Exhibit 4.40
Confidential Treatment Requested:
The portions of this document marked by "xxxxx" have been omitted pursuant to a
request for confidential treatment and have been filed separately with the
Securities and Exchange Commission
FIRST SUPPLEMENTAL AGREEMENT TO
THE REFUNDABLE CROSS DEPOSIT AGREEMENT
This First Supplemental Agreement (the "Supplemental Agreement") is made and
entered into effective as of December 19, 2003 between
CHARTERED SEMICONDUCTOR MANUFACTURING LTD ("Chartered"), with its principal
place of business at 00 Xxxxxxxxx Xxxxxxxxxx Xxxx X, Xxxxxx 0, Xxxxxxxxx 000000
(hereinafter referred to as "Chartered"),
And
INTERNATIONAL BUSINESS MACHINES CORPORATION ("IBM"), having an office for the
conduct of business at 0000 Xxxxx 00, Xxxxxxxx Xxxxxxxx, XX 00000, X.X.X.
and is supplemental to the Refundable Cross Deposit Agreement made and entered
into between such parties and effective the 26th November 2002 (the "Refundable
Cross Deposit Agreement").
Chartered and IBM shall hereinafter be jointly referred to as the "Parties" or
individually as a "Party".
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS
Initial capitalized expressions in this Supplemental Agreement shall,
unless the context otherwise requires, bear the same meaning and
construction as in the Refundable Cross Deposit Agreement. In addition for
the purpose of this Supplemental Agreement, the words below in bold letters
have the following meanings:
"IBM'S SUPPLEMENTAL PREPAID CAPACITY PERIOD" means the period commencing on
the first day of the calendar quarter in which IBM first purchases from
Chartered more than xxxxx wafers under all agreements collectively, and
ending three (3) years thereafter, or, if Section 4 is applicable, four (4)
years thereafter.
2. IBM'S SUPPLEMENTAL PREPAID CAPACITY DEPOSIT
IBM shall, pursuant to Section 3.5 of the Refundable Cross Deposit
Agreement, make an IBM's Supplemental Capacity Deposit in the amount of
xxxxx. The first xxxxx of such IBM's Supplemental Capacity Deposit shall be
made on or before xxxxx and the balance of such IBM's Supplemental Capacity
Deposit shall be made on or before xxxxx.
3. PRICING OF WAFERS
Notwithstanding Section 2.2 and Exhibit A of the Refundable Cross Deposit
Agreement:
(a) during the IBM's Supplemental Prepaid Capacity Period, and provided that
IBM's Prepaid Capacity Deposit has not yet been fully refunded pursuant to
Section 3.4 of the Refundable Cross Deposit Agreement, the price of the
first xxxxx wafers supplied by Chartered to IBM under all agreements
collectively in each calendar quarter shall be determined in accordance
with xxxxx, subject however, in the case of products supplied by Chartered
to IBM under the IBM Fabrication Subcontract Agreement between the Parties
and effective as of December 19, 2003, to the provisions on pricing in such
IBM Fabrication Subcontract Agreement between the Parties and effective as
of December 19, 2003; for the avoidance of doubt, the refund provisions of
Section 3.4 of the Refundable Cross Deposit Agreement shall apply to each
of these first xxxxx wafers;
(b) during the IBM's Supplemental Prepaid Capacity Period, the price of the
next xxxxx wafers supplied by Chartered to IBM under all agreements
collectively in each calendar quarter shall be xxxxx, subject however, in
the case of products supplied by Chartered to IBM under the IBM Fabrication
Subcontract Agreement between the Parties and effective as of December 19,
2003, to the provisions on pricing in such IBM Fabrication Subcontract
Agreement between the Parties and effective as of December 19, 2003; for
the avoidance of doubt, the refund provisions of Section 3.4 of the
Refundable Cross Deposit Agreement shall not apply to each of these next
xxxxx wafers; for the further avoidance of doubt, if IBM's Prepaid Capacity
Deposit has been fully refunded pursuant to Section 3.4 of the Refundable
Cross Deposit Agreement, then this subparagraph (b) shall, instead, apply
to the first xxxxx wafers supplied by Chartered to IBM under all agreements
collectively in each calendar quarter falling in IBM's Supplemental Prepaid
Capacity.
(c) during IBM's Supplemental Prepaid Capacity Period, the price of all
additional wafers supplied by Chartered to IBM under all agreements
collectively in each calendar quarter shall be determined in accordance
with xxxxx, subject however, in the case of products supplied by Chartered
to IBM under the IBM Fabrication Subcontract Agreement between the Parties
and effective as of December 19, 2003, to the provisions on pricing in such
IBM Fabrication Subcontract Agreement between the Parties and effective as
of December 19, 2003; for the avoidance of doubt, (i) the refund provisions
of Section 3.4 of the Refundable Cross Deposit Agreement shall not apply to
any of such additional wafers, and (ii) IBM shall not be obliged to make
any IBM's Supplemental Prepaid Capacity Deposit in connection with any of
such additional wafers.
4. EXTENSION OF IBM'S SUPPLEMENTAL PREPAID CAPACITY PERIOD
In the event that, after three (3) years have lapsed from the first day of
the calendar quarter period in which IBM first purchases from Chartered
more than xxxxx wafers under all agreements collectively, IBM has purchased
from Chartered less than xxxxx wafers in that three (3)-year period at the
price(s) determined in accordance with Section 3(b) of this Supplemental
Agreement, the IBM's Supplemental Prepaid Capacity Period shall be
continued for a further one (1) year. During such fourth year of IBM's
Supplemental Prepaid Capacity Period, if applicable, if IBM desires to
purchase, at a price of xxxxx, more than xxxxx wafers to complete purchase
of a cumulative total of xxxxx wafers at such price, then IBM and Chartered
shall discuss and then agree on a mutually acceptable solution.
5. REFUNDABILITY OF DEPOSIT
5.1 In the event that either the IBM Fabrication Subcontract Agreement between
the Parties and effective as of December 19, 2003 or the Manufacturing
Agreement
No.001254 made between the Parties and effective as of January 31, 2003 is
lawfully terminated by IBM, or in the event the Refundable Cross Deposit
Agreement is lawfully terminated by IBM under Sections 8.1(b), 8.1(c),
8.1(f), 8.1(g) or 8.1(i), then the IBM's Supplemental Capacity Deposit made
pursuant to this Supplemental Agreement shall be refunded by Chartered to
the following extent:
R = xxxxx - N x xxxxx
---------
xxxxx
where
"R" is the dollar value of the portion of IBM's Supplemental Prepaid
Capacity Deposit to be refunded; and
"N" is the aggregate number of wafers sold by Chartered to IBM during the
IBM's Supplemental Prepaid Capacity Period at the price(s) determined in
accordance with Section 3(b) of this Supplemental Agreement. For purposes
of this equation, the maximum value for N is xxxxx.
6. INCORPORATION BY REFERENCE
Sections 8, 9, 10, 11,12 and 13 of the Refundable Cross Deposit Agreement
are incorporated by reference into this Supplemental Agreement and shall
apply to this Supplemental Agreement as if set out in full herein.
IN WITNESS WHEREOF the Parties have hereunto entered into this Supplemental
Agreement as at the date first above written.
/s/ Chia Song Hwee
------------------
Name: Chia Song Hwee
Title: President and Chief Executive Officer
for and on behalf of
CHARTERED SEMICONDUCTOR MANUFACTURING LTD
/s/ Dr. Xxxx Xxxxx, III
-----------------------
Name: Dr Xxxx Xxxxx, III
Title: Senior Vice President and Group Executive, Technology Group
for and on behalf of
INTERNATIONAL BUSINESS MACHINES CORPORATION
