Exhibit 10.37
HHNEC WAFER SUPPLY
AGREEMENT
THIS AGREEMENT
, is made and entered into this 29
day of August, 2003 (“ Effective Date ”)
by and between JAZZ/HUA HONG, LLC, a limited liability
company organized in the State of Delaware (the “
LLC ”), NEWPORT FAB, LLC, a Delaware limited
liability company d/b/a Jazz Semiconductor (“Jazz”) and
SHANGHAI HUA HONG NEC ELECTRONICS COMPANY., LIMITED.,
a corporation formed under the laws of the Peoples Republic of
China (“ HHNEC ”) (hereinafter LLC
Jazz and HHNEC may each be referred to as a
“party” and may be jointly referred to as
“parties”).
PURPOSES
HHNEC is a member of the LLC and has
committed to provide the LLC with semiconductor products utilizing
manufacturing capacity at HHNEC’s facility in Shanghai,
Peoples Republic of China. This Agreement provides the terms and
conditions for the manufacture of such products by HHNEC for the
LLC, including the use of the information and know-how of Newport
Fab LLC d/b/a Jazz Semiconductor (“ Jazz
”) in order to meet LLC’s needs for Wafers and dies,
and for no other purpose.
In consideration of the mutual
promises of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE 1
DEFINITIONS
In this Agreement, unless otherwise
defined or the context otherwise requires, the following words and
expressions shall have the following meanings:
1.1
“CMOS”
and “BiCMOS”
shall refer to complementary metal oxide semiconductor devices and
bipolar complementary metal oxide semiconductor devices,
respectively.
1.2
“ Delivery Date
” shall mean a date for delivery of an agreed upon quantity
of Wafers ordered by LLC as set forth in any LLC order.
1.3
“ HHNEC’s
Facility ” shall mean HHNEC’s facility located
at No. 1188 Chuan Qiao Road, Pu Dong ,
Shanghai, Peoples Republic of China.
1.4
“ Intellectual Property
Rights ” shall
mean any and all right, title and interest in and to any and all
patents and all patent applications (including, without limitation,
originals, divisions, continuations, continuations-in-part,
CPA’s, RCE’s, provisional, extensions or reissues),
design rights (whether registered or not and all applications for
the foregoing), copyrights, database rights, topography rights,
mask work rights, applications to register any of the
aforementioned rights, trade secrets, rights in unpatented know-how
and show-how, information, data, drawings, concepts, drawings,
schematics, specifications, object code and machine-readable copies
of any software, source code relating to any software, rights of
confidence, rights of authorship, and any
Confidential treatment is being
requested for portions of this document. This copy of the
document filed as an exhibit omits the confidential
information subject to the confidentiality request. Omissions
are designated by the symbol [...***...]. A complete version
of this document has been filed separately with the Securities and
Exchange Commission.
other intellectual or industrial
property rights of any nature whatsoever in any part of the world
and whether arising under the common law, state law, federal law or
the laws of any foreign country.
1.5
“ Lead-time
” shall mean the estimated amount of time required from order
placement to delivery as agreed to by the parties.
1.6
“ Jazz Advanced
Technology ” shall mean all proprietary information
and know-how, no matter what form, and without limitation, related
to Jazz’s .18um advanced RF CMOS process including but not
limited to advanced features such […***…] and .25um
/.18um SiGe BiCMOS process and improvements thereto.
1.7
“ Jazz
Technology ” shall mean all proprietary information
and know-how obtained by LLC from Jazz and provided to HHNEC by
LLC, no matter what form and including without limitation
information and know-how identified in Confidential Information
Transmittal Report(s) (copies of which shall be provided to LLC),
that relate to Jazz’s process(es) for the manufacture of
Wafers, Jazz’s specifications for Wafers, Jazz’s
performance criteria for Wafers and all other matters relating to
Wafers and their manufacture., which has been provided to HHNEC by
Jazz for the specific purpose of manufacturing wafers.
1.8
“ Jazz Patent
Rights ” shall mean those patent rights under which
LLC is licensed by Jazz during the term of this
Agreement.
1.9
“ General Licensed
Process ” shall mean qualified process for the
manufacture of Wafers as communicated by LLC to HHNEC from time to
time during the term of this Agreement, which has been general
licensed to HHNEC, as set forth in Technology Transfer Agreement,
to enable HHNEC to do foundry business.
a)
[…***…] RF
CMOS,
b)
[…***…] RF
CMOS,
c)
[…***…] CMOS
d)
[…***…] CMOS
1.10
“Process
” shall mean qualified
process for the manufacture of Wafers as communicated by LLC to
HHNEC from time to time during the term of this Agreement, which
has been general licensed to HHNEC,
1.11
“ Have Made Licensed
Process ” shall mean qualified process referenced in
section 1.6 above, for the manufacture of Wafers as communicated by
LLC to HHNEC from time to time during the term of this Agreement to
be used by HHNEC for Jazz’s second source
requirements,
1.12
“SiGe”
(when used without an indication of
performance) shall refer to silicon germanium semiconductor
devices, generally.
1.13
“ Term ”
shall have the meaning ascribed to it in Article 13.
1.14
“ Wafers ”
shall mean wafers that have been manufactured or processed
according to the Process so as to include or embody any of the
products listed on Exhibit A attached hereto.
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1.15
“ Wafer Acceptance
Criteria ” shall mean those written Wafer
specifications, engineering requirements, performance criteria,
etc. provided by LLC to HHNEC and mutually agreed by LLC and HHNEC,
from time to time during the term of this Agreement.
1.16
“ WIP ”
shall mean work in process and includes all wafer and dies not yet
delivered to LLC.
Capitalized terms not
defined herein shall have the same meaning ascribed to them in the
Limited Liability Company Agreement of Jazz/Hua Hong, LLC (the
“ LLC
Agreement ”), the License
Agreements and the Supply Agreements between Jazz/Hua Hong, LLC and
Jazz Semiconductor.
ARTICLE 2
PURCHASE OF WAFERS; PURCHASE
FORECASTS, ETC.
2.1
HHNEC shall manufacture Wafers
utilizing the Process for LLC. LLC will purchase Wafers
manufactured by HHNEC in accordance with the terms of this
Agreement.
2.2
For the term of this Agreement, LLC
shall provide to HHNEC on or before the […***…], a six
(6) month rolling forecast setting forth its estimated requirements
by month for Wafers.
Solely to allow for the well
balanced loading in HHNEC’s facility(ies), both parties shall
review the next six months loading plan commencing from the first
loading, twice per year. Subject to Section 2.4, The loading plan
shall constitute a binding commitment of LLC to HHNEC to buy a
minimum 50% of the loading plan, from Q42004 till the end of 2005,
and a binding commitment of HHNEC to manufacture in accordance to
loading plan all wafers ordered by the LLC
Commencing January 1, 2006, for each
fixed 6 month period during the term of this agreement
HHNEC’s capacity commitment to the LLC shall be based on the
average loading of the prior three months [For example the HHNEC
capacity commitment for the period January 1 – June 30, 2006
shall be based on the loading average of October 1, 2005 through
December 31, 2005.] Such loading plan shall constitute a binding
commitment of LLC to HHNEC to buy minimum 50% of the loading plan
and a binding commitment of HHNEC to manufacture in accordance to
loading plan all wafers ordered by the LLC. The LLC may inform
HHNEC of its requirements for additional loading above the loading
plan, and provided the LLC commits to purchase […***…]
of such additional loading, HHNEC shall perform its
commercially best effort to supply wafers for LLC to support such
upside demand requests
In the event of order cancellation
after wafer starts, following penalty charges apply:
[…***…]
2.3
LLC shall place its purchase order
for Wafers with HHNEC in accordance with the Lead-time.
2.4
The LLC agrees, provided the
processes/products are qualified on time, and Jazz customers have
approved sourcing through HHNEC, to order a minimum of
[…***…] wafers per month commencing October 1, 2004,
and for all of 2005.
2.5
Except as expressly stated in this
Article, nothing herein shall be construed as an obligation on the
part of LLC to purchase any quantity of Wafers from
HHNEC.
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ARTICLE 3
ORDERS
3.1
LLC shall place orders for the
Wafers by mail or by facsimile to HHNEC or in another mutually
agreed upon way by the […***…] of calendar month for
wafers outs in the calendar month […***…] hence, except
for […***…] processes which will be placed
[…***…] hence. HHNEC shall, within […***…]
after receipt of such orders, send LLC an acknowledgement of such
orders. […***…].
3.2
The terms of this Agreement shall
supersede the terms of any LLC purchase order and/or HHNEC’s
acknowledgment/acceptance of such purchase order. Although it is
recognized that the parties may, for their respective convenience,
desire to use standardized purchase order forms,
acknowledgment forms and other documents which may contain terms in
addition to or at variance with the terms of this Agreement, no
purchase order or acknowledgement will amend this Agreement and all
purchase order or acknowledgements shall be subject to the terms
and conditions of this Agreement regardless of statements to the
contrary contained within the purchase order or
acknowledgment.
3.3
All matters designated herein as
subject to agreement of the parties must be agreed upon in a
writing signed by authorized representatives of both parties for
such agreement to be effective. All issues that arise during the
Term that are not addressed by the terms herein shall be resolved
in accordance with Article 15 below.
ARTICLE 4
MANUFACTURE OF WAFERS,
ETC.
4.1
HHNEC shall manufacture Wafers only
according to the Process.
4.2
HHNEC shall, at its own expense,
install all equipment necessary to support a minimum of 5,000 wafer
starts per month of 0.18 um CMOS wafer production capacity
commencing by December 2004 and additional 5000 by the end of
1H2005 for a total of 10,000 wafer starts per month.
4.3
Further, HHNEC shall install, at its
own expense, all equipment necessary to support the manufacture of
Jazz 0.18 um CMOS/SiGe Wafers, and qualify Jazz 0.18 RF CMOS/SiGE
by the end of the third quarter 2004.
4.4
HHNEC shall guarantee capacity on a
first right of refusal basis, provided Jazz forecasts with 6 months
advanced notice, up to eight thousand (8,000) wafers per month
commencing October 1, 2004, and up to ten thousand (10,000) wafers
per month commencing January 1, 2005 for the term of this agreement
and any extension thereof; and HHNEC shall perform its commercially
best effort to supply wafers for Jazz upside demand beyond such
levels.
4.5
Within a reasonable time after the
Effective Date, LLC shall provide HHNEC with Jazz Technology and
other technical assistance to enable HHNEC to implement the Process
to manufacture Wafers. Prior to the commercial production of
Wafers, LLC shall verify that HHNEC is utilizing the Process in
accordance with LLC’s specifications to produce Wafers
meeting the Wafer Acceptance Criteria. Absent prior approval and
subsequent verification by LLC, HHNEC shall not deviate from the
Process once the process at HHNEC’s Facility is
verified.
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4.6
HHNEC shall provide authorized
personnel of LLC and/or Jazz with access to the HHNEC Facility in
order to assist HHNEC in implementing the Process and, thereafter,
to periodically verify that HHNEC is manufacturing Wafers according
to the Process, that Wafers meet Wafer Acceptance Criteria and as
otherwise necessary in LLC’s or Jazz’s discretion to
inspect the Process and/or HHNEC’s Facility for compliance
with the terms of this Agreement. LLC and/or Jazz shall give
reasonable notice of its intent to inspect HHNEC’s
Facility.
4.7
LLC and/or Jazz shall help HHNEC to
qualify the suppliers to HHNEC of major equipment, chemicals and
other components required to manufacture the Wafers in accordance
with the Process and the terms hereof upon required by
HHNEC.
4.8
LLC shall provide HHNEC with advance
written notice of changes in Process and Jazz Technology relating
thereto. With assistance from LLC and/or Jazz, HHNEC shall change
its process to comply with any changes, verify the Process as
changed and assist LLC in verifying the Process as changed. LLC
and/or Jazz will be responsible for the wafer price increase based
upon actual cost and re-qualification cost due to such mentioned
Process change only if requested by Jazz.
4.9
A) Costs associated with the general
process production: Each party shall use its commercially
reasonable efforts to complete, and shall bear its own expenses in
connection with, the actions associated with enabling HHNEC to
utilize the processes identified in the Technology License and
Transfer Agreement, or general process production, verifying
HHNEC’s process, implementing changes to Process and ensuring
that Wafers meet Wafer Acceptance Criteria, however, Jazz will be
responsible for the cost associated with lab work and testing of
the product, and HHNEC shall provide engineering support, photo
masks, and engineering wafers to support the technology transfer
identified herein. The technology transfer completes at the time of
process qualification defined by meeting the Fabless Semiconductor
Association standards.
B) Costs associated with Have Made
production: Each party shall use its commercially reasonable
efforts to complete, and shall bear its own expenses in connection
with, the actions associated with enabling HHNEC to utilize the
Have Made Licensed Process, implementing changes to Have Made
Licensed Process and ensuring that Wafers meet Wafer Acceptance
Criteria, however, Jazz and/or its customer will be responsible for
the cost associated with photo masks, lab work and testing of the
product, and HHNEC shall provide engineering support, and
engineering wafers to support the technology transfer identified
herein. The technology transfer completes as defined by the
Technology License and Transfer Agreement.
C) HHNEC guarantees a wafer yield no
less than […***…].
4.10
Without expressed written consent by
Jazz, HHNEC shall not use Process,- Jazz Technology, or Jazz
Advanced Technology, at any location other than HHNEC’s
Facility or for any purpose other than as provided for in the
Technology License and Transfer Agreement and the Technology
Sublicense Agreements.
4.11
LLC may at any time request HHNEC to
halt the manufacture of Wafers still in-process and HHNEC shall
effect production stoppage. Such mentioned manufacturing halt shall
not exceed […***…], and LLC acknowledges that there
will be […***…] based on the halt date and
characteristics of Wafers. The manufacture of Wafers shall remain
on hold pending written
5
directions from LLC. HHNEC shall
re-start the manufacture of Wafers within […***…] after
receipt of LLC’s written request, subject to LLC’s
agreement to […***…].
ARTICLE 5
PRICES AND PAYMENT
5.1
Prices for LLC’s purchases of
Wafers, are provided herein, and HHNEC guarantees that wafer prices
shall be […***…].
5.2
HHNEC and the LLC shall review wafer
pricing annually and adjust pricing downward consistent with market
price decline but in no event more than a […***…]
downward adjustment per annum.
5.3
[…***…].
5.4
All prices are stated in U.S.
Dollars. All prices include all taxes, export duties, and other
charges imposed by the Peoples Republic of China and any local
governments in the Peoples Republic of China but are exclusive of
all federal, state or local sales, use, excise, or similar taxes
imposed by the United States of America and any local governments
within the United States of America. Any such tax(es) shall be
separately itemized on HHNEC’s invoice(s) and paid by LLC,
or, in lieu thereof, LLC shall furnish HHNEC a properly executed
tax exemption certificate prior to shipment.
5.5
HHNEC shall invoice LLC upon
HHNEC’s shipment of such Wafers to LLC. Payments from LLC
shall be due […***…] from the date of HHNEC’s
invoice, LLC shall pay the Invoices by wire transfer or check,
payable in U.S. Dollars. LLC shall make any wire transfer payment
requested by HHNEC to the account designated below or as otherwise
directed by HHNEC in writing:
Name: Shanghai Hua Hong NEC
Electronics Co., Ltd.
[…***…]
Intermerdiary Bank’s Name
& Account No.:
[…***…]
ARTICLE 6
TERMS OF DELIVERY,
PACKING
6.1
The terms of delivery are FOB
Shanghai Pudong airport as defined in Incoterms 2000.
6.2
Wafers shall be packed in accordance
with LLC’s packing instructions in accordance with Jazz or
HHNEC specifications [NPB PS-0414], and which shall be mutually
agreed by HHNEC and LLC from time to time. Prices for Wafers
include the cost of packing. Each delivery of Wafers to LLC must
include a packing list that contains at least LLC Order number, the
quantity of Wafers shipped; the Process Control Monitor (PCM) data
of the shipped Wafers (either as hard copy or
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location of web-based data); the
date of shipment and the results of any testing performed on the
Wafers pursuant to the Wafer Acceptance Criteria.
6.3
HHNEC shall be responsible for
complying with all regulations and paying for all duties relating
to the export from the Peoples Republic of China. LLC shall have
obligation to HHNEC with respect to any regulation or duty relating
to the import of Wafers. HHNEC shall be responsible for meeting all
customs requirements relating to Wafers in the Peoples Republic of
China. LLC and HHNEC shall at all times take necessary steps to
expedite all shipments of Wafers through customs.
6.4
HHNEC shall be responsible for
meeting all import and export controls relating to Wafers both in
the Peoples Republic of China and the United States of America. LLC
shall provide reasonable assistance in meeting import and export
control requirements. Prices for Wafers include the cost of export
control compliance.
6.5
LLC will promptly notify HHNEC
concerning any visible damage to Wafers or shipping containers from
shipment. LLC agrees to reasonably assist HHNEC in asserting any
claim for such loss or damage against HHNEC’s carrier for the
loss or damaged involved.
ARTICLE 7
DELIVERY DATES
7.1
HHNEC will make best efforts to
schedule the Delivery Dates consistent with HHNEC’s
Lead-time. The Delivery Date shall be specified in LLC’s
order. HHNEC shall deliver Wafers according to such Delivery
Dates.
7.2
Unless otherwise notified by HHNEC,
all orders will be delivered complete. HHNEC will give LLC prompt
notice if it reasonably expects a delay in a Delivery Date or if
only a portion of the Wafers will be available for delivery to meet
a Delivery Date. For pa
