Exhibit 10-k-6
***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b) (4) AND 240.24b-2
FOUNDRY AGREEMENT
MODIFIED EXCLUSIVELY FOR CONEXANT SYSTEMS, INC.
CONFIDENTIAL
This Foundry Agreement (the "Agreement") is entered into this 27th day of July,
2000 (the "Effective Date") by and between Conexant Systems, Inc. on behalf of
its Affiliates (as that term is defined below), a corporation having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
("Conexant") and UMC Group (USA), a California corporation having its principal
place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("UMC"),
for provision of foundry services to be performed by United Microelectronics
Corporation, a Republic Of China ("ROC") corporation ("Manufacturer"). This
Agreement applies to all purchase orders furnished by Conexant to UMC on or
after March 20, 2000. This Agreement shall, with respect to all terms and
conditions governing said purchase orders, supersede UMC's Wafer Foundry
Standard Terms and Conditions as modified for Conexant pursuant to the Side
Letter attached as Exhibit D to the Capacity Reservation and Deposit Agreement
entered between the parties on March 20, 2000 (the "Capacity Agreement"),
however, the Capacity Agreement shall remain in full force and effect. Any
inconsistency between this Agreement and the Capacity Agreement shall be
resolved in favor of this Agreement.
RECITALS
A. WHEREAS, UMC is in the business of furnishing integrated circuit
manufacturing services performed by Manufacturer, which shall perform, at UMC's
request, the manufacturing services contracted for with UMC hereunder;
B. WHEREAS, Conexant desires to have UMC furnish integrated circuit
manufacturing services for it;
NOW, THEREFORE, in consideration of the following covenants and conditions the
parties agree:
1 DEFINITIONS
1.1 As to Conexant, an "Affiliate" shall mean an entity controlling,
controlled by, or under common control of Conexant, subject to
request by Conexant, and provided that such entity shall be
considered an Affiliate only for the time during which such control
exists, and in any event subject to the written agreement between the
parties as to the terms under which each proposed affiliate shall be
added to the coverage of this Agreement. While UMC may not
unreasonably withhold consent to a Conexant request to add an entity
as an Affiliate, UMC may require that the Affiliate be added in such
a manner as will ensure clarity with respect to (1) any then-existing
foundry or other agreements between the proposed affiliate and UMC;
(2) any then-outstanding forecasts, purchase orders, or capacity
commitments to or from the proposed affiliate; and (3) responsibility
for payment for any then-pending orders or invoices affecting the
proposed affiliate. For purposes of this definition "control" shall
mean ownership or control, either directly or indirectly, of greater
than 50% of the voting rights of such entity.
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1.2 An "ECN" shall mean a form or letter provided by one party to the
other in the event a party anticipates a change in a Product (in
Conexant's case) or process (in UMC's case) which change may affect
physical, electrical or performance characteristics in a Product (in
the case of an anticipated change to a process) or result in changes
in one or more masks or reticles (in the case of an anticipated
change to a Product).
1.3 "Products" shall mean the products to be manufactured pursuant to
this Agreement as specified in Quotation(s).
1.4 "Quotation(s)" shall mean the quotations attached hereto as Exhibit A
and such further quotations as are issued in writing by UMC and
accepted via a purchase order issued in writing by Conexant. Each
such Quotation shall describe the Products to be manufactured,
prices, fees and charges for the Products, all aspects of, and
services needed for, mask making, testing, assembly and packaging,
and all other specifications, quantities, cycle and lead times and
parameters for the Products. Prices shall be separately itemized for
mask sets, processed wafers, wafer probe, assembly and final test.
All acceptance criteria for Products ("Acceptance Criteria") shall be
described in Exhibit B of this Agreement.
2 PRODUCTION PROCEDURES
2.1 Product Prototype Approval. No Product prototypes shall be
manufactured except pursuant to a Quotation issued in writing by UMC
and accepted in writing by Conexant and UMC. For each Quotation for a
new Product agreed upon by the parties, Conexant will deliver a tape
or electronic file by, e.g., File Transfer Protocol ("FTP") in GDS II
format or a mask set. If Conexant provides its design in the form of
a tape or electronic file, then upon receipt of the data from
Conexant, UMC, or its Conexant-approved subcontractors, will produce
a mask set. In either case, UMC will produce one or more pilot wafer
runs according to the schedule and at the price set forth in the
Quotation. Within ninety (90) days after receipt of pilot run wafers
for a new Product, Conexant may return any claimed non-conforming
pilot wafers to UMC with a written rejection statement specifying the
alleged failure or failures of the pilot wafers to meet the
Acceptance Criteria set forth in the Quotation or issue a written
approval of the pilot wafers. If Conexant does not return the pilot
wafers with a written rejection statement within such ninety (90) day
period and fails to furnish a written approval, then UMC shall
contact Conexant to determine the cause for the lack of response. If
any pilot wafer does not meet the Acceptance Criteria for reasons
attributable to UMC and is rejected by Conexant, UMC shall, at
Conexant's option and at UMC's expense, use commercially reasonable
efforts to rerun the pilot wafers and resubmit the results in a
manner that complies with the Acceptance Criteria. If UMC, within
ninety (90) days after receipt of Conexant's timely written rejection
report, is unable to supply Conexant with conforming pilot wafers,
then either party may by written notice to the other terminate this
Agreement as to such Product and Quotation, and if so terminated,
Conexant will not owe UMC any amounts for the pilot wafers involved
unless the noncompliance was substantially attributable to Conexant.
2.2 ECNs.
2.2.1 Conexant ECNs. After initial qualification, Conexant shall have the
right to make such changes as it deems appropriate to the design of
Products to be fabricated for it by UMC, provided however that each
such change must be timely documented by
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Conexant through written change notices. Notwithstanding anything to
the contrary, after process qualification runs for a particular
design have been made and approved by UMC and Conexant, any
Conexant-requested changes to design, process or materials for such
Products shall be subject to UMC's consent (which will not be
unreasonably withheld) and payment by Conexant of applicable
reasonable costs, if any, related to such change.
2.2.2 UMC ECNs. For changes that UMC and Conexant mutually agree to make,
the following procedure shall apply:
2.2.2.1 Routine Changes. UMC may make changes in the processes used to
manufacture Products (i) that do not materially affect physical or
functional interchangeability or performance; or (ii) when required
for purposes of safety and/or compliance with applicable law or
regulations.
2.2.2.2 Material Changes.
2.2.2.2.1 UMC shall give Conexant ninety (90) days advance written notice of
any proposed change(s) ("Proposed Change Notice") in materials and/or
to the manufacturing processes qualified for production of Products,
which, to the best of UMC's knowledge, might affect the form, fit,
performance, maintainability, operation, function, reliability,
interface, interconnectability, compatibility, design rules, models,
or size, or which might adversely affect yields of the chips for
Products then qualified and subject to open purchase orders from
Conexant.
2.2.2.2.2 Such Proposed Change Notice shall describe the nature of the proposed
change(s), including reasons for the change(s), the anticipated
schedule for implementation of the change(s), and other relevant
technical and logistic considerations, including without limitation
quality and reliability data to the extent available.
2.2.2.2.3 Conexant shall approve or disapprove any such proposed change
promptly, but in no event may any such change be disapproved later
than fifteen (15) business days after receipt of the Proposed Change
Notice. To the extent Conexant approves a proposed change, Conexant
shall nonetheless have ninety (90) days from receipt of a reasonable
number of samples of changed Product to reject the changed Products,
if such changed Products fail to meet the Acceptance Criteria.
2.2.2.2.4 If Conexant disapproves such proposed change within the fifteen (15)
business day period or the ninety (90) day period described in the
immediately preceding section, UMC shall fill all then-accepted
Conexant purchase orders with unchanged Products in accordance with
the applicable Agreements and shall continue to deliver such
unchanged Products pursuant to such accepted purchase orders for a
minimum of [***] from the date Seller issued the Proposed Change
Notice.
2.2.2.2.5 Upon the expiration of three (3) months after the issuance by UMC of
a Proposed Change Notice which is rejected by Conexant, UMC, in its
discretion and by then giving a minimum of twelve (12) months prior
written notice to Conexant, may stop manufacture and delivery of all
Products involved (except to the extent purchase orders for such
Products have at that time been accepted) without liability.
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2.2.3 Quality Assurance. Conexant's quality assurance requirements are
described in Exhibit C. Any additional quality assurance
requirements or measurements (whether cv plots, metal step coverage
analysis, SEM analysis, or other) shall be as agreed in writing,
with costs for such additional requirements or measurements, if any,
to be allocated as agreed in writing.
2.3 Risk Production and Volume Production. Prior to shipping wafer lots,
UMC will meet the following criteria:
(a) Wafer Lot Identification - All Production Lots shipped to
Conexant must be scribed with the correct Lot identification number
as provided by Conexant. The wafer scribe shall meet the
specification as defined by Conexant
2.4 Work-In-Process (WIP) Report.
(a) UMC shall provide Conexant an updated WIP lot location report at
least once every week through e-mail or "FTP" or accessible, by
password, through UMC's website.
(b) UMC shall provide Conexant a ship alert via fax or E-mail within
one (1) day after a shipment is made. The ship alert shall include
the Airway ▇▇▇▇ number, number of boxes shipped, as well as the
information given on the packing list.
2.5 Production Runs, Pilot Runs, Hot Runs, etc. Exhibits A and D set
forth the terms applicable to Product Cycle Time, Pilot Runs, Hot
Lots, Production Runs and On Hold.
3 ORDER, DELIVERY, PRICING AND PAYMENT TERMS
3.1 Forecasts and Additional Capacity Requests.
3.1.1 Conexant will comply with the forecasting requirements described in
the Capacity Agreement with respect to orders for Product to be
manufactured from the Allocated Production Capacity, as defined in
that Agreement, provided that each forecast for such capacity shall
be clearly marked as relating to "Allocated Production Capacity".
3.1.1.1 With respect to any additional capacity to be requested by Conexant,
whether during the term of the Capacity Agreement or thereafter,
forecasting requirements shall be as follows: During the first seven
(7) calendar days of each month, Conexant will provide to UMC by
facsimile or other electronic communication a written rolling
forecast of its wafer capacity requirements from UMC's facilities for
the next six (6) full calendar months (each a "Conexant Forecast").
3.1.1.2 Each such Conexant Forecast shall show the quantity of wafer outs and
the specific technology and/or process for the wafers listed.
Conexant shall make good faith efforts to ensure that all such
Conexant Forecasts are reasonable estimates of its anticipated needs.
Subject to this obligation, and except as expressly stated in this
Section 3.1.1 and/or in a written capacity quotation, all such
Conexant Forecasts (and any responses to them) will be for planning
purposes only, and will not create any obligation to purchase and/or
sell.
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3.1.1.3 Each such Conexant Forecast shall constitute a commitment by
Conexant to purchase a minimum of the following percentages of the
amounts indicated:
[***]
3.1.1.4 UMC will provide a written response to each Conexant forecast within
three (3) business days of UMC's receipt. Subject to Section 3.1.2
below and the other terms set forth in this Agreement, UMC's
response shall accept the quantities in the applicable months to the
extent they are less than or equal to those accepted by UMC for the
applicable month(s) pursuant to prior written agreement and/or
forecasts. Subject to the right of first refusal extended by Section
2.2 of the Capacity Agreement, UMC's response may accept and/or
reject in whole or in part any additional forecast quantities for
those months.
3.1.2 To the extent that any forecast from Conexant pursuant to Section
3.1.1 above fails to forecast the full capacity or quantity if any,
allocated or promised to Conexant during any one or more of the
first [***]: (i) UMC shall be entitled in its sole and complete
discretion to enter commitments with others for such unexercised
capacity for the applicable months and in the amounts not so
exercised, and (ii) Conexant will not have any right to require UMC
to provide that unexercised capacity to Conexant in the month(s)
involved.
3.2 Orders And Production Release. No order for production quantities of
a Product shall be placed by Conexant unless and until Conexant has
approved the pilot runs or prototypes for the Product. If Conexant
places an order for production quantities of a Product in accordance
with the provisions of this Agreement, UMC may deem such an order as
written production release approval for such Product. All orders for
Products shall be in writing. UMC shall acknowledge in writing,
within three (3) business days of receipt of an order its rejection
or any modification of the order by either fax or, (if provided),
e-mail notice to Conexant's Purchasing agent identified on the face
of the purchase order. Other than variances in quantities ordered,
no acceptance of a purchase order shall constitute acceptance of any
terms at variance with this Agreement, the Capacity Agreement (where
applicable) and/or previously agreed forecasts, and purchase orders
shall be null and void as to those variances.
3.3 Cancellation and Modifications to Orders.
3.3.1 Cancellations and Modifications. Unless wafer processing has
started, or UMC has incurred significant engineering or tooling
charges, Conexant may cancel or modify a purchase order without
penalty (except as provided in the Capacity Agreement) by delivering
to UMC a written notice of cancellation or modification; provided
however that no such cancellation will relieve Conexant of any
obligations under any other applicable provisions or agreements.
3.3.2 Cancellation Charges. In addition to, and without waiving any other
remedies, the charges for order cancellation shall be the contract
price (less the cost of the starting materials and, if applicable,
mask sets) multiplied by the proportion of the relative mask step at
which the wafer(s) were at the time of cancellation, plus all costs
of starting wafer materials and, if applicable, mask sets.
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3.3.3 Partially Completed Products. In the event Conexant cancels an order
after wafers have been started, but prior to completion, or wafers
are determined to be defective prior to shipment to Conexant, or
wafers are returned to UMC because they fail to meet the Acceptance
Criteria, UMC shall retain custody, subject to Conexant's
intellectual property rights and UMC's obligations of
confidentiality, to the partially completed or defective wafers, and
may destroy such wafers, or use them solely for internal
manufacturing-process testing and evaluation purposes.
3.4 Delivery.
3.4.1 Delivery will be made FCA (Incoterms 2000), Manufacturer's plant, to
▇▇▇▇▇ Worldwide or such other carrier as is identified by Buyer to
the following address whenever practicable, or to such other address
as is supplied in writing by Conexant:
Conexant Systems, Inc.-NPB
Conexant Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: QA Receiving
Packing Slip/Invoice Instructions. To ensure prompt payment, the
Packing Slip and Invoice must contain the following information:
Purchase Order Number
Line Number Reference
Conexant Product Description
Conexant Lot Number
Quantity Shipped
Billing Information. Invoices shall be sent to:
Conexant Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Accounts Payable
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
3.4.2 Packing Instructions are set forth in Exhibit F.
3.4.3 Title to the Products will pass to Conexant upon delivery to carrier.
3.4.4 All shipping and delivery dates are subject to timely receipt by UMC
of fully-approved mask sets and fully-completed purchase orders.
3.4.5 [***]
3.4.5.1 [***]
3.4.5.2 [***]
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3.4.5.3 [***]
3.4.6 In the event of any delays and/or any breach of any written warranty,
Conexant may, without liability to Conexant, give prompt written
notice to UMC, adjusting forecasted and/or ordered amounts, and/or
canceling orders for affected Products, to the extent necessary as a
result of any impact of such delay on Conexant's need for such
Products.
3.5 Pricing.
3.5.1 Unless otherwise agreed in writing, Wafer Price will be exclusively
as stated in UMC's written Quotation for the Products involved.
3.5.2 Except as to written prices quoted for quantities for delivery within
one year of UMC's acceptance of the purchase order involved or as
otherwise agreed in a written firm price commitment signed by UMC,
UMC may change quantities, times, and prices stated in any Quotation.
3.5.3 Any tax or related charge which UMC shall be required to pay to or
collect for any government upon or with respect to services rendered
or the sale, use or delivery of the Product or other materials
(except for taxes based on UMC 's income) shall be billed to Conexant
as a separate item and paid by Conexant, unless a valid exemption
certificate is furnished by Conexant to UMC.
3.6 Payment.
3.6.1 Unless otherwise agreed or stated in UMC's quotation, full payment
shall be made in U.S. Dollars within 30 days of delivery, except with
respect to Products that have been properly rejected prior to such
time.
3.6.2 In the event of late payments or significant changes in Conexant's
financial condition, UMC reserves the right to change credit terms at
any time. For orders in excess of Conexant's Allocated Production
Capacity, as that term is defined by the Capacity Agreement, Conexant
will issue written purchase orders at least four weeks, plus the
agreed cycle time, prior to requested wafer out day.
4 RELIABILITY & QUALITY
4.1 Quality Data. Within thirty (30) days of the Effective Date, UMC will
provide to Conexant its available reliability and quality data
regarding Products produced for Conexant for the purpose of
maintaining consistent quality and reliability standards for such
Products. In addition, Conexant will perform detailed wafer level and
packaged level quality/reliability tasks before releasing any new
process or Products to production.
4.2 Traceability. During the term of the foundry relationship and for a
period of five (5) years thereafter, UMC shall maintain fab and test
lot traceability for Products manufactured on behalf of Conexant.
4.3 Notification of Defects. UMC will, after discovery, promptly advise
Conexant of defects and/or non-conformity in Products already shipped
to and/or in lots currently in manufacture for Conexant.
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4.4 Acceptance Criteria. Wafer acceptance will be subject to process
control monitor acceptance criteria to be mutually agreed upon on in
a writing signed by both parties which clearly and specifically
identifies the Products (by mask or product number) and each process
(by UMC's process designation) involved. All accept/reject criteria
shall be stated in the agreed upon wafer acceptance and visual
inspection specifications and all critical dimension and process
tolerances shall be solely as agreed upon in writing. Any process
defects resulting from wafer or Product level reliability or quality
issues shall be subject to Return Material Authorization (RMA) as
described in Section 4.7.
4.5 Stop Shipments. Subject to Section 5 of the Capacity Agreement, with
respect to orders comprising Allocated Production Capacity, as
defined in that agreement, and Conexant's obligations with respect to
volumes committed under the ordering and forecasting procedures
involved, UMC will immediately stop shipment and manufacturing, upon
receipt of Conexant's written request ("Stop Request"), of Products
which are subject to a suspected failure to meet the criteria
specified in the wafer acceptance criteria agreed upon in writing
between Conexant and UMC. If UMC is responsible for such failure, and
UMC is not able to correct the matter within sixty (60) days of
receipt of such Stop Notice, then (i) Conexant may reject
non-conforming Products, and, (ii) Conexant may, without penalty
(including loss of capacity), cancel any then-pending purchase
order(s) for such Products as to which wafers have not been started
by sending written notice of cancellation to UMC within seventy-five
(75) days of the Stop Request. Such a notice of cancellation shall be
effective on receipt by UMC.
4.5.1 If Conexant requests UMC to stop shipment of any Products which
Conexant is obligated to purchase, and the Products are determined in
good faith by UMC and Conexant to have been processed in accordance
with the applicable written requirements and industry-standard
processing except to the extent Conexant's written requirements
require something other than industry-standard processing, in
addition to and without waiving any other remedies, Conexant shall
pay UMC in full for completed Products and, in addition, for UMC's
reasonable costs for work in progress. Under this Section 4.5 payment
for completed Products will be at the purchase order price, and
payment for work in progress shall be based on the formula used in
Section 3.3.2 for partially completed products.
4.6 Failure Analysis. Upon written request from Conexant and subject to
satisfactory arrangements for payment to UMC for the reasonable costs
involved, UMC will perform failure analysis of Products returned to
UMC with a UMC-issued Return Material Authorization number. If such
analysis shows the existence of material defects in breach of
applicable UMC warranties, UMC will not be entitled to payment for
the cost of UMC's failure analysis concerning such defects for the
specific Products which were subject to them.
4.7 Return Material Authorization (RMA). Conexant will not make any
returns to UMC without first obtaining a written RMA. All Production
Lots delivered by UMC shall be subject to incoming inspection and
testing on a monitoring basis by Conexant in accordance with the
Acceptance Criteria set forth in Exhibit B. In the event any lot or
wafer is found to fail the criteria in Exhibits B Conexant shall have
the right to reject such lot or wafer within (60) days after receipt
by Conexant. Conexant shall request an RMA from UMC for such
material. Conexant agrees to reimburse UMC the full purchase price
and all shipping and test costs and charges reasonably incurred by
UMC
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in connection with any returned wafers or Products which UMC
reasonably determines were within mutually agreed specifications at
the time of initial delivery to the carrier or at the time of return
to UMC. Upon verification by UMC of the defect following return of a
reasonable number of sample defective wafers to UMC, Conexant will
scrap the rejected wafers at Conexant. In the event that any of the
Products covered under the warranty of this Agreement fail to conform
to the agreed specifications of such Product, Conexant shall have the
option to receive a credit equal to the purchase price or have the
Product replaced as required by Conexant at that time. Conexant
agrees to cooperate in good faith with UMC to resolve any problems
that may arise and to promptly send UMC the results of all tests and
analyses concerning Products.
5 WARRANTY
5.1 Limited Warranty. UMC warrants Products delivered after initial
qualification shall be processed (i) using the masks (or duplicates
of them) which were used for qualification, (ii) within the
tolerances stated in the Acceptance Criteria's process
specifications, and (iii) in compliance with applicable Wafer
Acceptance and/or Yield Criteria agreed to in a writing signed by UMC
and Conexant.
5.2 Exclusions.
5.2.1 Products which have been subject (other than by UMC) to abuse,
misuse, accident, alteration, neglect, conditions outside
specification, unauthorized repair or improper application are not
covered by any warranty.
5.2.2 UMC shall not be responsible for defects or claims caused by acts not
performed by UMC or UMC's subcontractors; or by design or
application; or by combination of Products with other things.
5.2.3 Products are not intended for use in, and no warranty is made with
respect to, applications where failure to perform can reasonably be
expected to result in significant injury (including, without
limitation, navigation, weaponry, aviation or nuclear equipment, or
for surgical implant or to support or sustain life) and Conexant will
indemnify, defend, and hold harmless UMC from all claims, damages and
liabilities arising out of any such matters; provided that UMC: (a)
provides Conexant with prompt notice of the claim, (b) allows
Conexant to control the defense and any settlement of the claim, and
(c) provides cooperation as reasonably requested by Conexant.
5.3 Remedy. To the extent that any Products fail to meet the applicable
warranties and/or requirements due to reasons for which UMC is
responsible, UMC shall either, at Conexant's option (i) replace such
Products without charge, or (ii) refund the payments made to UMC for
such Products, all within thirty (30) calendar days of UMC's receipt
of written notice from Conexant of such non-conformity.
5.4 Sole Warranty. This Section 5 is the only warranty by or on behalf of
UMC and may not be modified or amended except in writing signed by
UMC and by Conexant. Conexant is not relying upon any warranty or
representation except for those specifically stated here or in such a
signed writing. With respect to obligations of UMC under this
Agreement which would logically be undertaken and/or performed by
Manufacturer, UMC guarantees Manufacturer's performance thereof.
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5.5 No Reliance. Conexant is not relying on any statements or information
in UMC's literature, and Conexant will test all parts and
applications under extended field and laboratory conditions as
appropriate. Notwithstanding any cross-reference or statements of
compatibility, functionality, interchangeability, and the like,
UMC-made goods, embedded devices and processes may differ from
similar goods, devices and processes from other vendors in
performance, function or operation, or as to matters, ranges and
conditions not stated in and/or outside UMC's written specifications;
and Conexant agrees that UMC makes no warranties and is not
responsible for such things. All reusable IP, including that listed
in UMC's Intellectual Property Catalog, and including but not limited
to blocks, libraries, tools, and documentation therefor, is licensed
to Conexant by the individual IP vendors and not by UMC, and in any
event UMC makes no warranty in connection with such IP. Conexant is
not relying on any statements or information provided by UMC in
connection with such IP, and Conexant will fully verify all IP as
appropriate and be responsible to ensure that such IP is compatible
and suitable for Conexant's intended purpose and applications.
5.6 Disclaimer. EXCEPT AS PROVIDED ABOVE, UMC MAKES NO WARRANTIES OR
CONDITIONS, EXPRESS, IMPLIED, OR STATUTORY, AND EXPRESSLY EXCLUDES
AND DISCLAIMS ANY WARRANTY OR CONDITION OF MERCHANTABILITY,
NONINFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE OR APPLICATION.
6 LIMITATION OF LIABILITY
6.1 Force Majeure. Neither party will be liable for any loss, damage or
claim resulting from causes beyond its reasonable control, including
but not limited to, war, fire, delay caused by others, material
shortage, or labor conditions; and in the event of such a
condition(s), and at Conexant's option, the date(s) for UMC's
performance may be extended for a period equal to any resulting
delay.
6.2 Limitation of Liability.
6.2.1 THE PARTIES' LIABILITY ARISING OUT OF ANY QUOTATION, THIS AGREEMENT,
ANY BREACH THEREOF, OR ANY PRODUCTS OR SERVICES WILL BE LIMITED TO
REFUND OF THE PURCHASE PRICE OR REPLACEMENT OF PURCHASED PRODUCTS
(RETURNED TO UMC FREIGHT PREPAID); ALL CLAIMS WILL BE SUBJECT TO THE
TIME LIMITATIONS STATED IN UMC'S RETURN POLICY AND PROCEDURE.
6.2.2 REGARDLESS OF CAUSE OR REASON FOR DAMAGE (WHETHER ACCIDENT,
NEGLIGENCE, OR OTHERWISE) NEITHER CONEXANT OR UMC SHALL HAVE ANY
LIABILITY (DIRECT, CONSEQUENTIAL OR OTHER) FOR, IN CONNECTION WITH OR
ARISING FROM CONEXANT PROPERTY FURNISHED FOR USE AT OR LEFT AT UMC;
and by delivering or entrusting property to UMC, both party's
expressly confirm this limitation. Notwithstanding this limitation,
UMC will replace, or pay the reasonable retooling costs to replace,
masks damaged or destroyed as a result of UMC's negligence or fault.
Upon written request sent to the billing address listed on Conexant's
latest-dated purchase order, Conexant will promptly take possession
of any and all property of Conexant, and should Conexant fail to do
so within thirty days of such request, UMC may destroy or reclaim
such property without liability.
- 10 -
6.2.3 AS A SEPARATE LIMITATION, AND EXCEPT FOR INDEMNITY OBLIGATIONS AND
BREACHES OF OBLIGATIONS OF CONFIDENTIALITY, IN NO EVENT WILL ANY
PARTY TO THIS AGREEMENT BE LIABLE (i) FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL OR INDIRECT DAMAGES, OR (ii) FOR LOSS OF USE, LOST
OPPORTUNITY, MARKET POTENTIAL, GOODWILL AND/OR PROFIT ON ANY THEORY
(CONTRACT, TORT, FROM THIRD PARTY CLAIMS OR OTHERWISE). THESE
LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OR OF ANY FAILURE OR INADEQUACY OF ANY REMEDY. THIS AGREEMENT
STATES THE ONLY AND EXCLUSIVE REMEDY FOR ANY AND ALL CLAIMS MADE
AGAINST ANY PARTY UNDER THIS AGREEMENT AND/OR WITH RESPECT TO WAFERS,
SERVICES, AND/OR PRODUCTS.
6.3 Commencement of Actions or Proceedings. No action or proceeding may
be commenced by either party against the other, whether for breach,
indemnification, contribution or otherwise, more than one year after
delivery of the Products to the carrier; and no claim may be brought
unless the non-claiming party has first been given commercially
reasonable notice, a full written explanation of all pertinent
details (including copies of all materials), and a good faith
opportunity to resolve the matter.
7 INDEMNIFICATION & COOPERATION
[***]
8 CONFIDENTIALITY
8.1 NDA. The terms of the Reciprocal Non-Disclosure Agreement dated
December 31, 1998, attached hereto as Exhibit E, are expressly
incorporated herein.
9 TERMINATION & RELATIONSHIPS
9.1 Term. The term of this Agreement as related to any specific Product
covered by this Agreement shall be three (3) years from the date of
the Quotation for that Product, and shall thereafter be automatically
extended for additional one (1) year terms, unless and until a party
to this Agreement gives no less than one (1) year's notice that the
term should not be further extended for that Product. If UMC gives
Conexant notice that the terms for a Product will not be extended,
then during the one (1) year notice period UMC shall continue to
accept and fill all orders placed by Conexant for commercially
reasonable quantities calling for delivery within lead time of that
Product.
9.2 Termination For Insolvency or Bankruptcy. Subject to Section 9.4
below, Conexant and/or UMC (collectively "the Parties") shall have
the right to terminate the rights of the other Party under their
applicable Agreements (and any other agreement concerning Products)
by giving written notice of termination to that other Party at any
time upon or after:
9.2.1 the filing by the other Party of a petition in bankruptcy or
insolvency;
9.2.2 any adjudication that the other Party is bankrupt or insolvent;
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9.2.3 the filing by the other Party of any petition or answer seeking
reorganization, readjustment or arrangement of its business under any
law relating to bankruptcy or insolvency;
9.2.4 the appointment of a receiver for all or substantially all of the
property of the other Party;
9.2.5 the making by the other Party of any assignment for the benefit of
creditors; or
9.2.6 the institution of any proceeding for the liquidation or winding up
of the other Party's business or for the termination of its corporate
charter.
Notwithstanding anything to the contrary, no termination under
Section 9.2 as to such other Party shall affect the rights of the
Party giving the notice of termination with respect to Products
delivered and/or as to which production had begun prior to the
effective date of termination. Termination pursuant to this Section
9.2 shall be effective immediately upon personal delivery of the
written notice, or in the case of airmail notice, five days after
dispatch.
9.3 Termination for Breach.
9.3.1 Termination Events. If any party fails to perform or violates any
material obligation under the applicable Agreements, effective upon
[***] written notice to the breaching party specifying such default
(the "Default Notice"), the non-breaching party may terminate the
applicable Agreement (and all related agreements concerning Products)
as to its responsibilities and obligations, without liability
(subject to Sections 9.4 and 9.5 below), unless:
9.3.1.1 The breach specified in the Default Notice has been cured within the
[***] period, or if the breach is disputed, the amount in dispute is
placed in a reasonably secure third party escrow account pending
resolution of the dispute; or
9.3.1.2 The default reasonably requires more than [***] to correct
(specifically excluding any failure to pay money), and the defaulting
party has begun substantial corrective action to remedy the default
within such [***] and diligently pursues such action, in which event,
termination shall not be effective unless [***] has expired from the
date of the defaulting party's receipt of the Default Notice without
such corrective action being completed and the default remedied.
9.3.1.3 In the event and for the duration of any dispute hereunder, except a
dispute arising out of a failure to pay invoices as they come due or
regarding alleged violation of intellectual property rights or misuse
or wrongful disclosure of Confidential Information, both parties
shall continue to perform their respective obligations (except
obligations which are themselves the subject of a bona fide dispute
such as, e.g., an "obligation" to pay a portion of an invoiced amount
which is in dispute) in a timely and professional manner. In any
event, both parties shall in good faith perform any obligations
resulting from the directives of any dispute resolution procedure
entered by agreement of the parties.
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9.4 Effect of Termination.
9.4.1 Termination by Conexant. If Conexant terminates the applicable
Agreements for any reasons stated in Sections 9.2 and/or 9.3 above,
UMC will, if so requested in writing by Conexant: (i) cease all
production required by Conexant's then outstanding purchase orders
under the Agreements; and/or (ii) otherwise complete and deliver all
Products pursuant to Conexant's then outstanding and accepted
purchase orders and invoice Conexant for the Products.
9.4.2 Termination by UMC. If UMC terminates this Agreement as to Conexant
pursuant to Section 9.3 above, without waiving any other remedy, UMC
shall be entitled to payment in full upon delivery of all completed
Products manufactured on behalf of Conexant.
9.5 Survival.
9.5.1 All obligations to pay monies which accrue prior to termination
and/or expiration, and the provisions of the Reciprocal Non
Disclosure Agreement attached as Exhibit E, as well as all other
obligations of confidentiality, all obligations to make delivery of
accepted orders, all limitations on warranties and remedies, all
obligations with respect to indemnification and cooperation,
contribution, dispute resolution, and termination shall survive the
expiration and/or termination of the applicable Agreements and/or of
any purchase order or understanding concerning Products.
9.5.2 The exclusions and limitations of Sections 5, 6 and 7 will survive
the termination of the applicable Agreements, and shall apply
notwithstanding any claim of a failure of any one or more remedies to
accomplish their purpose. THE PARTIES EXPRESSLY WAIVE AND RELINQUISH
ANY CONTRARY RIGHTS UNDER THIS AGREEMENT, AND/OR LAW, DECISION,
CUSTOM OR PRACTICE.
10 DISPUTE RESOLUTION
10.1 UMC and Conexant shall cooperate and attempt in good faith to resolve
any and all disputes arising out of and/or relating to any Agreement
and/or Products.
10.2 Any disputes relating to and/or arising out of this Agreement and/or
goods which cannot be so resolved will be decided exclusively by
binding arbitration under procedures which ensure efficient and
speedy resolution. The specific procedures concerning such
arbitrations shall be pursuant to the Rules for International
Arbitrations under the American Arbitration Association. The
arbitration shall be conducted in the English language in Santa ▇▇▇▇▇
County, California, if brought by Conexant, and in Orange County,
California, if brought by UMC, before a panel of three neutral,
independent arbitrators. Notwithstanding anything to the contrary:
10.2.1 the arbitrators will have no power to order discovery;
10.2.2 the arbitrators will follow such procedures and enter such orders and
conduct the hearing under conditions which ensure at least the same
degree of confidentiality for each party as provided by whatever
nondisclosure agreement is in effect between the parties at the time
of the arbitration, and which adequately protect the participants
from disclosure of highly sensitive information to anyone other than
the arbitrators and
- 13 -
lawyers (or comparable legal representatives) and reasonably
necessary expert witnesses and not to persons employed by one or more
of the parties nor to competitors of them, and
10.2.3 the arbitrators shall require pre-hearing exchange of documentary
evidence to be relied upon by each of the respective parties in their
respective cases in chief, and pre-hearing exchange of briefs,
witness lists and summaries of expected testimony.
10.3 The arbitrators will make their decision in writing; and their
decision will be binding upon the Parties and it may be entered by
any court having jurisdiction.
10.4 Notwithstanding anything to the contrary, any party may apply to any
court of competent jurisdiction for interim injunctive relief with
respect to irreparable harm which cannot be avoided and/or
compensated by such arbitration proceedings, without breach of this
Section 7 and without any abridgment of the powers of the
arbitrators.
10.5 Governing Law. This Agreement and all foundry arrangements involving
UMC and all performance and disputes arising out of and/or relating
to such matters and/or any Products involved will be governed by the
laws of California and the United States of America, without
reference to conflicts of laws principles, and/or any contrary
provision, including without limitation, the U.N. Convention on
Contracts for the International Sale of Goods.
11 GENERAL
11.1 Non-Exclusive Relationship. Except as stated in a separate written
agreement signed by duly authorized officers of UMC and of Conexant,
and subject to Section 8 "Confidentiality" above, nothing in the
Agreements shall prohibit Conexant from purchasing goods and/or
foundry services from other suppliers, nor prohibit UMC from offering
wafers and/or foundry services to others or from offering products or
services on its own behalf.
11.2 No Agency or Partnership. Nothing in the Agreements shall be deemed
to create a general or limited partnership or an agency relationship
between Conexant and/or UMC, and Conexant and UMC are independent
companies. Conexant will purchase products manufactured from UMC in
an arm's length vendor-purchaser relationship. No party shall be
entitled to act on behalf of and/or to bind any one or more of the
others.
11.3 Compliance with Law. The parties will comply with all applicable
restrictions and requirements of applicable law, including without
limitation those relating to labor, employment, environment, and
export control. Conexant agrees at its sole expense to comply with
all applicable laws in connection with the purchase, use or sale of
the Products.
11.4 No Implied Licenses. Nothing contained in this Agreement is intended
to or shall be construed as:
11.4.1 conferring any right to the other party to use in advertising,
publicity, or otherwise, any trademark, trade name or names of any
party, or any contraction, abbreviation or simulation thereof; and/or
- 14 -
11.4.2 conferring by implication, estoppel or otherwise, upon any party any
license or other right under any class or type of copyright,
maskwork, trademark, trade name, patent, utility model or design
patent except the licenses and rights expressly granted under a
written agreement signed by the Parties.
11.5 Entire Agreement. This Agreement and the Capacity Agreement
(including the attached Exhibits) contains all material and essential
terms of a binding agreement between the parties with respect to
foundry, fabrication, semiconductors, design support and goods, there
are no other agreements concerning such subject matter. This
Agreement, along with the Capacity Agreement, is the entire agreement
between the parties with respect to the stated subject matter; it
supersedes all prior understandings and agreements with respect to
these matters, and there are no prior representations, warranties or
other agreements relating thereto. This Agreement may not be
modified, except in writing signed by duly authorized officer of each
party, and no addition, deletion or modification shall be binding on
UMC unless expressly agreed to in a writing signed by an officer of
UMC.
11.6 Notices. All notices, payments, reports and other communications
required or permitted hereunder shall be in writing and shall be
mailed by first class, registered or certified mail, postage prepaid,
or otherwise delivered by hand, by messenger (including express mail
courier services) or by facsimile, addressed to the addresses first
set forth above or at such other address furnished with a notice in
manner set forth herein. Such notices shall be deemed to have been
served when delivered or, if delivery is not accomplished by reason
of some fault of the addressee, when tendered. Notices shall be
addressed as follows:
If to UMC:
UMC Group (USA)
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Copy to:
Law+
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Conexant:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Contracts Dept.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇.
11.7 Assignment. [***]
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11.8 Captions and Section Headings. The captions and section and paragraph
headings used in this Agreement are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement.
11.9 Partial Invalidity. If any paragraph, provision, or clause thereof in
this Agreement shall be found or be held to be invalid or
unenforceable in any jurisdiction in which this Agreement is being
performed, the remainder of this Agreement shall be valid and
enforceable and the parties shall negotiate, in good faith, a
substitute, valid and enforceable provision that most nearly reflects
the parties' intent in entering into this Agreement.
11.10 Presumptions. In construing the terms of this Agreement, no
presumption shall operate in either party's favor as a result of its
counsel's role in drafting the terms or provisions hereof.
11.11 Language. The English language shall govern the meaning and
interpretation of this Agreement.
11.12 Waiver. The failure of either party to enforce at any time the
provisions of this Agreement, or the failure to require at any time
performance by the other party of any of the provisions of this
Agreement, shall in no way be construed to be a present or future
waiver of such provisions, nor in any way affect the right of either
party to enforce each and every such provision thereafter. The
express waiver by either party of any provision, condition or
requirement of this Agreement shall not constitute a waiver of any
future obligation to comply with such provision, condition or
requirement.
11.13 Cumulative Remedies. The remedies under this Agreement shall be
cumulative and not alternative and the election of one remedy for a
breach shall not preclude pursuit of other remedies unless as
expressly provided in this Agreement.
11.14 Confidentiality of Agreement. Each party agrees that the terms and
conditions of this Agreement and Quotations shall be treated as
confidential information of both parties, and that neither party will
disclose the terms or conditions to any third party without the prior
written consent of the other party, provided, however, that each
party may disclose the terms and conditions of this Agreement, to the
extent necessary:
11.14.1 as required by any court or other governmental body;
11.14.2 as otherwise required by law;
11.14.3 to legal counsel of the parties, accountants, and other professional
advisors;
11.14.4 in confidence, to banks, investors and other financing sources and
their advisors;
11.14.5 in connection with the enforcement of this Agreement or rights under
this Agreement; or
- 16 -
11.14.6 in confidence, in connection with an actual or prospective merger or
acquisition or similar transaction.
11.15 Authority. Each party represents that all corporate action necessary
for the authorization, execution and delivery of this Agreement by
such party and the performance of its obligations hereunder has been
taken.
11.16 Counterparts. This Agreement may be executed in two (2) or more
counterparts, all of which, taken together, shall be regarded as one
and the same instrument.
IN WITNESS WHEREOF, the parties have authorized their undersigned
representatives to sign this Agreement and to bind them to its terms and
conditions in accordance with the foregoing.
CONEXANT: UMC:
/s/ ▇▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇ ▇▇▇▇▇
----------------------------- -----------------------------
Authorized Signature Authorized Signature
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
----------------------------- -----------------------------
Printed Name Printed Name
SVP, Operations President, UMC Group (USA)
----------------------------- -----------------------------
Title Title
8/4/00 07/27/00
----------------------------- -----------------------------
Date Date
11.17 CONEXANT AND UMC EXPRESSLY AGREE TO THE LIMITATIONS OF SECTIONS 5, 6,
7 AND 8 AND TO THEIR REASONABLENESS.
Initialed as accepted and agreed to by the parties hereto:
Conexant: /s/ TE
------------------------
UMC: /s/ JK
------------------------
- 17 -
EXHIBIT A
QUOTATIONS
QUOTATIONS SHALL INCLUDE THE FOLLOWING ELEMENTS, AS APPLICABLE.
A.1: Products to be manufactured
A.2: Product prices fees and charges:
A.3: Product mask making requirements:
A.4: Product testing requirements:
A.5: Product assembly requirements:
A.6: Product packaging requirements
A.7: Product Specification requirements:
A.8: Product Quantity requirements:
A.9: Product Cycle Time requirements:
A.10: Product lead-time requirements:
A.11: Other Product Parameters:
- 18 -
EXHIBIT B
ACCEPTANCE CRITERIA
[***]
[4 pages omitted]
- 19 -
EXHIBIT B.01
PRE-PRODUCTION FORM
[***]
- 20 -
EXHIBIT B.02
MASS PRODUCTION FORM
[***]
- 21 -
EXHIBIT B.03
OUTGOING QUALITY ASSURANCE (OQA) PROCEDURE
[***]
- 22 -
EXHIBIT C
QUALITY ASSURANCE
[***]
- 23 -
EXHIBIT D
PROCEDURES
[***]
[2 pages omitted]
- 24 -
EXHIBIT E
RECIPROCAL NDA
[See Exhibit E to Capacity and Reservation Deposit Agreement
dated as of March 20, 2000]
- 25 -
EXHIBIT F
PACKING INSTRUCTIONS
1. Product wafers shall be shipped in new wafer lot boxes with matching
wafer cassettes where the wafers are correctly slotted in the wafer
cassette as indicated by the slot numbers on the cassette. (ex: if
wafer #15 is missing, then cassette slot #15 is empty)
2. No broken wafers are to be shipped.
3. Each wafer lot box must have a label stating a) the Conexant PO number
and line item, b) the Conexant part number and lot number, c) the wafer
quantity, and d) the missing wafer information.
4. Wafer lot boxes are to be vacuum-sealed in moisture barrier bags. Bags
must be capable of maintaining vacuum throughout the shipping process.
5. One wafer lot box per heat sealed bag.
6. Vacuum in the bag at heat sealing must be a minimum of 5 torr under
current atmospheric pressure.
7. No more than two (2) wafer lots are packaged per shipping cardboard
box.
8. Heat-sealed wafer lot boxes are to be placed in insulation units, with
spacing between the wafer lot box and the inner wall of the cardboard
box and between wafer lot boxes (if applicable) all as specified by
UMC's standard practices, as amended from time to time. To the extent
Conexant desires packaging which differs in any respect from such UMC
standard packaging, Conexant and UMC shall negotiate in good faith as
to the practicality of such alternative arrangements and as to
allocation of the costs involved.
9. Cardboard shipping boxes pass the following tests at UMC: 1)- Vibration
test: Frequency 5Hz->100Hz->500Hz, duration of test 1 hour, 2)- Free
fall test: Drop height 100 cm-.
10. The cardboard box must be sealed with the appropriate means to insure
and retain closure throughout the shipping process.
11. The sum of the total number of shipping boxes must be identified on the
outside of each box. (ex: 3 shipping boxes are identified as 1/3, 2/3,
3/3)
12. Appropriate shipping information (packing list) must be attached to the
outside and inside of box #1.
13. Fragile and/or caution labels should be visible on the outside of each
shipping box.
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