Exhibit 10.38
LLC WAFER SUPPLY
AGREEMENT
THIS AGREEMENT
, is made and entered into this 30
th 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
The LLC has committed to provide
JAZZ with semiconductor products utilizing manufacturing capacity
secured through HHNEC’s facility in Shanghai, Peoples
Republic of China. This Agreement provides the terms and conditions
for the supply of such products manufactured by HHNEC and supplied
from the LLC to JAZZ, including the use of the information and
know-how of Newport Fab LLC d/b/a Jazz Semiconductor (“
Jazz ”) in order to meet Jazz’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 Jazz as set forth in
any Jazz 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 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.
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.
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 as […***…], 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.
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.
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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 NEC, LLC (the
“ LLC
Agreement ”), the License
Agreements and the Supply Agreements between Jazz/Hua Hong NEC, LLC
and Jazz Semiconductor.
ARTICLE 2
PURCHASE OF WAFERS; PURCHASE
FORECASTS, ETC.
2.1
Jazz will purchase from LLC Wafers
manufactured by HHNEC in accordance with the terms of this
Agreement.
2.2.1
For the term of this Agreement, Jazz
shall provide to LLC 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 Jazz to LLC to buy a
minimum 50% of the loading plan, from Q4 2004 till the end of 2005,
and a binding commitment of LLC to supply the Wafers manufactured
by HHNEC in accordance to loading plan all wafers ordered by
Jazz.
Commencing January 1, 2006, for
each fixed 6 month period during the term of this agreement the LLC
commitment of supply of the Wafers to Jazz shall be based on the
average loading of the prior three months Such loading plan shall
constitute a binding commitment of Jazz to LLC to buy a minimum 50%
of the loading plan and a binding commitment of HHNEC to
manufacture in accordance to loading plan all wafers ordered by
Jazz. Jazz may inform LLC of its requirements for
additional loading above the loading plan, and provided Jazz
commits to purchase […***…] of such additional loading,
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
Jazz shall place its purchase order
for Wafers with LLC in accordance with the Lead-time.
2.4
Jazz 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 Jazz to purchase any quantity of Wafers from
LLC.
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ARTICLE 3
ORDERS
3.1
Jazz shall place orders for the
Wafers by mail or by facsimile to the LLC 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. LLC shall, within […***…]
after receipt of such orders, send Jazz an acknowledgement of such
orders. […***…].
3.2
The terms of this Agreement shall
supersede the terms of any Jazz purchase order and/or LLC’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
Jazz hereby agrees that LLC shall
outsource the manufacture of Wafers to HHNEC in accordance with the
HHNEC Wafer Supply Agreement entered into by and between LLC and
HHNEC for the purpose of supply of Wafers by LLC to
Jazz.
ARTICLE 5
PRICES AND PAYMENT
5.1
Prices for Jazz’s purchases of
Wafers, are provided in Exhibit A, and LLC guarantees that
wafer prices shall be […***…].
5.2
Jazz and LLC shall review wafer
pricing annually and adjust pricing downward consistent with market
price decline but in no event more than […***…]
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.
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Any such tax(es) shall be separately
itemized on the LLC’s invoice(s) and paid by Jazz, or, in
lieu thereof, Jazz shall furnish LLC a properly executed tax
exemption certificate prior to shipment.
5.5
The LLC shall invoice Jazz upon
HHNEC’s shipment of such Wafers to LLC. Payments to the LLC
shall be due […***…] from the date of LLC’s
invoice, Jazz shall pay the Invoices by wire transfer or check,
payable in U.S. Dollars. Jazz shall make any wire transfer payment
requested by LLC to the account designated below or as otherwise
directed by LLC in writing:
Bank Name and 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 Jazz’s packing instructions in accordance with Jazz or
LLC specifications [NPB PS-0414], and which shall be mutually
agreed by LLC and Jazz from time to time. Prices for Wafers include
the cost of packing. Each delivery of Wafers to Jazz must include a
packing list that contains at least Jazz Order number, the quantity
of Wafers shipped; the Process Control Monitor (PCM) data of the
shipped Wafers (either as hard copy or 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
Prices for Wafers include the cost
of export control compliance.
6.5
Jazz will promptly notify LLC
concerning any visible damage to Wafers or shipping containers from
shipment. Jazz agrees to reasonably assist LLC 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
LLC will make best efforts to
schedule the Delivery Dates consistent with LLC’s
Lead-time. The Delivery Date shall be specified in Jazz’s
order. The LLC shall deliver Wafers according to such Delivery
Dates.
7.2
Unless otherwise notified by Jazz,
all orders will be delivered complete. LLC will give Jazz 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 partial shipments, LLC will deliver the
available Wafers unless directed by Jazz to reschedule a
delivery.
7.3
If LLC cannot deliver the Wafers in
accordance with the Delivery Dates due to LLC’s fault, then
LLC shall, as soon as LLC becomes aware of the delay,
inform Jazz thereof and LLC shall propose a new date for
delivery (the “ New Date ”‘) using
LLC commercially reasonable best effort to expedite the delivery
and mitigate any delay caused by such default. In the event the New
Date is unacceptable to Jazz, Jazz shall none the less grant LLC
[…***…] of grace period. In the event LLC fail to
deliver the Wafers within such grace period, LLC acknowledges that
there will be reasonable charge based on the delay
period:
-
[…***…]
5
-
[…***…]
-
[…***…]
-
[…***…]
7.4
LLC shall provide WIP data to Jazz
via electronic file extracts
7.5
Jazz and LLC will collaborate and
establish cycle time and delivery performance metrics.
7.6
Within […***…] after the
mass production of HHNEC starts, LLC shall prepare and submit to
Jazz a plan to reduce Leadtime. LLC shall review the Leadtime
improvement plan in each quarterly business review meeting to
reasonably reduce cycle time of manufacturing.
7.7
LLC shall notify Jazz in writing at
least […***…] in advance of end of life on any product
or process technology to allow Jazz to meet Jazz’s
requirement for such continuously loading product.
ARTICLE 8
INSPECTIONS, QUALITY REQUIREMENTS
AND ACCEPTANCE
8.1
Wafers furnished hereunder shall be
inspected and/or tested by LLC prior to shipment for conformance
with the Wafer Acceptance Criteria. No Wafers shall be supplied by
LLC that fail to meet the Wafer Acceptance Criteria.
8.2
Jazz, at its option,
may inspect and/or test Wafers after receipt for conformance
with the Wafer Acceptance Criteria.
8.3
Jazz shall accept or reject the
Wafers in each shipment within […***…] of its receipt
of Wafers.
8.4
LLC shall be responsible for meeting
Jazz quality specification and any extended requirements as
may be mutually agreed between the parties.
8.5
LLC shall establish internal quality
and reliability requirements to meet or exceed Jazz’s quality
and reliability specification.
8.6
LLC shall maintain process monitor
data for each device for […***…].
8.7
LLC shall demonstrate to Jazz that
there is a traceability system defining unique lot and wafer number
markings on each wafer. LLC must maintain the traceability records
for […***…].
ARTICLE 9
WAFER WARRANTY AND
RETURNS
9.1
LLC warrants that all Wafers
furnished under this Agreement will be free from defects in
material and workmanship and in conformity with the Wafer
Acceptance Criteria. Prior to shipment to Jazz, in the event that
LLC discovers that any of the Wafers do not meet any one of the
Wafer
6
Acceptance Criteria, LLC shall as
soon as reasonably possible effect the rectification or replacement
of the Wafers. Following the delivery to Jazz, LLC will, at
Jazz’s option, credit or replace any Wafers that, in
Jazz’s discretion, do not conform to this warranty,
provided LLC is notified of the nonconforming Wafers within thirty
(30) days after Jazz becomes aware of the nonconformity. LLC shall
credit amounts paid by Jazz for any Wafers that do not
conform to this warranty ag
