CONFIDENTIAL Exhibit 10.13
December 20, 2004
BASIC AGREEMENT
ON
DEVELOPMENT ORDERS
("BASIC AGREEMENT")
BY AND BETWEEN
SAIFUN SEMICONDUCTORS LTD. ("CONTRACTOR")
Having its principal place of business in Netanya, Israel
AND
INFINEON TECHNOLOGIES AG ("INFINEON")
Having its principal place of business in ▇▇.-▇▇▇▇▇▇-▇▇▇, ▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
- each hereinafter referred to as a "PARTY" and collectively as "PARTIES" -
on
REIMBURSEMENT OF DEVELOPMENT SERVICES IN THE FIELD OF SEMICONDUCTOR
TECHNOLOGIES AND PRODUCTS
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1. DEFINITIONS; REPLACEMENT
2. CARRYING OUT OF THE DEVELOPMENT WORK
3. COSTS OF THE DEVELOPMENT WORK
4. OWNERSHIP OF AND RIGHTS IN DEVELOPMENT RESULTS; LICENSES UNDER INFORMATION
5. WARRANTY AND LIABILITY
6. SECRECY
7. TERM AND TERMINATION
8. ARBITRATION AND SUBSTANTIVE LAW
9. MISCELLANEOUS
APPENDIX A COST REIMBURSEMENT
APPENDIX B CARD INTEGRATION TEAM
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1. DEFINITIONS, REPLACEMENT
1.1 The term "LICENSE AGREEMENT" means the License Agreement entered into
between Saifun Semiconductors Ltd., with offices at 45 Hamelacha ▇▇.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ("Saifun"); and Infineon
Technologies AG, with offices at ▇▇.-▇▇▇▇▇▇-▇▇▇. ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
("Infineon"), dated January 13, 2005.
1.2 The term "TECHNOLOGIES AND SERVICES" means and comprises the semiconductor
technologies, product designs, process development, software and firmware
codes and other development services which CONTRACTOR agrees to develop
based on a Statement of Work entered into subsequently to and based on the
Basic Agreement,
Each such Statement of Work is hereinafter referred to as "STATEMENT OF
WORK".
1.3 The term "CUSTOMER" means Infineon Technologies AG and its SUBSIDIARIES.
1.4 The term "DEVELOPMENT WORK" means any and all development work to be
performed by CONTRACTOR for TECHNOLOGIES AND SERVICES in accordance with
Section 2 below and the relevant STATEMENT OF WORK.
1.5 The term "DEVELOPMENT RESULTS" means any and all results, whether
patentable or not, in written or oral form, achieved by performing
DEVELOPMENT WORK.
1.6 The term "INFORMATION" means written and/or oral technical information with
regard to the relevant TECHNOLOGIES AND SERVICES, such information being
available at CUSTOMER, or CONTRACTOR at any time during the term of this
Basic Agreement and not resulting from performing DEVELOPMENT WORK. It is
understood that the term "INFORMATION" shall include, without being limited
to, patents, patent applications and other statutory protective rights
which are based on INFORMATION.
1.7 The term "SUBSIDIARY/IES" shall mean any legal entity directly or
indirectly controlled by a Party, for so long as such control lasts.
Control of an entity shall exist through the direct or indirect:
- control of more than 50% of the nominal value of the issued equity
share capital of the entity or more than 50% of the equity's shares
entitling the
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holders to vote for the election of directors or persons performing
similar functions, or
- right by any other means to elect or appoint directors of the entity
(or persons performing similar functions) who have a majority vote.
1.8 This Basic Agreement shall replace the Basic Agreement of Development
Orders between Saifun and Infineon Technologies Flash Ltd. dated January 9,
2003 as of the Effective Date hereof. The exercise of all rights and
obligations incurred by either Party under the Basic Agreement, in
particular the performance of any outstanding STATEMENT OF WORK entered
into under the Basic Agreement, shall be governed by this Basic Agreement,
and shall not be affected by its termination.
2. CARRYING OUT OF THE DEVELOPMENT WORK
2.1. Order of Precedence. In the event of conflicts between the documents
executed under this Basic Agreement, precedence in the following order
shall apply, unless provided otherwise herein (listed in order of
priority):
(i) This Basic Agreement including its Exhibits
(ii) The relevant STATEMENT OF WORK including its Appendices and updates;
In the event of conflicts between this Basic Agreement and its Exhibits,
this Basic Agreement shall prevail. This shall apply mutatis mutandis for
the STATEMENT OF WORK and its Appendices.
2.2 Procedure for Execution and Amendment of STATEMENTS OF WORK. In each case
where CUSTOMER wishes CONTRACTOR to carry out a development order under
this Basic Agreement and a relevant STATEMENT OF WORK, CUSTOMER shall
furnish CONTRACTOR with the relevant technical and commercial
specifications for the DEVELOPMENT WORK to be performed. Should CONTRACTOR
wish to receive additional specifications then CONTRACTOR shall so inform
CUSTOMER. Within four (4) weeks after receipt of such specifications - or,
as the case may be, additional clarifying specifications - CONTRACTOR shall
quote to CUSTOMER the terms and conditions for CONTRACTOR's acceptance of
the relevant development order to be reflected in a STATEMENT OF WORK. Upon
counter signature of the same by CUSTOMER, the relevant STATEMENT OF
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WORK shall become effective and CONTRACTOR agrees to carry out the
DEVELOPMENT WORK. CUSTOMER may initiate an ECO process (as defined below)
in order to modify the specification which is part of an applicable
STATEMENT OF WORK. Any substantial changes which might occur after signing
of a respective STATEMENT OF WORK will be treated according to an ECO
process which will result in an amendment to the respective STATEMENT OF
WORK. Any and all such amendments to STATEMENTS OF WORK must be agreed upon
and signed by both Parties, and shall update the terms of the STATEMENT OF
WORK with respect to all issues affected from the requested engineering
change (such as schedule and cost). For the avoidance of doubt, any
specification and other substantial changes to a STATEMENT OF WORK, whether
resulting in allocation of additional or less resources will be treated as
ECO.
For the purposes of this Basic Agreement "ECO" shall mean an Engineering
Change Order which is a controlled process which is started when a
specification or other substantial change is required to a respective
STATEMENT OF WORK, which usually causes additional development effort. Such
changes may include for example a tightening of the specification (i.e.
faster device, smaller area), an addition of new features for the product
(i.e. additional functionality, new interfaces), or change in manufacturing
process that results in additional resources required by CONTRACTOR.
Changes may also be required if the agreed upon features from the STATEMENT
OF WORK in place can not be developed. All ECO result in an amendment to
the STATEMENT OF WORK which lowers or increases the quotation, changes the
respective schedule, etc.
2.3 DEVELOPMENT WORK For [***] Design Teams During the INITIAL TWO YEARS. The
Parties undertake that in each of the initial two (2) years following the
Effective Date of this Basic Agreement ("INITIAL TWO YEARS"), CONTRACTOR
shall carry out for the CUSTOMER DEVELOPMENT WORK for [***] products in
parallel using [***] design teams within CONTRACTOR based on or
incorporating Saifun NROM Technology (as defined in the License Agreement)
as required by CUSTOMER, specification of which to be agreed upon and
defined under corresponding STATEMENTS OF WORK hereunder. Such DEVELOPMENT
WORK shall be performed in accordance with the procedures, terms and
conditions specified in this Basic Agreement and the respective STATEMENTS
OF WORK.
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
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2.4 Option For A [***] Product. In any event, CUSTOMER has an option to request
CONTRACTOR to carry out a DEVELOPMENT WORK for a [***] product to be
developed in parallel to the [***] products as stated in Section 2.3 based
on or incorporating Saifun NROM Technology, during each of the INITIAL TWO
YEARS. To the extent such request is made reasonable time in advance,
CONTRACTOR shall most favorably consider, and shall endeavor, to perform
the required DEVELOPMENT WORK provided that its internal resources
allocation in the given year, is not unreasonably affected by such
DEVELOPMENT WORK. Where the Parties agree on the development of such [***]
product, development specifications will be defined under corresponding
STATEMENT OF WORK hereunder.
If the resources for a [***] project are not available, the Parties may
agree, when feasible, on a re-allocation and prioritization within the
people of the design teams as stated in Section 2.3, which are working for
other CUSTOMER projects hereunder, via a controlled ECO process.
2.5 Additional Services - Card Integration and MLC. In addition, CONTRACTOR
shall provide card integration services performed by Infineon Technologies
Flash Ltd in the past, for a period of two years following the Effective
Date in accordance with Section 4.2 and MLC DEVELOPMENT WORK in accordance
with Section 4.1.
2.6 Content of STATEMENTS OF WORK. It is especially agreed that
- any and all STATEMENT OF WORKS have to be in writing in order to be
effective; the Parties agree that each STATEMENT OF WORK hereunder
shall be signed, respectively, only at project release as determined
by CUSTOMER. Before project release (prior to signature of the
respective STATEMENT OF WORK), the PARTIES shall enter into a binding
agreement regarding the feasibility of the DEVELOPMENT WORK. In the
course of such agreement CUSTOMER may ask CONTRACTOR to provide inter
alia, a resource and time plan and a feasibility study.
- In the event CUSTOMER is undertaking a patent search, CONTRACTOR will
cooperate with CUSTOMER or a third party supporting CUSTOMER in such
patent search at CUSTOMER'S cost and liability.
- Subject to the provisions of Section 2.3, 2.4 and 2.5 above, neither
CUSTOMER nor CONTRACTOR is required or obligated to enter into any or
any particular STATEMENT OF WORK.
_________________
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
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Unless otherwise agreed in writing by the PARTIES, any STATEMENT OF WORK
shall at least comprise the following elements:
- Product Specification
- Milestone Plan according to Infineon Methodology
- Project leader and project planned assignees;
- Following project release - personnel projected planning and
their basic qualification according to Milestone Plan;
Detailed deliverables from CUSTOMER;
Detailed deliverables from CONTRACTOR;
- Agreed upon estimated delivery dates. Estimated duration of
Services;
- Scheduled review meetings;
- Technology transfer mode;
- Cost per hour and per week/month, estimation of total cost and
payment, travel regulations that are charged to CONTRACTOR;
- Special tools and testing equipment that CONTRACTOR requires from
CUSTOMER for its performance of the DEVELOPMENT WORK.
- Deviations from criteria set forth within this Basic Agreement;
- Outsourcing services, expenses directly associated with the
DEVELOPMENT WORK.
2.7 Use of Subcontractors. The DEVELOPMENT WORK may be partly delegated to a
third party by CONTRACTOR upon CUSTOMER's prior written approval. This
approval shall only be refused by CUSTOMER for reasonable reasons. If the
development costs are reduced by CONTRACTOR decision to use a third party,
the benefit will be shared 50%-50%. In all such cases, however, CONTRACTOR
shall remain responsible for the proper execution of the DEVELOPMENT WORK
and maintaining confidentiality.
2.8 DEVELOPMENT WORK Schedules. CONTRACTOR shall make best efforts that the
DEVELOPMENT WORK shall be carried out in accordance with the estimated time
schedule set forth in each STATEMENT OF WORK, or in accordance with
schedule as amended via an ECO process.
2.9 Provision of INFORMATION. CUSTOMER, insofar as it lawfully may, shall make
available to CONTRACTOR within a reasonable period of time following the
coming into force of each STATEMENT OF WORK, and from time to time during
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the DEVELOPMENT WORK, its INFORMATION necessary for CONTRACTOR to carry out
the DEVELOPMENT WORK. CONTRACTOR will inform CUSTOMER in regular weekly
project meetings whenever it needs INFORMATION of CUSTOMER and will specify
the INFORMATION of CUSTOMER needed.
Such INFORMATION shall be submitted in writing and the STATEMENT OF WORK
will be amended respectively.
2.10 Approval of Additional Resources. Where additional resources, costs and
time delays beyond [***] percent ([***]%) of the initial estimations and
on-going forecasts are required to carry out DEVELOPMENT WORK such
additional budget / capacity or moved due dates must be expressly approved
by the Parties as part of the amendment to the respective STATEMENT OF
WORK. Approval by CUSTOMER requires the signature of at least the
CUSTOMER's VP Design, currently ▇▇. ▇▇▇▇▇▇-▇▇▇▇▇▇.
2.11 On-going Reports. CONTRACTOR will inform CUSTOMER at regular agreed upon
intervals, but at least once every other week about the status of the
DEVELOPMENT WORK in writing and in a format to be mutually agreed by
Parties. Those once every other week reports will at least comprise the
following information:
- description of work performed within the last reporting period;
- explanation of changes if any;
- risk evaluation
- update of MS Project Plan (including time planning) once a month as
well as resource planning as available at CONTRACTOR.
Subject to and in accordance with Section 2.13 below, upon the finalization
of the DEVELOPMENT WORK, or, if requested by CUSTOMER earlier, at such
request from CUSTOMER, CONTRACTOR shall deliver to CUSTOMER the DEVELOPMENT
RESULTS, including and without limitation all documentation and prototypes.
CONTRACTOR shall explain the DEVELOPMENT RESULTS with an appropriate
documentation (as defined in the STATEMENT OF WORK) and orally.
2.12 Project Leaders. Each Party shall appoint a project leader and respective
experts who will act as a point of contact during the DEVELOPMENT WORK
under each STATEMENT OF WORK.
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*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
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All INFORMATION and DEVELOPMENT RESULTS to be forwarded to a Party
hereunder will be addressed to such appointed expert or project leader,
respectively.
Both Parties shall use reasonable efforts to answer questions and requests
for information within a reasonable period of time in each case.
2.13 Share of Development Results. Except as otherwise agreed in this Basic
Agreement, CONTRACTOR shall share with CUSTOMER and shall deliver to it,
all DEVELOPMENT RESULTS, including without limitation the CAD-System (i.e.
GDSII, schematics, simulation set ups, simulation results, VHDL/ Verilog
Code, synthesis scripts, representations of any blocks and cells in the CAD
system, views for the relevant tools, algorithms, software). The
information thus transferred to CUSTOMER shall be used solely to enable
CUSTOMER to affect its rights under the LICENSE AGREEMENT, shall be deemed
INFORMATION of CONTRACTOR, and shall be subject to the secrecy and
confidentiality provisions of this Basic Agreement and of the License
Agreement. Notwithstanding anything to the contrary above CUSTOMER is
entitled to forward such INFORMATION and DEVELOPMENT RESULTS to an assignee
as part of an assignment under section 10.5 hereunder or as part of the
Exit Event as described in Section 5 of the License Agreement.
2.14 Hand-Over Sessions. CONTRACTOR shall provide at the request of CUSTOMER and
at CUSTOMER's cost and expense, hand over sessions for CUSTOMER at a
location to be agreed upon. The associated costs are to be included in the
STATEMENT OF WORK. Separate workshops for M2, M3 and M4/5 have to be
scheduled and included (including respective associated costs to be borne
by CUSTOMER) in the respective STATEMENT OF WORK.
2.15 Participation of CUSTOMER's Engineers in DEVELOPMENT WORK. The Parties may
jointly cooperate in the benefit of their mutual interests to enable the
participation of CUSTOMER's engineers ("Designated Engineers") in
CONTRACTOR's development teams performing the DEVELOPMENT WORK. CUSTOMER
shall reimburse CONTRACTOR for any costs associated with such
participation, such as work stations, software costs, etc. It is hereby
clarified that Designated Engineers will continue to be employees of
CUSTOMER and will not become employees or agents of, or consultants to,
CONTRACTOR, and any and all costs and expenses associated with such
Designated Employees (including
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salaries, insurances, traveling, lodging etc.) will be fully borne by
CUSTOMER. Each Designated Engineer shall comply with and be bound by
CONTRACTOR's internal policies and procedures including confidentiality
undertaking as being made available to the respective Designated Engineers
prior to the start of the DEVELOPMENT WORK. CUSTOMER shall ensure, and
shall be liable for the compliance of its Designated Engineers with said
agreements, policies and procedures, it being understood that such internal
policies and procedures do not prevail this Basic Agreement.
Except for injury or damage caused by the gross negligence or willful
misconduct of CONTRACTOR, or except for matters which are covered by
CONTRACTOR's corporate insurance policies, CONTRACTOR shall not be liable
under any circumstances for an injury or damage done to or suffered by the
Designated Engineers or to their property while at CONTRACTOR's premises
and CUSTOMER.
2.16 Clarification. It is clarified that the sharing of INFORMATION as set forth
above, and/or the training of CUSTOMER employees, or participation of
Designated Engineers and/or other CUSTOMER representatives does not entitle
any Party to claim, use or embody any portion of Confidential Information
of the other Party in a patent application filed by it or on its behalf
without the prior written consent of the other Party.
Unless otherwise agreed in this Basic Agreement, the terms and conditions
of Section 5 regarding Ownership of IP shall also apply to sharing of
INFORMATION as set forth above, and/or the training of CUSTOMER's employees
or participation of Designated Engineers and/or other CUSTOMER
representatives in the course of the DEVELOPMENT WORK.
2.17 Performance by Specific Employees. CONTRACTOR shall assign at least seventy
percent (70%) of the engineers and other staff necessary for performing the
DEVELOPMENT WORK on a full time basis, which are listed in Annex C to the
relevant STATEMENT OF WORK in order to warrant a certain competence level
of its personnel. In addition CONTRACTOR shall assign seventy percent (70%)
of the managers on a full or part time basis which are listed in Annex D.
For purposes of this Section, a project manager shall not be considered a
manager.
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3. COSTS OF THE DEVELOPMENT WORK (REMUNERATION)
3.1 Remuneration for DEVELOPMENT WORK and Mechanisms for Control of Costs
DEVELOPMENT WORK.
3.1.1 CUSTOMER shall reimburse CONTRACTOR for the DEVELOPMENT WORK in
accordance with the monthly/hourly rate per employee as set forth in
Appendix A hereto or as otherwise set forth in the relevant STATEMENT OF
WORK.
3.1.2 CONTRACTOR will provide a headcount forecast per month for each
STATEMENT OF WORK, corresponding to the estimated total man month of the
project specified under the respective STATEMENT OF WORK, as updated by any
ECO ("ESTIMATED SOW COST").The Parties may mutually agree at any time to
modify (increase or decrease) such headcount. CONTRACTOR shall notify
CUSTOMER of any changes to the projected forecast as soon as the changes
will be foreseeable.
3.1.3 Consequences for Materially Exceeding ESTIMATED SOW COST. Where with
respect to a specific STATEMENT OF WORK, CONTRACTOR exceeds the ESTIMATED
SOW COST by more than [***] percent ([***]%), then all DEVELOPMENT WORK
performed by CONTRACTOR employees under the respective STATEMENTS OF WORK
following the point in time in which the ESTIMATED SOW COST was exceeded by
more than [***] percent ([***]%), shall be charged at a [***]% discount.
In the event CONTRACTOR has caused the update of the STATEMENT OF WORK,
such update of the STATEMENT OF WORK shall not be taken into account when
calculating the ESTIMATED SOW COST.
3.1.4 Update of Rates. On the Effective Date, the Parties shall agree on
the cost per hour and/or per week/month for the next twelve (12) months,
for each of the levels of personnel performing the DEVELOPMENT WORK. The
cost per hour and/or per week/month for the first twelve (12) months of
DEVELOPMENT WORK is presented in Appendix A, as may be amended, in writing,
by both Parties.
3.1.5 Allocation of Personnel on Full or Partial Capacity. In accordance
with the requirements of the DEVELOPMENT WORK to be performed hereunder,
and subject to the provisions of Section 2.17, CONTRACTOR shall allocate
the personnel performing the DEVELOPMENT WORK to the DEVELOPMENT WORK on a
full or part time capacity. In the event DEVELOPMENT WORK is performed on a
full time capacity, CONTRACTOR may, subject to Section 3.1, charge CUSTOMER
for the
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*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
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costs of such personnel on a monthly basis. Notwithstanding the foregoing,
the Parties may agree on special services to be provided on a per hour
basis.
3.2 Payment Terms. CUSTOMER shall reimburse CONTRACTOR for the DEVELOPMENT WORK
on a monthly basis. All payments shall be made by CUSTOMER within thirty
(30) days after a receipt of invoice from CONTRACTOR subject to the
provisions of Section 3.1.
3.3 Taxes. CUSTOMER shall also reimburse CONTRACTOR for the costs as per
Section 3.1, above, and as set forth in the relevant STATEMENT OF WORK for
Israeli value added tax "VAT" and German withholding tax to be remitted, if
any. The Parties shall use their best efforts to support each other in
obtaining the respective tax exemptions, if any.
3.4 Procurement/Reimbursement for Costs and Materials. In addition to
reimbursement for DEVELOPMENT WORK as specified above, CUSTOMER is solely
responsible to procure - and if so, to what extent - materials, wafers,
test equipment and other tools and equipment ("DEVELOPMENT MATERIALS"),
required for the DEVELOPMENT WORK hereunder. The parties shall mutually
coordinate procedures for purchase and supply of DEVELOPMENT MATERIALS. If
CUSTOMER decides to supply DEVELOPMENT MATERIALS to CONTRACTOR it shall
bear the costs regarding such supply. Failure of CUSTOMER to provide
DEVELOPMENT MATERIALS may result in a suspension or postponement of the
relevant DEVELOPMENT WORK with no cost effect to CONTRACTOR.
Designated equipment which has already or will be provided by CUSTOMER to
CONTRACTOR and located at CONTRACTOR'S site will remain at CONTRACTOR at no
additional charge and has to be used exclusively for and in connection with
the DEVELOPMENT WORK without further charge. CUSTOMER shall remain the
owner of such DEVELOPMENT MATERIALS.
CUSTOMER shall also reimburse CONTRACTOR for any and all travel expense
associated with the performance of the STATEMENT OF WORK incurred by
CONTRACTOR in accordance with the travel regulations specified under the
corresponding STATEMENT OF WORK.
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4. SPECIAL DEVELOPMENT WORK:
As of the Effective Date of this Basic Agreement CONTRACTOR had already
offered to engage in certain DEVELOPMENT WORK as specified below, and
CUSTOMER already accepted to engage CONTRACTOR in such DEVELOPMENT WORK
under the following terms:
4.1 MLC DEVELOPMENT WORK
4.1.1 CONTRACTOR offered and CUSTOMER accepted to engage CONTRACTOR in
DEVELOPMENT WORK for NROM MLC Product (as defined in Section 1.28 of the
LICENSE AGREEMENT) based on CONTRACTOR proprietary NROM Technology.
4.1.2 Deferment of Payment. Notwithstanding the payment terms specified under
Section 3 above, CONTRACTOR agrees that CUSTOMER will defer all payments
related to CONTRACTOR's DEVELOPMENT WORK specified under Section 4.1.1
above until the earliest of the shipment qualification by CUSTOMER of the
MLC product (M9) specified under Section 4.1.1 or start sales of the NROM
MLC Product (other than samples). In the event that the STATEMENT OF WORK
relating to this MLC DEVELOPMENT WORK is terminated before such milestone
M9 was achieved, CUSTOMER shall not be obliged to pay any of the
aforementioned deferred payments. To the extent that the CUSTOMER accepts
to engage the DEVELOPMENT WORK for NROM MLC Product, the procurement and
reimbursement regarding DEVELOPMENT MATERIALS shall be handled as stated in
Section 3.4.
4.1.3 Without derogating from the provisions of Section 8.4 below, in the event
CUSTOMER decides not to proceed with MLC DEVELOPMENT WORK, it will inform
CONTRACTOR hereof within a reasonable period of time.
4.2 CARD INTEGRATION DEVELOPMENT WORK
4.2.1 General. CONTRACTOR shall provide card integration DEVELOPMENT WORK which
shall consist of on-going monthly services ("CARD INTEGRATION DEVELOPMENT
WORK") to CUSTOMER. During the shorter of: (i) first two (2) years after
the Effective Date; or (ii) from the Effective Date until termination of
this Agreement; or (iii) from the Effective Date until full or Partial
Termination of CARD INTEGRATION DEVELOPMENT WORK; CONTRACTOR shall provide
CARD INTEGRATION DEVELOPMENT WORK exclusively to CUSTOMER and not to any
other third party.
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For the purpose of this Basic Agreement, "Partial Termination of CARD
INTEGRATION DEVELOPMENT WORK" shall mean a reduction, following CUSTOMER
request, in the headcount of the group performing CARD INTEGRATION
DEVELOPMENT WORK of more than thirty percent (30%) of the employees
assigned by CONTRACTOR to this specific CARD INTEGRATION DEVELOPMENT WORK.
4.2.2 Performance by Former Employees of Infineon Technologies Flash Ltd. Except
as otherwise requested by CUSTOMER upon 90 days prior written notice, and
subject to and in accordance with the relevant provisions of the
Termination Agreement between the Parties dated December 20, 2004, subject
to Section 4.2.3 CONTRACTOR shall perform such CARD INTEGRATION DEVELOPMENT
WORK using personnel of the card integration group previously employed by
Infineon Technologies Flash Ltd specified in Appendix B.
4.2.3 Pricing of CARD INTEGRATION DEVELOPMENT WORK. The CARD INTEGRATION
DEVELOPMENT WORK will be performed for a fixed monthly price specified
under Appendix A attached hereto. Such work shall be coordinated by the
Parties on an on-going basis, by the group of personnel specified in
Appendix B. In the event of termination of any member of the personnel
specified under Appendix B, from its engagement with CONTRACTOR, CONTRACTOR
will either: (i) make best efforts to replace such member of personnel with
a replacement (either of employees or subcontractors) of comparable
experience in the relevant field; or (ii) proportionally adjust the monthly
payment.
CUSTOMER shall be entitled, at its discretion and even prior to reaching an
agreement with CONTRACTOR on detailed terms and conditions regarding the
CARD INTEGRATION DEVELOPMENT WORK, but subject to timely payment of the
abovementioned monthly fees and other related costs, to direct, at
CUSTOMER's sole responsibility, CONTRACTOR to start/continue with the
implementation of the said CARD INTEGRATION DEVELOPMENT WORK according to
CUSTOMER instructions or to direct any other specific part of the
DEVELOPMENT WORK ("CUSTOMER Directed Work"). CONTRACTOR agrees to commence
reasonable efforts necessary to comply with any CUSTOMER Directed Work
without undue delay.
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The personnel engaged in the CARD INTEGRATION DEVELOPMENT WORK shall be
integrated in a separate development unit and CUSTOMER shall have the
right, upon prior written notice to CONTRACTOR, and during normal business
hours to do a technical review, (including a capital review of the
DEVELOPMENT MATERIALS purchased according to Section 4.2.7) regarding the
CARD INTEGRATION DEVELOPMENT WORK on a frequent basis as it sees fit.
4.2.4 CARD INTEGRATION IP. Notwithstanding the provisions of Section 5 below,
all IP developed during the term and in the course of performing CARD
INTEGRATION DEVELOPMENT WORK under this Section 4.2 by CONTRACTOR shall be
jointly owned by the Parties and the provisions of Section 11.2 of the
License Agreement shall apply equally to all such jointly owned IP,
provided however, that CONTRACTOR must not use the DEVELOPMENT RESULTS of
the CARD INTEGRATION DEVELOPMENT WORK "AS IS" or in any other substantially
similar form. For the avoidance of doubt, nothing in this Section shall be
construed to grant CONTRACTOR any further rights than granted under the
LICENSE AGREEMENT with regard to CUSTOMER INFORMATION.
4.2.5 Card Integration Non-Compete. During the shorter of: (i) first two (2)
years after the Effective Date; or (ii) from the Effective Date until
termination of this Agreement; or (iii) from the Effective Date until full
or Partial Termination (as above defined) of CARD INTEGRATION DEVELOPMENT
WORK; CONTRACTOR shall not engage in any card integration development
activities regarding mass storage cards.
4.2.6 Transfer of Card Integration Know-How. Upon CUSTOMER's request, CONTRACTOR
shall deliver to CUSTOMER the CARD INTEGRATION DEVELOPMENT WORK DEVELOPMENT
RESULTS ("CARD INTEGRATION DEVELOPMENT RESULTS") including without
limitation all documentation and prototypes, and related INFORMATION
necessary to practically use the CARD INTEGRATION DEVELOPMENT RESULTS.
CONTRACTOR shall explain the CARD INTEGRATION DEVELOPMENT RESULTS with an
appropriate documentation (as defined in the SOW) and orally.
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4.2.7 Procurement/Reimbursement for Costs and Materials. The terms and
conditions of Section 3.4 shall apply to this Section 4.2.
4.3 Except as expressly stated under this Section 4.1 and 4.2, all terms and
conditions of this Basic Agreement will govern such DEVELOPMENT WORK
specified under this Section 4.1 and 4.2.
5. OWNERSHIP OF AND RIGHTS IN DEVELOPMENT RESULTS; LICENSES UNDER INFORMATION
Except as expressly specified under this Basic Agreement, the relevant
provisions of Section 11 ("Ownership of IP") of the LICENSE AGREEMENT,
dated [ ], between CONTRACTOR and CUSTOMER, shall apply to the DEVELOPMENT
WORK AND DEVELOPMENT RESULTS hereunder.
Notwithstanding the above, the Parties may agree in writing on a
case-by-case basis, prior to the commencement of any DEVELOPMENT WORK and
signing of a STATEMENT OF WORK, that a specific DEVELOPMENT RESULT (or a
portion thereof) would be based mainly on proprietary technology of
Customer (for example a Microcontroller proprietary to CUSTOMER, under
specifications fully provided by CUSTOMER) and that therefore (where so
expressly agreed in advance and in writing by the Parties) such
specifically designated DEVELOPMENT RESULT (or portion thereof) shall be
owned by CUSTOMER.
6. WARRANTY AND LIABILITY
6.1 CONTRACTOR shall use reasonable efforts, comparable to efforts for its own
comparable development to achieve the goals of the DEVELOPMENT WORK, but
CONTRACTOR shall be liable to CUSTOMER only in the event of wilfulness or
gross negligence.
6.2 CONTRACTOR warrants that no third party has raised any claims of whatever
nature against CONTRACTOR with regard to its INFORMATION on the date of
effectiveness of the relevant STATEMENT OF WORK. CONTRACTOR also warrants
as of the Effective Date, that it is not aware of any infringement of any
patent or other intellectual property rights of a third party by any
Licensed Saifun IP or any Licensed Product (as these terms are defined
under the License Agreement) designed for
CONFIDENTIAL
December 20, 2004
-17
CUSTOMER under this Basic Agreement, and that no such claim or allegation
has been made by any third party.
CONTRACTOR will inform CUSTOMER immediately as soon as it becomes aware
that rights of third parties might have been infringed or that third
parties do infringe upon CUSTOMER rights in any way with regard to
INFORMATION of CONTRACTOR and/or DEVELOPMENT RESULTS and/or TECHNOLOGIES
AND SERVICES.
The sole obligation of CUSTOMER with respect to its INFORMATION shall be to
forward same to CONTRACTOR as provided in this Basic Agreement, and, to
correct errors that might have occurred in this INFORMATION without undue
delay after such errors were made known to CUSTOMER. No other warranty of
CUSTOMER of whatever kind and nature shall exist.
6.3 Either PARTY represents and warrants that it has sufficient power, right
and authority to enter into this Agreement and to grant the rights and
undertake the obligations set forth in this Agreement and there are no
outstanding assignments, encumbrances, obligations or agreements to which
it is a party or by which it is bound and which are inconsistent with this
Agreement.
7. SECRECY
CONTRACTOR agrees that all INFORMATION which it receives from CUSTOMER and
other information about CUSTOMER designated "confidential" shall be
maintained by CONTRACTOR in confidence and shall be used only for carrying
out of the DEVELOPMENT WORK, provided, however, that CONTRACTOR may
disclose such information to its officers, and those of its employees and
others under its control for the purposes of this Basic Agreement.
The confidentiality obligations shall apply mutatis mutandis to CUSTOMER
with regard to INFORMATION of CONTRACTOR.
The Confidential Information (as defined in Section 7.1 and in the LICENSE
AGREEMENT) which is disclosed under this Basic Agreement will be governed
by the standards and principles set in the LICENSE AGREEMENT mutatis
mutandis. The provisions of Section 13.4 of the LICENSE AGREEMENT regarding
confidentiality of terms shall apply mutatis mutandis with regards to the
terms of this Basic Agreement.
CONFIDENTIAL
December 20, 2004
-18
8. TERM AND TERMINATION
8.1 This Basic Agreement shall become effective on the date it is signed by
both parties ("Effective Date").
8.2 This Basic Agreement (unless terminated earlier under a relevant provision
set forth in this Basic Agreement) shall terminate on the second
anniversary of the Effective Date. This Basic Agreement shall be only
extended for successive periods of one (1) year each upon mutual agreement
by the Parties.
8.3 The STATEMENT(s) OF WORK shall have the term specified in the relevant
STATEMENT(s) OF WORK. Unless otherwise provided in a STATEMENT OF WORK, the
Initial Term and any subsequent term of a Statement of Work will be
equivalent to the Initial Term and a subsequent term of this Agreement.
8.4 Termination for Convenience. CUSTOMER may terminate this Agreement and any
STATEMENT OF WORK for convenience upon three (3) months prior written
notice to CONTRACTOR without any additional costs.
8.5 Notwithstanding the foregoing, this Basic Agreement (unless terminated
earlier under a relevant provision hereunder) shall also terminate upon 90
days prior written notice in the event of termination of the License
Agreement for material breach by either Party.
8.6 In addition, This Basic Agreement may be terminated at any time by either
party upon the giving of not less than four weeks' prior written notice to
the other party
- if the other Party hereto is declared bankrupt or otherwise cannot
fulfill its financial obligations; or
- if the other Party hereto substantially defaults in the performance of
this Basic Agreement and does not remedy the default within four (4)
weeks after receipt of a relevant request of the one Party.
8.7 Sections 5, 6 and 7 shall survive termination of this Basic Agreement.
8.8 Should at the time this Basic Agreement terminates DEVELOPMENT WORK under
an STATEMENT OF WORK not be completed then this Basic Agreement shall be
CONFIDENTIAL
December 20, 2004
-19
regarded as remaining in force for the purposes of completion of such
DEVELOPMENT WORK, provided, however, that this Section 8.8 shall not apply
and the relevant STATEMENT OF WORK shall terminate at the date this Basic
Agreement terminates if this Basic Agreement is terminated as per Section
8.5.
8.9 CUSTOMER may terminate a STATEMENT OF WORK at any time, if CUSTOMER is of
the reasonable opinion that the relevant development goal cannot be
achieved or can only be achieved with significant additional expenditures.
In case of such early termination CUSTOMER agrees to reimburse CONTRACTOR
for its actual costs, as proved to exist before termination and which are
directly related to the relevant STATEMENT OF WORK and which have not been
included in previous payments. This shall be CONTRACTOR's exclusive remedy
in the event of such early termination of a STATEMENT OF WORK.
The Parties may agree in good faith to terminate a STATEMENT OF WORK for
other reason than mentioned above.
8.10 On or before the termination of this Basic Agreement as per Section 8.3 and
in each case an STATEMENT OF WORK expires or terminates CONTRACTOR shall
deliver to CUSTOMER the DEVELOPMENT RESULTS which up till that point in
time CUSTOMER has not yet received, subject to CUSTOMER's payment of all
applicable fees which are due up to the point of such termination.
9. ARBITRATION AND SUBSTANTIVE LAW
The provisions regarding substantive law and dispute resolution of the
LICENSE AGREEMENT, shall apply to this Basic Agreement.
10. MISCELLANEOUS
10.1 This Basic Agreement and each STATEMENT OF WORK may not be released,
discharged, abandoned, changed or modified in any manner, except by an
instrument in writing signed on behalf of each of the Parties hereto by
their duly authorized representatives.
CONFIDENTIAL
December 20, 2004
-20
10.2 The failure of any Party hereto to enforce at any time any of the
provisions of this Basic Agreement or any STATEMENT OF WORK shall in no way
be construed to be a waiver of any such provision, nor in any way to affect
the validity of this Basic Agreement or the relevant STATEMENT OF WORK, or
any part thereof; or the right of any Party thereafter to enforce each and
every such provision. No waiver of any breach of this Basic Agreement or
any STATEMENT OF WORK shall be held to be a waiver of any other or
subsequent breach.
10.3 All notices or other communications required or permitted hereunder with
regard to the interpretation, validity etc. of the Basic Agreement and each
STATEMENT OF WORK shall be in writing and shall be given by certified mail
addressed, if to CONTRACTOR:
Saifun Semiconductors Ltd. Attn: CFO
45 Hamalacha St. Industrial ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Fax: ▇▇▇▇ (▇) ▇▇▇▇▇▇▇
and, if to CUSTOMER:
Infineon Technologies AG
Memory Products Group
Attn: CFO
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Fax.: ▇▇▇ (▇▇) ▇▇▇ ▇▇▇▇▇
with a copy to:
Infineon Technologies AG
Legal Department
Fax: ▇▇▇ (▇▇) ▇▇▇ ▇▇▇▇▇
or to such other address that the Parties might identify to each other for
this purpose and with reference to this Basic Agreement or the relevant
STATEMENT OF WORK.
CONFIDENTIAL December 20, 2004
-21
10.4 No Party hereto shall issue any press release or public announcement or
otherwise divulge the existence of this Basic Agreement and each STATEMENT
OF WORK, or the transactions contemplated hereby, without the prior
approval of the other Party hereto.
10.5 This Basic Agreement and each STATEMENT OF WORK shall be binding upon and
inure to the benefit of the Parties hereto and the successors or assigns of
the Parties hereto.
CUSTOMER may, upon prior written notification to CONTRACTOR, assign its
rights and obligations hereunder in the event of assignment of the LICENSE
AGREEMENT under and in accordance with the provisions of Section 13.6 of
the LICENSE AGREEMENT.
10.6 Titles and headings to Sections herein and in each STATEMENT OF WORK are
inserted for the convenience or reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Basic Agreement
and a STATEMENT OF WORK.
10.7 This Basic Agreement and each STATEMENT OF WORK may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement.
IN WITNESS WHEREOF, the Parties have executed these presents on the dates
specified below.
Saifun Semiconductor Ltd. Infineon Technologies AG
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By: ▇. ▇▇▇▇▇▇▇
--------------------------------- -----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Name: ▇. ▇▇▇▇▇▇▇
------------------------------- ----------------------------------
Title: President Title: CEO
------------------------------ ---------------------------------
Date: 12/18/2004 Date: 11/13/2005
------------------------------- ----------------------------------
Saifun Semiconductor Ltd. Infineon Technologies AG
By: ▇▇▇▇ ▇▇▇▇▇ By: ▇. ▇▇▇▇▇▇▇
--------------------------------- -----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇ Name: ▇. ▇▇▇▇▇▇▇
------------------------------- ----------------------------------
Title: Chairman and CEO Title: CFO
------------------------------ ---------------------------------
Date: 12/19/2004 Date: 1/13/2005
------------------------------- ----------------------------------
CONFIDENTIAL
APPENDIX A - PERSONNEL COSTS
Cost
per Yearly
Hours Hours hour cost Monthly
Qualification profile per week per year in $ $ cost $
------------------------------------------------------------------------------------
VP Development More than 10 years 40 1880 [***] [***] [***]
= Fellow experience in relevant
field heading the R&D
organization or
Technical R&D
activities
------------------------------------------------------------------------------------
Director = More than 8 years 40 1880 [***] [***] [***]
Staff Eng. design experience
after graduation in
relevant field
------------------------------------------------------------------------------------
Design Manager More than 6 years 40 1880 [***] [***] [***]
= Principal design experience
Eng. after graduation in
relevant field
------------------------------------------------------------------------------------
Lead Engineer More than 4 years 40 1880 [***] [***] [***]
design experience
after graduation in
relevant field
------------------------------------------------------------------------------------
Engineer Between 1 and 4 years 40 1880 [***] [***] [***]
design experience
after graduation in
relevant field
------------------------------------------------------------------------------------
Junior Engineer Less than 1 year 40 1880 [***] [***] [***]
design experience
after graduation in
relevant field
------------------------------------------------------------------------------------
Layout team More than 5 years 40 1880 [***] [***] [***]
Leader = layout and design
Layout experience after
Principal Eng. graduation in relevant
field
------------------------------------------------------------------------------------
Layout Engineer Between 1 and 4 years 40 1880 [***] [***] [***]
layout experience
after graduation in
relevant field
------------------------------------------------------------------------------------
Junior Layout Less than 1 year 40 1880 [***] [***] [***]
Engineer layout experience
after graduation in
relevant field
------------------------------------------------------------------------------------
Test Operator Technician 40 1880 [***] [***] [***]
------------------------------------------------------------------------------------
Student (full Student from technical 40 1880 [***] [***] [***]
time) field of electronics
before final graduation
------------------------------------------------------------------------------------
All amounts in US Dollars.
Without derogating from the provisions of Section 2.4 of the Agreement,
unless otherwise agreed by the Parties, all amounts include customary and
reasonable overhead directly connected to the Engineers' performance of
the Development Work, such as design tools, software licenses, Engineers
PC and space, used by the Engineers' in the performance of the Development
Work.
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
CONFIDENTIAL
APPENDIX B - CARD INTEGRATION GROUP
LAST NAME FIRST NAME REMARK
-------------------------------------------------
1 [***] [***]
-------------------------------------------------
2 [***] [***]
-------------------------------------------------
3 [***] [***]
-------------------------------------------------
4 [***] [***]
-------------------------------------------------
5 [***] [***]
-------------------------------------------------
6 [***] [***]
-------------------------------------------------
7 [***] [***]
-------------------------------------------------
8 [***] [***]
-------------------------------------------------
9 [***] [***]
-------------------------------------------------
10 [***] [***]
-------------------------------------------------
11 [***] [***]
-------------------------------------------------
12 [***] [***]
-------------------------------------------------
13 [***] [***]
-------------------------------------------------
14 [***] [***]
-------------------------------------------------
15 [***] [***]
-------------------------------------------------
16 [***] [***]
-------------------------------------------------
17 [***] [***]
-------------------------------------------------
18 [***] [***]
-------------------------------------------------
19 [***] [***]
-------------------------------------------------
20 [***] [***]
-------------------------------------------------
21 [***] [***] (Subcontractor)
-------------------------------------------------
22 [***] [***] (Subcontractor)
-------------------------------------------------
23 [***] [***] (Subcontractor)
-------------------------------------------------
24 [***] [***] (Subcontractor)
-------------------------------------------------
25 [***] [***] (Subcontractor)
-------------------------------------------------
26 [***] [***] (Subcontractor)
-------------------------------------------------
Total fixed monthly price for the card integration work for the first year
as of the date hereof: $[***]. The fixed monthly price for the second year
will be negotiated in good faith between the Parties. Failure to reach an
agreement will cause the price to remain the same subject to adjustment in
changes for headcount.
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
APPENDIX C - LIST OF ENGINEERS
-----------------------------------------------------
[***] Lead Engineer
-----------------------------------------------------
[***] Lead Engineer
-----------------------------------------------------
[***] Lead Engineer
-----------------------------------------------------
[***] Lead Engineer
-----------------------------------------------------
[***] Lead Engineer
-----------------------------------------------------
[***] Lead Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Engineer
-----------------------------------------------------
[***] Junior Engineer
-----------------------------------------------------
[***] Junior Engineer
-----------------------------------------------------
[***] Junior Engineer
-----------------------------------------------------
[***] Junior Engineer
-----------------------------------------------------
[***] Junior Engineer
-----------------------------------------------------
[***] Junior Engineer
-----------------------------------------------------
[***] Junior Engineer
-----------------------------------------------------
[***] Layout Engineer
-----------------------------------------------------
[***] Student
-----------------------------------------------------
[***] Student
-----------------------------------------------------
[***] Student
-----------------------------------------------------
[***] Student
-----------------------------------------------------
[***] Student
-----------------------------------------------------
[***] Student
-----------------------------------------------------
[***] Student
-----------------------------------------------------
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
APPENDIX D - LIST OF MANAGERS
---------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ VP Development
---------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ CEO
---------------------------------------------------
[***] Fellow
---------------------------------------------------
[***] Director
---------------------------------------------------
[***] Director
---------------------------------------------------
[***] Director
---------------------------------------------------
[***] Director
---------------------------------------------------
[***] Principal Eng.
---------------------------------------------------
[***] Design Manager
---------------------------------------------------
[***] Principal Eng.
---------------------------------------------------
[***] Design Manager
---------------------------------------------------
[***] Design Manager
---------------------------------------------------
[***] Design Manager
---------------------------------------------------
[***] Principal Eng.
---------------------------------------------------
[***] Principal Eng.
---------------------------------------------------
[***] Principal Eng.
---------------------------------------------------
*** Omitted pursuant to a confidential treatment request. The confidential
information has been filed separately with the SEC.
