Exhibit 10.38
CONFIDENTIAL TREATMENT REQUESTED.
OMITTED PORTIONS MARKED WITH [*] AND FILED SEPARATELY WITH THE
SEC
Amendment
Agreement
to the
Manufacturing Services
Collaboration Agreement
between
NXP SEMICONDUCTORS NETHERLANDS
B.V.
and
DSP GROUP, INC.
and
DSP GROUP LTD.
Contents
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Page
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Clause
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1
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INTERPRETATION
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4
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2
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COMMENCEMENT
DATE
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6
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3
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AMENDMENT OF
DSPG PLANS
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6
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4
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AMENDMENT OF
DSPG PURCHASE OBLIGATION
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6
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5
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AMENDMENT TO
PURCHASE ORDERS, ORDER PLACEMENT, MANAGEMENT AND BATCH
RELEASES
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7
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6
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AMENDMENT OF
PRICES AND TAXES
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8
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7
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AMENDMENT OF
PENALTY FOR LATE/NON DELIVERY
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9
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8
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WAIVER AND
SETTLEMENT OF CLAIMS
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10
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9
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CLOSURE OF
FISHKILL
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10
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10
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AMENDMENT TO
SCHEDULE 12 OF THE AGREEMENT
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12
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11
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CONTINUATION OF
THE AGREEMENT
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12
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12
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TERMINATION
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12
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13
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GOVERNING LAW
AND COURT
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13
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Annexes
Annex A – Revised 2009
Prices
Annex B – Revised 2010
Prices
Annex C – NXP Lead-time
Catalogue in Days
Annex D – A-Gate
Checklist
Annex E – Bridging Stock in
[*] Devices
Annex F – End of Life Stock in
[*] Devices
Annex G – Finished Goods
Prices and Methodology for [*] Price Adjustment
2 / 22
Amendment Agreement to the Manufacturing
Services Collaboration Agreement
THE UNDERSIGNED:
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(1)
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NXP
SEMICONDUCTORS NETHERLANDS B.V ., a limited liability company incorporated
under the laws of the Netherlands with corporate seat in Eindhoven,
the Netherlands and having its address at High Tech Campus 60, 5656
AG Eindhoven, the Netherlands (“ NXPBV ”),
acting on behalf of itself and also acting for the benefit of its
Affiliates (collectively “ NXP ”),
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and
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(2)
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DSP GROUP,
INC. , a company
incorporated under the laws of the State of Delaware, United States
of America, having its address at 2580 North First Street, Suite
460, San Jose, CA 95131, United States of America (“ DSPG
INC ”),
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and
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(3)
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DSP GROUP
LTD. (“ DSPG
”), a private company with limited liability incorporated
under the laws of Israel, with corporate seat in Herzeliya, Israel
and having its address at 5 Shenkar Street, Herzeliya, 46120,
Israel, entering into this Agreement on behalf of itself and its
Affiliates, the obligations of which shall be guaranteed by DSPG
INC as provided for in Clause 14 of the SBSA,
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NXP, DSPG INC and DSPG shall also be
referred to as “Parties” or a “Party”, as
the case may be,
WHEREAS:
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(A)
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The Parties
entered into a Manufacturing Services Collaboration Agreement,
effective 4 September 2007, relating to the manufacturing,
pre-testing, assembling and final-testing of NXP Products by NXP
and/or NXP Sub-contractors (the “ Agreement
”).
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(B)
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The Parties
wish to amend and supplement the Agreement.
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(C)
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NXP and DSPG
INC and DSPG wish to conclude this Amendment Agreement (as defined
below).
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3 / 22
IT IS AGREED AS
FOLLOWS:
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1.1.1
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The definition
of “ Derivative ” in Clause 1.1 of the Agreement
is deleted in its entirety and replaced with the following: “
Derivative ” shall mean any commercial successors
having the same process flows fully or partially, steps and/or
parameters and utilizing the identical manufacturing equipment
tools fully or partially.
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1.1.2
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The definition
of “ NXP Lead-time Catalogue ” in Clause 1.1 of
the Agreement is deleted in its entirety and replaced with the
following: “ NXP Lead-time Catalogue ” means the
lead-time catalogue attached to this Amendment Agreement as
Annex C , as the same may be updated from time to time by
NXP and approved by DSPG, which approval shall not unreasonably be
withheld or delayed, to reflect any Derivatives which will be
provided by NXP to DSPG. For the avoidance of doubt,
notwithstanding the absence of any reference in Annex C ,
the Parties (i) shall mutually agree upon a reasonable NXP
Order Lead-Time for any existing NXP Products or NXP Services not
included in Annex C for any reason, and (ii) agree that
the NXP Order Lead-Time for a Derivative shall be the [*] as
further clarified in Annex G to this Amendment Agreement; it
being understood that a Derivative’s lead-time is [*]
, adjusted for [*] have been [*] . Annex C
shall be updated accordingly based on sub (i) and sub
(ii).
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1.1.3
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The definition
of “ NXP ROM-Coded Products ” in Clause 1.1 of
the Agreement is deleted in its entirety and replaced with the
following: “ NXP ROM-Coded Products ” shall mean
the ROM-coded NXP Products. For the avoidance of doubt, [*]
are ROM-coded NXP Products.
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1.1.4
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The definition
of “ Grace Period ” in Clause 1.1 of the
Agreement is deleted in its entirety and replaced with the
following: “ Grace Period ” shall mean in
respect of NXP Non-ROM-Coded Products and NXP ROM-Coded
Products:
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(i)
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with regard to
Purchase Order Type A: [*] ;
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(ii)
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with regard to
Purchase Order Type B: [*] ; and
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(iii)
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with regard to
Purchase Order Type C: [*] .
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1.1.5
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The definition
of “ Systematic Late Delivery ” in Clause 1.1 of
the Agreement is deleted in its entirety and replaced with the
following: “ Systematic Late Delivery ” shall
mean delivery by NXP of [*] or more of the aggregate of all
individual Line-Items in (Adjusted) Binding Purchase Orders in a
[*] beyond the applicable NXP Order Lead-time.
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1.1.6
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The definition
of “ Systematic Non-Delivery ” in Clause 1.1 of
the Agreement is deleted in its entirety and replaced with the
following: “ Systematic Non-delivery ” shall
mean delivery by NXP of:
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(a)
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[*] or
more of the aggregate of all individual Line-Items in (Adjusted)
Binding Purchase Orders in a [*] after expiration of
[*] beyond the applicable NXP Order Lead-times in respect of
NXP ROM-Coded Products (the “ Quarterly ROM-Coded
Systematic Non-Delivery ”);
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4 / 22
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(b)
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[*] or
more of the aggregate of all individual Line-Items in (Adjusted)
Binding Purchase Orders in a [*] after expiration of
[*] beyond the applicable NXP Order Lead-times in respect of
NXP Non-ROM-Coded Products (the “ Quarterly Non-ROM-Coded
Systematic Non-Delivery ”);
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(c)
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[*] or
more of the aggregate of all individual Line-Items in (Adjusted)
Binding Purchase Orders in a [*] after expiration of
[*] beyond the applicable NXP Order Lead-times in respect of
NXP ROM-Coded Products (the “ Annual ROM-Coded Systematic
Non-Delivery ”); or
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(d)
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[*] or
more of the aggregate of all individual Line-Items in (Adjusted)
Binding Purchase Orders in a [*] after expiration of
[*] beyond the applicable NXP Order Lead-times in respect of
NXP Non-ROM-Coded Products (the “ Annual Non-ROM-Coded
Systematic Non-Delivery ”).
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Capitalized words in this Amendment
Agreement (including the preamble and recitals), shall have the
same meaning as set out in the Agreement, except if defined
otherwise herein and unless the subject or context otherwise
requires, and the following definitions are added as
follows:
“ A - Gate checklist
” means the checklist attached hereto as Annex D
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“ Amendment Agreement
” means this amendment agreement including the annexes
thereto.
“ Backend Transfer Plan
” means the plan related to the qualification of certain
back-end services for [*] products; it being agreed that the
qualification of these services will be done simultaneously with
the qualification of the Wafer products from the Nijmegen Facility
for those relevant [*] products.
“ Fishkill Facility
” has the meaning set out in Clause 9.1.1 of this Amendment
Agreement.
“ MCM Product ”
means any NXP Product in which multiple integrated circuits, each
fabricated on a separate semiconductor die, are packaged together
for use as a single Device.
“ Nijmegen Facility
” means the NXP facility in Nijmegen, the
Netherlands.
“ Obsolete ”
means NXP Products for which no Purchase Order has been issued by
DSPG for a period of [*] .
“ Product Transfer
Engineers ” has the meaning set out in Clause 9.4.1 of
this Amendment Agreement.
“ Revised 2009 Prices
” means Annex A to this Amendment Agreement, subject
to any adjustments provided in Annex G to this Amendment
Agreement. For the avoidance of doubt, notwithstanding the absence
of any reference in Annex A , the Parties shall mutually
agree upon the prices for any Derivatives in accordance with Clause
10.2 of the Agreement (as amended pursuant to this Amendment
Agreement) and update Annex A accordingly.
“ Revised 2010 Prices
” means Annex B to this Amendment Agreement, subject
to any adjustments provided in Annex G to this Amendment
Agreement. For the avoidance of doubt, notwithstanding the absence
of any reference in Annex B , the Parties shall mutually
agree upon the prices for any Derivatives in accordance with Clause
10.2 of the Agreement (as amended pursuant to this Amendment
Agreement) and update Annex B accordingly.
5 / 22
“ Revised Price Plans
” means Annex A and Annex B to this Amendment
Agreement, subject to any adjustments provided in Annex G to
this Amendment Agreement.
“ Shaded Table of Schedule
1 ” has the meaning set out in Clause 6 of this Amendment
Agreement.
“ Storage Plan ”
has the meaning set out in Clause 9.1.1 of this Amendment
Agreement.
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1.3
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Clauses and
schedules
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References to clauses and schedules
are to clauses of and schedules to the Agreement unless the context
otherwise requires.
This Amendment Agreement will take
effect as from the date of signing of this Amendment Agreement by
the Parties thereto, except that as set forth in Clause 10.1.1 of
the Agreement (as amended pursuant to this Amendment Agreement),
Annex A , and to the extent relevant, Annex G , to
this Amendment Agreement will [*] .
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3
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AMENDMENT OF
DSPG PLANS
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3.1
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Clause 5.2.2
of the Agreement shall be
amended such that the entire sub-clause reads as
follows:
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The MTP will describe DSPG’s
projected NXP Product and NXP Service needs on a [*] basis
(total quantity and quantity in each Main Capacity Bucket). The
quantities for any [*] shall not [*] and shall not
[*] of the quantities for [*] including that
[*] ; provided, however, the quantity limitations for
[*] in the MTP shall be disregarded to the extent NXP
confirms such MTP pursuant to Clause 5.2.3.
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3.2
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New Clause
5.3.6 : Notwithstanding
anything to the contrary contained in Clause 5.3, the quantity
limitations applicable to STPs shall be disregarded to the extent
NXP confirms such STP pursuant to Clause 5.3.3.
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4
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AMENDMENT OF
DSPG PURCHASE OBLIGATION
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Clause 6 of the Agreement (DSPG
Purchase Obligation) shall be amended such that the entire clause
reads as follows:
6.1 For NXP Non-ROM-Coded Products, DSPG shall be
obliged to purchase for [*] of the aggregate NXP
Non-ROM-Coded Product quantities for such [*] included in
[*] applicable to such [*] . For the avoidance of
doubt, DSPG shall have no obligation to purchase any quantities of
NXP Non-ROM-Coded Products [*] , and with consideration of
Clause 6.5 below, DSPG’s purchase obligations shall be
satisfied to the extent NXP [*] .
6 / 22
6.2 For NXP ROM-Coded Products, DSPG shall be
obliged to purchase for [*] of the relevant Confirmed STP
[*] of the aggregate NXP ROM-Coded Product quantities for
such [*] calculated as an [*] applicable to such
[*] . For the avoidance of doubt, DSPG shall have no
obligation to purchase any quantities of NXP ROM-Coded Products
[*] , and with consideration of Clause 6.5 below,
DSPG’s purchase obligations shall be satisfied to the extent
NXP [*] . The Parties agree that with respect to [*]
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6.3 In [*] of any calendar year, DSPG and NXP
will determine on an [*] basis whether DSPG purchased less
than the obligated quantities of NXP Non-ROM-Coded Products and/or
NXP ROM-Coded Products set out in Clauses 6.1 and 6.2 above,
respectively. For purposes of the above determination, DSPG shall
have the right to [*] . In the event that based on the
[*] determination that DSPG purchased less than the
obligated quantities of NXP Non-ROM-Coded Products and/or NXP
ROM-Coded Products set out in Clauses 6.1 and 6.2 above,
respectively, and NXP satisfied the NXP Order Lead-times
with respect to DSPG’s obligated quantities of NXP
Non-ROM-Coded Products and/or NXP ROM-Coded Products, as
applicable, that have not been purchased, DSPG shall pay to NXP a
compensation of [*] , that DSPG was obligated to purchase in
accordance with Clauses 6.1 and 6.2 above and did not purchase,
subject to this Clause 6.3.
6.4 DSPG’s purchase obligation
as set out in this Clause 6 shall not apply in respect of the
Confirmed STPs relating to the third quarter and the fourth quarter
of 2007. DSPG’s purchase obligation is only with respect to
finished NXP Products, and a Binding Purchase Order or an Adjusted
Binding Purchase Order shall be issued by DSPG only with respect to
finished NXP Products. DSPG shall purchase the finished NXP
Products at fixed prices to be mutually agreed upon by the Parties
and consistent with Annex A and Annex B of the
Amendment Agreement, subject to adjustments provided in Annex
G of the Amendment Agreement.
6.5 For the avoidance of doubt, commencing with the
date the Fishkill Facility is closed, all deliveries of NXP
Products set forth in Annex D of the Amendment Agreement
shall be [*] is fully consumed by DSPG’s Binding
Purchase Orders and/or Adjusted Binding Purchase Orders for
[*] .
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5
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AMENDMENT TO
PURCHASE ORDERS, ORDER PLACEMENT, MANAGEMENT AND BATCH
RELEASES
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5.1
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Clause 8.5
of the Agreement (Cancellation of Purchase Order) shall be
amended such that the entire sub-clause reads as
follows:
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Subject to Clause 6, DSPG may
[*] to NXP that specifies the relevant Adjusted Binding
Purchase Order, (Binding) Purchase Order or portion thereof that
DSPG [*] . In such event, DSPG’s [*] pursuant to
Clause 6.3 of the Agreement (as amended pursuant to this Amendment
Agreement).
7 / 22
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6
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AMENDMENT OF
PRICES AND TAXES
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Clause 10 of the Agreement (Prices
and Taxes) shall be amended such that the entire clause reads as
follows:
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10.1
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Prices
During the (Remaining) Term of the Agreement
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Contract year
2009
10.1.1 Subject to Clause 10.1.2 and
any adjustments provided in Annex G to the Amendment
Agreement, the Parties agree that as from 1 January 2009 until
31 December 2009 (unless the Agreement terminates earlier),
the prices for NXP Products shall be equal to the prices as set out
in the Revised 2009 Prices attached as Annex A to the
Amendment Agreement, subject to [*] to the Agreement (the
“ Shaded Table of Schedule 1 ”).
