Exhibit 10.162
[***] DENOTES CONFIDENTIAL
MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.
INTEL/MICRON
CONFIDENTIAL
SUPPLY AGREEMENT
This SUPPLY AGREEMENT (the
“Agreement ”), is made and entered into as of
this 6 th day of January, 2006 (the “Effective
Date” ), by and between Micron Technology, Inc., a
Delaware corporation ( “Micron” ), and IM Flash
Technologies, LLC, a Delaware limited liability company (the
“Joint Venture Company” ).
RECITALS
A.
The Joint Venture Company is engaged
in the manufacturing, assembly and test of NAND Flash Memory
Products (as defined hereinafter) for Micron.
B.
Micron and the Joint Venture Company
(each, a “Party” and collectively, the
“Parties” ) desire the Joint Venture Company to
supply Products , including Secondary
Silicon, for Micron in accordance with Micron’s
Sharing Interest upon the terms and subject to the conditions set
forth in this Agreement.
AGREEMENT
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties intending to be legally bound do
hereby agree as follows.
ARTICLE 1
DEFINITIONS; CERTAIN INTERPRETIVE MATTERS
1.1
Definitions
. In addition to the terms
defined elsewhere in this Agreement, capitalized terms used in this
Agreement shall have the respective meanings set forth in
Exhibit A .
1.2
Certain Interpretive
Matters .
(a)
Unless the context requires
otherwise, (1) all references to Sections, Articles, Exhibits,
Appendices or Schedules are to Sections, Articles, Exhibits,
Appendices or Schedules of or to this Agreement, (2) each of
the Schedules will apply only to the corresponding Section or
subsection of this Agreement, (3) each accounting term not
otherwise defined in this Agreement has the meaning commonly
applied to it in accordance with Modified GAAP, (4) words in
the singular include the plural and visa versa, (5) the term
“ including ” means “ including without
limitation ,” and (6) the terms “
herein ,” “ hereof ,” “
hereunder ” and words of similar import shall mean
references to this Agreement as a whole and not to any individual
Section or portion hereof. All references to $ or dollar amounts
will be to lawful currency of the United States of America. All
references to “ day ” or “ days
” will mean calendar days and all references to
“quarter(ly)”, “month(ly)” or
“year(ly)” will mean Fiscal Quarter, Fiscal Month or
Fiscal Year, respectively.
(b)
No provision of this Agreement will
be interpreted in favor of, or against, any of the Parties by
reason of the extent to which any such Party or its counsel
participated in the drafting
thereof or by reason of the extent
to which any such provision is inconsistent with any prior draft of
this Agreement or such provision.
ARTICLE 2
OBLIGATIONS OF THE JOINT VENTURE COMPANY;
PROCESSES AND
CONTROLS
2.1
General Obligations
. The Joint Venture Company will (1)
supply Product to Micron in accordance with the purchasing process
set forth in Article 4 hereof; (2) develop its Facilities
and operations to meet Capacity according to the Ramp Plan and the
Initial Business Plan, as may be amended thereafter, and the
Operating Plan and the obligations set forth herein, including
Sections 2.2, 2.5 and 2.9 ; (3) supply Products which meet
the Specification(s), Price, Yield, Cycle-Time, and Quality and
Reliability as agreed by the Parties; and (4) operate its
Facilities so that Product output from any one Facility matches the
other Facilities in form, fit and function, in accordance with
Section 2.14 .
2.2
Products to Supply
. The Joint Venture Company
will manufacture, assemble and test Products for Micron in
accordance with the Operating Plan and applicable Specifications,
developed in response to Micron’s Demand Forecast provided to
Joint Venture Company in accordance with Article 3
below.
2.3
Process and Design
Information .
Micron agrees to provide to the Joint Venture Company: (i) such
process technology or information as is required to be disclosed
under the Joint Development Program Agreement and the Technology
License Agreement; and (ii) design information reasonably required
to manufacture NAND Flash Memory Wafers.
2.4
Control; Processes
. The Joint Venture Company and
Micron will review Joint Venture Company’s control and
process mechanisms, including but not limited to such mechanisms
that are utilized to ensure that all parameters of the
Specification, including the Performance Criteria, are met or
exceeded in the Joint Venture Company’s manufacture of
Products by either the Joint Venture Company or its approved
subcontractor for Micron. The Parties agree to work together
in good faith to define mutually agreeable control and process
mechanisms including the following: [***].
2.5
Equipment, Systems,
Materials .
Except as provided in other Joint Venture
Documents, the Joint Venture Company shall be responsible
for procuring all manufacturing equipment, tools, automated
material handling systems therein and materials, including Prime
Wafers, which are reasonably required for the Joint Venture Company
to achieve the Ramp Plan and the Operating Plan. The Joint
Venture Company shall endeavor to manage the entire supply chain,
including equipment, materials, systems, maintenance and
subcontractors and vendors, to create efficiency and maximize the
Performance Criteria.
2.6
Production Masks
. Unless otherwise agreed with
Micron, the Joint Venture Company or its subcontractors will be
responsible to obtain, maintain, repair and replace masks used in
the production of Products. Such masks will only be used in
the production of Products for Micron. Production masks will
be repaired and replaced solely at mask operations which have been
approved by Micron, which approval shall not be unreasonably
withheld. [***].
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2.7
Designation of WIP
. [***].
2.8
Subcontractors
. The Joint Venture Company
may utilize subcontractors to perform any portion of the
manufacture, assembly and test process in making Products for
Micron, subject to all subcontractors being approved by the
Members, which approval shall not be unreasonably withheld.
The Joint Venture Company will ensure that all contracts with
subcontractors will provide the Joint Venture Company with the same
level of access and controls as set forth in the Agreement,
including Sections 2.4, 2.9, 2.10, 2.11, 2.12 and Article 5
.
2.9
Staffing . The Joint Venture Company shall
adequately staff its Facilities and ensure that its subcontractors
adequately staff their facilities to sustain and manage production
of Product for Micron, including the obligations set forth in
Section 2.1 and meeting scheduled commitments, including the
Ramp Plan, the Operating Plan and the Performance
Criteria.
2.10
Business Continuity
Plan. The Joint
Venture Company will develop a process to recover the production
process in the event of a natural disaster or any other event that
disrupts the production process or the ability of the Joint Venture
Company to meet its delivery commitments to Micron or satisfy
customer orders. If requested by Micron, Joint Venture
Company will review its Business Continuity Plan with Micron and
make changes as agreed with Micron, subject to any confidentiality
requirements.
2.11
[***] . In addition to the quarterly review and
monthly report requirements set forth in Section 3.2 and 3.3
, the Joint Venture Company will promptly notify Micron of
[***].
2.12
Traceability and Data
Retention . Micron and
the Joint Venture Company shall review the Joint Venture
Company’s process traceability system [***]. The Joint
Venture Company agrees to maintain such data for a minimum of [***] . The Joint Venture Company
will endeavor to provide Micron [***].
2.13
Additional Customer
Requirements .
Micron will inform the Joint Venture Company in writing of any
auditable supplier requirements of
Micron’s customer relating to any Facility at which
Product is manufactured, assembled or tested. The Parties
will work together in good faith to resolve such
requests.
2.14
Transfer; Equivalency of
Operations .
[***].
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ARTICLE 3
PLANNING MEETINGS AND
FORECASTS;
PERFORMANCE REVIEWS AND
REPORTS
3.1
Planning and
Forecasting .
(a)
Micron will quarterly provide the
Joint Venture Company, in a timeframe to be mutually agreed by the
Parties to meet customer expectations, with a written demand
forecast for [***] ([***]) quarters corresponding to the Joint
Venture Company’s Fiscal Quarters or as may be otherwise
agreed between the Parties. This demand will include desired
finished product breakout by design id, technology node, wafer as
finished goods or package type ( “Demand
Forecast” );
(b)
The Joint Venture Company shall
furnish Micron with a written response within [***] ([***])
Business Days indicating a response regarding capacity and what
portion of the demand that the Joint Venture Company can commit to
meet. This written response (the “Planning
Forecast” ) will include:
[***].
(c)
Based on the Planning Forecast, the
Joint Venture Company shall develop a [***] ([***]) Fiscal Quarter
proposed Product loading plan for such period ( “Proposed
Loading Plan” ). The Joint Venture Company shall provide
Micron with the Proposed Loading Plan at least [***] ([***])
Business Days prior to its review by the Manufacturing
Committee.
(d)
The Joint Venture Company will
submit the Proposed Loading Plan, Planning Forecast and other
requested information to the Manufacturing Committee for
endorsement. Once endorsed by the Manufacturing Committee,
the Proposed Loading Plan shall become part of the Operating
Plan.
3.2
Performance
Reviews and Reports . The Joint Venture
Company shall meet with Micron each quarter to discuss the
Performance Criteria and the most recent monthly
report. The monthly report will be distributed to
Micron monthly, on a date to be agreed by the Parties, and will
include the following information:
(a)
Describes [***];
(b)
Describes [***];
(c)
Describes [***];
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(d)
Describes [***].
(e)
Identifies [***].
3.3
Monthly
Review . In addition, the
Parties shall hold a monthly meeting, on a date to be agreed by the
Parties, with the primary purpose of [***].
ARTICLE 4
PURCHASE AND SALE OF
PRODUCTS
4.1
Product Quantity
. Micron shall purchase from the
Joint Venture Company a percentage, equal to Micron’s Sharing
Interest (as the same may change from time to time), of all of the
Joint Venture Company’s output of Products that meet the
Specifications. The Joint Venture Company shall produce all
Products in accordance with the Operating Plan, developed in
response to Micron’s Demand Forecast under Article 3
above. If Micron fails purchase its full Sharing
Interest of the Joint Venture Company’s output, produced in
accordance with the Operating Plan ( “ Underloading
” ), then the increased Prices associated with such
Underloading shall be isolated and charged solely to Micron, which
Micron shall remain solely responsible for paying.
Notwithstanding the foregoing, Micron may elect, but is not
obligated, to purchase Product in excess of its Sharing Interest
only by mutual agreement of the other Member.
4.2
Secondary
Silicon . Any Secondary Silicon produced by the Joint
Venture Company or its subcontractors will be provided [***] by the
Joint Venture Company to the Members in a percentage equal to
Micron’s Sharing Interest (as the same may change from time
to time). ALL SECONDARY SILICON PROVIDED HEREUNDER IS
PROVIDED “AS IS,” “WHERE IS” WITH ALL
FAULTS AND DEFECTS BASIS WITHOUT WARRANTY OF ANY KIND.
4.3
Placement of Purchase
Orders . Prior to the
commencement of every Fiscal Quarter or another time period agreed
by the Parties in conjunction with the planning cycle specified in
Article 3 , the Joint Venture Company shall place a
non-cancelable blanket purchase order in writing (via e-mail or
facsimile transmission) for the quantity of Product to be supplied
by the Joint Venture Company in the following Fiscal Quarter as
indicated in the Operating Plan (each such order, a “
Purchase Order ” ). Micron may issue
change orders to such Purchase Orders to reflect changes in the
Operating Plan, provided that such changes can be reasonably
accommodated by the Joint Venture Company without disrupting
on-going manufacturing operations. Micron may also elect to
place out-of-cycle purchase order of Product, including expedited
Probed Wafers, to the Joint Venture Company on an as-needed
basis. The terms and conditions of this Agreement supersede
the terms and conditions contained in either Party’s sales or
purchase documentation provided in connection herewith unless
expressly agreed otherwise in a writing signed by each
Party.
4.4
Shortfall . The Joint Venture Company shall
immediately notify Micron in writing of any inability to meet a
Purchase Order commitment to Micron.
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4.5
Acceptance of Purchase
Order . Each Purchase
Order that corresponds to the Operating Plan in the manner
contemplated by Section 4.3 and, and is otherwise free of
errors, shall be deemed accepted by the Joint Venture Company upon
receipt and shall be binding on the Parties, to the extent not
inconsistent with the Operating Plan.
4.6
Content of Purchase
Orders . Each Purchase
Order shall specify the following items:
(a)
Purchase Order number;
(b)
Description and part number of each
Product;
(c)
Forecasted quantity of each
different Product and the Sharing Interest portion thereof for the
calendar month;
(d)
Forecasted unit Price and total
forecasted Price for each different Product, and total forecasted
Price for all Products ordered;
(e)
Level of Probe Testing;
(f)
Marking specification and packaging
requirements;
(g)
Requested delivery date;
(h)
Place of delivery; and
(i)
Other terms (if any).
4.7
Taxes .
(a)
General. All sales, use and
other transfer taxes imposed directly on or solely as a result of
the supplying of Products and the payments therefor provided herein
shall be stated separately on the Joint Venture Company’s
invoice, collected from Micron and
shall be remitted by the Joint Venture Company to the appropriate
tax authority (“ Recoverable Taxes” ), unless
Micron provides valid proof of tax exemption prior to the effective date of the transfer of the
Products or otherwise as permitted by law prior to the time the
Joint Venture Company is required to pay such taxes to the
appropriate tax authority . When property is delivered
and/or services are provided or the benefit of services occurs
within jurisdictions in which collection and remittance of taxes by
Micron is required by law, the Joint Venture Company shall have
sole responsibility for payment of said taxes to the appropriate
tax authorities. In the event such taxes are Recoverable Taxes and
the Joint Venture Company does not collect tax from Micron or pay
such taxes to the appropriate governmental entity on a timely
basis, and is subsequently audited by any tax authority, liability
of Micron will be limited to the tax assessment for such
Recoverable Taxes, with no reimbursement for penalty or interest
charges or other amounts incurred in connection therewith.
Notwithstanding anything herein to the contrary, taxes other than
Recoverable Taxes shall not be reimbursed by Micron, and each Party
is responsible for its own respective income taxes (including
franchise and other taxes based on net income or a variation
thereof), taxes based upon gross revenues or receipts, and taxes
with respect to general overhead, including but not limited to
business and occupation taxes, and such taxes shall not be
Recoverable Taxes.
(b)
Withholding Taxes. In the
event that Micron is prohibited by law from making payments to the
Joint Venture Company unless Micron deducts or withholds taxes
therefrom and remits such taxes to the local taxing jurisdiction,
then Micron shall duly withhold and remit such taxes and
shall
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pay to the Joint Venture Company the
remaining net amount after the taxes have been withheld. Such
taxes shall not be Recoverable Taxes and Micron shall not reimburse
the Joint Venture Company for the amount of such taxes
withheld.
4.8
Invoicing; Payment
. The Joint Venture
Company shall invoice Micron on a monthly basis for the Price of
the Products provided and all overhead, interest, general and
administrative and other costs, including all start-up costs for
Facilities which shall be split between the Members based on
Sharing Interest. All amounts owed under this Agreement are
stated, calculated and shall be paid in United States
Dollars. Except as otherwise specified in this Agreement, the
Micron shall pay the Joint Venture Company for the amounts due,
owing, and duly invoiced under this Agreement within [***] ([***])
days following delivery of an invoice therefore to such place as
the Joint Venture Company may reasonably direct therein.
4.9
Payment to
Subcontractors .
The Joint Venture Company shall be responsible for and shall hold
Micron harmless for any and all payments to its vendors or
subcontractors utilized in the performance of this
Agreement.
4.10
Delivery, Title and Risk of
Loss . The Joint Venture
Company, in order to ensure timely and complete shipment of
Products to Micron, shall arrange for and pay for all shipping
charges, insurance, taxes, customs charges and any fees and duties
in connection with such shipment. The Joint Venture Company
shall hold title to and risk of loss of Products under this
Agreement, including WIP held by subcontractors, until tender to
the carrier, at which time title and risk of loss and damage to
Products shall transfer to Micron.
4.11
Packaging . All shipment packaging of the Products shall
be in conformance with the Specifications, the Micron’s
reasonable instructions, and general industry standards, and shall
be resistant to damage that may occur during transportation.
Marking on the packages shall be made by Joint Venture Company in
accordance with Micron’s reasonable instructions.
4.12
Shipment . All Products shall be prepared for
shipment in a manner that: (i) follow good commercial practice;
(ii) is acceptable to common carriers for shipment at the lowest
rate; and (iii) is adequate to ensure safe arrival. The Joint
Venture Company shall mark all containers with necessary lifting,
handling, and shipping information, Purchase Order number, date of
shipment, and the names of the Micron and applicable
customer. If no instructions are given, the Joint Venture
Company shall select the most price effective carrier, given the
time constraints known to the Joint Venture Company. At
Micron’s request, the Joint Venture will provide
drop-shipment of Products to Micron’s customers. Such
shipment service may be provided by a subcontractor to the Joint
Venture Company provided that title remains with the Joint Venture
Company and then passes to Micron upon tender to the
carrier.
4.13
Customs Clearance
. Upon Micron’s request,
the Joint Venture Company will promptly provide Micron with a
statement of origin for all Products and with applicable customs
documentation for Products wholly or partially manufactured outside
of the country of import.
ARTICLE 5
VISITATIONS, AUDITS
5.1
Visits . The Joint Venture Company will support
Micron’s reasonable requests for visits to Facilities and
meetings for the purpose of reviewing performance of production of
Products including requests for further information and assistance
in troubleshooting performance issues. Such requests
shall
7
be reasonably granted by the Joint
Venture Company so long as such visits and meetings do not unduly
interfere with the Joint Venture Company’s operations and
business affairs.
5.2
Audit . Micron representatives and key customer
representatives, upon Micron’s request, shall be allowed to
visit the Joint Venture Company’s Facilities during normal
working hours upon reasonable advanced written notice to the Joint
Venture Company for the purposes of monitoring production processes
and compliance with any requirements set forth in this Agreement
and the Specifications. Upon completion of the audit, the
Joint Venture Company and Micron will agree to an audit closure
plan, to be documented in the audit report issued by
Micron.
5.3
Financial Audit
. Micron reserves the right to
have the Joint Venture Company’s books and records related to
the Pricing hereunder inspected and audited not more than [***]
during any Fiscal Year to ensure compliance with Schedule 4.8 of
this Agreement in regards to Pricing. Such audit will be
performed by an independent third party auditor acceptable to both
Parties at Micron’s expense. Micron shall provide [***]
([***]) days advance written notice to the Joint Venture Company of
its desire to initiate an audit and the audit shall be scheduled so
that it does not adversely impact or interrupt the Joint Venture
Company’s business operations. If the audit reveals any
material discrepancies, the Joint Venture Company or Micron shall
reimburse the other, as applicable, for any material discrepancies
within [***] ([***]) days after completion of the audit. The
results of such audit shall be kept confidential by the auditor and
only the discrepancies shall be reported to the Parties, and be
limited to discrepancies identified by the audit.
Notwithstanding the foregoing, any auditor reports shall not
disclose any the Joint Venture Company pricing or terms of purchase
for any purchases of materials or equipment hereunder to Micron,
absent written agreement from the Members’ respective legal
counsel. If any audit reveals a material discrepancy, Micron
may increase the frequency of such audits to [***] for the
subsequent [***] ([***]) month period.
5.4
Subcontractor; Vendor
Visits . The Joint
Venture Company will use commercially
reasonable efforts to ensure that all contracts with vendors
and subcontractors will provide the Joint Venture Company and
Micron with the right to visit and audit rights similar to those
set forth in this Article 5 .
ARTICLE 6
WARRANTY; HAZARDOUS MATERIALS; DISCLAIMER
6.1
Product Warranty
. The Joint Venture Company makes
the following warranties regarding Products furnished hereunder,
which warranties shall survive any delivery, inspection,
acceptance, payment, or resale of the Products:
(a)
Products conform to all agreed
Specifications;
(b)
Products are free from defects in
materials or workmanship; and
(c)
The Joint Venture Company has the
necessary right, title, and interest to provide Products to the
Joint Venture Company and the Products will be free of liens and
encumbrances, not including any implied warranty of non-infringement .
6.2
Warranty Claims
. [***].
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6.3
Inspections
. Member may, upon reasonable
advance written notice, request samples of Products (including WIP)
during production for purposes of determining compliance with the
requirements and Specification(s) hereunder, provided that the
provision of such samples shall not materially impact the Joint
Venture Company’s performance to the Operating Plan or its
ability to meet delivery requirements under any accepted Purchase
Order. Any samples provided hereunder shall be: (i) limited
in quantity to the amount reasonably necessary for the purposes
hereunder; (ii) included in the pricing; and (iii) included in any
performance requirements, if any. The Joint Venture
Comp
