o changes to * *
Production wafer
* *
- with process changes / * *
splits
* *
- normal accelerated
- normal rocket lot
------------------------------------------------------------------------------
Mask Set * US $ * US $
------------------------------------------------------------------------------
*) Prices will be renegotiated and mutually agreed on a quarterly basis
**) Based on a maximum of * Wafer starts per week
***) Accelerated charge and material hold will not apply to the first *
prototype lots. NeoMagic Corporation may order up to * more prototype lots
using normal cycle time that may require material hold at standard price.
The prices for the following quarters will be agreed according to 4.1 and
documented in a separate agreement.
* confidential treatment requested
EXHIBIT E
-23-
EMBEDDED DRAM CORE FOR NMG5
PRODUCT SPECIFICATION
DESCRIPTION: SIGNALS:
*
*
* 256-bit *
* *
synchronous DRAM module.
*
*
*
*
*
FEATURES:
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
* confidential treatment requested
-24-
