1
"[ ]" indicates that the
confidential portion has been
omitted and filed separately with
the Commission.
EXHIBIT 10.9
Dated this day of 1995
Between
CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD
And
CHIPS AND TECHNOLOGIES, INC.
-----------------------------------------
DEPOSIT AGREEMENT
-----------------------------------------
2
DEPOSIT AGREEMENT
THIS AGREEMENT is made the 16th day of November 1995 by and between :
(1) CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD, a company incorporated
in Singapore with its registered office at No. 0 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx Science Park, Singapore 0511 (hereinafter referred to as
"CSM"); and
(2) CHIPS AND TECHNOLOGIES, INC., a company incorporated in California and
having its place of business at 0000 Xxxxxx Xxxx, Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx of America (hereinafter referred to as "Customer").
WHEREAS:
(A) CSM is engaged primarily in the business of the development,
manufacturing, assembly, marketing and selling of semiconductors, with
its 2 wafer fabrication facilities situated in Singapore. CSM intends
to establish a third wafer fabrication facility in Singapore.
(B) Customer desires to deposit certain funds with CSM to enable CSM to
procure increased wafer fabrication capacity and to make available to
Customer certain wafer manufacturing capacity, on the terms and
conditions of this Agreement.
IT IS HEREBY AGREED as follows:
1. THE DEPOSIT
1.1 In consideration of CSM agreeing to make available to Customer certain
wafer manufacturing capacity, Customer will deposit with CSM the sum of
US$20,000,000 (the "Deposit") on such dates and in such amounts as
specified in Annex A.
1.2 The Deposit shall be paid by telegraphic transfer to an account
designated by CSM and such Deposit shall be maintained by Customer to
the full amount of US$20,000,000 during the term of this Agreement.
1.3 Upon the expiry of the term of this Agreement or the earlier
termination thereof in accordance with Clause 6 or Clause 7.2, CSM will
return to Customer the Deposit, without interest and subject to any
deductions made by CSM pursuant to the terms of this Agreement.
1
3
2. CSM SUPPLY COMMITMENT
2.1 In consideration of the payment of the Deposit by Customer and
Customer's maintenance of the full deposit amount of US$20,000,000 with
CSM, CSM will make available to Customer, wafer manufacturing capacity
for [ ] wafers (based on [ ] wafers) in each calendar quarter
commencing from the second calendar quarter of 1996 until the expiry or
the earlier termination of the term of this Agreement, in such
quantities as set out in Annex B (the "CSM Supply Commitment").
2.2 The Parties agree that the [ ] of the CSM Supply Commitment for
each [
]
Example
[
]
2.3 Unless otherwise expressly provided in this Agreement, the sale of
wafers by CSM to Customer, the capacity of which is made available to
Customer under this Agreement, shall be governed by the terms and
conditions of CSM's foundry agreement to be entered into by CSM and
Customer (the "Foundry Agreement").
2.4 CSM reserves the right to adjust the pricing of wafers to be supplied
by CSM from time to time depending on prevailing market conditions
and/or subject to the provisions of Clause 8.6, Provided however that
CSM shall give Customer not less than [ ] prior written notice of such
adjustment. In any event, the price of wafers supplied to Customer
shall be [
]
2
4
Confidential Treatment
Requested
3. CUSTOMER LOADING COMMITMENT
3.1 Customer agrees to place purchase orders with CSM for such quantity of
[ ] wafers (based on [ ] wafers) for delivery during the
calendar quarters set out in Annex B (the "Customer Loading
Commitment"). The quantity of wafers for which orders are placed by
Customer is hereinafter referred to as the "Customer Actual Loading".
3.2 The Customer Actual Loading for each calendar quarter during the term
of the Agreement shall be equal to the Customer Loading Commitment. In
addition, the [ ] in the Customer Actual Loading shall not
exceed [ ] without the prior written approval of CSM.
3.3 Notwithstanding the provisions of Clause 3.2, CSM agrees to waive
payment of liquidated damages under Clause 4 if the Customer Actual
Loading for any calendar [ ] is in aggregate not less than [ ] of
the Customer Loading Commitment for that [ ].
4. LIQUIDATED DAMAGES
4.1 The Parties acknowledge that in the initial period, CSM and Customer
would work together to qualify Customer's products at CSM's wafer
fabrication facility. Accordingly, the provisions of Clause 4 for the
payment of liquidated damages shall be effective in respect of the CSM
Supply Commitment and the Customer Loading Commitment from the first
calendar quarter of 1997 onwards. In addition, CSM shall not be liable
for any losses or damages whatsoever incurred by Customer in the event
that CSM fails to deliver the Customer Actual Loading for the period
prior to the first calender quarter of 1997.
4.2 In the event that the Customer Actual Loading for any calendar [ ] is
less than [ ] of the Customer Loading Commitment for that [ ],
Customer shall pay to CSM liquidated damages calculated based on the
shortfall from [ ] of the Customer Loading Commitment for that [ ],
at CSM's [ ] per wafer for such [ ]. The formula for
calculation of such liquidated damages shall be as follows:
[
]
4.3 In the event that CSM fails to deliver at least [ ] of the Customer
Actual Loading for any calendar [ ], CSM shall pay to Customer
liquidated damages calculated based on the shortfall from [ ] of the
Customer Actual Loading, based on CSM's [ ] per wafer for that
[ ]. The formula for calculation of such liquidated damages shall be
as follows:
3
5
Confidential Treatment
Requested
[
]
4.4 CSM and Customer agree and acknowledge that the amount payable as
liquidated damages pursuant to Clauses 4.2 and 4.3 is a genuine
pre-estimate of the loss which would be suffered by the non-defaulting
Party as a consequence of the failure of the defaulting Party to
fulfill its respective obligations under Clauses 2 and 3 of this
Agreement.
4.5 CSM and Customer each agrees that their respective liability, in CSM's
case to fulfill the CSM Supply Commitment under Clause 2 and in
Customer's case to fulfill the Customer Loading Commitment under Clause
3, shall be limited to the liability expressly specified in Clause 4
and that neither Party shall be liable for any indirect, special or
consequential damages even if such Party had or should have had any
knowledge, actual or constructive, of the possibility of such damages.
5. SET OFF AND MAINTENANCE OF DEPOSIT
5.1 CSM shall be entitled to deduct from and set-off against the Deposit,
the following sums due from Customer:
(a) the amount of liquidated damages as they fall due pursuant to
Clause 4; and
(b) any payment falling due and remaining unpaid under the Foundry
Agreement.
5.2 At the end of each calendar quarter, CSM shall issue a written notice
to Customer stating the amount of the liquidated damages and/or overdue
payments and Customer shall pay the relevant sum to CSM so as to
maintain the Deposit at US$20,000,000, within 30 days of the date of
such notice.
5.3 CSM's right of deduction and set-off pursuant to Clause 5.2 shall be in
addition to CSM's right to claim the aforesaid liquidated damages and
overdue payments separately as a debt due from Customer and shall not
in any way prejudice such right or any other rights or remedies which
CSM may have at law or in equity.
4
6
Confidential Treatment
Requested
6. TERM AND TERMINATION
6.1 The term of this Agreement shall expire on 31 December 2000 and may be
earlier terminated in the following events:
(a) At the option of CSM, in the event that the amount of the
Deposit falls below [ ] and Customer fails to make payment
of the shortfall up to [ ] to CSM within the period set out
in Clause 5.2;
(b) At the option of CSM, in the event that the Customer Actual
Loading is in aggregate less than [ ] of the Customer Loading
Commitment for [ ] consecutive calendar months;
(c) At the option of Customer, in the event that CSM fails to
deliver to Customer in aggregate at least [ ] of the Customer
Actual Loading for [ ] consecutive calendar months;
(d) At the option of either Party, in any of the following events:-
(i) the inability of the Party to pay its debts in the
normal course of business; or
(ii) the other Party ceasing or threatening to cease wholly
or substantially to carry on its business, otherwise
than for the purpose of a reconstruction or
amalgamation without insolvency; or
(iii) any encumbrancer taking possession of or a receiver,
manager, trustee or judicial manager being appointed
over the whole or any substantial part of the
undertaking, property or assets of the other Party; or
(iv) the making of an order by a court of competent
jurisdiction or the passing of a resolution for the
winding-up of the other Party or any company
controlling the other Party, otherwise than for the
purpose of a reconstruction or amalgamation without
insolvency.
6.2 Termination of the Agreement pursuant to Clause 6.1 shall take effect
immediately upon the issue of a written notice to that effect by the
Party terminating the Agreement to the other. The termination of this
Agreement howsoever caused shall be without prejudice to any
obligations or rights of either Party which have accrued prior to such
termination and shall not affect any provision of this Agreement which
is expressly or by implication provided to come into effect on or to
continue in effect after such termination.
5
7
7. FORCE MAJEURE
7.1 CSM's obligation to provide the CSM Supply Commitment and Customer's
obligation to place purchase orders in accordance with the terms of
this Agreement shall be suspended upon the occurrence of a force
majeure event such as act of God, flood, earthquake, fire, explosion,
act of government, war, civil commotion, insurrection, embargo, riots,
lockouts, labour disputes affecting CSM or Customer as the case may be,
for such period as such force majeure event may subsist. Upon the
occurrence of a force majeure event, the affected Party shall notify
the other Party in writing of the same and shall by subsequent written
notice after the cessation of such force majeure event inform the other
Party of the date on which that Party's obligation under this Agreement
shall be reinstated.
7.2 Notwithstanding anything in this Clause 7, upon the occurrence of a
force majeure event affecting either Party, and such force majeure
event continues for a period exceeding 6 consecutive months without a
prospect of a cure of such event, the other Party shall have the
option, in its sole discretion, to terminate this Agreement. Such
termination shall take effect immediately upon the written notice to
that effect from the other Party to the Party affected by the force
majeure event.
8. WARRANTY AND INDEMNITY
8.1 Customer warrants that it has the right to use and license the use of
the design provided by Customer and processes provided by Customer and
hereby grants to CSM the right to use the aforesaid design and
processes for the performance of its obligations under this Agreement
and the Foundry Agreement.
8.2 Except to the extent provided in paragraph 8.4 Customer shall
indemnify, hold harmless and defend CSM against any claims that
Customer's products or a process or design licensed from or otherwise
provided by Customer and used by CSM for the performance of its
obligations under this Agreement is an infringement of any letters
patent or other intellectual property rights, including, without
limitation, any infringement based on specifications furnished by
Customer or resulting from the use of any equipment or process
specified by Customer.
8.3 CSM shall notify Customer of any claim of infringement or of
commencement of any suit, action, or proceedings alleging infringement
of any intellectual property rights of any third party forthwith after
receiving notice thereof. Customer shall have the right in its sole
discretion and at its expense to participate in the defence of any such
claim, suit, action or proceedings and in any and all negotiations with
respect thereto.
8.4 CSM shall indemnify, hold harmless and defend Customer against any
claims that the wafers manufactured by CSM pursuant to this Agreement
or any of CSM's
6
8
manufacturing processes used by CSM for the performance of its
obligations under this Agreement is an infringement of any letters
patent or other intellectual property rights of any third party.
8.5 Customer shall notify CSM of any claim of infringement or of
commencement of any suit, action, or proceedings alleging infringement
of any intellectual property rights of any third party forthwith after
receiving notice thereof. CSM shall have the right in its sole
discretion and at its expense to participate in the defence of any such
claim, suit, action or proceedings and in any and all negotiations with
respect thereto.
8.6 Customer hereby agrees that in the event that CSM is required to make
any payments, including without limitation, licence fees or royalty
payments, to any third party in respect of any of CSM's manufacturing
processes used by CSM in the performance of its obligations under this
Agreement, CSM shall be entitled to adjust the pricing of the wafers
supplied to Customer accordingly. Such adjustment shall be effective
upon CSM giving to Customer not less than 3 months' prior written
notice thereof.
9. CONFIDENTIALITY
9.1 All Confidential Information shall be kept confidential by the
recipient unless or until the recipient Party can reasonably
demonstrate that any such Confidential Information is, or part of it
is, in the public domain through no fault of its own, whereupon to the
extent that it is in the public domain or is required to be disclosed
by law this obligation shall cease. For the purposes of this Agreement,
"Confidential Information" shall mean all communications between the
Parties, and all information and other materials supplied to or
received by either of them from the other (a) prior to or on the date
of this Agreement whether or not marked confidential; (b) after the
date of this Agreement which is marked confidential with an appropriate
legend, marking, stamp or other obvious written identification by the
disclosing Party, and (c) all information concerning the business
transactions and the financial arrangements of the Parties with any
person with whom any of them is in a confidential relationship with
regard to the matter in question coming to the knowledge of the
recipient.
9.2 The Company and the Parties and shall take all reasonable steps to
minimise the risk of disclosure of Confidential Information, by
ensuring that only they themselves and such of their employees and
directors whose duties will require them to possess any of such
information shall have access thereto, and will be instructed to treat
the same as confidential.
9.3 The obligation contained in this Clause shall endure, even after the
termination of this Agreement, for a period of 5 years from the date of
receipt of the Confidential
7
9
Information except and until such Confidential Information enters the
public domain as set out above.
10. NOTICES
10.1 Addresses
All notices, demands or other communications required or permitted to
be given or made under or in connection with this Agreement shall be in
writing and shall be sufficiently given or made (a) if delivered by
hand or commercial courier or (b) sent by pre-paid registered post or
(c) sent by legible facsimile transmission (provided that the receipt
of such facsimile transmission is confirmed and a copy thereof is sent
immediately thereafter by pre-paid registered post) addressed to the
intended recipient at its address or facsimile number set out below. A
Party may from time to time notify the others of its change of address
or facsimile number in accordance with this Clause.
CSM
Xx. 0 Xxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxxxxx Xxxx,
Xxxxxxxxx 0000
Facsimile no: (00) 000-0000
Attn: Xx. Xxx Xxxx Xxxx
President
Customer
0000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxx of America
Facsimile no: (000) 000-0000
Attn: Mr. Xxxxx Xxxxxxxx
President
10.2 Deemed Delivery
Any such notice, demand or communication shall be deemed to have been
duly served (a) if delivered by hand or commercial courier, or sent by
pre-paid registered post, at the time of delivery; or (b) if made by
successfully transmitted facsimile transmission, at the time of
dispatch (provided that the receipt of such facsimile transmission is
confirmed and that immediately after such dispatch, a copy thereof is
sent by pre-paid registered post.
8
10
11. WAIVER AND REMEDIES
11.1 No delay or neglect on the part of either Party in enforcing against
the other Party any term or condition of this Agreement or in
exercising any right or remedy under this Agreement shall either be or
be deemed to be a waiver or in any way prejudice any right or remedy of
that Party under this Agreement.
11.2 No remedy conferred by any of the provisions of this Agreement is
intended to be exclusive of any other remedy which is otherwise
available at law, in equity, by statute or otherwise and each and every
other remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law, in
equity, by statute or otherwise. The election of any one or more of
such remedies by either of the Parties hereto shall not constitute a
waiver by such Party of the right to pursue any other available remedy.
12. SEVERANCE
If any provision or part of this Agreement is rendered void, illegal or
unenforceable in any respect under any enactment or rule of law, the
validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
13. ENTIRE AGREEMENT
This Agreement and the Manufacturing agreement constitute the entire
agreement between CSM and Customer with respect to the subject matter
hereof and shall supersede all previous agreements and undertakings
between Parties.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of Singapore. The Parties hereby irrevocably submit to the
non-exclusive jurisdiction of the courts of Singapore.
15. RENEWAL OPTION
Six months before the expiration of this agreement, Customer will have
the option to renew this aagreement for a period of up to two years,
with the terms of the renewal to be negotiated by the parties.
9
11
IN WITNESS WHEREOF the Parties have hereunto entered into this Agreement the
date first above written.
Signed by Tan Xxxx Xxxx, President )
CHARTERED SEMICONDUCTOR )
MANUFACTURING PTE LTD )
in the presence of : )
--------------------------
--------------------------------
Name
Signed by Xxxxx Xxxxxxxx, President )
CHIPS AND TECHNOLOGIES, INC. )
in the presence of : )
--------------------------
--------------------------------
Name
10
12
Confidential Treatment
Requested
ANNEX A
Payment Schedule
[
]
CHIPS AND TECHNOLOGIES, INC.
13
Confidential Treatment
Requested
ANNEX B
[
]
CHIPS AND TECHNOLOGIES, INC.
