\nARTICLE 18 GENERAL PROVISIONS…………………………………………… 37<\/p>\n 18.1 Severability………………………………………………… 37
\n 18.2 Neutral Interpretation; Waiver of Conflict……………………… 37
\n 18.3 Notices…………………………………………………….. 37
\n 18.4 Time of the Essence………………………………………….. 37
\n 18.5 Governing Law……………………………………………….. 37
\n 18.6 Entire Agreement…………………………………………….. 37
\n 18.7 Waiver; Amendment……………………………………………. 37
\n 18.8 Cooperation…………………………………………………. 38
\n 18.9 Counterparts………………………………………………… 38
\n 18.10 Exhibits and Schedules……………………………………….. 38
\n 18.11 Attorneys’ Fees……………………………………………… 38
\n 18.12 Date of Performance………………………………………….. 38
\n 18.13 Survival……………………………………………………. 38
\n 18.14 Assignment; Parties Bound…………………………………….. 38
\n 18.15 Third-Party Beneficiaries…………………………………….. 39
\n 18.16 Governing Language of Agreement……………………………….. 39
\n 18.17 Consent to Jurisdiction and Service of Process………………….. 39
\n 18.18 Authorized Representatives……………………………………. 39
\n 18.19 Relationship of the Parties…………………………………… 39
\n 18.20 Manufacturing Agreement………………………………………. 40<\/p>\n
<\/c><\/c><\/caption>\n<\/table>\n
iv
\n PURCHASE AGREEMENT<\/p>\n
6
\n LIST OF EXHIBITS<\/p>\n
Exhibit “A” — Pricing Schedule<\/p>\n
Exhibit “B” — Product Qualification Plan<\/p>\n
Exhibit “C” — Quality and Reliability Specifications<\/p>\n
Exhibit “D” — Wafer Equivalents<\/p>\n
Exhibit “E” — Production Ramp-Up Plan<\/p>\n
Exhibit “F” — Buyer’s Purchase Forecast<\/p>\n
Exhibit “G” — Design Rule and Parametric Information<\/p>\n
Exhibit “H” — Inspection and Testing Methods<\/p>\n
Exhibit “I” — Addresses for Notices<\/p>\n
Exhibit “J” — Form of Confidentiality Agreement<\/p>\n
Exhibit “K” — Method for Apportioning the Unused Minimum Purchase
\n Allocation<\/p>\n
Exhibit “L” — Form of Confidentiality Agreement Between a Buyer and Its
\n Customer<\/p>\n
Exhibit “M” — Form of Indemnity<\/p>\n
v
\n PURCHASE AGREEMENT<\/p>\n
7
\n PURCHASE AGREEMENT<\/p>\n
This Purchase Agreement (“Agreement”) is entered into as of the
\nEffective Date, by and among Taiwan Semiconductor Manufacturing Co., Ltd.,
\nincorporated in Taiwan, Republic of China, as seller hereunder (“TSMC”), and
\nAnalog Devices, Inc. (“ADI”), incorporated in Massachusetts; Altera Corporation
\n(“Altera”), incorporated in California; and Integrated Silicon Solutions, Inc.
\n(“ISSI”), incorporated in Delaware; as buyers hereunder (each of whom is
\nindividually referred to as a “Buyer,” and two or more of whom are collectively
\nreferred to as “Buyers”). TSMC, ADI, Altera and ISSI each are individually
\nsometimes referred to as a “Party”, and two or more of them are collectively
\nsometimes referred to as “Parties”.<\/p>\n
RECITALS:<\/p>\n
This Agreement is made with reference to the following facts and
\ncircumstances:<\/p>\n
A. Each capitalized term used herein (i) if defined herein, has the
\nmeaning specified in these Recitals, in Article 1 below, or elsewhere
\nparenthetically herein or (ii) if not defined herein, has the meaning specified
\n(A) in the instrument or document that is referenced where the term is
\nintroduced herein or (B) in the LLC Agreement, if no instrument or document is
\nso referenced.<\/p>\n
B. TSMC is in the business of (i) manufacturing integrated circuits to
\nits customers’ specifications; and (ii) selling its entire output to customers.<\/p>\n
C. Each Buyer has been, and currently is, a customer of TSMC, and TSMC
\nhas made, and currently is making, integrated circuits to each Buyer’s
\nspecifications at TSMC’s existing wafer-fabrication plants.<\/p>\n
D. In order to increase its output, TSMC has expanded its manufacturing
\ncapacity by subcontracting with its Affiliate, TSMC Development, Inc., a
\nDelaware corporation (“TSMC Development”), to have integrated circuits made for
\nTSMC pursuant to that certain Manufacturing Agreement dated as of February 16,
\n1996 (the “Manufacturing Agreement”).<\/p>\n
E. Under the Manufacturing Agreement, (i) TSMC Development has agreed
\nto construct, or cause the construction of, a semiconductor wafer-fabrication
\nplant and related improvements in Camas, Washington (the “Foundry”) for the
\npurpose of manufacturing integrated circuits; (ii) TSMC Development has agreed
\nto offer the entire Calculated Installed Capacity of the Foundry for purchase by
\nTSMC for a three (3) year period (as such period may be extended pursuant to
\nSection 2.2); and (iii) TSMC has agreed to purchase a minimum of eighty-five
\npercent (85%) of such Calculated Installed Capacity for said period, with the
\noptional ability to purchase up to one hundred percent (100%) of the Foundry’s
\nCalculated Installed Capacity.<\/p>\n
F. Each Buyer desires to purchase a portion of its TSMC-supplied
\nrequirements for integrated circuits from the Foundry’s Calculated Installed
\nCapacity. Accordingly, each of the Buyers <\/p>\n
PURCHASE AGREEMENT<\/p>\n
8
\ndesires to secure for itself a minimum and maximum percentage of Calculated
\nInstalled Capacity of the Foundry.<\/p>\n
G. TSMC is willing to sell, and each Buyer is willing to purchase, a
\npercentage of the Foundry’s Calculated Installed Capacity upon and subject to
\nthe terms and conditions set forth in this Agreement.<\/p>\n
H. TSMC Development has entered into that certain Limited Liability
\nCompany Agreement dated as of even date herewith (the “LLC Agreement”), with
\nADI, Altera, ISSI, and each of the other persons or entities identified on the
\nsignature page of the LLC Agreement as a third party investor, for the purpose
\nof forming WaferTech, LLC, a Delaware limited liability company, which will
\nconstruct, own and operate the Foundry. In connection with the formation of
\nWaferTech, LLC, TSMC Development has assigned its rights and duties under the
\nManufacturing Agreement to WaferTech, LLC by written instrument dated as of even
\ndate herewith.<\/p>\n
I. The Parties intend that this Agreement shall be operative so long
\nas the Manufacturing Agreement is in effect, and that this Agreement shall
\nterminate upon termination of the Manufacturing Agreement.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing Recitals and the
\nterms, covenants and conditions contained herein, and for other good and
\nvaluable consideration, the receipt and sufficiency of which are hereby
\nacknowledged, the Parties agree as follows:<\/p>\n
ARTICLE 1
\n DEFINITIONS AND RULES OF INTERPRETATION<\/p>\n
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
\nAgreement, the following words and expressions shall have the meaning set forth
\nbelow.<\/p>\n
1.1.1 “AAA” means the American Arbitration Association.<\/p>\n
1.1.2 “AFFILIATE” of a Party means any corporation, limited
\nliability company, partnership or other business enterprise:<\/p>\n
(a) Which owns or controls, directly or
\n indirectly, fifty percent (50%) or more of the voting rights
\n with respect to the election of directors or managers, or
\n which has practical control directly or indirectly, of the
\n Party;<\/p>\n
(b) Of which fifty percent (50%) or more of
\n the voting rights with respect to the election of directors or
\n managers is owned or controlled, directly or indirectly, by,
\n or which is under the practical control directly or indirectly
\n of, the Party; or<\/p>\n
(c) Of which fifty percent (50%) or more of
\n the total voting rights with respect to the election of
\n directors or managers is owned or controlled, directly or
\n indirectly, by, or which is under the practical control
\n directly or indirectly of, any <\/p>\n
2
\n PURCHASE AGREEMENT<\/p>\n
9<\/p>\n
corporation, limited liability company, partnership or other
\n business enterprise described by subsections (a) or (b) above.<\/p>\n
Any corporation, limited liability company, partnership or other business
\nenterprise which would at any time be an Affiliate of a Party by reason of the
\nforegoing, shall be considered an Affiliate for purposes hereof only for so long
\nas the foregoing conditions are met. For purposes hereof, no Party shall be
\nconsidered an Affiliate of any other Party.<\/p>\n
1.1.3 (a) “BASIC PURCHASE SHARE” of a Buyer at a given time
\nmeans the Buyer’s “Adjusted Percentage Interest” expressed as a decimal fraction
\n(between zero and one inclusive).<\/p>\n
(b) For purposes of paragraph (a), if no Percentage Interest
\nis held by any Person as a result of a grant under the Company’s Executive
\nIncentive Plan, then the “Adjusted Percentage Interest” of a Buyer at a given
\ntime means:<\/p>\n
(i) the Buyer’s Percentage Interest in effect pursuant
\n to the LLC Agreement at such time;<\/p>\n
increased by<\/p>\n
(ii) any prior reduction in the Buyer’s Percentage
\n Interest attributable to operation of (A) the penultimate sentence of
\n Section 3.3.1.1 to the extent that (I) the Buyer has failed to
\n contribute that part of the Missing Capital that is not contributed by
\n any other Person and such failure reduces the capital contribution the
\n Buyer would otherwise have made and the total capital contributions
\n that the parties to the LLC Agreement would otherwise have made or (II)
\n any part of the Missing Capital is contributed by a member of the LLC
\n that is not an existing Party and does not become a Party at the time
\n of the contribution, (B) clause (i) of Section 3.3.1.4 of the LLC
\n Agreement, (C) Section 3.3.2.1 of the LLC Agreement, where the Buyer
\n failed to make an Additional Capital Contribution and such failure was
\n not a Dilution Event, (D) the last sentence of Section 3.3.2.2 of the
\n LLC Agreement, (E) Section 3.5.4 of the LLC Agreement, where the Buyer
\n failed to guarantee the Company’s debt and such failure was not a
\n Dilution Event, or (F) clause (i) of Section 10.5 of the LLC Agreement;<\/p>\n
and reduced by<\/p>\n
(iii) any prior increase in the Buyer’s Percentage
\n Interest attributable to operation of (A) the penultimate sentence of
\n Section 3.3.1.1 to the extent that (I) another party to the LLC
\n Agreement has failed to contribute that part of the Missing Capital
\n that is not contributed by any other Person and such failure reduces
\n the total capital contributions that the parties to the LLC Agreement
\n would otherwise have made or (II) any part of the Missing Capital is
\n contributed by a member of the LLC that is not an existing Party and
\n does not become a Party at the time of the contribution, (B) clause (i)
\n of Section 3.3.1.4 of the LLC Agreement, (C) Section 3.3.2.1 of the LLC
\n Agreement, where another party to the LLC Agreement failed to make an
\n Additional Capital Contribution and such failure was not a Dilution
\n Event, (D) the last sentence of Section 3.3.2.2 of the LLC Agreement,
\n (E) Section 3.5.4 of the LLC Agreement, where another party to the LLC
\n Agreement failed to guarantee the Company’s debt and such failure was
\n not a Dilution Event, or (F) clause (i) of Section 10.5 of the LLC
\n Agreement.<\/p>\n
3
\n PURCHASE AGREEMENT<\/p>\n
10
\n (c) For purposes of paragraph (a), if any Percentage Interest
\nis held by a Person as a result of a grant under the Company’s Executive
\nIncentive Plan, then the “Adjusted Percentage Interest” of a Buyer at a given
\ntime means the quotient of (i) the quantity described as the “Adjusted
\nPercentage Interest” in paragraph (b) divided by (ii) (A) one minus (B) the
\ntotal Percentage Interests held by all Persons as a result of grants under the
\nCompany’s Executive Incentive Plan.<\/p>\n
(d) On the Effective Date, the Basic Purchase Share for
\nAltera is 0.18; for ADI, 0.18; and for ISSI, 0.04.<\/p>\n
1.1.4 “BUSINESS DAY” means a day, other than Saturday or
\nSunday, on which banking institutions are open for business in Seattle,
\nWashington and San Jose, California.<\/p>\n
1.1.5 “CALCULATED INSTALLED CAPACITY” means the physical
\nproduction capacity of the Foundry from time to time based on the installed
\ncapital equipment which is actually in service, as determined in the reasonable,
\ngood faith judgment of the Company’s industrial engineers. The Foundry’s
\nproduction capacity at any time shall take into account production of Risk
\nWafers, Test Wafers, and Proven Products. The determination of Calculated
\nInstalled Capacity may be adjusted from time to time based on the skills,
\ntraining and other organizational abilities of the Company. Since the number of
\nWafers that can be produced at the Foundry depends on the Wafer Specifications,
\nthe Calculated Installed Capacity shall be calibrated in “Wafer Equivalents.”<\/p>\n
1.1.6 “COMPANY” means WaferTech, LLC.<\/p>\n
1.1.7 “CLAIM” means a claim, demand, cause of action, loss,
\ndamage, liability, fine, penalty, cost or expense (including reasonable
\nattorneys’ fees and litigation costs).<\/p>\n
1.1.8 “COMMENCEMENT OF PRODUCTION” means the date upon which
\nthe Foundry is deemed to have commenced manufacturing operations, which date
\nshall be the date, as certified in writing by TSMC to the Buyers, that TSMC
\ndetermines, in the exercise of its reasonable judgment, that one or more
\nProducts have attained the status of a Proven Product.<\/p>\n
1.1.9 “COMMENCEMENT OF PURCHASE RIGHTS” means the later of (a)
\nthe Commencement of Production or (b) the date on which the Company achieves the
\ncapability of producing Products at an aggregate yield rate of *** Wafer
\nEquivalents per month for a period of thirty (30) consecutive days, as
\ndetermined by TSMC in the exercise of its reasonable judgment, or if there is an
\nobjection from one or more Buyers, as such date is fixed by the Company’s board
\nof directors.<\/p>\n
1.1.10 “DESIGN RULES” means the design rules and parametric
\ninformation for a particular Process.<\/p>\n
1.1.11 “DEVICES” means good dies of a Buyer’s integrated
\ncircuits that are topologically identical (or similar) to those manufactured by
\nor for a Buyer.<\/p>\n
1.1.12 “EFFECTIVE DATE” means June 25, 1996.<\/p>\n
1.1.13 “EVENT OF DEFAULT” has the meaning given in Section
\n14.1.<\/p>\n
4
\n PURCHASE AGREEMENT<\/p>\n
*** Confidential treatment requested pursuant to a request for
\nconfidential treatment filed with the Commission by Altera Corporation on
\nAugust 14, 1996. The omitted portions have been filed separately with the
\nCommission. <\/p>\n
11
\n 1.1.14 “FORCE MAJEURE” means any one or more of the following
\nto the extent outside of the reasonable control of a Party: acts of war declared
\nor undeclared, nationalization, expropriation, civil unrest or other public
\ndisturbance, fire, storm, flood, typhoon, tidal wave, hurricane, cyclone or
\nother severe weather conditions, earthquake, or other Acts of God, legal
\nrestraints, governmental or like interference, judicial action, accidental
\ndamage to equipment, inability of the Foundry to deliver Proven Products to TSMC
\nunder the Manufacturing Agreement due to a Force Majeure event defined in the
\nManufacturing Agreement, as well as any other cause outside the reasonable
\ncontrol of a Party. “Force Majeure” also includes the failure to obtain such
\nlicense(s) and other governmental approvals as are required by United States law
\nor other applicable law for any equipment, technical information, Proprietary
\nInformation, Intellectual Property Rights, Processes, or Products to be provided
\npursuant to the terms of this Agreement.<\/p>\n
1.1.15 “INTELLECTUAL PROPERTY RIGHTS” means (a) all patent
\nrights and all right, title and interest in and to all letters patent and
\napplications for letters patent, and all other government-issued or -granted
\nindicia of invention ownership, including any reissue, division, term
\nextensions, continuation or continuation-in-part applications; (b) all
\ncopyrights and all other literary property and author rights, and all right,
\ntitle and interest in and to all copyrights, copyright registrations,
\ncertificates of copyrights and copyrighted interests; (c) all trademarks, trade
\nnames and service marks, and all rights, title and interest in and to all
\napplications, certifications and registrations therefor; (d) all mask work
\nrights, mask work applications, and mask work registrations; (e) all rights,
\ntitle and interest in and to all trade secrets and trade secret rights; and (f)
\nall licenses or license rights with respect to the foregoing.<\/p>\n
1.1.16 “MAXIMUM PURCHASE SHARE” of a Buyer at a given time
\nmeans, the product of (i) 1.5 times (ii) the Buyer’s Basic Purchase Share at
\nsuch time. On the Effective Date, ADI’s Maximum Purchase Share is 0.27, Altera’s
\nMaximum Purchase Share is 0.27, and ISSI’s Maximum Purchase Share is 0.06.<\/p>\n
1.1.17 “MEDIATION” has the meaning given in section 17.2.<\/p>\n
1.1.18 “MINIMUM PURCHASE SHARE” of a Buyer at a given time
\nmeans the product of (i) 0.85 times (ii) the Buyer’s Basic Purchase Share at
\nsuch time. On the Effective Date, ADI’s Minimum Purchase Share is 0.153,
\nAltera’s Minimum Purchase Share is 0.153, and ISSI’s Minimum Purchase Share is
\n0.034.<\/p>\n
1.1.19 “MONTH” means (a) a calendar month that lies entirely
\nwithin the Purchase Period, or (b) in the case of a calendar month that lies
\npartially within the Purchase Period, the part of that month that so lies.<\/p>\n
1.1.20 “OBLIGATION PERIOD” means, with respect to each Buyer,
\nthe period (a) commencing on either (i) the Commencement of Purchase Rights, or,
\n(ii) if later, the date on which the Foundry first achieves Process
\nQualification for a Process and Production Qualification for a Product of use to
\nthe Buyer, provided the Buyer designates a Process for Process Qualification and
\na Product for Production Qualification on or before Commencement of Production,
\nsuch Product to be substantially the same as one already being purchased by the
\nBuyer from another foundry of TSMC or of an Affiliate of TSMC at the time of
\ndesignation, and (b) ending on the termination or expiration hereof.<\/p>\n
5
\n PURCHASE AGREEMENT<\/p>\n
12<\/p>\n
1.1.21 “PERCENTAGE INTEREST” has the meaning given in
\nSubsection 1.1.51 of the LLC Agreement.<\/p>\n
1.1.22 “PERSON” means a natural person, partnership (whether
\ngeneral or limited), limited liability company, trust, estate, association,
\ncorporation, custodian, nominee or any other individual or entity in its own or
\nany representative capacity, in each case whether domestic or foreign.<\/p>\n
1.1.23 “PRICING SCHEDULE” means the prices at which TSMC shall
\nsell Proven Products, Test Wafers, and Risk Wafers to Buyers in accordance
\nherewith. The initial Pricing Schedule will be established in accordance with
\nSubsection 6.2.3(a) and shall be updated as provided in Subsections 6.2.3(b) and
\n6.2.3(c). Each such Pricing Schedule will be deemed to be attached hereto as
\nExhibit “A”.<\/p>\n
1.1.24 “PROCESS” means the process used to manufacture
\nProducts, or have Products manufactured, which may either be a Buyer’s process,
\nTSMC’s process, or the Company’s process, including those processes that are
\ndisclosed to the Company under (a) the Technology License and Assistance
\nAgreement, dated February 20, 1996, originally entered into between TSMC
\nDevelopment and TSMC Technology, Inc. and assigned by TSMC Development to the
\nCompany pursuant to the Assignment and Assumption dated as of the date hereof
\nand (b) the Advanced Process License Agreement, dated April 10, 1996, originally
\nentered into between TSMC Development and TSMC International Investment Ltd. and
\nassigned by TSMC Development to the Company pursuant to the Assignment and
\nAssumption.<\/p>\n
1.1.25 “PROCESS QUALIFICATION” means the process flow, Design
\nRules and SPICE models established by TSMC or the Company (as the case may be)
\nwhich, in the reasonable judgment of TSMC or the Company define a Process that
\nwill achieve a level of quality, consistency and reliability necessary to mass
\nproduce Products at Wafer yields acceptable to TSMC and the Company.<\/p>\n
1.1.26 “PRODUCT QUALIFICATION PLAN” is that certain plan for
\nproducing a Product with a Buyer’s mask sets using a Qualified Process, which
\nwill be agreed to by TSMC and the Buyer who decides to order the Product in
\nquestion, acting in conjunction with the Company, reduced to writing and signed
\nby TSMC, the ordering Buyer and the Company, and shall be deemed to be attached
\nhereto as Exhibit “B”.<\/p>\n
1.1.27 “PRODUCTION QUALIFICATION” has the meaning given in
\nSubsection 4.2.4.<\/p>\n
1.1.28 “PRODUCTION RAMP-UP PLAN” means that certain ramp-up
\nschedule prepared by TSMC in conjunction with the Company, which delineates the
\nprojected production of the Foundry expressed in Wafer Equivalents by Month and
\ncalendar year within the schedule. The initial Production Ramp-up Plan is
\nattached hereto as Exhibit “E”. In March and September of each calendar year
\nduring the Purchase Period (or more frequently at the option of TSMC), TSMC
\nshall issue to Buyers a projection, consistent with the Business Plan of the
\nCalculated Installed Capacity of the Foundry for each Month of the next six-
\n(6-) Month period from July to December (in the case of a projection issued in
\nMarch) or from January to June (in the case of a projection issued in
\nSeptember). With the exception of the Calculated Installed Capacity calculation,
\nthe ramp-up figures contained in the Production Ramp-Up Plan, expressed in Wafer
\nEquivalents per Month, shall not vary from the ramp-up plan set forth in the
\nBusiness Plan (as such term is defined in Subsection 1.1.11 of the LLC<\/p>\n
6
\n PURCHASE AGREEMENT<\/p>\n
13
\nAgreement), as the Business Plan may be amended from time to time in accordance
\nwith the LLC Agreement.<\/p>\n
1.1.29 “PRODUCTS” means Devices, Wafers and Units, as the case
\nmay be.<\/p>\n
1.1.30 “PROPRIETARY INFORMATION” means any information that is
\ncontrolled by a Party and is identified as proprietary and confidential and that
\nis disclosed by one Party to another under this Agreement. Written Proprietary
\nInformation shall be clearly marked or labeled “PROPRIETARY” or “CONFIDENTIAL.”
\nAll oral disclosures of Proprietary Information shall be identified as such
\nprior to disclosure and confirmed, in writing, by the disclosing Party within
\nthirty (30) days of the oral disclosure.<\/p>\n
1.1.31 “PROVEN PRODUCT” means a Product manufactured using a
\nQualified Process that has verified functionality and yield and otherwise meets,
\nand continues to meet, the Product Qualification Plan as demonstrated in one or
\nmore Qual Lot Runs.<\/p>\n
1.1.32 “PURCHASE ORDER” means an order or other release
\ndocument issued by a Buyer to TSMC in accordance herewith for the purpose of
\npurchasing Proven Products, Risk Wafers or Test Wafers.<\/p>\n
1.1.33 “PURCHASE PERIOD” means that period of time beginning
\nwith the Commencement of Purchase Rights and ending with the termination or
\nexpiration of this Agreement.<\/p>\n
1.1.34 “QUAL LOT RUN” means manufacture of one or more Wafer
\nlots using a Qualified Process to verify a Buyer’s mask sets.<\/p>\n
1.1.35 “QUALIFIED PROCESS” means a Process that has achieved
\nProcess Qualification in the reasonable judgment of TSMC.<\/p>\n
1.1.36 “QUALITY AND RELIABILITY SPECIFICATIONS” means the
\nquality and reliability specifications, as well as other standards or
\nrequirements, that the Parties deem necessary, as agreed to by TSMC and those
\nBuyers who intend to order a Proven Product. Once the Quality and Reliability
\nSpecifications have been agreed to with respect to each Proven Product, they
\nshall be reduced to writing and signed by TSMC and such Buyers, and shall
\nconstitute the acceptance standards to be used by a Buyer for Proven Products,
\nand shall be deemed to be attached hereto as Exhibit “C”.<\/p>\n
1.1.37 “QUARTER” means (a) a calendar quarter that lies
\nentirely within the Purchase Period, or (b) in the case of a calendar quarter
\nthat lies partially within the Purchase Period, the part of that quarter that so
\nlies.<\/p>\n
1.1.38 “RISK WAFER” means a Wafer containing a non-Proven
\nProduct and which has been run on either a Qualified Process or on a Process
\nthat is not-yet qualified. Except as otherwise expressly provided herein with
\nrespect to manufacturing defects (including, by way of illustration but without
\nlimitation, Section 5.16), the Buyer takes full technical and financial
\nresponsibility for, and assumes all risks related to design and other defects in
\na Risk Wafer.<\/p>\n
1.1.39 “TERM” means the term of this Agreement in accordance
\nwith the provisions of Article 2 below.<\/p>\n
7
\n PURCHASE AGREEMENT<\/p>\n
14
\n 1.1.40 “TEST WAFER” means a Wafer that has been produced in a
\nQual Lot Run.<\/p>\n
1.1.41 “UNIT” means a Device which has been packaged and
\nmarked in accordance with the requirements provided by a Buyer and accepted by
\nTSMC and the Company.<\/p>\n
1.1.42 “WAFER ACCEPTANCE CRITERIA” have the meaning given in
\nSection 5.13.<\/p>\n
1.1.43 “WAFER” means an eight inch (8″) diameter silicon wafer
\ncontaining integrated circuits.<\/p>\n
1.1.44 “WAFER EQUIVALENT” has the meaning set forth in the
\nequivalency factor table attached hereto as Exhibit “D”.<\/p>\n
1.2 RULES OF INTERPRETATION. For the purpose of this Agreement:<\/p>\n
1.2.1 Unless the context otherwise requires, (a) “or” is not
\nexclusive (i.e., it means either or both); (b) words in the singular include the
\nplural and vice versa; (c) words in the masculine gender include the feminine
\nand neuter gender and vice versa; (d) words such as “herein,” “hereinafter,”
\n“hereto,” “hereby,” and “hereunder,” when used in this Agreement, refer to this
\nAgreement as a whole, unless the context otherwise requires; and (e) forms of
\nthe verb “include” are not limiting.<\/p>\n
1.2.2 References to Articles and Sections are to Articles and
\nSections of this Agreement unless stated otherwise. Article and Section headings
\nused in this Agreement are for convenience of reference only and shall not be
\nused in construing or interpreting this Agreement.<\/p>\n
1.2.3 References herein to any agreement, schedule or other
\ninstrument shall, unless the context otherwise requires (or the definition
\nthereof otherwise specifies), be deemed references to the same as it may from
\ntime to time be amended, modified or extended.<\/p>\n
1.2.4 Technical words and phrases not otherwise defined in
\nthis Agreement shall have the meaning generally assigned to them in the
\nsemiconductor foundry industry.<\/p>\n
ARTICLE 2
\n TERM<\/p>\n
2.1 TERM. Unless sooner terminated pursuant to Section 2.3 or other
\nearly termination provisions hereof or unless extended pursuant to Section 2.2,
\nthis Agreement shall be effective upon the Effective Date and shall continue in
\neffect through the close of business on the calendar day immediately preceding
\nthe third anniversary of the Commencement of Production.<\/p>\n
2.2 AUTOMATIC EXTENSION.<\/p>\n
2.2.1 If Calculated Installed Capacity does not equal or
\nexceed thirty thousand (30,000) Wafer Equivalents per month by December 31,
\n2000, as determined by the Company in the exercise of its reasonable judgment,
\nthen this Agreement shall be extended automatically for an additional one year
\nperiod, terminating upon the close of business on the calendar day immediately
\npreceding the fourth anniversary of the Commencement of Production.<\/p>\n
8
\n PURCHASE AGREEMENT<\/p>\n
15
\n 2.2.2 If TSMC desires to exercise its optional extension
\nrights under the Manufacturing Agreement, it shall notify the Buyers in writing
\nof this fact at least sixty (60) days prior to the date that TSMC intends to do
\nso. Each Buyer shall have thirty (30) days from the date it is deemed to have
\nreceived such notice under Section 18.3 to notify TSMC in writing whether each
\nBuyer desires to continue to purchase Proven Products, Risk Wafers and Test
\nWafers under this Agreement during the option extension period or whether each
\nBuyer declines to do so. If any one of the Buyers notifies TSMC that it declines
\nto continue purchasing Proven Products, Risk Wafers and Test Wafers under this
\nAgreement, then TSMC will not exercise the applicable extension option under the
\nManufacturing Agreement. Failure of a Buyer to respond to TSMC in writing within
\nsaid thirty (30) day period shall constitute such Buyer’s consent to continue
\npurchasing Proven Products, Risk Wafers and Test Wafers under this Agreement for
\nthe extension period in question. If all Buyers either notify TSMC that they
\ndesire to continue purchasing Proven Products, Risk Wafers and Test Wafers as
\naforesaid, or are deemed to have consented to do so, then TSMC shall exercise
\nits optional extension rights under the Manufacturing Agreement, and this
\nAgreement shall be extended for a period equal to the extended term of the
\nManufacturing Agreement. TSMC shall give Buyers written notice of TSMC’s
\nexercise of its optional extension rights under the Manufacturing Agreement
\nwithin ten (10) days following the date that it has exercised such extension
\nrights, which notice shall specify the termination date of this Agreement, as so
\nextended.<\/p>\n
2.2.3 Upon automatic extension of this Agreement under either
\nSubsection 2.2.1 or 2.2.2, all terms and conditions of this Agreement shall
\ncontinue in full force and effect.<\/p>\n
2.3 TERMINATION OF MANUFACTURING AGREEMENT. This Agreement shall
\nterminate automatically upon termination of the Manufacturing Agreement by lapse
\nof time or otherwise.<\/p>\n
ARTICLE 3
\n WAFER SUPPLY; FOUNDRY OUTPUT RIGHTS AND OBLIGATIONS<\/p>\n
3.1 FACILITIES.<\/p>\n
3.1.1 TSMC shall promptly notify Buyers in writing of the date
\nupon which the Foundry has achieved Commencement of Production.<\/p>\n
3.1.2 TSMC shall notify Buyers in writing at least sixty (60)
\ndays in advance of the date on which TSMC expects the Foundry to achieve
\nCommencement of Purchase Rights and shall keep Buyers apprised of any expected
\ndelay in such achievement.<\/p>\n
3.2 MANUFACTURING CAPABILITY. During the Purchase Period, the
\nCalculated Installed Capacity of the Foundry is anticipated to increase as shown
\nin the initial Production Ramp-Up Plan attached hereto as Exhibit “E”. TSMC
\nshall exert commercially reasonable efforts to cause the Company to ramp
\nproduction in accordance with the schedule set forth on Exhibit “E” (as Exhibit
\n“E” is updated from time to time); provided, however, there is no guarantee that
\nactual Foundry production will achieve the projected production levels or the
\nCalculated Installed Capacity set forth in the initial or any subsequent
\nProduction Ramp-Up Plans, either at the time indicated therein or at any time.<\/p>\n
3.3 PRODUCTION AVAILABILITY.<\/p>\n
9
\n PURCHASE AGREEMENT<\/p>\n
16
\n 3.3.1 During the Obligation Period applicable to each Buyer,
\nTSMC shall have an obligation to make available to each Buyer a quantity of
\nProducts ranging between its Minimum Purchase Share and its Maximum Purchase
\nShare of Calculated Installed Capacity.<\/p>\n
3.3.2 During the Obligation Period applicable to each Buyer,
\neach Buyer shall have the right to purchase Products in amounts up to its
\nMaximum Purchase Share of Calculated Installed Capacity in accordance with
\nSubsection 3.4.1, and each Buyer shall be obligated to purchase only its Minimum
\nPurchase Share of Calculated Installed Capacity in accordance with Subsection
\n3.4.2.<\/p>\n
3.3.3 In the event that TSMC cannot provide each Buyer with
\nthe quantity of Products set forth in a Buyer’s Purchase Orders accepted by TSMC
\nfor any given Quarter during the Obligation Period (a “Quarterly Order Deficit”)
\ndue to inability or failure of the Company to deliver to TSMC those Products
\nthat TSMC has ordered from the Company or due to Force Majeure, then the
\nfollowing shall apply: (a) where the Company has been unable or fails to supply
\nTSMC for reasons other than Force Majeure, TSMC shall not be deemed to be in
\ndefault hereunder so long as TSMC can make up the Quarterly Order Deficit in the
\nfollowing Quarter from Products supplied by the Company; and (b) where TSMC’s
\nfailure to fill the Buyer’s Purchase Orders is due to Force Majeure, the
\naffected Buyer shall be excused from its purchase obligations to the extent that
\nthe Buyer placed orders for Products in amounts equal to or greater than the
\nunits of Products that TSMC is able to deliver for the Quarter in question, and
\nTSMC shall only invoice the Buyer for the actual number of units TSMC is able to
\nship for the Quarter in question. With respect to clause (a) of this Subsection
\n3.3.3, to the extent that TSMC is unable to make up the Buyer’s Quarterly Order
\nDeficit in the succeeding Quarter, TSMC shall be responsible for any damages
\nsustained by such Buyer, subject to the limitation on damages set forth in
\nArticle 10 below. With respect to clause (b) of this Subsection 3.3.3, TSMC
\nshall have no liability or obligation whatsoever to an affected Buyer where
\nTSMC’s inability to fill a Buyer’s Purchase Order is due to an event of Force
\nMajeure.<\/p>\n
3.3.4 As used in this Article 3, “Quarter” refers to a Quarter
\ncovered (or partially covered) by each Buyer’s six (6) Month forecast described
\nin Section 4.1.2 or 4.1.3.<\/p>\n
3.4 ADI’S, ALTERA’S AND ISSI’S MAXIMUM AND MINIMUM PURCHASE RIGHTS AND
\nOBLIGATIONS.<\/p>\n
3.4.1 During the Obligation Period applicable to each Buyer,
\nsuch Buyer shall have the right to purchase a maximum percentage of Calculated
\nInstalled Capacity in any given Quarter determined by multiplying such
\nCalculated Installed Capacity as shown in the applicable Production Ramp-Up Plan
\ntimes each Buyer’s respective Maximum Purchase Share; and<\/p>\n
3.4.2 During the Obligation Period applicable to each Buyer,
\nsuch Buyer shall have the obligation to purchase a minimum percentage of
\nCalculated Installed Capacity in any given Quarter determined by multiplying
\nsuch Calculated Installed Capacity as shown in the applicable Production Ramp-Up
\nPlan times each Buyer’s respective Minimum Purchase Share. In each Quarter,
\nunless the applicable Buyer and TSMC otherwise agree, a Buyer’s minimum purchase
\nobligation is subject to the following limitation: a Buyer’s minimum purchase
\nobligation in any given Month may not deviate more than *** from the
\npreceding Month’s purchase obligation, unless Month-to-Month percentage
\ndeviations shown in the applicable Production Ramp-Up Plan exceed ***, in which
\ncase a Buyer’s minimum purchase obligation in any given Month may not deviate
\nmore than the Month-to-Month percentage deviation shown in the applicable
\nProduction Ramp-Up Plan. If a Buyer requests an <\/p>\n
10
\n PURCHASE AGREEMENT<\/p>\n
*** Confidential treatment requested pursuant to a request for confidential
\ntreatment filed with the Commission by Altera Corporation on August 14, 1996.
\nThe omitted portions have been filed separately with the Commission. <\/p>\n
17
\nincrease in the Month-to-Month *** percentage deviation, TSMC agrees to
\nreasonably negotiate such increase with such Buyer in good faith, provided,
\nhowever, that each Buyer recognizes that TSMC’s flexibility in negotiating an
\nincrease in the Month-to-Month *** percentage deviation may be limited by
\ncommitments to other Buyers and TSMC’s other customers.<\/p>\n
3.4.3 A Buyer’s purchase of Risk Wafers, Test Wafers, and
\nProven Products shall be taken into account for purposes of (a) the Buyer’s
\nsatisfying its minimum purchase obligation under Subsection 3.4.2 and (b) TSMC’s
\nsatisfying the Buyer’s maximum purchase right under Subsection 3.4.1.<\/p>\n
3.5 TAKE-OR-PAY OBLIGATION FOR UNUSED MINIMUM PURCHASE SHARE.<\/p>\n
3.5.1 During each Quarter of the Obligation Period applicable
\nto each Buyer, such Buyer agrees that it shall purchase Products from TSMC in
\naccordance with Subsection 3.4.2. If in any Quarter during its Obligation Period
\na Buyer (a “Defaulting Buyer”) is unable to purchase the Products in accordance
\nwith Subsection 3.4.2 (the “Unused Minimum Purchase Allocation”), such
\nDefaulting Buyer shall give TSMC and all other Buyers written notice (a “UMPA
\nNotice”) no later than ninety (90) days before the date that the Products in
\nquestion are to begin manufacture in accordance with the Defaulting Buyer’s six
\n(6) Month rolling forecast. TSMC and the other Buyers (collectively, the
\n“Non-Defaulting Parties”) shall each have a right of first refusal to take the
\nUnused Minimum Purchase Allocation, provided they exercise such right by written
\nnotice to the Defaulting Buyer and the other Non-Defaulting Parties within
\nthirty (30) days following receipt of the Defaulting Buyer’s written notice (the
\n“RFR Deadline”). The apportionment of the Unused Minimum Purchase Allocation
\namong the Non-Defaulting Parties electing to take any part of it shall be
\ndetermined by the method set forth in Exhibit “K” hereto, unless the
\nNon-Defaulting Parties agree to another procedure at the time. If the
\nNon-Defaulting Parties exercise their rights of first refusal, then the
\nDefaulting Buyer shall be excused from any Bill-Back Charges (as defined below)
\napplicable to that portion of the Unused Minimum Purchase Allocation that the
\nNon-Defaulting Parties elect to take; subject, however, to the last sentence of
\nthis Subsection 3.5.1. If the Non-Defaulting Parties elect not to take (or fail
\ntimely to elect) any part of the Unused Minimum Purchase Allocation, then the
\nDefaulting Buyer shall have no later than sixty (60) days following delivery of
\nits UMPA Notice to identify in writing third parties ready, willing and able to
\npurchase from TSMC the unelected part of the Unused Minimum Purchase Allocation.
\nSo long as (a) TSMC approves such third parties or any other third parties
\n(collectively, “Such Third Parties”), which approval shall not be unreasonably
\nwithheld or delayed (provided, that in no event shall Such Third Parties be
\n“Prohibited Persons”, as that term is defined in the LLC Agreement), (b) Such
\nThird Parties purchase all of the unelected part of the Unused Minimum Purchase
\nAllocation within sixty (60) days after the date that the Defaulting Buyer
\nidentifies Such Third Parties to TSMC in writing, and (c) Such Third Parties pay
\nthe invoice price in full to TSMC within thirty-five (35) days after the date of
\ninvoice, then the Defaulting Buyer shall be exonerated from any Bill-Back
\nCharges applicable to the Unused Minimum Purchase Allocation. A Buyer’s
\ntake-or-pay obligation shall be measured on a Quarter- by-Quarter basis;
\naccordingly, for a Defaulting Buyer to avoid Bill-Back Charges applicable to a
\nparticular Quarter’s Unused Minimum Purchase Allocation, either the
\nNon-Defaulting Parties or Such Third Parties must have committed to purchase the
\nDefaulting Buyer’s Unused Minimum Purchase Allocation during the Quarter in
\nwhich the Defaulting Buyer is unable to purchase Products in accordance with
\nSubsection 3.4.2.<\/p>\n
3.5.2 If any part of the Unused Minimum Purchase Allocation
\n(a) is not taken by the Non-Defaulting Parties in accordance with Subsection
\n3.5.1 and (b) (i) is not sold to third parties or (ii) <\/p>\n
11
\n PURCHASE AGREEMENT<\/p>\n
*** Confidential treatment requested pursuant to a request for confidential
\ntreatment filed with the Commission by Altera Corporation on August 14, 1996.
\nThe omitted portions have been filed separately with the Commission. <\/p>\n
18
\nis not paid for by purchasing third parties in accordance with that Subsection,
\nthen the Defaulting Buyer shall compensate TSMC for such part of the Unused
\nMinimum Purchase Allocation at the full price for the Products in question, less
\nany avoided costs (the “Bill-Back Charge”). TSMC shall invoice any Bill-Back
\nCharges once each Quarter during the Purchase Period, and within 30 days
\nfollowing the end of the Purchase Period by lapse of time or otherwise. Any
\nDefaulting Buyer shall pay the Bill-Back Charge within thirty (30) days after
\nthe date of invoice (the “Payment Date”). Any Bill-Back Charge not received by
\nTSMC within thirty-five (35) days after the date of invoice shall bear interest
\nfrom the Payment Date until paid in full by the Defaulting Buyer to TSMC at the
\nannual rate equal to 5% above the prime or reference rate for commercial
\nborrowing announced by Bank of America N.T.& S.A., as such rate changes from
\ntime-to-time; provided, however, that in no event shall such interest rate
\nexceed the highest rate permissible under applicable law. For the purpose of
\ncomputing the Bill- Back Charge, the maximum Calculated Installed Capacity shall
\nnot be deemed to exceed *** Wafer Equivalents per month. The damage
\nlimitation excluding lost profits set forth in Section 10.1 shall in no way be
\ndeemed to limit or qualify the calculation of the Bill-Back Charge or a Buyer’s
\nliability therefor.<\/p>\n
3.5.3 The provisions of Sections 3.5.1 and 3.5.2 shall be
\nTSMC’s sole remedy under this Agreement for any failure by the Buyers to
\npurchase their respective minimum quantities of Calculated Installed Capacity in
\nany Quarter as set forth in Subsection 3.4.2.<\/p>\n
ARTICLE 4
\n PRODUCTION PLANNING AND QUALIFICATION<\/p>\n
4.1 FORECASTS.<\/p>\n
4.1.1 On or before April 1, 1998, Buyers shall deliver to TSMC
\ntheir initial forecasts of Buyers’ anticipated purchases of Products during the
\nfirst six (6) Months following the Commencement of Purchase Rights. The Parties
\nrecognize that these initial forecasts are provisional in nature because no
\nProcess has achieved Process Qualification. Such initial forecasts shall be
\ndeemed to be attached hereto as Exhibit “F.”<\/p>\n
4.1.2 Each Buyer shall, at the time of TSMC’s notice of
\nCommencement of Purchase Rights, provide TSMC with a six (6) Month purchase
\nforecast according to the Foundry’s projected output by Month set forth in the
\ninitial Production Ramp-Up Plan, with Product-mix shown by Process and by
\ngeometry. The first fourteen (14) weeks of such forecast shall be firm with
\nrespect to the quantity of the Proven Products to be purchased or ordered within
\nsaid period.<\/p>\n
4.1.3 Each Month during the Purchase Period, Buyers shall
\nprovide TSMC in writing with a six (6) Month rolling forecast of the respective
\nBuyers’ requirements for Products, with Product-mix shown by Process and by
\ngeometry. The first fourteen (14) weeks of such forecast shall be firm with
\nrespect to the quantity of Products to be purchased or ordered within said
\nperiod. If the Company’s standard production lead time for a particular Process
\nor Product exceeds twelve (12) weeks, the Buyers’ forecast with respect to such
\nProcess or Product shall be firm for the Company’s standard production lead time
\nplus two weeks. Unless the applicable Buyer and TSMC otherwise agree, the linear
\nrate deviation for each Buyer’s forecast for a given Month shall be *** of
\nthe preceding Month’s forecast, unless Month-to-Month percentage deviations
\nshown in the applicable Production Ramp-Up Plan exceed ***, in which case a
\nBuyer’s monthly forecast may not deviate more than the Month-to-Month percentage
\ndeviation shown in the applicable Production Ramp-Up Plan. <\/p>\n
12
\n PURCHASE AGREEMENT<\/p>\n
*** Confidential treatment requested pursuant to a request for confidential
\ntreatment filed with the Commission by Altera Corporation on August 14, 1996.
\nThe omitted portions have been filed separately with the Commission. <\/p>\n
19
\nThe foregoing linear rate deviation applicable to Buyer’s monthly forecast
\nrelates to the overall quantity of Products set forth in the forecast and not to
\nany one Process or to any specific Product. If a Buyer requests an increase in
\nthe Month-to-Month *** percentage deviation, TSMC agrees to reasonably negotiate
\nsuch increase with such Buyer in good faith, provided, however, that each Buyer
\nrecognizes that TSMC’s flexibility in negotiating an increase in the
\nMonth-to-Month *** percentage deviation may be limited by commitments to other
\nBuyers and TSMC’s other customers.<\/p>\n
4.2 PRODUCTION QUALIFICATION.<\/p>\n
4.2.1 TSMC shall advise the Buyers concerning each Process to
\nbe loaded at the Foundry for use in the manufacture of Products. TSMC then shall
\ncause the Company to engage in Process Qualification. Once TSMC has determined,
\nin its reasonable judgement, that a Process has achieved Process Qualification,
\nsuch Process shall be a Qualified Process. TSMC shall promptly notify the Buyers
\nwhen a Process becomes a Qualified Process.<\/p>\n
4.2.2 For each Product a Buyer desires to order, TSMC shall
\ncause the Company to furnish Design Rules for the applicable Process, which
\nshall be deemed attached hereto as Exhibit “G”. For each Product a Buyer desires
\nto order, TSMC and the Buyer who intends to order the Product in question (the
\n“Relevant Buyer”) shall further agree, in conjunction with the Company, to a
\nProduct Qualification Plan. Once TSMC and the Relevant Buyer have agreed, in
\nconjunction with the Company, to a Product Qualification Plan, it shall be
\nreduced to writing and signed by TSMC, the Relevant Buyer and the Company and
\nshall be deemed to be attached hereto as Exhibit “B”. TSMC and the Relevant
\nBuyer also shall agree, in conjunction with the Company, to the Quality and
\nReliability Specifications, which shall be reduced to writing and signed by
\nTSMC, the Relevant Buyer and the Company and shall be deemed to be attached
\nhereto as Exhibit “C”.<\/p>\n
4.2.3 Upon a Buyer’s request, TSMC will cause the Company to
\ndesignate a mask vendor, to whom a Buyer shall provide device database tapes and
\nto whom TSMC shall cause the Company to provide mask alignment and test
\nstructure databases, or the Buyer will provide mask sets or portions thereof.
\nBuyer shall bear all costs and expenses of producing the mask sets necessary for
\nthe manufacture of Products under this Agreement.<\/p>\n
4.2.4 Using a Buyer’s mask sets and the Design Rules, TSMC
\nshall cause the Company to perform one or more Qual Lot Runs. TSMC will provide
\neach Buyer with such amount of Test Wafers produced in such Qual Lot Runs as
\nsuch Buyer may require for its qualification at the purchase prices specified in
\nthe Pricing Schedule. Within ninety (90) days following receipt of the Test
\nWafers, each Buyer shall inform TSMC in writing of whether or not such Test
\nWafers meet the applicable Quality and Reliability Specifications, and if
\nnotification is in the affirmative, full qualification for that Product is
\ncompleted. If TSMC does not receive notification from the Buyers during the time
\nperiod specified in the preceding sentence, full qualification for that Product
\nshall be deemed accomplished. In the event that the Test Wafers do not meet the
\nQuality and Reliability Specifications, TSMC and the Relevant Buyers will work
\ntogether in good faith to achieve full qualification for that Product. The
\nsuccessful completion of the procedures outlined in Subsections 4.2.1 through
\n4.2.4, inclusive, is herein referred to as “Production Qualification”.<\/p>\n
4.2.5 Prior to the completion of full Production Qualification
\nfor each Product, each Buyer may, by giving at least seven (7) Business Days
\nnotice to TSMC, terminate the production of any Test Wafers specified in
\nSubsection 4.2.4 or Risk Wafers, and TSMC will cause the Company to do so<\/p>\n
13
\n PURCHASE AGREEMENT<\/p>\n
*** Confidential treatment requested pursuant to a request for confidential
\ntreatment filed with the Commission by Altera Corporation on August 14, 1996.
\nThe omitted portions have been filed separately with the Commission. <\/p>\n
20
\nfollowing the completion of the Process steps at which such Test Wafers or Risk
\nWafers reside at the time TSMC receives such notice. The terminating Buyer shall
\npay TSMC for all the Test Wafers or Risk Wafers so affected, and the prices for
\nsuch Test Wafers or Risk Wafers shall be the respective purchase prices
\nspecified in the Pricing Schedule, equitably prorated based on the completed
\nstage of production.<\/p>\n
4.2.6 Once Production Qualification has been achieved for a
\nProduct, such Product is a Proven Product, and TSMC will proceed to cause the
\nCompany to produce that Proven Product pursuant to Purchase Orders issued by
\nBuyers and accepted by TSMC under Section 6.1 below.<\/p>\n
ARTICLE 5
\n OTHER AGREEMENTS RELATING TO PRODUCTION AND SUPPLY<\/p>\n
5.1 QUANTITY REQUIREMENT. Subject to the Buyers’ Maximum Purchase
\nShares, TSMC agrees to use commercially reasonable efforts to cause the Company
\nto meet all the quantity requirements of the Buyers for Products.<\/p>\n
5.2 ACCELERATE SUPPLY. It is anticipated that from time to time there
\nmay be instances where an accelerated lead and cycle time is required to serve
\nthe needs of a Buyer, and in such instances, TSMC shall, upon mutually agreed
\nupon terms and conditions, use commercially reasonable efforts to cause the
\nCompany to accelerate the schedule of production for Proven Products or Risk
\nWafers and\/or increase the manufacturing volume in order to meet that Buyer’s
\nneeds.<\/p>\n
5.3 MODIFICATIONS TO EXISTING PROCESSES OR SPECIFICATIONS. If a Buyer
\ndesires that TSMC cause the Company to make modifications to a Qualified Process
\nor to the Quality and Reliability Specifications, such Buyer shall give TSMC
\nwritten notice thereof, and within a reasonable amount of time after TSMC’s
\nreceipt of Buyer’s notice, TSMC shall confer with the Company and thereafter
\nnotify the Buyer in writing of any additional costs associated with making such
\nmodifications (including, without limitation, retooling costs), any adjustments
\nin price, production, delivery schedule, and any other terms and conditions of
\nthis Agreement that are necessary to make such modifications (collectively, the
\n“Modification Costs”). Within thirty (30) days of its receipt of TSMC’s written
\nnotification of any such Modification Costs, such Buyer shall either agree in
\nwriting to accept the obligation to pay TSMC or the Company (as the case may be)
\nany such Modification Costs or the Buyer may, in the exercise of its sole and
\nabsolute discretion, withdraw its request that such modifications be made. TSMC
\nand the Company shall not incur any Modification Costs on behalf of a Buyer
\nunless and until TSMC has received Buyer’s written agreement to pay the
\nModification Costs. In addition to the foregoing requirement, any such requested
\nmodifications must be acceptable to TSMC and the Company and further must pass
\nthe Production Qualifications procedures set forth in Section 4.2. If a
\nrequested modification is unacceptable to TSMC or the Company, or if it fails to
\npass the qualifications procedures set out in Section 4.2, then TSMC will
\ninstruct the Company to continue to manufacture the Proven Product in question
\nin accordance with the existing Qualified Process and\/or the existing Quality
\nand Reliability Specifications, in which event the notifying Buyer shall be
\nobligated to continue to purchase such Proven Product as so manufactured. Once a
\nBuyer has agreed to pay Modification Costs, such Buyer shall pay to TSMC or to
\nthe Company (as the case may be) all such Modification Costs within thirty (30)
\ndays of TSMC’s invoice therefor. If TSMC or the Company (as the case may be)
\ndoes not receive full payment of Modification Costs within thirty-five (35) days
\nafter the date of invoice, the invoice price shall bear interest from the date
\nof invoice until paid in full at the <\/p>\n
14
\n PURCHASE AGREEMENT<\/p>\n
21
\nannual rate equal to 5% above the prime or reference rate for commercial
\nborrowing announced by Bank of America N.T.& S.A., as such rate changes from
\ntime-to-time; provided, however, that in no event shall such interest rate
\nexceed the highest rate permissible under applicable law.<\/p>\n
5.4 ADDITIONS OR SUBSTITUTIONS OF PRODUCTS. If a Buyer desires that
\nTSMC cause the Company to add or substitute a similar Product type using a
\nQualified Process (i.e., one that has not been assigned a current product model
\nnumber) such Buyer shall give TSMC written notice thereof. Within a reasonable
\namount of time after TSMC’s receipt of a Buyer’s notice, TSMC shall confer with
\nthe Company and thereafter notify the Buyer in writing of any additional cost
\nassociated with adding or substituting a similar Product type (the “Additional
\nCosts”). Within thirty (30) days of its receipt of TSMC’s written notification
\nof Additional Costs, such Buyer shall either agree in writing to accept the
\nobligation to pay TSMC or the Company (as the case may be) all such Additional
\nCosts or the Buyer may, in the exercise of its sole and absolute discretion,
\nwithdraw the request for such addition or substitution. TSMC and the Company
\nshall not incur any Additional Costs on behalf of the Buyer unless and until
\nTSMC has received Buyer’s written agreement to pay the Additional Costs and TSMC
\nand the Buyer have agreed upon the purchase price for such similar Product type.
\nThereafter, TSMC shall use commercially reasonable efforts to cause the Company
\nto produce such similar Product type as requested, subject to such similar
\nProduct type achieving Production Qualification under the procedures set forth
\nin Section 4.2. Once a Buyer has agreed to pay Additional Costs, such Buyer
\nshall pay to TSMC or to the Company (as the case may be) all such Additional
\nCosts within thirty (30) days of TSMC’s invoice therefor. If TSMC or the Company
\n(as the case may be) does not receive full payment of Additional Costs within
\nthirty-five (35) days after the date of invoice, the invoice price shall bear
\ninterest from the date of invoice until paid in full at the annual rate equal to
\n5% above the prime or reference rate for commercial borrowing announced by Bank
\nof America N.T.& S.A., as such rate changes from time-to-time; provided,
\nhowever, that in no event shall such interest rate exceed the highest rate
\npermissible under applicable law.<\/p>\n
5.5 VENDOR INFORMATION. Upon Buyer’s written request, TSMC shall cause
\nthe Company to provide Buyer with (a) Process control information, including but
\nnot limited to: Process and electrical test yield results, current Process
\nspecifications, calibration schedules and logs for equipment, environmental
\nmonitor information for air, gasses and DI water, documentation or operator
\nqualification and training, documentation of traceability through the Company’s
\noperation, Process verification information, and the Company’s trouble reports
\nwith respect to Process control information; and (b) a status of
\nwork-in-process.<\/p>\n
5.6 PROCESS RECORDS. TSMC shall cause the Company to maintain, for a
\nperiod of five (5) years from the date that any Qualified Process was performed
\nto produce Proven Products, accurate records describing in detail such Qualified
\nProcess on a by-die-lot basis. TSMC shall cause the Company to give each Buyer
\nthe right, at any time during the Company’s normal business hours and upon
\nreasonable notice, to inspect and make copies of any of the Company’s Qualified
\nProcess records.<\/p>\n
5.7 TRADEMARKS. With respect to trademarks, the Parties agree as
\nfollows:<\/p>\n
5.7.1 Except as authorized in Subsection 5.7.2, TSMC shall
\nnot, at any time, in any place, or in any manner, utilize the trademarks of the
\nBuyers, nor any name or logo confusingly similar thereto, in connection with
\nTSMC’s business activities, or in the manufacture, use, sale or other
\ndisposition of Products, or in any other way whatsoever. TSMC shall exert
\ncommercially reasonable efforts to cause the Company to comply with the
\nprohibitions set forth in this Subsection 5.7.1.<\/p>\n
15
\n PURCHASE AGREEMENT<\/p>\n
22
\n 5.7.2 To the extent and only to the extent required by any
\nBuyer, such Buyer may give TSMC and the Company written authorization to
\nsymbolize or otherwise mark Proven Products with the authorizing Buyer’s
\ntrademarks or other proprietary logos.<\/p>\n
5.7.3 The Buyers shall not, at any time, in any place, or any
\nmanner, utilize the trademarks of TSMC, its Affiliates, or the Company, or any
\nname or logo confusingly similar thereto, in connection with the Buyers’
\nbusiness activities, or the use, sale or other disposition of Products, or in
\nany other way whatsoever.<\/p>\n
5.8 MASK SET PROTECTION. TSMC shall cause the Company to protect all
\nmask sets, whether transferred from a Buyer or obtained by TSMC or the Company
\nfrom a mask vendor of a Buyer, as trade secrets of each Buyer in accordance with
\nthe confidentiality provisions of (a) Article 15 hereof, and (b) any license or
\nconfidentiality agreement entered into between TSMC and a Buyer or any Affiliate
\nthereof. Any masks generated by TSMC or the Company from Buyer’s database tapes
\nshall be the property of Buyer. When any mask set is no longer usable by the
\nCompany for the purposes hereof, or upon the termination or expiration hereof,
\nTSMC shall cause the Company either to immediately return such mask set to the
\nappropriate Party, or upon such Party’s written instructions, to destroy such
\nmask set and provide such Party with written certification of such destruction.
\nThe Parties understand that mask sets, if not used for a specified period of
\ntime, will be handled in accordance with the Company’s idle mask policy then in
\neffect. TSMC agrees, upon written request of a Buyer, to cause the Company to
\ndisclose its idle mask policy to such Buyer.<\/p>\n
5.9 RIGHTS TO INSPECT AND MONITOR PRODUCTION. TSMC shall cause the
\nCompany to grant to each Buyer (a) the right to inspect and monitor production
\nat the Foundry, (b) the right to maintain one or more resident representatives
\nat the Foundry for the purpose of insuring compliance with the Quality and
\nReliability Specifications applicable to Proven Products and otherwise aiding
\nthe Buyer in exercising its rights under this Section, (c) the right to conduct
\nquality and yield audits of the Foundry, and (d) the right to perform monitoring
\ntests and to recommend disposition\/corrective action, to the same extent, and
\nsubject to the same terms and conditions, that TSMC enjoys such rights under the
\nManufacturing Agreement with the Company. At the request of a Buyer, TSMC shall
\nprovide such Buyer with a copy of those provisions of the Manufacturing
\nAgreement that confer such rights upon TSMC. Subject to a Buyer’s end customer
\nsigning a confidentiality agreement with the Company substantially in the form
\nof Exhibit “J,” TSMC shall cause the Company to grant to each Buyer’s end
\ncustomers the right to inspect the Foundry, to conduct quality audits of the
\nFoundry, and to review Design Rules at the Foundry.<\/p>\n
5.10 OBTAIN GRANT OF NON-EXCLUSIVE MANUFACTURING RIGHTS. To the extent
\nthat the proposed manufacture of any Products ordered by the Buyers hereunder
\nrequires, in the reasonable judgment of TSMC and\/or the Company, the grant of
\nnon-exclusive Intellectual Property Rights (including, by way of illustration
\nbut without limitation, a non-exclusive grant in mask work rights, copyrights,
\npatents, utility models or design rights and applications for any of the
\nforegoing) to avoid infringement resulting from manufacture or sale of such
\nProducts, the Buyers agree to obtain and grant to TSMC and\/or the Company
\nnon-exclusive rights in such Intellectual Property Rights relating to ordered
\nProducts, whether by way of non-exclusive license, sublicense, have-made rights
\nor otherwise, for the sole purpose of manufacturing such Products for sale to
\nthe respective Buyers. Any such grant of non-exclusive Intellectual Property
\nRights shall not confer the right on TSMC or the Company to grant rights to
\nothers under any of the foregoing (unless expressly provided for in the granting
\ninstrument). Notwithstanding the foregoing, a Buyer may decline to obtain a
\nlicense in such Intellectual <\/p>\n
16
\n PURCHASE AGREEMENT<\/p>\n
23
\nProperty Rights if the Buyer executes and delivers to TSMC a written
\nindemnification agreement substantially in the form of Exhibit “M” attached
\nhereto, whereby the Buyer agrees to indemnify, defend and hold TSMC and the
\nCompany harmless from any Claims of infringement or misappropriation asserted by
\nholders of such Intellectual Property Rights. TSMC will neither deliver nor
\ncause the delivery of Proven Products, Test Wafers or Risk Wafers unless and
\nuntil the Buyers have (a) obtained and granted the necessary non-exclusive
\nIntellectual Property Rights to TSMC and\/or the Company; or (b) executed and
\ndelivered to TSMC such indemnity agreement. The provisions of this Section 5.10
\nshall not apply to any Process covered by the Company’s indemnification
\nobligations assigned to Buyers under Subsection 11.1.1 below.<\/p>\n
5.11 UNIQUE PROCESSES, METHODS OR MATERIALS. If a Buyer desires that
\nTSMC cause the Company to load a Process, method or materials at the Foundry
\nthat is unique to a Buyer (i.e., one that (a) in the case of a Process, deviates
\nfrom a Qualified Process that is then in use at the Foundry, and (b) in the case
\nof a method and materials, deviates from methods and materials then in use or
\nproduction at the Foundry), such Buyer shall give TSMC written notice thereof.
\nIf TSMC agrees to cause the Company to load a unique Process, method or
\nmaterials at the Foundry, then within a reasonable amount of time after TSMC’s
\nreceipt of Buyer’s notice, TSMC shall confer with the Company and thereafter
\nnotify the Buyer in writing of any additional costs associated with such unique
\nProcess, method or materials, including, without limitation, purchase part and
\nwork-in-process inventory, supplies, tooling, and any equipment that is specific
\nto such unique Process, method or materials (collectively, “Unique Costs”).
\nWithin thirty (30) days of its receipt of TSMC’s written notification of Unique
\nCosts, such Buyer shall either agree in writing to accept the obligation to pay
\nTSMC or the Company (as the case may be) all such Unique Costs or the Buyer may,
\nin the exercise of its sole and absolute discretion, withdraw the request for
\nsuch unique Process, method or materials. TSMC and the Company shall not incur
\nany Unique Costs on behalf of a Buyer unless and until TSMC has received Buyer’s
\nwritten agreement to pay such Unique Costs. Once a Buyer has agreed to pay
\nUnique Costs, such Buyer shall pay to TSMC or to the Company (as the case may
\nbe) all such Unique Costs within thirty (30) days of TSMC’s invoice therefor. If
\nTSMC or the Company (as the case may be) does not receive full payment of Unique
\nCosts within thirty-five (35) days after the date of invoice, the invoice price
\nshall bear interest from the date of invoice until paid in full at the annual
\nrate equal to 5% above the prime or reference rate for commercial borrowing
\nannounced by Bank of America N.T.& S.A., as such rate changes from time-to-time;
\nprovided, however, that in no event shall such interest rate exceed the highest
\nrate permissible under applicable law.<\/p>\n
5.12 ADJUSTMENT IN CAPACITY RIGHTS AND OBLIGATIONS. Unless otherwise
\nagreed in writing by the Parties, any adjustment in the Buyers’ Percentage
\nInterests which results in a change in their Adjusted Percentage Interests (as
\ndefined in Subsection 1.1.3), shall not become effective for purposes of the
\nBuyers’ Basic Purchase Shares until the thirteenth (13th) week after the date
\nupon which the adjustment in Percentage Interests occurs pursuant to the LLC
\nAgreement, and unless agreed otherwise by TSMC and each Buyer under a Purchase
\nOrder, no such adjustment in Percentage Interests, when so effective, shall
\noperate to cancel, amend or otherwise affect any Purchase Orders accepted by
\nTSMC prior to the date that such adjustment in Percentage Interests is so
\neffective.<\/p>\n
5.13 CERTAIN TERMS APPLICABLE TO TEST WAFERS. The provisions of Section
\n6.2 through 6.5, inclusive, and Article 7 respecting Proven Products shall be
\nequally applicable to Test Wafers. There is no product warranty under Article 9
\nfor Test Wafers unless TSMC and the applicable Buyer agree to such warranty in
\nwriting prior to shipment. If TSMC and the applicable Buyer do enter into such a
\nwritten product warranty, then Test Wafers covered by such warranty shall be
\ntreated as Proven <\/p>\n
17
\n PURCHASE AGREEMENT<\/p>\n
24
\nProducts under the provisions of Article 9. Additionally, Test Wafers covered by
\nsuch written product warranty shall be treated as Proven Products under Article
\n8. If Test Wafers are not covered by a written product warranty, then TSMC shall
\nprovide (or cause the Company to provide) the applicable Buyers with the
\nCompany’s Wafer acceptance test parameters and outgoing visual acceptance
\ncriteria (such parameters and criteria, collectively, the “Wafer Acceptance
\nCriteria”). If on delivery of Test Wafers to such Buyer, the Test Wafers fail an
\nincoming test under the Wafer Acceptance Criteria, such Test Wafers shall be
\ndeemed to be defective. Any such defective Test Wafers may be returned within
\n120 days of Buyer’s receipt thereof to TSMC in care of the Foundry, F.O.B. the
\nFoundry, and if such defective Test Wafers are indeed defective and not caused
\nby Abuse and Misuse (as defined below), then TSMC shall, at its option, either
\nrepair, replace or credit Buyer for such defective Test Wafers; and furthermore,
\nTSMC shall return any such Test Wafers repaired or replaced to the applicable
\nBuyer, transportation prepaid, and shall reimburse the Buyer for the
\ntransportation charges paid by Buyer for returning such defective Test Wafers to
\nTSMC. Any dispute regarding whether Test Wafers fail an incoming test under the
\napplicable Wafer Acceptance Criteria or whether Test Wafers have been subjected
\nto Abuse and Misuse shall be resolved in accordance with Article 17.<\/p>\n
5.14 SALES ENGINEERING SUPPORT. TSMC shall provide the Buyers with
\nsales engineering support in respect to all Purchase Orders placed hereunder in
\nthe same manner and to the same extent as TSMC provides engineering sales
\nsupport in respect to Products manufactured at TSMC’s existing
\nsemiconductor-wafer fabrication plants. The cost of such sales engineering
\nsupport is included in the prices quoted in the Pricing Schedule. TSMC, at its
\nelection, may provide such sales engineering support through any of its
\nAffiliates.<\/p>\n
5.15 SUPPLEMENTAL WAFER SUPPLY ARRANGEMENTS. Under that certain
\nTechnology License and Assistance Agreement (as that term is defined in the LLC
\nAgreement) and that certain Advanced Process License Agreement (as that term is
\ndefined in the LLC Agreement), Affiliates of TSMC have agreed to provide the
\nCompany with as-yet-to-be-developed process technologies no later than such
\nprocess technologies are reduced to practice and released into production at
\nother semiconductor-wafer fabrication plants owned by TSMC or its Affiliates. In
\nthe event that any of these as-yet-to-be-developed process technologies are in
\nfact reduced to practice and released into production at any such other
\nsemiconductor-wafer fabrication plants during the Purchase Period before being
\nloaded at the Foundry, and the Company notifies TSMC that it desires to load
\nsuch new process technologies at the Foundry, then any Buyer that intends to
\nhave Wafers manufactured at the Foundry using such new process technologies may
\nplace orders on TSMC until such new process technologies are loaded at the
\nFoundry for the purpose of having Risk Wafers or Test Wafers manufactured at
\nthose other semiconductor-wafer fabrication plants owned by TSMC or its
\nAffiliates at which such new process technologies have been loaded. For any such
\nBuyers, TSMC shall provide the Design Rules for the new process technologies.
\nThe terms and conditions of said sale of such Risk Wafers or Test Wafers
\n(including, without limitation, price, delivery, and the granting of
\nnon-exclusive Intellectual Property Rights that relate to manufacture or sale of
\nProducts produced using the new process technology), shall be documented by
\nseparate purchase agreements or wafer supply agreements which shall be
\nnegotiated in good faith by and between TSMC and those Buyers who desire to have
\nearly access to new process technologies that are intended to be loaded at the
\nFoundry. Any such separate purchase or wafer supply agreements shall contain, as
\na general proposition, terms and conditions customarily contained in TSMC’s
\nstandard purchase or wafer supply agreements.<\/p>\n
5.15.2 A Buyer’s purchase of Risk Wafers or Test Wafers
\npursuant to Subsection 5.15.1 shall be taken into account for purposes of (a)
\nthe Buyer’s satisfying its minimum <\/p>\n
18
\n PURCHASE AGREEMENT<\/p>\n
25
\npurchase obligation under Subsection 3.4.2 and (b) TSMC’s satisfying the Buyer’s
\nmaximum purchase right under Subsection 3.4.1.<\/p>\n
5.16 CERTAIN TERMS APPLICABLE TO RISK WAFERS RUN ON A QUALIFIED
\nPROCESS. For any Risk Wafers run on a Qualified Process (“RWRQPs”), TSMC shall
\nprovide (or cause the Company to provide) the applicable Buyers with the
\nCompany’s Wafer Acceptance Criteria (as that term is defined in Section 5.13).
\nIf on delivery of RWRQPs to such Buyer, the RWRQPs fail an incoming test under
\nthe Wafer Acceptance Criteria, such RWRQPs shall be deemed to be defective. Any
\nsuch defective RWRQPs may be returned within one hundred twenty (120) days of
\nBuyer’s receipt thereof to TSMC in care of the Foundry, F.O.B. the Foundry, and
\nif such defective RWRQPs are indeed defective and not caused by Abuse and Misuse
\n(as defined below), then TSMC shall, at its option, either repair, replace or
\ncredit Buyer for such defective RWRQPs; and furthermore, TSMC shall return any
\nsuch RWRQPs repaired or replaced to the applicable Buyer, transportation
\nprepaid, and shall reimburse the Buyer for the transportation charges paid by
\nBuyer for returning such defective RWRQPs to TSMC. Any dispute regarding whether
\nRWRQPs fail an incoming test under the applicable Wafer Acceptance Criteria or
\nwhether RWRQPs have been subjected to Abuse and Misuse shall be resolved in
\naccordance with Article 17.<\/p>\n
5.17 SALE OF RISK WAFERS. TSMC shall sell Risk Wafers if so requested
\nby a Buyer, subject to the negotiation of a mutually acceptable risk start
\nagreement.<\/p>\n
ARTICLE 6
\n PURCHASES<\/p>\n
6.1 PURCHASE ORDERS.<\/p>\n
6.1.1 Subject to the provisions of Section 3.4 and 4.1, each
\nBuyer shall place Purchase Orders for such quantities of Products according to
\nthe current Production Ramp-Up Plan. The Purchase Orders shall (a) be open
\npurchase orders for fixed quantities of Products; (b) constantly cover a
\nfourteen (14) week period (unless the Company’s standard production lead time
\nfor a particular Product exceeds thirteen (13) weeks, in which case Purchase
\nOrders for such Product shall constantly cover a period that is two weeks longer
\nthan the Company’s standard production lead time for the Product in question);
\n(c) be placed with TSMC no later than ninety (90) days prior to the shipment
\ndate specified in such Purchase Order; (d) constitute firm purchase obligations
\non the part of each Buyer, and (e) be final, subject only to acceptance by TSMC,
\nwhich acceptance shall not be unreasonably withheld or delayed. TSMC may accept
\na Buyer’s Purchase Order(s) either by written acknowledgement of the Purchase
\nOrder(s) placed or by shipment of the Products ordered. On or before seven (7)
\nBusiness Days prior to the date that the Company commences production of Proven
\nProducts ordered by a Buyer, such Buyer may substitute other Proven Products
\nthat have a currently-assigned product model number for those actually ordered
\nwithout incurring any administrative cost therefor.<\/p>\n
6.1.2 TSMC shall notify a Buyer of any anticipated problems in
\nfilling a Purchase Order within twenty-five (25) days following its receipt. To
\nthe extent that the terms of any Purchase Order or any TSMC corresponding
\nquotation, order acknowledgment, or invoice conflict herewith, this Agreement
\nshall be controlling unless TSMC and the Buyer placing the Purchase Order
\nexpressly agree to the contrary. To the extent that the terms of any Purchase
\nOrder conflict with the terms of TSMC’s corresponding quotation, order
\nacknowledgment, or invoice (the so-called “battle of the forms”),<\/p>\n
19
\n PURCHASE AGREEMENT<\/p>\n
26
\nTSMC’s quotation, order acknowledgement or invoice shall be controlling unless
\nTSMC and the Buyer placing the Purchase Order expressly agree to the contrary.<\/p>\n
6.2 PRICE. TSMC shall sell Proven Products, Test Wafers and Risk Wafers
\nto Buyer in accordance with the Pricing Schedule in effect at the time of
\nshipment, subject to the following:<\/p>\n
6.2.1 The prices quoted in each Pricing Schedule shall be firm
\nand valid until the Pricing Schedule is amended in accordance with Subsections
\n6.2.3(b) or 6.2.3(c).<\/p>\n
6.2.2 The Prices quoted in the Pricing Schedule are in U.S.
\ncurrency and net of any and all taxes and duties, including but not limited to
\ncustoms duties, sales tax, value added tax, use tax, and excise tax. Each Buyer
\nshall be responsible for all applicable taxes (including one or more of the
\nabove taxes), in addition to the prices quoted in the Pricing Schedule that
\nrelate to a Buyer’s order.<\/p>\n
6.2.3 The initial pricing, quarterly pricing and annual
\npricing shall be set as follows:<\/p>\n
(a) During the first calendar quarter of 1998, the
\n initial Pricing Schedule shall be established as follows: For each
\n Process planned for initial loading at the Foundry, TSMC shall
\n calculate an average price for such Process in use at all of TSMC’s and
\n its Affiliates’ Taiwanese semiconductor-wafer manufacturing plants in
\n the previous calendar quarter, and such average price shall be the
\n “Market Price” for each such Process to be used to manufacture Products
\n at the Foundry. Using TSMC’s standard procedures for translating
\n pricing of Processes into pricing for Products manufactured by means of
\n such Processes, TSMC shall calculate a price for each Product. If the
\n Parties agree upon the initial prices, such prices shall be reduced to
\n writing and signed by the Parties, and shall be deemed to be attached
\n hereto as Exhibit “A” as the initial Pricing Schedule. If any one or
\n more of the Buyers objects to the initial pricing, TSMC and such Buyers
\n shall attempt to negotiate the initial pricing in good faith. If no
\n agreement can be reached with respect to initial prices by April 30,
\n 1998, the Parties shall submit pricing to binding arbitration under
\n Section 17.3 through 17.6, inclusive; subject to the further provisions
\n of Subsection 6.2.3(d).<\/p>\n
(b) Within ten (10) Business Days after the beginning
\n of each Quarter, TSMC shall provide each Buyer in writing with its
\n determination of the Market Price (based on the prior calendar quarter)
\n for each Process used to manufacture Products included in the Buyer’s
\n then-current rolling six (6) Month forecasts (“TSMC’s Quarterly Pricing
\n Report”). If the Market Price (as set forth in TSMC’s Quarterly Pricing
\n Report) for the Process to be used to manufacture a particular Product
\n deviates, up or down, by more than three percent (3%) from the price of
\n such Process used to calculate pricing for Products shown on the
\n Pricing Schedule, the price for the Process and for each Product in
\n question shall be revised accordingly, and such revised price shall be
\n reduced to writing and signed by the Parties, and shall be deemed to be
\n attached hereto as an addendum to Exhibit “A”, which shall be the new
\n Pricing Schedule in respect to that Product. If any one or more of the
\n Buyers objects to any Market Price set by TSMC in TSMC’s Quarterly
\n Pricing Report, (the “Objecting Buyers”), then the Objecting Buyers may
\n request an audit of TSMC’s and its Affiliates’ books and records
\n containing information necessary to confirm TSMC’s calculation of such
\n Market Price for each Process and Product in question. The audit shall
\n be conducted by Price Waterhouse & Company or by another public
\n accounting firm nationally recognized in the United States of America
\n selected by the Objecting Buyers and reasonably acceptable to TSMC.
\n TSMC shall cooperate in the <\/p>\n
20
\n PURCHASE AGREEMENT<\/p>\n
27
\n audit, cause its Affiliates’ to do the same, and, if requested by the
\n auditors, shall request any subcontractor of TSMC or a TSMC Affiliate
\n to likewise cooperate. The Objecting Buyers shall pay the cost of the
\n audit unless the audit reveals a discrepancy of more than three percent
\n (3%) from the Market Price in the average price of any Process and the
\n related Product in question, which three percent (3%) discrepancy must
\n result in a higher Market Price quoted by TSMC than calculated by the
\n auditors based on their audit of TSMC’s and its Affiliates’ relevant
\n books and records. The auditor’s calculations shall be based on TSMC’s
\n standard procedures for translating pricing of Processes into pricing
\n for Products manufactured by such Processes. In the event of such three
\n percent (3%) discrepancy, TSMC shall pay the cost of the audit, the
\n price for the Process in question as established by the audit shall be
\n the new price for such Process, and the auditors shall calculate the
\n pricing for Products to be manufactured using such Process based upon
\n TSMC’s standard procedures for translating pricing of Processes into
\n pricing for Products manufactured by such Processes. The new prices as
\n established by the auditors shall be reduced to writing and signed by
\n the Parties and shall be deemed to be attached hereto as an addendum to
\n Exhibit “A”, which shall be the new Pricing Schedule in respect to the
\n Products in question. In no event shall there be more than two (2)
\n audits of TSMC’s Quarterly Pricing Report figures in any calendar year.<\/p>\n
(c) The Parties shall annually renegotiate the prices
\n for all Processes used to manufacture Products for each succeeding
\n calendar year, which annual price negotiation shall commence on or
\n about August 1 of the then-current year. In advance of the annual price
\n negotiation, TSMC shall provide each Buyer in writing with its
\n determination of the Market Price for each Qualified Process used to
\n manufacture Products included in the Buyer’s then-current rolling six
\n (6) Month forecast. Once the Parties have agreed upon the renegotiated
\n prices for a succeeding year, such renegotiated prices shall be reduced
\n to writing and signed by the Parties, and shall be deemed to be
\n attached hereto as Exhibit “A” as the Pricing Schedule in effect at the
\n beginning of such year. If no agreement can be reached with respect to
\n renegotiating prices by September 30 of the then-current year, the
\n Parties shall submit pricing to binding arbitration under Section 17.3
\n through 17.6, inclusive; subject to the further provisions of
\n Subsection 6.2.3(d).<\/p>\n
(d) With respect to binding arbitration conducted
\n pursuant to Subsection 6.2.3(a) and 6.2.3(c) above, in advance of the
\n hearing each Party shall submit to the arbitrator and exchange with the
\n other Parties their last best offers with respect to pricing. In
\n addition to the matters set forth in Section 17.3 through 17.6, the
\n arbitrator shall base his award on his determination of Market Price
\n (as defined in Subsection 6.2.3(a) above) for each Process to be used
\n for manufacture of Products hereunder, and on his determination of
\n price for each Product manufactured by means of such Process, based on
\n TSMC’s standard procedures for translating pricing of Processes into
\n pricing for Products manufactured by such Processes. The highest price
\n submitted by any Party for a specific Product shall be the maximum
\n price that the arbitrator shall be empowered to award for that Product,
\n and the lowest price for a specific Product submitted by any Party
\n shall be the minimum price that the arbitrator shall be empowered to
\n award for that Product. For each Product, it is understood among the
\n Parties that if the arbitrator awards an amount between (and including)
\n the minimum and maximum prices submitted by the Parties for such
\n Product, then the exact award amount shall be the price set for that
\n Product in the applicable year. The prices as so set by the arbitrator
\n thereafter shall be subject to quarterly adjustment as described in
\n Subsection 6.2.3(b) above.<\/p>\n
21
\n PURCHASE AGREEMENT<\/p>\n
28
\n (e) All pricing for Products calculated or published
\n pursuant to this Section 6.2 shall be expressed as a price per Wafer.<\/p>\n
6.3 INVOICE. Upon shipment of any Proven Products, Test Wafers or Risk
\nWafers, TSMC shall invoice the sale. Applicable taxes, freight, and insurance
\npaid by TSMC shall be separately stated on the invoice.<\/p>\n
6.4 PAYMENT. Unless otherwise agreed upon by TSMC and the ordering
\nBuyer, payment terms shall be net due thirty (30) days after the date of TSMC’s
\ninvoice (the “Invoice Payment Date”). For any invoice that is due and owing
\nunder this Section 6.4 which is not paid within thirty-five (35) days after the
\ndate of invoice, the invoice amount shall bear interest from the Invoice Payment
\nDate until paid in full at the annual rate equal to 5% above the prime or
\nreference rate for commercial borrowing announced by Bank of America N.T.& S.A.,
\nas such rate changes from time to time; provided, however, that in no event
\nshall such interest rate exceed the highest rate permissible under applicable
\nlaw. Any payment made hereunder shall be in U.S. dollars.<\/p>\n
6.5 NO LIMITATION ON BUYER’S PRICING. The prices charged by TSMC to
\na Buyer hereunder shall not limit in any way the prices that a Buyer may charge
\nits customers.<\/p>\n
ARTICLE 7
\n DELIVERY<\/p>\n
7.1 DELIVERY. TSMC agrees to make all commercially reasonable efforts
\nso that the Proven Products or Risk Wafers shall be delivered to Buyer’s
\ndesignated delivery point in accordance with its “route and ship to”
\ninstructions on the date(s) set forth in any Purchase Order(s) accepted by TSMC.<\/p>\n
7.2 SHIPMENTS F.O.B. Shipments shall be made F.O.B. Buyer’s designated
\nplace of delivery point (the “F.O.B. Point”) as designated in Buyer’s “route and
\nship to” instructions. All title and risk of loss or damage shall be borne by
\nTSMC from the time of the Company’s delivery of Proven Products or Risk Wafers
\nto a common carrier at the Foundry until delivery to the F.O.B. Point.<\/p>\n
7.3 PACKAGING AND SHIP DATE. TSMC shall package, or cause the packaging
\nof, the Proven Products or Risk Wafers for secure shipment according to good
\nmanufacturing practices in consideration of the method of shipment chosen. The
\ndate of the bill of lading or other receipt issued by the carrier shall be proof
\nof the date and fact of shipment of the Proven Products or Risk Wafers.<\/p>\n
7.4 PARTIAL SHIPMENTS. Partial shipments are allowed, so long as full
\nshipment of the appropriate quantities are made by +\/-10 days of delivery dates
\nspecified in Purchase Orders accepted by TSMC. Such partial shipments may be
\ninvoiced individually or in combination with all the other partial shipments
\nmade for the same Purchase Orders.<\/p>\n
7.5 FAILURE TO MEET DELIVERY DATES. Delivery made within +\/-10 days of
\nthe delivery dates specified in Purchase Orders accepted by TSMC are deemed
\ntimely delivery. Buyer shall not be entitled to damages or specific performance
\nfor any material failure by TSMC to timely meet such delivery schedules (a) when
\nsuch failure is the result of any act or omission of Buyer, its employees or
\nagents, or (b) except to the extent otherwise provided in Subsection 3.3.3, when
\nsuch failure is the result of the Company’s failure to timely deliver Proven
\nProducts or Risk Wafers to TSMC where <\/p>\n
22
\n PURCHASE AGREEMENT<\/p>\n
29
\nTSMC has timely placed purchase orders with the Company for Proven Products or
\nRisk Wafers ordered by Buyers hereunder and the Company’s failure to deliver is
\nnot attributable to the acts or omissions of TSMC, its employees or agents. TSMC
\nshall not be liable for any penalty or any indirect, special, incidental or
\nconsequential damages imposed upon or incurred by a Buyer as a result of failure
\nof TSMC to timely deliver Proven Products or Risk Wafers.<\/p>\n
7.6 FORCE MAJEURE. Whenever any actual or potential event of Force
\nMajeure that reasonably can be anticipated (e.g., a labor dispute) delays or
\nthreatens to delay the timely performance of any delivery under a Purchase
\nOrder, TSMC shall promptly give notice thereof to the impacted Buyer. Whenever
\nany actual or potential event of Force Majeure reasonably can be anticipated to
\ndelay or threaten to delay a Buyer’s ability to accept delivery under a Purchase
\nOrder, such Buyer shall promptly give notice thereof to TSMC.<\/p>\n
ARTICLE 8
\n INCOMING TEST; ACCEPTANCE AND RETURNS<\/p>\n
8.1 INCOMING TESTING. TSMC, the Buyers ordering Proven Products in
\nquestion, and the Company shall agree upon inspection and testing methods, which
\nshall be signed by TSMC and such Buyers, and attached hereto as Exhibit “H”.
\nEach Buyer may perform incoming inspection and testing on each shipment of
\nProven Products received hereunder in accordance with the agreed-upon inspection
\nand testing methods. If such Proven Products fail to conform to the applicable
\nQuality and Reliability Specifications, or otherwise fail the inspection and
\ntesting standards set forth on Exhibit “H”, the Buyer shall have the right to
\nreturn such Proven Products to TSMC for rework or replacement at no cost to
\nBuyer or for credit in accordance with the terms and conditions of Section 9.1
\nbelow. Except as otherwise provided in Section 5.16, Risk Wafers may not be
\nreturned.<\/p>\n
8.2 ACCEPTANCE. Buyers shall accept all conforming tenders of Proven
\nProducts delivered under this Agreement, and shall notify TSMC in writing,
\nwithin (a) thirty (30) days following the delivery of any Proven Products whose
\nindividual dies have been functionally probed or (b) sixty (60) days following
\nthe delivery of any other Proven Products, as to either acceptance or rejection
\nthereof. If no notification indicating rejection is received by TSMC within the
\nabove time period, then such Proven Products shall be deemed accepted. Except as
\notherwise provided in Section 5.16, Risk Wafers must be accepted.<\/p>\n
8.3 RETURNS. Defective Proven Products (either detected by incoming
\ninspection and testing or during the warranty period) shall be returned to TSMC
\nin accordance with the terms and conditions of Section 9.1 below.<\/p>\n
ARTICLE 9
\n PRODUCT WARRANTY<\/p>\n
9.1 TSMC’S WARRANTY. TSMC warrants that the Proven Products delivered
\nhereunder shall meet the Quality and Reliability Specifications and shall be
\nfree from defects in materials and workmanship under normal use for a period of
\none (1) year from the date of shipment. If, during the one year period, (a) TSMC
\nis notified promptly in writing upon discovery of any defect in the Proven<\/p>\n
23
\n PURCHASE AGREEMENT<\/p>\n
30
\nProducts, including a detailed description of the alleged defect, (b) such
\nProven Products are returned to TSMC in care of the Foundry, F.O.B. the Foundry,
\nand (c) such Proven Products are indeed defective and not caused by accident,
\nabuse, misuse, neglect, improper installation or packaging, repair or alteration
\nby someone other than TSMC, or improper testing or use contrary to any
\ninstructions given by TSMC (collectively, “Abuse or Misuse”), then TSMC shall,
\nat its option, either repair, replace, or credit a Buyer for such defective
\nProven Products. TSMC shall return any Proven Products repaired or replaced
\nunder this warranty to a Buyer transportation prepaid, and shall reimburse a
\nBuyer for the transportation charges paid by the Buyer for returning such
\ndefective Proven Products to TSMC in care of the Foundry. The performance of
\nthis warranty shall not act to extend the one-year warranty period for any
\nProven Products repaired or replaced beyond that period applicable to such
\nProven Products as originally delivered. There is no warranty for Risk Wafers.
\nUnless otherwise expressly agreed to the contrary by Seller and a Buyer in
\nwriting prior to shipment, there is no warranty for Test Wafers.<\/p>\n
9.2 LIMITED WARRANTY. THE WARRANTIES HEREIN (A) ARE EXCLUSIVE AND
\nSTATED IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS, STATUTORY, OR IMPLIED,
\nINCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
\nPARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED; AND (B)
\nNEITHER ASSUME NOR AUTHORIZE ANY OTHER PARTY TO ASSUME FOR TSMC ANY OTHER
\nLIABILITIES IN CONNECTION WITH THE MANUFACTURE OR SALE OF PROVEN PRODUCTS. THE
\nWARRANTIES SHALL NOT APPLY TO ANY PROVEN PRODUCTS WHICH HAVE BEEN SUBJECTED TO
\nABUSE OR MISUSE (AS DEFINED IN SECTION 9.1 ABOVE).<\/p>\n
9.3 TSMC’S INSPECTION RIGHTS. Notwithstanding the provisions of Section
\n9.1 above, prior to any return of allegedly defective Proven Products by a Buyer
\npursuant to Section 9.1, such Buyer shall first afford TSMC (and the Company if
\nthe Company so desires) the opportunity, upon TSMC’s request, to inspect the
\nallegedly defective Proven Products at such Buyer’s facilities. If TSMC thereby
\ndetermines that the allegedly defective Proven Products are defective or
\nnon-conforming with the applicable Quality and Reliability Specifications, or
\nthat such alleged defects are caused by defects in material or workmanship of
\nthe Company or TSMC, as the case may be, then the Buyer shall be entitled to
\nrepair, replacement or credit under Section 9.1. If TSMC determines that such
\nallegedly defective Proven Products are not defective or conform with the
\napplicable Quality and Reliability Specifications, the disagreement with respect
\nto defectiveness or non-conformity shall be resolved pursuant to Article 17.
\nInspection and determination by TSMC (and by the Company, if applicable) under
\nthis Section shall not be unreasonably withheld or delayed.<\/p>\n
ARTICLE 10
\n LIMITATION ON DAMAGES; CONTRACTUAL LIMITATIONS PERIOD<\/p>\n
10.1 LIMITATION ON DAMAGES.<\/p>\n
10.1.1 WITH THE EXCEPTION OF ANY LOSS, LIABILITY, DAMAGE OR
\nOBLIGATION ARISING OUT OF OR RELATING TO DISCLOSURE OF PROPRIETARY INFORMATION
\nIN VIOLATION OF ARTICLE 15, NO PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL,
\nINCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE (INCLUDING, WITHOUT LIMITATION, LOSS
\nOF PROFITS OR LOSS OF USE) SUFFERED BY ANY OTHER PARTY ARISING FROM OR RELATING
\nTO A PARTY’S PERFORMANCE, NON-<\/p>\n
24
\n PURCHASE AGREEMENT<\/p>\n
31
\nPERFORMANCE, BREACH OF OR DEFAULT UNDER A COVENANT, WARRANTY, REPRESENTATION,
\nTERM OR CONDITION HEREOF. EXCEPT AS SPECIFICALLY PROVIDED IN THE PRECEDING
\nSENTENCE, EACH PARTY WAIVES AND RELINQUISHES CLAIMS FOR INDIRECT, SPECIAL,
\nINCIDENTAL OR CONSEQUENTIAL DAMAGES. NOTWITHSTANDING SUCH WAIVER AND
\nRELINQUISHMENT, WITH RESPECT TO ANY LOSS, LIABILITY, DAMAGE OR OBLIGATION
\nARISING OUT OF OR RELATING TO DISCLOSURE OF PROPRIETARY INFORMATION IN VIOLATION
\nOF ARTICLE 15, A PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
\nCONSEQUENTIAL DAMAGE (INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR LOSS OF
\nUSE) SUFFERED BY ANY OTHER PARTY ARISING FROM OR RELATING TO A PARTY’S
\nNON-PERFORMANCE, BREACH OF OR DEFAULT UNDER SAID ARTICLE 15.<\/p>\n
10.1.2 NO PARTY SHALL HAVE THE RIGHT TO RECOVER PUNITIVE
\nDAMAGES FROM ANY OTHER PARTY, AND EACH PARTY HEREBY WAIVES AND RELINQUISHES ANY
\nAND ALL PUNITIVE DAMAGE CLAIMS.<\/p>\n
10.1.3 THE LIMITATIONS ON LIABILITY AND DAMAGES SET FORTH IN
\nSUBSECTIONS 10.1.1 AND 10.1.2 APPLY TO ALL CAUSES OF ACTION THAT MAY BE ASSERTED
\nHEREUNDER, WHETHER SOUNDING IN BREACH OF CONTRACT, BREACH OF WARRANTY, TORT,
\nPRODUCT LIABILITY, NEGLIGENCE OR OTHERWISE.<\/p>\n
10.2 CONTRACTUAL LIMITATIONS PERIOD. Any arbitration, litigation,
\njudicial reference, mediation, or other legal proceeding involving the Parties
\nshall be commenced within two (2) years after the accrual of the cause of
\naction, except (a) for arbitration, litigation, judicial reference, mediation,
\nor other legal proceedings in respect to claims for indemnification hereunder,
\nwhich claims shall be commenced within the statutory limitations period provided
\nby applicable law; and (b) where there is an affirmative misrepresentation of a
\nmaterial fact that was relied upon and the relying Party was entitled to rely
\nthereon, or where a Party fraudulently concealed the existence of a cause of
\naction, the claims shall be commenced within two (2) years of the date that the
\naggrieved Party discovered the material facts giving rise to the cause of
\naction.<\/p>\n
ARTICLE 11
\n INDEMNITIES<\/p>\n
11.1 INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.<\/p>\n
11.1.1 TSMC assigns to the Buyers (and to each of them) TSMC’s
\nrights, remedies and interests in, to, or under Section 11.1 of the
\nManufacturing Agreement, pursuant to which and subject to whose terms TSMC is
\nindemnified by the Company against Claims based solely on an allegation that a
\nProcess that is normally specified and used by the Company in the manufacture of
\na Proven Product or RWRQPs directly infringes a third party’s Intellectual
\nProperty Rights. This assignment is made without recourse against TSMC.<\/p>\n
11.1.2 Each Buyer acknowledges that the Company shall have no
\nliability for any Claim (a) where infringement is attributable, in whole or in
\npart, to (i) the Company’s compliance with or implementation of any of the
\nBuyer’s instructions, specifications, designs, mask works, utility models or
\nrequirements, (ii) a Process (insofar as a Process or any part thereof has been
\nspecified by the Buyer <\/p>\n
25
\n PURCHASE AGREEMENT<\/p>\n
32
\nand supplied by TSMC or such Buyer to the Company and the deviation of the
\nBuyer’s specifications from the Company’s normal specifications causes direct or
\ncontributory infringement), or (iii) other information or materials provided by
\nthe Buyer and supplied by TSMC or such Buyer to the Company for the performance
\nof this Agreement; or (b) relating to Risk Wafers that are not run on a
\nQualified Process. Each Buyer shall indemnify, defend, protect and hold TSMC and
\nthe Company harmless from and against any and all such Claims, provided that
\nTSMC complies with the provisions of Section 11.4 below and that the Company
\ncomplies with the provisions of the Manufacturing Agreement that are comparable
\nto Section 11.4 below.<\/p>\n
11.1.3 If the court or a settlement enjoins the use of a
\nProcess by the Company, or if, in TSMC’s or the Company’s opinion, a Process is
\nlikely to become the subject of a claim of infringement, then the Party
\nproviding the Process shall have the option to modify such Process so that it
\nbecomes non-infringing, substitute a substantially equivalent non-infringing
\nProcess, or obtain the right to continue using such Process. If the curative
\nactions described in the preceding sentence cannot be accomplished within a
\nreasonable period of time, the Company or TSMC shall have the right to decline
\nto continue to manufacture or sell Proven Products or Risk Wafers using such
\nProcess.<\/p>\n
11.1.4 The foregoing states the entire and exclusive remedies
\nof each Buyer for infringement of a third party’s Intellectual Property Rights
\nby the Proven Products, Test Wafers, Risk Wafers or the Processes used to
\nmanufacture any Products furnished hereunder. TSMC shall not be liable to any
\nBuyer for any third-party Claim for the type of Intellectual Property Rights
\ninfringement described in Subsections 11.1.1 or 11.1.2.<\/p>\n
11.2 PERSONAL INJURY INDEMNITY. Each Buyer shall indemnify, defend,
\nprotect and hold TSMC harmless against any and all Claims arising out of injury
\nor death of any of such Buyer’s personnel assigned to work at the Foundry, or
\nwhile performing tasks at the Foundry pursuant hereto or any other agreement or
\ninstrument to which a Buyer and TSMC are parties in connection herewith,
\nnotwithstanding that such personnel are in TSMC’s or the Company’s care, custody
\nor control while at the Foundry, provided that this indemnity shall not apply in
\nany instance in which such Claims are based upon the gross negligence or willful
\nmisconduct of TSMC or its employees or agents.<\/p>\n
11.3 PRODUCT LIABILITY.<\/p>\n
11.3.1 Except as otherwise expressly provided herein:<\/p>\n
(a) TSMC and the Company shall have no liability
\n under this Agreement or otherwise for any product liability Claim with
\n respect to any of the Proven Products, Risk Wafers or Test Wafers,
\n whether such product liability Claim is based on alleged defects in the
\n design, manufacture, or packaging of Proven Products, Risk Wafers or
\n Test Wafers or on any other adverse conditions.<\/p>\n
(b) Buyers (and each of them), on behalf of
\n themselves and any of their Affiliates that purchase or resell Proven
\n Products, Risk Wafers or Test Wafers, hereby waive, release and
\n discharge TSMC and the Company from and against any and all Claims
\n arising from or relating to product liability, including, without
\n limitation, Claims based on alleged defects in the design, manufacture
\n or packing of Proven Products, Risk Wafers or Test Wafers or on any
\n other adverse conditions. The foregoing waiver, release and discharge
\n is intended to <\/p>\n
26
\n PURCHASE AGREEMENT<\/p>\n
33
\n extend to any and all product liability Claims of any kind or
\n character, whether fixed or contingent, known or unknown.<\/p>\n
11.3.2 TSMC’s and the Company’s sole and exclusive liability
\nand obligation with respect to any defective Proven Product and any Test Wafers
\ncovered by a written product warranty shall be as set forth in Section 9.1.
\nTSMC’s and the Company’s sole and exclusive liability and obligation with
\nrespect to defective Test Wafers not covered by a written product warranty shall
\nbe as set forth in Section 5.13. TSMC’s and the Company’s sole and exclusive
\nliability and obligation with respect to defective RWRQPs shall be as set forth
\nin Section 5.16.<\/p>\n
11.3.3 Each Buyer shall indemnify, defend, protect and hold
\nTSMC and\/or the Company, as the case may be, harmless against any and all
\nproduct liability Claims brought by third parties, including, without
\nlimitation, any of Buyer’s customers or any ultimate end users of any product,
\nsystem or subsystem into which a Proven Product, Test Wafer or Risk Wafer (or
\nany part thereof) has been incorporated. The foregoing shall not apply, however,
\nto the extent any such Claims result from the negligence or willful misconduct
\nof TSMC and\/or the Company.<\/p>\n
11.4 GENERAL INDEMNITY PROVISIONS. Each Party’s indemnification
\nobligations hereunder shall be subject to the following provisions:<\/p>\n
11.4.1 Indemnitor’s indemnification obligations also shall
\nextend to any one or more of indemnitee’s officers, directors, managers,
\nshareholders, members, employees, and agents.<\/p>\n
11.4.2 Each Party’s indemnification obligations hereunder
\nshall survive the early termination or expiration of the Term for the remainder
\nof the statutory limitations period governing actions on a written agreement.<\/p>\n
11.4.3 Each Party’s obligation to indemnify any other Party
\nhereunder shall be conditioned upon:<\/p>\n
(a) Indemnitee’s giving indemnitor prompt notice in
\n writing of any Claims giving rise to the obligation to indemnify and of
\n which indemnitee is aware;<\/p>\n
(b) Indemnitee’s permitting indemnitor, through
\n counsel of indemnitor’s choice and reasonably acceptable to indemnitee,
\n to defend against, contest or settle the same; and<\/p>\n
(c) Indemnitee’s reasonably cooperating with
\n indemnitor and reasonably providing indemnitor with information and
\n assistance to enable indemnitor to defend, contest or settle same.<\/p>\n
11.4.4 Unless expressly provided to the contrary, the
\nindemnification provisions herein shall be interpreted and construed as
\nindemnifying indemnitee against indemnitee’s negligence, whether active or
\npassive.<\/p>\n
27
\n PURCHASE AGREEMENT<\/p>\n
34
\n ARTICLE 12
\n FORCE MAJEURE<\/p>\n
12.1 FORCE MAJEURE. Subject to the limitations set forth in Section
\n12.4, should a Party be prevented from performing its obligations hereunder due
\nto a Force Majeure event, that Party shall not be liable to the other Parties
\nfor any delay or failure of performance caused by such event; nor shall the
\nParty subject to such event be deemed to have committed an Event of Default
\nhereunder. Notwithstanding the foregoing, a Force Majeure event shall not excuse
\na Party’s obligation to pay money. However, a monetary obligation shall be
\nsuspended until cessation of such Force Majeure event if, and only if, the Force
\nMajeure event actually and directly renders physically impossible a Party’s
\npayment of money due hereunder.<\/p>\n
12.2 NOTIFICATION. The Party prevented or delayed by an event of Force
\nMajeure in the performance of any obligation hereunder shall promptly notify the
\naffected Party or Parties of the occurrence of any Force Majeure event by cable,
\ntelex or telecopier.<\/p>\n
12.3 RESPONSE TO FORCE MAJEURE. Should the delay caused by a Force
\nMajeure event continue for more than ninety (90) days, the Parties shall settle
\nthe problem of further performance of this Agreement through good faith
\nnegotiations as soon as possible with the objective of restructuring the
\nrelationship among them to minimize the effects of such event. If the Parties
\ncannot agree on a mutually acceptable solution within one hundred twenty (120)
\ndays of a Party’s request for such negotiations, any Party that is not subject
\nto the Force Majeure event may terminate this Agreement by notice to the other
\nParties. If the Party giving notice of termination is a Buyer, the termination
\nshall be effective only as to such Buyer, and this Agreement shall continue in
\nfull force and effect among TSMC and the non-terminating Buyers. Notwithstanding
\nthe foregoing, no Buyer shall be permitted to terminate this Agreement due to
\nthe Buyer’s inability to pay for its Minimum Purchase Share or to otherwise meet
\nits financial obligations due to a continuing Force Majeure event.<\/p>\n
12.4 LIMITATIONS ON APPLICABILITY OF FORCE MAJEURE. This Article shall
\nbe void and inapplicable to any Party (a) if it fails to use reasonable
\ndiligence to remedy any Force Majeure event that prevents or delays that Party’s
\nperformance hereunder by continuously pursuing such actions as that Party
\nreasonably can take under the circumstances; and (b) in the event of a strike,
\nlockout or other labor disruption, if the Party is found by the National Labor
\nRelations Board or other governmental agency having jurisdiction to have caused
\nsuch strike, lockout or labor disruption or if such Party refuses to enter into
\nbargaining with respect to such strike, lockout or labor disruption.<\/p>\n
ARTICLE 13
\n GOVERNMENTAL INTERVENTION<\/p>\n
13.1 GOVERNMENTAL INTERVENTION. Should any government or agency thereof
\nat any time during the Term hereof take any action which is material and adverse
\nto a Party or make recommendations to the Parties or any of them requiring
\ndirectly or indirectly, formally or informally, alteration or modification of
\nany term or condition hereof, or of the performance of the Parties hereunder,
\nincluding refusal to grant any necessary government approval, in a manner which
\nis material and adverse to one Party, then, if said one Party makes written
\nrequest (the “Requesting Party”) to the <\/p>\n
28<\/p>\n
35
\nother Parties within sixty (60) days from said action or recommendation of the
\ngovernment or governmental agency, the Parties shall enter into good faith
\nnegotiations with the objective of restructuring the relationship among the
\nParties to minimize the adverse effect of said alteration or modification. If
\nthe Parties cannot reach a reasonably acceptable modification hereto within six
\n(6) months from the date of dispatch of said written request by the Requesting
\nParty, or within such longer period of time as mutually agreed upon, the
\nRequesting Party shall have the right to terminate this Agreement forthwith by
\ngiving notice to that effect to the other Parties; provided, however, that if
\nthe Requesting Party giving notice of termination is a Buyer, the termination
\nshall be effective only as to such Buyer and this Agreement shall continue in
\nfull force and effect among TSMC and the non-terminating Buyers. It is expressly
\nunderstood and agreed by the Parties that in the event of termination under this
\nArticle, no Party shall incur any liability to the others for any alleged
\ndefault or breach in the performance hereof, arising from the exercise of the
\nright herein provided to terminate this Agreement. Termination under this
\nArticle 13 shall not be deemed to be a termination for default.<\/p>\n
ARTICLE 14
\n DEFAULT AND TERMINATION<\/p>\n
14.1 EVENTS OF DEFAULT. The occurrence or happening, at any time and
\nfrom time to time, of any one or more of the following shall be a breach or
\ndefault under this Agreement (an “EVENT OF DEFAULT”):<\/p>\n
14.1.1 If any Party fails (a) to make any payment required to
\nbe made pursuant to this Agreement when due, and such Party does not cure such
\nfailure following thirty (30) days written notice thereof, or (b) to perform any
\nmaterial obligation under this Agreement, and such Party does not cure such
\nfailure following sixty (60) days written notice thereof.<\/p>\n
14.1.2 If any Party breaches its obligations of non-
\ndisclosure and confidentiality set forth in Subsection 15.1.1.<\/p>\n
14.1.3 If any representation, warranty or statement made by
\nany Party under or pursuant to this Agreement, or under any affidavit,
\ncertificate or other instrument executed in connection with this Agreement,
\nshall be false or misleading in any material respect as of the Effective Date or
\nshall become so at any time prior to the expiration of the Term, and such Party
\ndoes not cure (to the extent cure is possible) the same following thirty (30)
\ndays written notice thereof.<\/p>\n
14.1.4 If any Party files a certificate of dissolution or
\notherwise dissolves, terminates or liquidates, or is merged with or is
\nconsolidated into any other corporation, limited liability company, partnership,
\nor other entity other than an Affiliate of such Party, without the other
\nParties’ written consent (which consent shall not be unreasonably withheld);
\nprovided that the following shall not be an Event of Default: (a) any
\ndissolution, liquidation, merger or consolidation that is permitted in
\naccordance with Section 18.14; and (b) any merger or consolidation not entered
\ninto for the purpose of and not having the effect of changing or influencing the
\ncontrol of the Party.<\/p>\n
14.1.5 If any Party shall (a) be adjudicated as bankrupt or
\ninsolvent; (b) make a general assignment for the benefit of its creditors; (c)
\nfile a petition, answer or consent seeking, or have entered against it (or fail
\nreasonably to contest the material allegations of any petition for) an order for
\nrelief (or any similar remedy) under any provision of Title 11 of the United
\nStates Code or any other federal or state law relating to insolvency,
\nbankruptcy, rehabilitation, liquidation or reorganization, or consent to <\/p>\n
29
\n PURCHASE AGREEMENT<\/p>\n
36
\nthe institution of any proceedings thereunder; (d) convene a general meeting of
\nits creditors, or any class thereof, for the purpose of effecting a general
\nmoratorium upon or general extension or composition of its debts; (e) fail to
\npay its debts as they mature; (f) admit in writing that it is generally not able
\nto pay its debts as they mature; or (g) apply for or consent to the appointment
\nof a receiver, trustee, custodian, liquidator or other similar official of all
\nor a substantial portion of its assets.<\/p>\n
14.1.6 If (a) a petition is filed or any case or proceeding
\ndescribed in Section 14.1.5 above is commenced against any Party, or against the
\nassets thereof, unless such petition and the case or proceeding initiated
\nthereby is dismissed within sixty (60) days from the date of the filing; (b) an
\nanswer is filed by any Party admitting the allegations of any such petition; (c)
\na court of competent jurisdiction enters an order, judgment or decree
\nappointing, without the consent of any Party, a custodian, trustee, agent or
\nreceiver of it, or for all or a substantial part of its property, or authorizing
\nthe taking possession by a custodian, trustee, agent or receiver of it, or of
\nall or a substantial part of its property unless such appointment is vacated or
\ndismissed or such possession is terminated within sixty (60) days from the date
\nof such appointment or commencement of such possession, but not later than 5
\ndays before the proposed sale of any assets of such Party by such custodian,
\ntrustee, agent or receiver.<\/p>\n
14.1.7 If a Buyer is terminated as a member of the Company
\npursuant to Section 3.3.1, 3.3.2.2, or 10.2 of the LLC Agreement.<\/p>\n
14.2 REMEDIES FOR DEFAULT.<\/p>\n
14.2.1 If the Party committing an Event of Default under
\neither Subsection 14.1.1, 14.1.3 or 14.1.4 above does not cure such Event of
\nDefault within the applicable cure periods, then any non-breaching Party may,
\nsubject to the procedures set forth in Article 17, seek:<\/p>\n
(a) specific performance of the breaching Party’s
\nobligations under this Agreement;<\/p>\n
(b) damages suffered by said non-breaching Party as a
\nresult of such Event of Default, limited, however, by the provisions of Article
\n10.<\/p>\n
Except as otherwise expressly provided to the contrary herein, the non-breaching
\nParty shall not have a right to terminate the Agreement. If TSMC is the
\nnon-breaching Party and the Event of Default involves the non-payment of money
\ndue to TSMC from a Buyer, then TSMC shall be entitled (in addition to any other
\nrights and remedies it may have hereunder, at law or in equity) to suspend
\nperformance of all sales and services to that Buyer hereunder until all
\ndelinquent amounts are paid in full. If the Event of Default is a breach by TSMC
\nof its delivery obligations under Section 7.1, as qualified by Section 7.5, for
\nany reason other than the Company’s inability or failure to deliver Calculated
\nInstalled Capacity to TSMC or Force Majeure, then the affected Buyer may, in
\nlieu of the remedies of specific performance, elect to cancel the Purchase Order
\nto the extent of any undelivered Proven Products, Test Wafers or Risk Wafers;
\nprovided, however, that such Buyer shall remain obligated to pay for any partial
\ndeliveries under such Purchase Order.<\/p>\n
14.2.2 Each of the Parties acknowledges that a breach or
\ndefault by it of its covenants regarding non-disclosure and confidentiality
\ncontained in Subsection 15.1.1 will result in irreparable injury to the Party
\nmaking disclosure of its Proprietary Information, and consequently the
\ndisclosing Party shall be entitled to temporary, preliminary and permanent
\ninjunctive relief, or to a protective <\/p>\n
30
\n PURCHASE AGREEMENT<\/p>\n
37
\norder for any threatened or actual violation of the provisions of Subsection
\n15.1.1. Each Party agrees and consents to the entry of an injunction or
\nprotective order by any court of competent jurisdiction upon a showing by the
\ndisclosing Party of a reasonable belief that its Proprietary Information is
\nbeing used or disclosed contrary to the terms of Subsection 15.1.1. The
\nforegoing provisions are in addition to, and not in limitation of, the remedies
\nof specific performance, damages, and any other remedies at law, in equity or
\notherwise, that the Parties may have upon breach of Subsection 14.1.2; provided,
\nhowever, that the non-breaching Party shall not have the right to terminate this
\nAgreement. The Parties stipulate that the provisions of Article 17 shall not
\napply to any temporary restraining order, injunctive relief, protective order or
\nother provisional remedy sought to prohibit a breach or threatened breach of the
\nprovisions of Subsection 15.1.1.<\/p>\n
14.2.3 In the event of an Event of Default under Subsection
\n14.1.5 or 14.1.6, the non-breaching Party or Parties shall have the right, at
\nits (their) option, to terminate this Agreement by giving ten (10) days prior
\nwritten notice of termination. If TSMC and one or more of the Buyers are
\nnon-breaching Parties, they, or any one or more of them may terminate this
\nAgreement by giving such written notice to the breaching Buyer or Buyers, in
\nwhich event this Agreement shall continue in full force and effect between TSMC
\nand each of the non- breaching Buyers.<\/p>\n
14.2.4 If a Buyer’s Percentage Interest is reduced to zero in
\naccordance with the LLC Agreement, this Agreement shall terminate with respect
\nto the Buyer, subject to Section 5.12 (including the effective date provided
\ntherein for the corresponding reduction in the Buyer’s Basic Purchase Share and
\nthe effect, if any, on Purchase Orders prior to the adjustment date). So long as
\nany Buyer has a positive Percentage Interest, this Agreement shall continue in
\nfull force and effect between TSMC and any such Buyer.<\/p>\n
14.3 EFFECTIVE DATE OF TERMINATION. Termination of this Agreement
\npursuant to any notice of termination given under any provision of this
\nAgreement shall be effective ten (10) days following the date such termination
\nnotice is deemed to be given pursuant to Section 18.3 below.<\/p>\n
14.4 RIGHTS AND REMEDIES FOLLOWING TERMINATION. The termination of this
\nAgreement shall be without prejudice to (a) the right of TSMC to receive upon
\nits request all payments accrued and unpaid hereunder; (b) the rights and
\nremedies of any Party with respect to any previous breach of any other
\nrepresentations, warranties, covenants, terms, conditions or provisions of this
\nAgreement (provided that the limitation on liability set forth in Article 10
\nshall apply to such rights and remedies); (c) any rights to indemnification set
\nforth herein; and (d) any other provisions hereof which expressly or necessarily
\ncall for performance after the termination of this Agreement.<\/p>\n
14.5 REMEDIES CUMULATIVE, CONCURRENT AND NON-EXCLUSIVE. The Parties
\nshall have all rights, remedies and recourse granted in this Agreement, in any
\nother agreements entered into between the Parties, and available at law or in
\nequity, and except as otherwise provided in this Agreement the same (a) shall be
\ncumulative and concurrent; (b) may be pursued separately, successively or
\nconcurrently; (c) may be exercised as often as occasions therefor shall arise,
\nit being agreed that the exercise or failure to exercise any right, remedy or
\nrecourse shall in no event be construed as a waiver or release thereof; and (d)
\nare intended to be, and shall be, non-exclusive.<\/p>\n
31
\n PURCHASE AGREEMENT<\/p>\n
38
\n ARTICLE 15
\n PROPRIETARY INFORMATION<\/p>\n
15.1 PROPRIETARY INFORMATION.<\/p>\n
15.1.1 Each Party agrees to maintain the other Parties’
\nProprietary Information in strict confidence, not to make use thereof other than
\nfor the performance of this Agreement, to release it only to employees who have
\nreasonable need to know the same, and except as required by law, not to release
\nor disclose it to any third parties, without the prior written consent of the
\ndisclosing Party. The obligations set forth in this Subsection shall not apply
\nto any information that: (a) is now or hereafter in the public domain or
\notherwise becomes available to the public other than by breach of this Agreement
\nby the receiving Party, (b) has been rightfully in the receiving Party’s
\npossession prior to receipt from the disclosing Party, (c) is rightfully
\nreceived by the receiving Party from a third party without restriction on
\ndisclosure, (d) is independently developed by the receiving Party, (e) is
\nauthorized in writing by the disclosing Party to be released or disclosed, or
\n(f) subject to the receiving Party’s compliance with Section 15.4 below, is
\nrequired to be disclosed by the receiving Party pursuant to law, governmental
\nregulation or judicial order.<\/p>\n
15.1.2 Notwithstanding the provisions of Subsection 15.1.1,
\nTSMC shall be entitled to transmit or disclose a Buyer’s Proprietary Information
\nto the Company if TSMC determines, in the exercise of its reasonable good faith
\njudgment, that the Company requires access to or disclosure of the Buyer’s
\nProprietary Information in order to enable TSMC to comply with its obligations
\nto such Buyer under this Purchase Agreement. In effecting such transmission or
\ndisclosure to the Company, TSMC shall identify Buyer’s information as
\n“Proprietary” and “Confidential” so that it will be protected under the
\nproprietary information provisions of the Manufacturing Agreement.<\/p>\n
15.1.3 All Proprietary Information and any copies thereof
\nshall remain the property of the disclosing Party, and no license or other
\nrights therein is granted or implied hereby. The receiving Party shall, upon the
\ndisclosing Party’s request, return the original and all copies of tangible
\nProprietary Information. Notwithstanding the foregoing, any of the Buyers’
\nProprietary Information that is transmitted or disclosed to the Company by TSMC
\nin accordance with the provisions of Subsection 15.1.2 and is thereafter
\nincorporated into a Process or manufacturing method used in the Foundry, may be
\nretained by the Company in the form so incorporated or used, and the Company
\nshall have the nonexclusive right to use such Proprietary Information as so
\nincorporated or used, and as such incorporation or use may be modified or
\nimproved.<\/p>\n
15.2 OTHER CONFIDENTIALITY AGREEMENTS. This Article is supplemental
\nto and not in limitation of any confidentiality agreements to which the Parties
\nare signatories.<\/p>\n
15.3 CONFIDENTIALITY AGREEMENTS FOR SPECIFIC PERSONS. Any of Buyers’
\nofficers, directors, employees, agents, representatives or contractors who are
\nassigned to or visit the Foundry pursuant to Section 5.9 shall execute and
\ndeliver a confidentiality agreement in form of Exhibit “J” attached hereto.<\/p>\n
15.4 THIRD PARTY REQUEST FOR INFORMATION. Except as otherwise provided
\nherein, each Party shall immediately notify the other of any private or
\ngovernmental request for Proprietary Information or documents relating to the
\nProven Products, Risk Wafers, Test Wafers or this Agreement; provided, however,
\nthat (a) a request for documents relating to Proven Products, Risk Wafers, or
\nTest Wafers received by any Buyer from its customers or prospective customers in
\nthe ordinary course of business <\/p>\n
32
\n PURCHASE AGREEMENT<\/p>\n
39
\nwhere disclosure of such information would not contain Proprietary Information
\nof TSMC, the Company, or any other Buyer shall be excluded from the provisions
\nof this Section 15.4 and (b) a Buyer may disclose to its customer, upon the
\ncustomer’s request in the ordinary course of business, Design Rules or
\nreliability data relating to Proven Products, Risk Wafers, or Test Wafers, if
\n(i) the Buyer and its customer enter into a confidentiality agreement
\nsubstantially in the form of Exhibit “L” and (ii) the Buyer notifies TSMC of the
\ndisclosure before or promptly after it. Each Party shall have the right to
\nparticipate in the other Party’s response to any such request. In the event that
\na Party receives any subpoena or other legal process requiring the production of
\ninformation, documents, data, work papers, reports, or other materials relating
\nto Proprietary Information, Proven Products, Risk Wafers, Test Wafers or this
\nAgreement, that Party shall:<\/p>\n
15.4.1 Give the affected Party, if possible, the opportunity
\nto participate in quashing, modifying or otherwise responding to any compulsory
\nprocess in an appropriate and timely manner; and<\/p>\n
15.4.2 Cooperate fully with the affected Party’s efforts to
\nnarrow the scope of any such compulsory process, to obtain a protective order
\nlimiting the use or disclosure of the information sought, or in any other lawful
\nway to obtain continued protection of such information.<\/p>\n
15.5 REPORTING LOSS, THEFT OR MISAPPROPRIATION. If any Party becomes
\naware of the loss, theft or misappropriation of Proprietary Information which is
\nin that Party’s possession or control, that Party shall notify the other Party
\nwhose Proprietary Information has been lost, stolen or misappropriated within
\nfive (5) days after the discovery of such loss, theft or misappropriation.<\/p>\n
ARTICLE 16
\n EXPORT COMPLIANCE<\/p>\n
16.1 COMPLIANCE WITH EXPORT ADMINISTRATION REGULATIONS. Each Party
\nagrees that, unless prior authorization is obtained from the United States
\nGovernment, it shall not knowingly:<\/p>\n
(a) Re-export, directly or indirectly, any technical data (as
\ndefined in Part 779 of the Export Administration Regulations of the Department
\nof Commerce) received from the other Buyers, TSMC or the Company, their
\nAffiliates, or their respective customers to; or<\/p>\n
(b) Disclose such technical data for use in; or<\/p>\n
(c) Export, directly or indirectly, any Proven Product, Risk
\nWafer, Test Wafers, product containing a Proven Product, Risk Wafer, Test Wafers
\nor such technical data to any destination or country to which the re-export or
\nrelease of technical data or export of Proven Products, Risk Wafers, Test Wafers
\nor products containing Proven Products, Risk Wafers, Test Wafers or technical
\ndata is prohibited by U.S. laws and regulations. These assurances are furnished
\nby each Party in compliance with Part 779 Technical Data of the Export
\nAdministration Regulations of the Department of Commerce of the Government of
\nthe United States of America.<\/p>\n
16.2 U.S. EXPORT LICENSES. Each Party further agrees to obtain any
\nnecessary export license or other documentation prior to exportation of any
\nProven Product, Test Wafer or Risk Wafer, product containing a Proven Product,
\nTest Wafer or Risk Wafer, or technical data acquired from any other <\/p>\n
33
\n PURCHASE AGREEMENT<\/p>\n
40
\nParty, its Affiliates, or their respective customers hereunder. Accordingly,
\neach Party shall not sell, export, re-export, transfer, divert or otherwise
\ndispose of any Proven Product, Test Wafer or Risk Wafer or a product containing
\na Proven Product, Test Wafer or Risk Wafer, directly or indirectly, to any
\nperson, entity or country to which such disposal is prohibited by the laws or
\nregulations of the United States. Further, each Party shall notify any person or
\nentity obtaining any such Proven Product, Test Wafer or Risk Wafer or a product
\ncontaining a Proven Product, Test Wafer or Risk Wafer from such Party of the
\nneed to comply with such laws or regulations. Each Party shall secure at its
\nsole expense such licenses and export and import documents as are necessary for
\nthe Party to fulfill its obligations hereunder.<\/p>\n
16.3 REPUBLIC OF CHINA EXPORT REGULATIONS. If TSMC or Buyers are
\nsubject to the national export control regulations of the Republic of China,
\neach Party shall take all appropriate measures to comply with such applicable
\nregulations.<\/p>\n
ARTICLE 17
\n DISPUTE RESOLUTION; ARBITRATION<\/p>\n
17.1 NEGOTIATION BETWEEN EXECUTIVES. The Parties shall attempt in good
\nfaith to resolve any dispute, controversy or claim (“Dispute”) arising out of or
\nrelating to this Agreement promptly by negotiations between executives who have
\nauthority to settle the Dispute. Any Party may give the other Parties written
\nnotice of any Dispute not resolved in the normal course of business. Within
\ntwenty (20) days after delivery of such a notice, executives of the Parties who
\nhave authority to settle the dispute shall meet at a mutually acceptable time
\nand place, and thereafter as often as they reasonably deem necessary, to attempt
\nto resolve the Dispute. If the matter has not been resolved within thirty (30)
\ndays after such notice, unless extended by the agreement of the Parties in
\nwriting (the “Negotiation Period”), the matter shall be subject to mediation as
\nprovided in Section 17.2. If a Party intends to be accompanied at a meeting by
\nan attorney, the other Parties shall be given at least three (3) Business Days’
\nnotice of such intention and may also be accompanied by an attorney. All
\nnegotiations pursuant to this provision are confidential and shall be treated as
\ncompromise and settlement negotiations for purpose of the United States Federal
\nRules of Evidence and state rules of evidence.<\/p>\n
17.2 MEDIATION. Any Dispute not settled pursuant to Section 17.1 shall
\nbe submitted to mediation administered by the American Arbitration Association
\nunder its Commercial Mediation Rules (such mediation, “Mediation”), before
\nresorting to arbitration as hereinafter provided. The Mediation shall be
\ncompleted within forty-five (45) days of its initiation pursuant to the
\nCommercial Mediation rules, unless the Parties otherwise agree. Executives of
\nthe Parties with authority to resolve the Dispute shall participate in the
\nMediation. The Mediation shall take place in San Jose, California. The Parties
\nshall attempt in good faith to reach agreement on the appointment of a mediator.
\nIf they cannot so agree, the mediator shall be appointed pursuant to the
\nCommercial Mediation Rules; provided, however, that the mediator appointed shall
\nhave a background in the semiconductor industry. The Parties shall each pay
\ntheir own expenses of Mediation, including attorney’s fees, and shall share
\nequally the mediator’s fees and expenses.<\/p>\n
17.3 CLAIMS SUBJECT TO ARBITRATION. Except as otherwise specifically
\nprovided herein, any Dispute arising out of or relating to this Agreement, or
\nthe breach or termination hereof, and not resolved pursuant to Section 17.1 or
\nSection 17.2 shall be resolved by binding arbitration in accordance with the
\nFederal Arbitration Act, 9 U.S.C. SectionSection 1 et seq. (the “FAA”), and the
\nCommercial Arbitration <\/p>\n
34
\n PURCHASE AGREEMENT<\/p>\n
41
\nRules, and where the amount in controversy exceeds $1,000,000, the Supplementary
\nProcedures for Large Complex Disputes, of the AAA (collectively, the “Rules”).
\nIn the event of a conflict between the FAA and the Rules, the Rules shall
\ngovern. In the event of a conflict between this Article and the FAA or the
\nRules, this Article shall govern. A court of competent jurisdiction, upon
\napplication from any Party, may relieve the Parties of their duty to arbitrate
\nDisputes in whole or in part, or may stay any arbitration hereunder in whole or
\nin part, if ongoing litigation between one or more of the Parties and a third
\nparty (or parties) involves issues of fact or law common with those subject to
\narbitration hereunder and there exists the possibility of inconsistent judgments
\nif such relief is not granted. Each Party reserves the right to file with a
\ncourt of competent jurisdiction an application for temporary or preliminary
\ninjunctive relief, a protective order or other appropriate provisional remedy on
\ngrounds that (a) the arbitration award to which the applicant may be entitled
\nmay be rendered ineffectual in the absence of such relief; or (b) in the event
\nof a breach or threatened breach of the provisions of Subsection 15.1.1
\nprohibiting disclosure of Proprietary Information.<\/p>\n
17.4 VENUE. The venue for any arbitration proceeding hereunder shall
\nbe San Jose, California.<\/p>\n
17.5 SELECTION OF ARBITRATOR AND DETERMINATION OF CONTROVERSIES.<\/p>\n
17.5.1 Any Dispute subject to arbitration shall be submitted
\nto a single neutral arbitrator, who, unless otherwise agreed by the Parties,
\nshall be a retired judge or other lawyer who is a member of the arbitration
\npanel of the Judicial Arbitration and Mediation Service (“JAMS”) or the national
\npanel of arbitrators of the AAA, and who has substantial experience in the area
\nof the Dispute. The Parties shall confer concerning the selection of AAA or JAMS
\nwith the objective of selecting one or the other within thirty (30) days of the
\nconclusion of the Mediation; provided, however, that, if all Parties to the
\nDispute do not agree on one or the other within such thirty (30) day period, the
\nDispute initially will be submitted simultaneously to both AAA and JAMS for the
\nsole purpose of picking the arbitrator. If the Parties select JAMS, then the
\nterm “Rules” as used herein shall mean the then-prevailing JAMS rules. The AAA
\n(or JAMS, as the case may be) simultaneously shall submit to each Party an
\nidentical list of five proposed qualified arbitrators drawn from the applicable
\npanel of commercial arbitrators. If the Parties are unable to agree upon an
\narbitrator within thirty (30) days from the date that AAA (or JAMS, as the case
\nmay be) submits such list to each Party, then AAA (or JAMS, as the case may be)
\nshall simultaneously submit to each Party a second list of five additional
\nproposed qualified arbitrators drawn from the applicable panel of commercial
\narbitrators. If for any reason, the appointment of an arbitrator cannot be made
\nfrom either list, AAA (or JAMS, as the case may be) may make the appointment
\nfrom among other qualified members of the panel without the submission of
\nadditional lists to the Parties. If the Dispute is initially submitted to both
\nAAA and JAMS for the purpose of picking the arbitrator, then both AAA and JAMS
\nsimultaneously shall submit to each Party lists of five proposed qualified
\narbitrators drawn from the applicable panel (with each Party receiving the
\nidentical list from AAA and the identical list from JAMS), and if the Parties
\nare unable to agree upon an arbitrator within thirty (30) days from the date
\nthat both AAA and JAMS submit the first such lists to each Party, then AAA and
\nJAMS simultaneously shall submit to each Party second lists of five additional
\nproposed qualified arbitrators (with each Party receiving an identical second
\nlist from AAA and an identical second list from JAMS). If the Parties for any
\nreason are unable to select an arbitrator from the first and second lists
\nsubmitted by AAA and by JAMS, then a majority of the Parties shall select to
\narbitrate with either AAA or with JAMS, and the arbitration organization so
\nselected shall make the appointment from among other qualified members of the
\narbitration panel of that organization without the submission of additional
\nlists to the Parties. Where the Parties have initially submitted the Dispute to
\nboth JAMS and AAA, then once an arbitrator has been appointed, the <\/p>\n
35
\n PURCHASE AGREEMENT<\/p>\n
42
\narbitration proceeding will be terminated with the arbitration organization that
\nhas not been selected and the Parties shall equally share the costs and fees of
\nthe arbitration organization so terminated. If for any reason the Parties to the
\nDispute have not selected an arbitrator within ninety (90) days of the
\nconclusion of the Mediation, then the arbitration shall be conducted with the
\nAAA. No matter how selected, the arbitrator shall have no prior or existing
\naffiliation or relationship with any Party or its counsel and shall sign an oath
\nof impartiality upon appointment.<\/p>\n
17.5.2 The Parties shall be entitled to obtain pre-hearing
\ndiscovery through depositions and requests for the inspection and copying of
\ndocuments and other items upon reasonable notice and to obtain the issuance of a
\nsubpoena duces tecum therefor in accordance with applicable law, including
\nwithout limitation, 9 U.S.C. Section 7 and (notwithstanding Section 1297.17 of
\nthe California Code of Civil Procedure) Section 1283.05 of the California Code
\nof Civil Procedure; provided that depositions shall not be taken unless leave to
\ndo so is first granted by the arbitrator. As between the Parties, the arbitrator
\nshall have the power to enforce the rights, remedies, procedures, duties,
\nliabilities and obligations of discovery by the imposition of the same terms,
\nconditions, consequences, sanctions and penalties as may be imposed in like
\ncircumstances in a civil action by a U.S. Federal court.<\/p>\n
17.6 ARBITRATION AWARD AND JUDICIAL REVIEW. The arbitrator, in deciding
\nany Dispute, shall base his decision on the record and in accordance with this
\nAgreement and applicable law. In no event shall the arbitrator make any ruling,
\nfinding or award that does not conform to the terms and conditions of this
\nAgreement, is not supported by the weight of the evidence, or is contrary to
\nstatute, administrative regulations or established judicial precedents. The
\narbitration award shall be a factually detailed, reasoned opinion stating the
\narbitrator’s findings of fact and conclusions of law. Unless the arbitrator for
\ngood cause determines otherwise, the final award shall include attorneys’ fees,
\ncosts and expenses of the prevailing Party, including expert and nonexpert
\nwitness fees and the prevailing Party’s share of the administrative fee and the
\narbitrator’s fees and expenses, if any. Notwithstanding any other provisions
\nhereof, the arbitrator shall have no jurisdiction to award damages in
\ncontravention of Article 10 hereof. The arbitration award shall be subject to
\njudicial review in accordance with 9 U.S.C. SectionSection 10-12; provided,
\nhowever, that the arbitration award shall also be vacated to the extent that the
\narbitrator exceeds his or her authority as set forth in this Section 17.6, and,
\non balance, the Party seeking vacation of the award has been materially and
\nadversely affected thereby. Judgment may be entered on the award by a United
\nStates District Court in accordance with 9 U.S.C. Section 9.<\/p>\n
17.7 CONSOLIDATION AND JOINDER. It is the Parties’ intent to avoid, to
\nthe maximum extent possible, having to arbitrate claims arising out of this
\nAgreement in more than one proceeding. Accordingly, the Parties hereby consent
\nto the joinder of the Company and any other person or entity sought to be joined
\nwhere the Company or other person or entity is substantially involved in a
\ncommon question of fact or law and its or his presence is required for complete
\nrelief to be accorded in an arbitration proceeding under this Article 17. Should
\nthe Company arbitrate a claim or dispute by or against TSMC under the
\nManufacturing Agreement involving similar issues of law or fact arising out of
\nthis Agreement, each of the Buyers hereby consents to consolidation of such
\narbitration with any arbitration brought under this Article 17. Thus, by way of
\nillustration but without limitation, the Parties consent to the foregoing
\njoinder and consolidation in respect to Disputes arising out of or relating to
\nProduction Qualification under Section 4.2, production and supply issues under
\nArticle 5, purchase orders and pricing issues under Article 6, delivery issues
\nunder Article 7, production warranty issues under Article 9, and indemnity
\nissues under Article 11.<\/p>\n
36
\n PURCHASE AGREEMENT<\/p>\n
43
\n ARTICLE 18
\n GENERAL PROVISIONS<\/p>\n
18.1 SEVERABILITY. If any provision of this Agreement is or becomes or
\nis deemed invalid, illegal or unenforceable in any jurisdiction, such provision
\nshall be deemed amended to conform to applicable laws so as to be valid and
\nenforceable or, if it cannot be so amended without materially altering the
\nintention of the Parties, it shall be stricken and the remainder of this
\nAgreement shall remain in full force and effect.<\/p>\n
18.2 NEUTRAL INTERPRETATION; WAIVER OF CONFLICT. Each Party has
\nreceived independent legal advice from its attorneys with respect to the
\nadvisability of executing this Agreement and the meaning of the provisions
\nhereof. Each Party waives any real, apparent, possible or inchoate conflict in
\nconnection with, arising out of or resulting from the representation of TSMC and
\nits Affiliates by the same law firm relative to the negotiation and execution of
\nthis Agreement, the LLC Agreement, the Manufacturing Agreement, the Advanced
\nProcess License Agreement, the Technology License and Assistance Agreement, the
\nSide Letter (as defined below), and any confidentiality agreement provided for
\nherein. The provisions of this Agreement shall be construed as to their fair
\nmeaning, and not for or against any Party based upon any attribution to such
\nParty as the source of the language in question.<\/p>\n
18.3 NOTICES. Any notices, demands, requests, waivers, or other
\ncommunications required or permitted to be given to a Party hereunder shall be
\nin writing in the English language and shall be delivered or sent to such Party
\nat its address set forth on Exhibit “I” hereto, or such other address as such
\nParty may hereafter specify, and shall be deemed given (a) when personally
\ndelivered to such Party, (b) when transmitted by facsimile and receipt of such
\ntransmission is confirmed by facsimile, (c) 24 hours after dispatch via an
\nestablished overnight courier service, or (d) three (3) days after mailing by
\nprepaid first class, certified mail with return receipt requested.<\/p>\n
18.4 TIME OF THE ESSENCE. Time is of the essence with respect to each
\nprovision of this Agreement in which time is a factor.<\/p>\n
18.5 GOVERNING LAW. This Agreement shall be governed by and construed
\nin accordance with the laws of the State of Delaware, United States of America,
\nwithout regard to conflicts of laws principles. The Parties expressly reject any
\napplication of the United Nations Convention on Contracts for the International
\nSale of Goods.<\/p>\n
18.6 ENTIRE AGREEMENT. This Agreement, the LLC Agreement and a letter
\nagreement dated as of the date hereof between the Parties (the “Side Letter”)
\nconstitute and contain the entire agreement of the Parties, and supersede any
\nand all prior or contemporaneous negotiations, correspondence, understandings
\nand agreements among the Parties, written or oral, respecting the subject matter
\nhereof. In case of any conflict between the LLC Agreement and this Agreement,
\nthe LLC Agreement shall govern.<\/p>\n
18.7 WAIVER; AMENDMENT. No waiver of any provision of this Agreement
\nshall be effective unless and until made in writing and signed by the Party to
\nbe charged. No waiver, forbearance or failure by any Party hereto of its right
\nto enforce any provision of this Agreement shall constitute a waiver or estoppel
\nof such Party’s right to enforce any other provision of this Agreement or a<\/p>\n
37
\n PURCHASE AGREEMENT<\/p>\n
44
\ncontinuing waiver by such Party of compliance with any provision. Any amendment
\nor modification of this Agreement shall be by unanimous written consent of the
\nParties.<\/p>\n
18.8 COOPERATION. Each Party shall cooperate with the other Parties
\nhereto and shall take such further action and shall execute and deliver such
\nfurther documents as may be reasonably necessary or desirable in order to carry
\nout the provisions and purposes of this Agreement.<\/p>\n
18.9 COUNTERPARTS. This Agreement may be executed in one or more
\ncounterparts, each of which shall be deemed to be an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
18.10 EXHIBITS AND SCHEDULES. All exhibits and schedules to which
\nreference is made in this Agreement are deemed to be incorporated by reference
\ninto this Agreement, whether or not actually attached hereto.<\/p>\n
18.11 ATTORNEYS’ FEES. In the event of any litigation, arbitration,
\njudicial reference or other proceeding involving the Parties to this Agreement
\nto enforce any provision of this Agreement, to enforce any remedy available upon
\ndefault under this Agreement, or seeking a declaration of the rights of a Party
\nunder this Agreement, the prevailing Party(ies) shall be entitled to recover
\nfrom the other(s) such attorneys’ fees and costs as may be reasonably incurred,
\nincluding the cost of reasonable investigation, preparation and professional or
\nexpert consultation incurred by reason of such litigation, arbitration, judicial
\nreference or other proceeding. Notwithstanding the foregoing, (a) in an
\narbitration proceeding the award of attorneys’ fees shall be governed by the
\nprovisions of Section 17.6; and (b) in a Mediation under Section 17.2 each Party
\nshall pay its own attorneys’ fees and expenses in accordance with Section 17.2.<\/p>\n
18.12 DATE OF PERFORMANCE. If the date on which any performance
\nrequired hereunder is other than a Business Day, then such performance shall be
\nrequired as of the next following Business Day.<\/p>\n
18.13 SURVIVAL. Following early termination or the expiration of this
\nAgreement, the provisions of Article I (Definitions and Rules of Construction),
\nArticle 9 (Product Warranty), Article 10 (Limitation on Damages; Contractual
\nLimitations Period), Article 11 (Indemnities), Article 15 (Proprietary
\nInformation) Article 16 (Export Compliance), Article 17 (Arbitration), Article
\n18 (General Provisions), Section 14.4 (Rights and Remedies Following
\nTermination), Section 14.5 (Remedies Cumulative, Concurrent and Non-Exclusive),
\nand the Buyers’ payment obligations under Subsection 3.5.2 and Sections 5.3,
\n5.4, 5.11, and 6.4 shall survive and remain in full force and effect in
\naccordance with their terms.<\/p>\n
18.14 ASSIGNMENT; PARTIES BOUND. Except as expressly permitted in this
\nSection 18.14, or as otherwise permitted elsewhere in this Agreement, neither
\nthis Agreement nor any rights or obligations arising hereunder may be assigned
\nor transferred (by operation of law or otherwise) by any Party, in whole or in
\npart, without the prior written consent of the other Parties. Notwithstanding
\nthe foregoing, (a) TSMC may assign or transfer (by operation of law or
\notherwise) this Agreement without the Buyers’ consent (i) to any corporation or
\nlimited liability company resulting from the merger, consolidation,
\nreincorporation or reorganization of TSMC (excluding, however, a reorganization
\nin bankruptcy); or (ii) to an Affiliate of TSMC; provided, however, that TSMC
\nshall remain personally and primarily liable for all the rights and obligations
\nunder this Agreement following any such assignment or transfer <\/p>\n
38
\n PURCHASE AGREEMENT<\/p>\n
45
\n(unless TSMC is merged or consolidated with an Affiliate contemporaneously with
\nor subsequent to such assignment or transfer); and (b) each Buyer may assign or
\ntransfer this Agreement to any Affiliate of a Buyer; provided, however, that
\nsuch Buyer shall remain personally and primarily liable for all rights and
\nobligations under this Agreement following any such assignment or transfer
\n(unless Buyer is merged or consolidated with an Affiliate contemporaneously with
\nor subsequent to such assignment or transfer). This Agreement shall be binding
\nupon and inure to the benefit of the Parties and their respective successors,
\npermitted transferees, and permitted assigns.<\/p>\n
18.15 THIRD-PARTY BENEFICIARIES. There are no third-party
\nbeneficiaries of this Agreement, except as expressly provided with respect to
\nindemnitees under Section 11.4.1.<\/p>\n
18.16 GOVERNING LANGUAGE OF AGREEMENT. This Agreement is in the English
\nlanguage only, which language shall be controlling in all respects, and all
\nother versions thereof in any other language shall be for accommodation only and
\nshall not be binding upon the Parties. All communications to be made or given
\npursuant to this Agreement shall be in the English language.<\/p>\n
18.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Each Party
\nirrevocably consents to the jurisdiction of the state and Federal courts located
\nin San Jose, California, agrees, subject to the provisions of Article 17 and
\nArticle 10, that any action, suit or proceeding by or among the Parties (or any
\nof them) may be brought in any such court sitting in San Jose, California, and
\nwaives any objection which the Party may now or hereafter have concerning
\njurisdiction and venue, whether based on considerations of personal
\njurisdiction, forum non conveniens or on any other ground. Each Party hereby
\nirrevocably designates, appoints and empowers the Secretary of State of
\nCalifornia to receive for and on behalf of such Party service of process in the
\nState of California and further irrevocably consents to the service of process
\noutside of the territorial jurisdiction of said courts by mailing copies thereof
\nby registered or certified United States mail, postage prepaid, to such Party’s
\nlast known address as established in accordance with Section 18.3 with the same
\neffect as if the Party were a resident of the State of California and had been
\nlawfully served in such state. Any process served on the California Secretary of
\nState in accordance with the preceding sentence shall also be noticed to the
\nParty’s last known address established in accordance with Section 18.3 in a
\nmanner permitted by said Section 18.3. Nothing in this Agreement shall affect
\nthe right to service of process in any other manner permitted by law. Each Party
\nfurther agrees that final judgment against it in any such action or proceeding
\nshall be conclusive and may be enforced in any other jurisdiction within or
\noutside the State of California by suit on the judgment, a certified or
\nexemplified copy of which shall be conclusive evidence of the fact and the
\namount of such judgment.<\/p>\n
18.18 AUTHORIZED REPRESENTATIVES. Each Party shall designate an
\nindividual to act on behalf of the Party so designating him as its authorized
\nrepresentative with full power and authority to speak for and bind such Party in
\nconnection with all matters arising under this Agreement. Such designation shall
\nbe by written notice delivered in accordance with Section 18.3. Each Party may
\nfrom time to time change its authorized representative hereunder by giving
\nwritten notice of such change to the other Party at least seven (7) Business
\nDays prior to the effective date of such change.<\/p>\n
18.19 RELATIONSHIP OF THE PARTIES. The Parties intend that the
\nrelationship between them hereunder shall be solely that of buyer and seller.
\nNothing herein shall be construed (a) to create a partnership or joint venture,
\n(b) to constitute either Party an agent or legal representative of the other
\nParty; or (c) to create any fiduciary relationship between the Parties. This
\nAgreement does not grant any Party any right or authority to assume or create
\nany obligation or responsibility on behalf of any <\/p>\n
39
\n PURCHASE AGREEMENT<\/p>\n
46
\nother Party, and no Parties shall be in any way responsible for the debts of any
\nother Party incurred under or pursuant to the terms of this Agreement.<\/p>\n
18.20 MANUFACTURING AGREEMENT. TSMC agrees to exercise its rights
\nunder the Manufacturing Agreement so as to comply with its obligations to Buyers
\nunder this Purchase Agreement.<\/p>\n
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]<\/p>\n
40
\n PURCHASE AGREEMENT<\/p>\n
47
\n [SIGNATURE PAGE TO PURCHASE AGREEMENT]<\/p>\n
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
\ndates set forth below their respective names, effective as of the Effective
\nDate.<\/p>\n
TAIWAN SEMICONDUCTOR ANALOG DEVICES, INC.
\nMANUFACTURING CO., LTD. <\/p>\n
By: \/s\/ Donald W. Brooks By: \/s\/ Joseph E. McDonough
\n ——————————– ———————————-
\nName: Donald W. Brooks Name: Joseph E. McDonough
\n —————————— ——————————–
\nTitle: President Title: Vice President Finance & CFO
\n —————————– ——————————-
\nDate: June 25, 1996 Date: June 25, 1996
\n —————————— ——————————–<\/p>\n
ALTERA CORPORATION INTEGRATED SILICON SOLUTIONS, INC. <\/p>\n
By: \/s\/ Rodney Smith By: \/s\/ Jimmy S.M. Lee
\n ——————————– ———————————
\nName: Rodney Smith Name: Jimmy S.M. Lee
\n —————————— ——————————–
\nTitle: President, Chief Executive Title: Chairman, President and Chief
\n —————————– ——————————
\n Officer and Chairman Executive Officer
\n —————————– ——————————
\nDate: June 25, 1996 Date: June 25, 1996
\n —————————— ——————————<\/p>\n
48
\n EXHIBIT “A”<\/p>\n
Pricing Schedule<\/p>\n
(To be determined subsequent to the date of this Agreement)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
49
\n EXHIBIT “B”<\/p>\n
Product Qualification Plan<\/p>\n
(To be determined subsequent to the date of this Agreement)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
50
\n EXHIBIT “C”<\/p>\n
Quality and Reliability Specifications<\/p>\n
(To be determined subsequent to the date of this Agreement)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
51
\n EXHIBIT “D”<\/p>\n
Wafer Equivalents<\/p>\n
(See Following Page)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
52
\n EXHIBIT D<\/p>\n
EQUIVALENCY FACTOR TABLE<\/p>\n
***<\/p>\n
*** Confidential treatment requested pursuant to a request for
\nconfidential treatment filed with the Commission by Altera Corporatioon on
\nAugust 14, 1996. The omitted portions have been filed separately with the
\nCommission.<\/p>\n
53
\n EXHIBIT “E”<\/p>\n
Production Ramp-Up Plan<\/p>\n
(See Following Page)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
54
\n EXHIBIT E<\/p>\n
I.3 JV COMPANY IN USA CAPACITY RAMP UP PLAN
\n (8″ WAFER 30K\/MONTH)<\/p>\n
Unit: 8: Kpcs<\/p>\n
\n\n– —————————————————————————————————————-
\n YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL
\n– —————————————————————————————————————-<\/p>\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n
\n1998 *** *** *** *** *** *** *** *** *** ***
\n– —————————————————————————————————————-
\n1999 *** *** *** *** *** *** *** *** *** *** *** *** ***
\n– —————————————————————————————————————-
\n2000 *** *** *** *** *** *** *** *** *** *** *** *** ***
\n– —————————————————————————————————————-
\n2001 *** *** *** *** *** *** *** *** *** *** *** *** ***
\n– —————————————————————————————————————-
\n2002 *** *** *** *** *** *** *** *** *** *** *** *** ***
\n– —————————————————————————————————————-<\/p>\n<\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/caption>\n<\/table>\n
* Jan: Annual Maintenance 6 days = [greater than sign] Working
\n day = 25 days
\n Feb: Working day = 28 days
\n Dec: Christmas Holiday 4 days = [greater than sign] Working
\n day = 27 days<\/p>\n
*** Confidential treatment requested pursuant to a request for
\n confidential treatment filed with the Commission by Altera
\n Corporation on August 14, 1996. The redacted portions have been
\n filed seperately with the Commission.<\/p>\n
55
\n EXHIBIT “F”<\/p>\n
Buyers’ Purchase Forecasts<\/p>\n
(To be determined subsequent to the date of this Agreement)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
56
\n EXHIBIT “G”<\/p>\n
Design Rule and Parametric Information<\/p>\n
(To be determined subsequent to the date of this Agreement)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
57
\n EXHIBIT “H”<\/p>\n
Inspection and Testing Methods<\/p>\n
(To be determined subsequent to the date of this Agreement)<\/p>\n
PURCHASE AGREEMENT<\/p>\n
58
\n EXHIBIT “I”<\/p>\n
Addresses for Notices<\/p>\n
TSMC:<\/p>\n
Taiwan Semiconductor Manufacturing Co., Ltd.
\n 121, Park Avenue 3, Science-Based Industrial Park,
\n Hsinchu, Taiwan, R.O.C.<\/p>\n
ADI:<\/p>\n
Analog Devices, Inc.
\n 1 Technology Way
\n Norwood, Massachusetts 02062-2634<\/p>\n
ALTERA:<\/p>\n
Altera Corporation
\n 2610 Orchard Parkway
\n San Jose, California 95134-2020<\/p>\n
ISSI:<\/p>\n
Integrated Silicon Solutions, Inc.
\n 680 Alamanor Avenue
\n Sunnyvale, California 94086<\/p>\n
PURCHASE AGREEMENT<\/p>\n
59
\n EXHIBIT “J”<\/p>\n
FORM OF
\n CONFIDENTIALITY AGREEMENT<\/p>\n
This Confidentiality Agreement (the “Agreement”) is made and entered
\ninto as of _____________, by and between WaferTech, L.L.C., a _____________
\n(“Disclosing Party”), and __________________________, [a _____________
\ncorporation or other entity] [a natural person] (the “Receiving Party”).<\/p>\n
WHEREAS, the Disclosing Party has agreed to give the Receiving Party
\naccess to the Disclosing Party’s semiconductor wafer-fabrication plant located
\nin _____________ (the “Foundry”), and as a result of granting such access the
\nDisclosing Party has disclosed or will disclose to the Receiving Party certain
\nConfidential Information (as defined below) regarding the Disclosing Party’s
\nbusiness operations and products (the “Business”); and<\/p>\n
WHEREAS, the Disclosing Party’s grant of access to the Foundry and its
\ndisclosure of certain Confidential Information regarding the Disclosing Party’s
\nBusiness is for the following purpose: __________________________(the
\n“Purpose”); and<\/p>\n
WHEREAS, the Disclosing Party desires to maintain the secrecy of its
\nConfidential Information and accordingly has requested that the Receiving Party
\nexecute this Agreement as a condition precedent to the granting of access to the
\nFoundry and the disclosure of such information to the Receiving Party; and<\/p>\n
WHEREAS, this Agreement is made and entered into pursuant to that
\ncertain Purchase Agreement by and between Taiwan Semiconductor Manufacturing
\nCo., Ltd., incorporated in Taiwan, Republic of China and the Buyers named as
\nparties therein, dated as of , 1996 (the “Purchase Agreement”),
\nreference to which Purchase Agreement is here made for all purposes, whereby
\neach party agrees to grant access to facilities and information to the other
\nparty’s engineers, technicians and personnel so long as they execute and deliver
\na copy of this Agreement. <\/p>\n
NOW THEREFORE, in consideration of the above premises, and for other
\ngood and valuable consideration, the receipt and sufficiency of which are hereby
\nacknowledged, the parties hereto agree as follows:<\/p>\n
1. DEFINITION OF CONFIDENTIAL INFORMATION<\/p>\n
As used herein, “Confidential Information” shall mean all data,
\nconcepts, ideas, methods, processes, techniques, formulae, know-how, mask-works,
\ntrade and industrial secrets and improvements relating to research, development
\nor manufacturing activities of the Disclosing Party and other confidential and
\nproprietary information concerning the Disclosing Party’s existing or proposed
\nbusiness and marketing plans, operations, customers, and contact lists,
\nmarketing expertise and strategies, the terms and conditions of the Purchase
\nAgreement, business development proposals and other information compiled and
\ndeveloped by the Disclosing Party for use in semiconductor- wafer fabrication
\noperations. Confidential Information shall include not only written information,
\nbut also (a) information transferred orally, visually, electronically or by any
\nother means, provided that the Disclosing Party expressly indicates to the
\nReceiving<\/p>\n
J-1
\n PURCHASE AGREEMENT<\/p>\n
60
\nParty that such disclosures constitute “Confidential Information” for purposes
\nof this Agreement, and (b) all notes, analyses, compilations, presentations or
\nother documents (including materials prepared by the Receiving Party), which
\ncontain or otherwise reflect such information. Confidential Information shall
\ninclude, if applicable, any confidential or proprietary information of any
\nsubsidiary or other affiliate of the Disclosing Party.<\/p>\n
2. NON-CONFIDENTIAL INFORMATION<\/p>\n
The term “Confidential Information” does not include information which
\n(a) becomes generally available to the public other than as the result of a
\ndisclosure by the Receiving Party; (b) was available to the Receiving Party on a
\nnonconfidential basis (including, but not limited to information developed by
\nthat party or, if applicable, its employer) prior to its disclosure to the
\nReceiving Party by the Disclosing Party and\/or its officers, directors,
\nemployees, representatives or agents; (c) becomes available to the Receiving
\nParty on a nonconfidential basis from a source other than the Disclosing Party
\nor its officers, directors, employees, representatives or agents provided that
\nsuch source is not bound by a confidentiality agreement with the Disclosing
\nParty or is not otherwise prohibited from transmitting the information to the
\nReceiving Party by a contractual, legal or fiduciary obligation; or (d) is
\nrequired to be disclosed by the Receiving Party pursuant to law, governmental
\nregulation or judicial order, provided that written notice is given to the
\nDisclosing Party prior to the required disclosure.<\/p>\n
3. USE OF CONFIDENTIAL INFORMATION<\/p>\n
The Receiving Party shall use the Confidential Information solely for
\nthe Purpose and for no other purpose. In no event shall a Receiving Party use
\nConfidential Information in the Receiving Party’s own business (or, if
\napplicable, in the business of its employer), or in the business of any other
\nentity, or in any other manner whatsoever except as may be expressly permitted
\nin this Agreement or in the Purchase Agreement. The Disclosing Party shall have
\nthe right to review all documents prepared by the Receiving Party relating to
\nConfidential Information prior to any dissemination of such communication to
\nthird parties. The Receiving Party shall delete any information from the
\ndocuments that the Disclosing Party requires to be deleted.<\/p>\n
4. DISCLOSURE OF CONFIDENTIAL INFORMATION<\/p>\n
Without the prior consent of the Disclosing Party, the Receiving Party
\nshall not disclose to any person (a) the fact that the Confidential Information
\nhas been made available to the Receiving Party or that the Receiving Party has
\ninspected any portion of the Confidential Information, or (b) any of the terms,
\nconditions or other facts with respect to the Business or the Disclosing Party,
\nexcept to the extent the foregoing is required to be disclosed by the Receiving
\nParty pursuant to law, governmental regulation or judicial order, provided that
\nwritten notice is given to the Disclosing Party prior to the required
\ndisclosure. The fact that such information has been delivered to the Receiving
\nParty and any discussions regarding the Business or the Disclosing Party, are
\ndeemed Confidential Information for the purposes of this Agreement, except to
\nthe extent the foregoing is required to be disclosed by the Receiving Party
\npursuant to law, governmental regulation or judicial order, provided that
\nwritten notice is given to the Disclosing Party prior to the required
\ndisclosure.<\/p>\n
5. DESTRUCTION OR RETURN OF CONFIDENTIAL INFORMATION<\/p>\n
J-2
\n PURCHASE AGREEMENT<\/p>\n
61
\n Upon request from the Disclosing Party to the Receiving Party (a) the
\nReceiving Party shall either destroy or return to the Disclosing Party all
\nConfidential Information which is in tangible form, including any copies of
\nwhich the Receiving Party may have made, destroy all abstracts, summaries
\nthereof or references thereto in the documents of the Receiving Party, and
\ncertify to Disclosing Party that this has been done, and (b) the Receiving Party
\nshall not use any of the Confidential Information with respect to, or in
\nfurtherance of, any of its businesses (or, if applicable, the business of its
\nemployer) or in the business of anyone else, whether or not in competition with
\nthe Disclosing Party, or for any other purpose whatsoever.<\/p>\n
6. INDEMNIFICATION<\/p>\n
The Receiving Party hereby agrees to indemnify, defend and hold
\nharmless the Disclosing Party from any damages, loss, cost or liability
\n(including legal fees and costs of enforcing this indemnity) arising out of or
\nresulting from any unauthorized use or disclosure by the Receiving Party of the
\nConfidential Information.<\/p>\n
7. REMEDIES<\/p>\n
Receiving Party acknowledges that money damages would be both
\nincalculable and an insufficient remedy for any breach of this Agreement by a
\nReceiving Party, and that such breach would cause Disclosing Party irreparable
\nharm. In addition to all other remedies available to Disclosing Party at law, in
\nequity or under this Agreement, the Disclosing Party will be entitled to
\nspecific performance and injunctive or other equitable relief as a remedy for
\nany such breach, and the breaching party agrees to waive any requirement of
\nreceiving or posting of any bond in connection with such remedy. Each party
\nagrees and consents to the entry of a preliminary injunction or protective order
\nby any court of competent jurisdiction upon a showing by the Disclosing Party
\nthat its Confidential Information is being used or disclosed contrary to the
\nprovisions of this Agreement. The arbitration provisions of Sections 17.3
\nthrough 17.7 of the Purchase Agreement shall not apply to any temporary
\nrestraining order, preliminary injunctive relief, protective order or other
\nprovisional remedy sought to prohibit a breach or threatened breach of the
\nprovisions of this Agreement.<\/p>\n
8. NO LICENSE<\/p>\n
This Agreement does not imply any license to the Receiving Party (or,
\nif applicable, its employer) of Disclosing Party’s Confidential Information or
\nany of its patents, copyrights, trademarks, mask-work rights or applications
\ntherefor. All proprietary rights, including but not limited to patent rights and
\ntrade and industrial secrets, in and to the Confidential Information shall
\nremain the Disclosing Party’s property.<\/p>\n
9. ADDITIONAL AGREEMENT IF RECEIVING PARTY IS A BUSINESS ORGANIZATION<\/p>\n
If the Receiving Party is a corporation, limited liability company, or
\nother business organization, it agrees (a) that it shall hold all Confidential
\nInformation it receives from the Disclosing Party in strict confidence and with
\nthe same degree of care that Receiving Party gives to Receiving Party’s own
\nproprietary and confidential information, but not less than a reasonable degree
\nof care, and shall not disclose such Confidential Information to others, except
\nas may be required by law; (b) Receiving Party’s covenants and agreements set
\nforth in this Agreement shall be binding upon its officers, directors,
\nemployees, representatives and agents; and (c) the Receiving Party shall cause
\nits officers, directors, <\/p>\n
J-3
\n PURCHASE AGREEMENT<\/p>\n
62
\nemployees, representatives and agents to abide by the provisions of this
\nAgreement. Notwithstanding the provisions of paragraph 4 above, the Receiving
\nParty may disclose Confidential Information without the prior consent of the
\nDisclosing Party to its officers, directors and employees who have a need to
\nknow such information in order to perform their duties; provided, however, that
\neach person to whom the Confidential Information is disclosed must be advised of
\nits confidential nature and of the terms of this Agreement and must have entered
\ninto a written agreement with the Receiving Party that obligates such person to
\nabide by such terms (a copy of which must be delivered to the Disclosing Party
\nupon the Disclosing Party’s request).<\/p>\n
10. WAIVERS<\/p>\n
It is understood and agreed that no failure or delay by the Disclosing
\nParty in exercising any right, power or privilege hereunder shall operate as a
\nwaiver thereof, nor shall any single or partial exercise thereof preclude any or
\nfurther exercise or the exercise of any right, power or privilege hereunder.<\/p>\n
11. SEVERABILITY<\/p>\n
The invalidity or unenforceability of any provision of this Agreement
\nshall not affect the validity or enforceability of any other provision of this
\nAgreement, which shall remain in full force and effect.<\/p>\n
12. CONSENT TO JURISDICTION; GOVERNING LAW<\/p>\n
Except as otherwise provided herein, all disputes, differences or
\ncontroversies arising from this Agreement shall be settled by arbitration in
\naccordance with and pursuant to the arbitration provisions set forth in Sections
\n17.3 through 17.6 of the Purchase Agreement, a copy of which Sections 17.3
\nthrough 17.6 are attached hereto as Exhibit “A” and is incorporated by reference
\nherein. Each Party reserves the right to file with a court of competent
\njurisdiction an application for temporary or preliminary injunctive relief, a
\nprotective order or other appropriate provisional remedy (a) on grounds that the
\narbitration award to which the applicant may be entitled may be rendered
\nineffectual in the absence of such relief, or (b) in the event of a breach or
\nthreatened breach of the provisions of this Agreement prohibiting disclosure of
\nConfidential Information. This Agreement shall be governed by and construed in
\naccordance with the laws of Delaware.<\/p>\n
13. DURATION<\/p>\n
This Agreement shall become effective upon execution and delivery
\nhereof and shall continue in full force and effect for so long as the Disclosing
\nParty shall exist; provided, however, that the obligation of the Receiving Party
\nunder paragraphs 3, 4, 5, 6, 7, 9 and 12 shall survive indefinitely.<\/p>\n
14. ENTIRE AGREEMENT; SURVIVAL; SUCCESSORS AND ASSIGNS<\/p>\n
This Agreement contains the entire understanding of the parties hereto
\nconcerning the subject matter hereof and supersedes any prior agreement or
\nunderstanding of the parties. This Agreement shall survive the execution of any
\nother definitive document between the parties hereto and may not be modified
\nexcept in writing, duly signed by the party against whom enforcement is sought.
\nThis Agreement shall inure to the benefit of and is binding upon each of the
\nparties hereto and their respective heirs, successors, assigns and personal
\nrepresentatives.<\/p>\n
J-4
\n PURCHASE AGREEMENT<\/p>\n
63
\n 15. COUNTERPARTS.<\/p>\n
This Agreement is expected to be executed in one or more counterparts,
\neach of which shall be deemed to be an original, but all of which together shall
\nconstitute one and the same instrument. The facsimile signature of a party to
\nthis Agreement is and shall be deemed to be an original execution and is
\nbinding.<\/p>\n
J-5
\n PURCHASE AGREEMENT<\/p>\n
64
\n IN WITNESS WHEREOF, the parties have executed and delivered this
\nAgreement as of the date first written above.<\/p>\n
DISCLOSING PARTY: RECEIVING PARTY: <\/p>\n
WAFERTECH L.L.C. __________________________________ <\/p>\n
By:_______________________________ By:_______________________________
\n Name:_________________________ Name:_________________________
\n Title:________________________ Title:________________________ <\/p>\n
Address for Notices: Address for Notices:
\n__________________________________ __________________________________
\n__________________________________ __________________________________
\nTelephone:________________________ Telephone:________________________
\nFacsimile:________________________ Facsimile:________________________ <\/p>\n
J-6
\n PURCHASE AGREEMENT<\/p>\n
65
\n EXHIBIT “A” TO CONFIDENTIALITY AGREEMENT<\/p>\n
ARBITRATION<\/p>\n
Shown below is a copy of Sections 17.3 to 17.7 of that certain Purchase
\nAgreement, dated as of June 25, 1996, by and among Taiwan Semiconductor
\nManufacturing Co., Ltd., as Seller, and Analog Devices, Inc., Altera
\nCorporation, and Integrated Silicon Solutions, Inc., as Buyers (such copy, the
\n“Copy”). The Copy is an exact copy of the Purchase Agreement except for the
\ninsertion of the phrase “by negotiation or mediation between the Parties” in the
\nfirst sentence of Section 17.3 of the Purchase Agreement, replacing a reference
\nto Sections 17.1 to 17.2 of that agreement, which Sections are not applicable to
\nthis Agreement. All references to Articles, Sections, and Subsections in the
\nCopy are to corresponding subdivisions of the Purchase Agreement. All undefined
\ncapitalized terms in the Copy have the meanings given in the Purchase Agreement.<\/p>\n
17.3 CLAIMS SUBJECT TO ARBITRATION. Except as otherwise specifically
\nprovided herein, any Dispute arising out of or relating to this Agreement, or
\nthe breach or termination hereof, and not resolved by negotiation or mediation
\nbetween the Parties shall be resolved by binding arbitration in accordance with
\nthe Federal Arbitration Act, 9 U.S.C. Sections 1 et seq. (the “FAA”), and
\nthe Commercial Arbitration Rules, and where the amount in controversy exceeds
\n$1,000,000, the Supplementary Procedures for Large Complex Disputes, of the AAA
\n(collectively, the “Rules”). In the event of a conflict between the FAA and the
\nRules, the Rules shall govern. In the event of a conflict between this Article
\nand the FAA or the Rules, this Article shall govern. A court of competent
\njurisdiction, upon application from any Party, may relieve the Parties of their
\nduty to arbitrate Disputes in whole or in part, or may stay any arbitration
\nhereunder in whole or in part, if ongoing litigation between one or more of the
\nParties and a third party (or parties) involves issues of fact or law common
\nwith those subject to arbitration hereunder and there exists the possibility of
\ninconsistent judgments if such relief is not granted. Each Party reserves the
\nright to file with a court of competent jurisdiction an application for
\ntemporary or preliminary injunctive relief, a protective order or other
\nappropriate provisional remedy on grounds that (a) the arbitration award to
\nwhich the applicant may be entitled may be rendered ineffectual in the absence
\nof such relief; or (b) in the event of a breach or threatened breach of the
\nprovisions of Subsection 15.1.1 prohibiting disclosure of Proprietary
\nInformation.<\/p>\n
17.4 VENUE. The venue for any arbitration proceeding hereunder shall be
\nSan Jose, California.<\/p>\n
17.5 SELECTION OF ARBITRATOR AND DETERMINATION OF CONTROVERSIES.<\/p>\n
17.5.1 Any Dispute subject to arbitration shall be submitted
\nto a single neutral arbitrator, who, unless otherwise agreed by the Parties,
\nshall be a retired judge or other lawyer who is a member of the arbitration
\npanel of the Judicial Arbitration and Mediation Service (“JAMS”) or the national
\npanel of arbitrators of the AAA, and who has substantial experience in the area
\nof the Dispute. The Parties shall confer concerning the selection of AAA or JAMS
\nwith the objective of selecting one or the other within thirty (30) days of the
\nconclusion of the Mediation; provided, however, that, if all Parties to the
\nDispute do not agree on one or the other within such thirty (30) day period, the
\nDispute initially will be submitted simultaneously to both AAA and JAMS for the
\nsole purpose of picking the arbitrator. If the Parties select JAMS, then the
\nterm “Rules” as used herein shall mean the then-prevailing JAMS rules. The AAA
\n(or JAMS, as the case may be) simultaneously shall submit to each Party an
\nidentical list of five proposed qualified arbitrators drawn from the applicable
\npanel of commercial arbitrators. If the Parties are unable to agree upon an
\narbitrator within thirty (30) days from the date that AAA (or JAMS, as the case
\nmay be)<\/p>\n
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\n PURCHASE AGREEMENT<\/p>\n
66
\nsubmits such list to each Party, then AAA (or JAMS, as the case may be)
\nshall simultaneously submit to each Party a second list of five additional
\nproposed qualified arbitrators drawn from the applicable panel of commercial
\narbitrators. If for any reason, the appointment of an arbitrator cannot be made
\nfrom either list, AAA (or JAMS, as the case may be) may make the appointment
\nfrom among other qualified members of the panel without the submission of
\nadditional lists to the Parties. If the Dispute is initially submitted to both
\nAAA and JAMS for the purpose of picking the arbitrator, then both AAA and JAMS
\nsimultaneously shall submit to each Party lists of five proposed qualified
\narbitrators drawn from the applicable panel (with each Party receiving the
\nidentical list from AAA and the identical list from JAMS), and if the Parties
\nare unable to agree upon an arbitrator within thirty (30) days from the date
\nthat both AAA and JAMS submit the first such lists to each Party, then AAA and
\nJAMS simultaneously shall submit to each Party second lists of five additional
\nproposed qualified arbitrators (with each Party receiving an identical second
\nlist from AAA and an identical second list from JAMS). If the Parties for any
\nreason are unable to select an arbitrator from the first and second lists
\nsubmitted by AAA and by JAMS, then a majority of the Parties shall select to
\narbitrate with either AAA or with JAMS, and the arbitration organization so
\nselected shall make the appointment from among other qualified members of the
\narbitration panel of that organization without the submission of additional
\nlists to the Parties. Where the Parties have initially submitted the Dispute to
\nboth JAMS and AAA, then once an arbitrator has been appointed, the
\narbitration proceeding will be terminated with the arbitration organization that
\nhas not been selected and the Parties shall equally share the costs and fees of
\nthe arbitration organization so terminated. If for any reason the Parties to the
\nDispute have not selected an arbitrator within ninety (90) days of the
\nconclusion of the Mediation, then the arbitration shall be conducted with the
\nAAA. No matter how selected, the arbitrator shall have no prior or existing
\naffiliation or relationship with any Party or its counsel and shall sign an oath
\nof impartiality upon appointment.<\/p>\n
17.5.2 The Parties shall be entitled to obtain pre-hearing
\ndiscovery through depositions and requests for the inspection and copying of
\ndocuments and other items upon reasonable notice and to obtain the issuance of a
\nsubpoena duces tecum therefor in accordance with applicable law, including
\nwithout limitation, 9 U.S.C. Section 7 and (notwithstanding Section 1297.17 of
\nthe California Code of Civil Procedure) Section 1283.05 of the California Code
\nof Civil Procedure; provided that depositions shall not be taken unless leave to
\ndo so is first granted by the arbitrator. As between the Parties, the arbitrator
\nshall have the power to enforce the rights, remedies, procedures, duties,
\nliabilities and obligations of discovery by the imposition of the same terms,
\nconditions, consequences, sanctions and penalties as may be imposed in like
\ncircumstances in a civil action by a U.S. Federal court.<\/p>\n
17.6 ARBITRATION AWARD AND JUDICIAL REVIEW. The arbitrator, in deciding
\nany Dispute, shall base his decision on the record and in accordance with this
\nAgreement and applicable law. In no event shall the arbitrator make any ruling,
\nfinding or award that does not conform to the terms and conditions of this
\nAgreement, is not supported by the weight of the evidence, or is contrary to
\nstatute, administrative regulations or established judicial precedents. The
\narbitration award shall be a factually detailed, reasoned opinion stating the
\narbitrator’s findings of fact and conclusions of law. Unless the arbitrator for
\ngood cause determines otherwise, the final award shall include attorneys’ fees,
\ncosts and expenses of the prevailing Party, including expert and nonexpert
\nwitness fees and the prevailing Party’s share of the administrative fee and the
\narbitrator’s fees and expenses, if any. Notwithstanding any other provisions
\nhereof, the arbitrator shall have no jurisdiction to award damages in
\ncontravention of Article 10 hereof. The arbitration award shall be subject to
\njudicial review in accordance with 9 U.S.C. Sections 10-12; provided, however,
\nthat the arbitration award shall also be vacated to the extent that the
\narbitrator exceeds his or her authority as set forth in this Section 17.6, and,
\non balance, the Party seeking vacation of the award has been materially and <\/p>\n
J-8
\n PURCHASE AGREEMENT<\/p>\n
67
\nadversely affected thereby. Judgment may be entered on the award by a United
\nStates District Court in accordance with 9 U.S.C. Section 9.<\/p>\n
17.7 CONSOLIDATION AND JOINDER. It is the Parties’ intent to avoid, to
\nthe maximum extent possible, having to arbitrate claims arising out of this
\nAgreement in more than one proceeding. Accordingly, the Parties hereby consent
\nto the joinder of the Company and any other person or entity sought to be joined
\nwhere the Company or other person or entity is substantially involved in a
\ncommon question of fact or law and its or his presence is required for complete
\nrelief to be accorded in an arbitration proceeding under this Article 17. Should
\nthe Company arbitrate a claim or dispute by or against TSMC under the
\nManufacturing Agreement involving similar issues of law or fact arising out of
\nthis Agreement, each of the Buyers hereby consents to consolidation of such
\narbitration with any arbitration brought under this Article 17. Thus, by way of
\nillustration but without limitation, the Parties consent to the foregoing
\njoinder and consolidation in respect to Disputes arising out of or relating to
\nProduction Qualification under Section 4.2, production and supply issues under
\nArticle 5, purchase orders and pricing issues under Article 6, delivery issues
\nunder Article 7, production warranty issues under Article 9, and indemnity
\nissues under Article 11.<\/p>\n
J-9
\n PURCHASE AGREEMENT<\/p>\n
68
\n EXHIBIT “K”<\/p>\n
METHOD FOR APPORTIONING
\n THE UNUSED MINIMUM PURCHASE ALLOCATION<\/p>\n
The Unused Minimum Purchase Allocation (the “UMPA”) will be apportioned
\namong the Non-Defaulting Parties (as defined in Subsection 3.5.1) in the
\nfollowing manner, unless the Non- Defaulting Parties otherwise agree. Following
\nthe Defaulting Buyer’s (as defined in Subsection 3.5.1) written notice to the
\nNon-Defaulting Parties, as provided in Subsection 3.5.1, each Non-Defaulting
\nParty will notify the others of the proportion (between zero and one inclusive)
\nof the UMPA the Non-Defaulting Party elects to take (in this exhibit, such
\nproportion, as may be reduced by the method below, the Non-Defaulting Party’s
\n“elected proportion,” and the part (in Wafer Equivalents) of the UMPA
\ncorresponding to the elected proportion, the Party’s “election”). If a
\nNon-Defaulting Party fails to elect any part of the UMPA within thirty (30) days
\nfollowing receipt of the Defaulting Buyer’s written notice, that Party is
\nconsidered to have elected to take none of the UMPA.<\/p>\n
NONTECHNICAL DESCRIPTION OF THE METHOD<\/p>\n
If the Non-Defaulting Parties elect in the aggregate to take all or
\nonly part of the UMPA, each Non-Defaulting Party will be allowed to take exactly
\nthe amount it elects. If, on the other hand, the Non-Defaulting Parties
\n“oversubscribe” to the UMPA, some of their elections will be reduced as required
\nuntil their aggregate elections (the “election total”) equal the UMPA. (Since a
\nNon- Defaulting Party’s election can be reduced, but will not be increased, each
\nNon-Defaulting Party should elect the maximum amount of the UMPA the Party is
\nwilling to take.)<\/p>\n
In the oversubscribed case, the method will attempt to accommodate each
\nNon-Defaulting Party’s election within the available UMPA, yet will not permit
\none Party to take more than a given multiple of its Basic Purchase Share to the
\nextent that other Parties also seek at least the same multiple of their Basic
\nPurchase Shares. (For purposes of this exhibit, TSMC will be considered to have
\na Basic Purchase Share equal to the difference of (a) one minus (b) the sum of
\nthe Basic Purchase Shares of the Buyers.) This fairness principal is
\noperationalized through the “election ratio,” i.e., the ratio of a Party’s
\nelected proportion to its Basic Purchase Share. For example, if one Party has an
\nelection ratio of 2, while another has an election ratio of 1, the first Party
\nhas elected twice as much as its Basic Purchase Share, while the second Party
\nhas elected its Basic Purchase Share.<\/p>\n
Any Non-Defaulting Party whose elected proportion is less than or equal
\nto the quotient of (a) the Party’s Basic Purchase Share divided by (b) the sum
\nof the Basic Purchase Shares among the Non-Defaulting Parties will be able to
\ntake the Party’s election without reduction.<\/p>\n
Among the remaining Non-Defaulting Parties, the method reduces the
\nelections of Parties whose election ratios are higher than others’ before
\nreducing the others’ elections and continues until the election total is reduced
\nto the UMPA or until the election ratios among such Parties are all equal. If
\nthe elections of several Parties with equal election ratios are to be reduced
\nduring any step of the process, those elected proportions are reduced by the
\nsame percentage so as to preserve the equality of those Parties’ election ratios
\nafter the reduction. (When all the election ratios among the Parties are equal,
\nthe election of each such Party is proportionate to its Basic Purchase Share.)
\nIf the election total still exceeds the UMPA after<\/p>\n
K-1
\n PURCHASE AGREEMENT<\/p>\n
69
\nall election ratios among such Parties are equalized, the election of each such
\nParty is further reduced by a percentage (identical for each such Party) which
\nyields an election total equal to the UMPA.<\/p>\n
For numerical examples of the method, see the section “Numerical
\nExamples” below.<\/p>\n
MATHEMATICAL DESCRIPTION OF THE METHOD<\/p>\n
A. ELECTION TOTAL LESS THAN OR EQUAL TO THE UMPA. If the election
\ntotal is less than or equal to the UMPA, then each Non-Defaulting Party will
\ntake its election without further adjustment.<\/p>\n
B. ELECTION TOTAL GREATER THAN THE UMPA. If the election total
\nexceeds the UMPA, then the following procedure is used to reduce the election
\ntotal to the UMPA:<\/p>\n
Step 1: Assign to each Non-Defaulting Party whose elected proportion is
\nless than or equal to the ratio of (a) its Basic Purchase Share to (b) the sum
\nof the Non-Defaulting Parties’ Basic Purchase Shares that Party’s election
\nwithout reduction.<\/p>\n
Step 2: List the remaining Non-Defaulting Parties in decreasing order
\nof their election ratios. There will be at most three Non-Defaulting Parties on
\nthe list: TSMC and two Buyers.<\/p>\n
Step 3:<\/p>\n
(a) If only one Party is on the list, reduce its election
\n until the election total equals the UMPA.(1) The process stops at this
\n step and the Non-Defaulting Parties will take their respective
\n elections (as adjusted) at the completion of this step.<\/p>\n
(b) If two or more Parties are on the list, reduce the first
\n Party’s election until (1) the Party’s election ratio equals that of
\n the second Party’s or (2) the election total equals the UMPA.(2) If the
\n election total equals the UMPA, the process stops at this step and the
\n Parties on the list will take their respective elections at the
\n completion of this step; otherwise, the process continues to the next
\n step.<\/p>\n
Step 4 (when two or more Parties are on the list):<\/p>\n
– —————————-<\/p>\n
(1) The Party’s election will be reduced to (1) the UMPA less (2) the
\nsum of the other Non- Defaulting Parties’ elections.<\/p>\n
(2) The first Party’s election will be reduced to the greater of (1)
\n(a) the UMPA less (b) the sum of the other Non-Defaulting Parties’ elections or
\n(2) the product of (a) the UMPA, (b) the Party’s Basic Purchase Share, and (c)
\nthe election ratio of the second Party on the list.<\/p>\n
K-2
\n PURCHASE AGREEMENT<\/p>\n
70
\n (a) If there are two Parties on the list, reduce each of their
\nelections (as adjusted through step 3) by the same factor until the election
\ntotal equals the UMPA.(3) The process stops at this step and the Parties on the
\nlist will take their respective elections (as adjusted) at the completion of
\nthis step.<\/p>\n
(b) If there are three Parties on the list, reduce each of the
\n first two Parties’ elections (as adjusted through step 3) by the same
\n factor until (1) the two Parties’ election ratios equal that of the
\n third Party’s or (2) the election total equals the UMPA.(4) If the
\n election total equals the UMPA, the process stops at this step and the
\n Parties on the list will take their respective elections at the
\n completion of this step; otherwise, the process continues to the next
\n step.<\/p>\n
Step 5 (when there are three Parties on the list): Reduce each of the
\nlisted Parties’ elections (as adjusted through step 4) by the same factor until
\nthe election total equals the UMPA.(5)<\/p>\n
NUMERICAL EXAMPLES<\/p>\n
As an illustration of the above method, suppose that the three Buyers’
\nBasic Purchase Shares are, respectively, 18%, 18%, and 4%. Then TSMC’s Basic
\nPurchase Share for purposes of this exhibit is 100% – 40% = 60%. Suppose
\nfurther that Buyer No. 1 with an 18% Basic Purchase Share is a Defaulting Buyer
\nand the remaining Buyers (Buyers No. 2 and No. 3) are not. Finally, suppose that
\nthe UMPA equals 100 Wafer Equivalents. The table below shows three cases with
\nthe Non- Defaulting Parties’ initial elections and final elections after
\nadjustments by the above method.<\/p>\n
– —————————-<\/p>\n
(3) The appropriate factor is the quotient of (1) (a) the UMPA less (b)
\nthe election of the Non- Defaulting Party not on the list divided by (2) the sum
\nof the two elections before the reduction.<\/p>\n
(4) The appropriate factor is the greater of (1) the quotient of (a)
\nthe UMPA less the election of the third Non-Defaulting party on the list divided
\nby (b) the sum of the two Parties’ elections before the reduction or (2) the
\nquotient of (a) the election ratio of the third Party on the list divided by (b)
\nthe election ratio of the first Party on the list.<\/p>\n
(5) The appropriate factor is the quotient of (1) the UMPA divided by
\n(2) the sum of the three elections before the reduction.<\/p>\n
K-3
\n PURCHASE AGREEMENT<\/p>\n
71<\/p>\n
\n\n====================================================================================================================================<\/p>\n
\n
\n
\n
\n
\n
\n
\n
\n
\nCol 1 2 3 4 5 6 7 8 9
\n– ————————————————————————————————————————————
\n CASE 1 CASE 2 CASE 3
\n– ————————————————————————————————————————————
\n BASIC
\n PURCH BPS\/
\n ELECTION ELECTION ELECTION SHARE TOTAL
\n ELECTION RATIO ELECTION RATIO ELECTION RATIO (BPS) BPS
\n– ————————————————————————————————————————————
\nRow INITIAL ELECTIONS
\n– ———————————————————————————————————
\n 1 TSMC 70 1.167 100 1.667 100 1.667 0.60 0.732
\n 2 Buyer #2 23 1.278 100 5.556 100 5.556 0.18 0.220
\n 3 Buyer #3 0 0.000 4 1.000 100 25.000 0.04 0.049
\n —————————————————————————————————————————
\n 4 TOTAL 93 — 204 — 300 — 0.82 1.000
\n====================================================================================================================================
\n FINAL ELECTIONS
\n– ———————————————————————————————————
\n 5 TSMC 70 1.167 73.85 1.231 73.17 1.220
\n 6 Buyer #2 23 1.278 22.15 1.231 21.95 1.220
\n 7 Buyer #3 0 0.000 4.00 1.000 4.88 1.220
\n ————————————————————————————————
\n 8 TOTAL 93 — 100.00 — 100.00 —
\n====================================================================================================================================<\/p>\n<\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/caption>\n<\/table>\n
Column 8 of the table lists the Basic Purchase Shares of the
\nNon-Defaulting Parties. Column 9 expresses each Basic Purchase Share as a
\nproportion of the total of the Non-Defaulting Parties’ Basic Purchase Shares.<\/p>\n
Case 1: The Non-Defaulting Parties elect 70, 93, and 0 Wafer
\nEquivalents, respectively (rows 1 to 3, column 2). Since the election total (93
\nWafer Equivalents; row 4, column 2) is less than 100 Wafer Equivalents, each
\nNon-Defaulting Party will take its initial election (see rows 5 to 7, column 2).<\/p>\n
Case 2: The Non-Defaulting Parties elect 100, 100, and 4 Wafer
\nEquivalents, respectively (rows 1 to 3, column 4). Since the election total (204
\nWafer Equivalents) exceeds the UMPA, some of the elections must be reduced.
\nComparing columns 4 and 9 (rows 1 to 3), we see that TSMC’s and Buyer No. 2’s
\nelected proportions exceed their respective Basic Purchase Shares as proportions
\nof the sum of the Non-Defaulting Parties’ Basic Purchase Shares. Since that is
\nnot true for Buyer No. 3, it will take its entire election.<\/p>\n
TSMC’s and Buyer No. 2’s elections must be reduced, since their
\nelections sum to 200. Buyer No. 2’s election is reduced first, because its
\nelection ratio (5.556) exceeds TSMC’s (1.667). Even after Buyer No. 2’s election
\nis reduced so that its election ratio equals TSMC’s, the Parties’ aggregate
\nelections (130 Wafer Equivalents) are still too much (not shown in the table),
\nso each of their elections is (further) reduced (rows 5 to 6, column 4) until
\ntheir aggregate elections are 96 Wafer Equivalents. Note that at this point,
\ntheir election ratios have been reduced to 1.231 (rows 5 to 6, column 5). Thus,
\nonce Buyer No. 2’s election ratio is made equal to TSMC’s, each Party’s election
\nis reduced by the same factor until the two Parties’ aggregate elections equal
\n96 Wafer Equivalents.<\/p>\n
Case 3: The Non-Defaulting Parties elect 100 Wafer Equivalents each.
\nBuyer No. 3 has the highest election ratio, followed by Buyer No. 2, then TSMC
\n(rows 1 to 3, column 7). As shown in rows 5 to 7, columns 6 to 7, each
\nNon-Defaulting Party’s election is reduced until their three Parties’ common
\nelection ratio is 1.220 (rows 5 to 7, column 7). In terms of the above method,
\nBuyer No. 3’s initial election ratio (25) is first reduced to Buyer No. 2’s
\n(5.556). Because the election total still<\/p>\n
K-4
\n PURCHASE AGREEMENT<\/p>\n
72
\nexceeds 100 Wafer Equivalents (not shown in the table), both Buyers’ election
\nratios are reduced to TSMC’s (1.667). Because the election total is still too
\nhigh (not shown in the table), all Non-Defaulting Parties’ election ratios are
\nreduced to the final value of 1.220, at which point the election total is 100
\nWafer Equivalents.<\/p>\n
K-5
\n PURCHASE AGREEMENT<\/p>\n
73
\n EXHIBIT “L”<\/p>\n
FORM OF CONFIDENTIALITY AGREEMENT BETWEEN A BUYER AND ITS CUSTOMER<\/p>\n
This Confidentiality Agreement (the “Agreement”) is made and
\nentered into as of________________ , by and between_________________
\n[Buyer], a______________________ (“Disclosing Party”), and ____________________,
\na___________________ corporation [or other entity] (the “Receiving Party”).<\/p>\n
WHEREAS, pursuant to that certain Purchase Agreement (as
\ndefined below), the Disclosing Party purchases part of the wafer production
\nmanufactured by WaferTech, LLC, a Delaware limited liability company (the
\n“Company”), which owns and operates a semiconductor wafer-fabrication plant in
\nCamas, Washington (such plant, the “Foundry”), and following such purchase,
\nDisclosing Party uses the wafer production in its own products for resale to its
\ncustomers; and<\/p>\n
WHEREAS, the Receiving Party is a customer of the Disclosing
\nParty and desires to obtain from the Company design rules, parametric
\ninformation, and reliability data relating to Foundry products of interest to
\nthe Receiving Party (such information, the “Information”); and<\/p>\n
WHEREAS, the Receiving Party intends to use the Information to
\nevaluate products incorporating the wafer production for purchase from the
\nDisclosing Party (such purpose, the “Purpose”); and<\/p>\n
WHEREAS, the Disclosing Party is willing to provide the
\nInformation to the Receiving Party subject to the terms below; and<\/p>\n
WHEREAS, the Disclosing Party is a party to that certain
\nPurchase Agreement, dated as of June 25, 1996, between (i) Taiwan Semiconductor
\nManufacturing Co., Ltd., a corporation formed under the laws of Taiwan, Republic
\nof China (“TSMC”) and (ii) other parties which, together with the Disclosing
\nParty, are named as “Buyers” under the Purchase Agreement (the “Purchase
\nAgreement”); and<\/p>\n
WHEREAS, the Disclosing Party is obligated by the Purchase
\nAgreement to enter into this Agreement with the Receiving Party as a condition
\nto the disclosure of the Information; and<\/p>\n
WHEREAS, the Receiving Party is willing to use such
\ninformation and preserve its confidentiality in the manner set forth below;<\/p>\n
NOW THEREFORE, in consideration of the above premises, and for
\nother good and valuable consideration, the receipt and sufficiency of which are
\nhereby acknowledged, the parties hereto agree as follows:<\/p>\n
L-1
\n PURCHASE AGREEMENT<\/p>\n
74
\n 1. DEFINITION OF CONFIDENTIAL INFORMATION<\/p>\n
As used herein, “Confidential Information” shall mean (a) all
\ndata, concepts, ideas, methods, processes, techniques, formulae, know-how,
\nmask-works, trade and industrial secrets and improvements relating to research,
\ndevelopment or manufacturing activities of the Company or other parties to the
\nPurchase Agreement. Confidential Information shall include not only written
\ninformation, but also (a) information transferred orally, visually,
\nelectronically or by any other means, provided that the Disclosing Party
\nexpressly indicates to the Receiving Party that such disclosures constitute
\n“Confidential Information” for purposes of this Agreement, and (b) all notes,
\nanalyses, compilations, presentations or other documents (including materials
\nprepared by the Receiving Party), which contain or otherwise reflect such
\ninformation. Confidential Information shall include the Information.<\/p>\n
2. NON-CONFIDENTIAL INFORMATION<\/p>\n
The term “Confidential Information” does not include
\ninformation which (a) becomes generally available to the public other than as
\nthe result of a disclosure by the Receiving Party; (b) was available to the
\nReceiving Party on a nonconfidential basis (including, but not limited to
\ninformation developed by that party) prior to its disclosure to the Receiving
\nParty by the Disclosing Party; (c) becomes available to the Receiving Party on a
\nnonconfidential basis from a source other than the Disclosing Party provided
\nthat such source is not bound by a confidentiality agreement with the Disclosing
\nParty or the Company or is not otherwise prohibited from transmitting the
\ninformation to the Receiving Party by a contractual, legal or fiduciary
\nobligation; or (d) is required to be disclosed by the Receiving Party pursuant
\nto law, governmental regulation or judicial order, provided that written notice
\nis given to the Disclosing Party and the Company prior to the required
\ndisclosure.<\/p>\n
3. USE OF CONFIDENTIAL INFORMATION<\/p>\n
The Receiving Party shall use Confidential Information solely
\nfor the Purpose and for no other purpose.<\/p>\n
4. DISCLOSURE OF CONFIDENTIAL INFORMATION<\/p>\n
Without the prior consent of the Disclosing Party, the
\nReceiving Party shall not disclose to any person the fact that Confidential
\nInformation has been made available to the Receiving Party or that the Receiving
\nParty has inspected any Confidential Information, except to the extent the
\nforegoing is required to be disclosed by the Receiving Party pursuant to law,
\ngovernmental regulation or judicial order, provided that written notice is given
\nto the Disclosing Party and the Company prior to the required disclosure. The
\nfact that such information has been delivered to the Receiving Party is deemed
\nto be Confidential Information for the purposes of this Agreement, except to the
\nextent the foregoing is required to be disclosed by the Receiving Party pursuant
\nto law, governmental regulation or judicial order, provided that written notice
\nis given to the Disclosing Party and the Company prior to the required
\ndisclosure.<\/p>\n
L-2
\n PURCHASE AGREEMENT<\/p>\n
75
\n 5. DESTRUCTION OR RETURN OF CONFIDENTIAL INFORMATION<\/p>\n
Upon request from the Disclosing Party to the Receiving Party
\n(a) the Receiving Party shall (i) either destroy or return to the Disclosing
\nParty all Confidential Information received in tangible form, including any
\ncopies of which the Receiving Party may have made, (ii) destroy all abstracts,
\nsummaries thereof or references thereto in the documents of the Receiving Party,
\nand (iii) certify to Disclosing Party that this has been done, and (b) the
\nReceiving Party shall not use any of the Confidential Information with respect
\nto, or in furtherance of, any of the Receiving Party’s businesses or in the
\nbusiness of anyone else, or for any other purpose whatsoever.<\/p>\n
6. INDEMNIFICATION<\/p>\n
The Receiving Party hereby agrees to indemnify, defend and
\nhold harmless the Disclosing Party, the other parties to the Purchase Agreement,
\nand the Company (each such indemnified party, an “Indemnitee”) from any damages,
\nloss, cost or liability (including legal fees and costs of enforcing this
\nindemnity) arising out of or resulting from any unauthorized use or disclosure
\nby the Receiving Party of the Confidential Information.<\/p>\n
7. REMEDIES<\/p>\n
Receiving Party acknowledges that money damages would be both
\nincalculable and an insufficient remedy for any breach of this Agreement by a
\nReceiving Party, and that such breach would cause one or more Indemnitees
\nirreparable harm. In addition to all other remedies available to an Indemnitee
\nat law, in equity or under this Agreement, the Indemnitee will be entitled to
\nspecific performance and injunctive or other equitable relief as a remedy for
\nany such breach, and the breaching party agrees to waive any requirement of
\nreceiving or posting of any bond in connection with such remedy. The Receiving
\nParty agrees and consents to the entry of a preliminary injunction or protective
\norder by any court of competent jurisdiction upon a showing by an Indemnitee
\nthat Confidential Information is being used or disclosed contrary to the
\nprovisions of this Agreement to the detriment of the Indemnitee.<\/p>\n
8. NO LICENSE<\/p>\n
This Agreement does not imply any license to the Receiving
\nParty of Confidential Information or any of patents, copyrights, trademarks,
\nmask-work rights or applications therefor. All proprietary rights, including but
\nnot limited to patent rights and trade and industrial secrets, in and to the
\nConfidential Information shall remain the property of its owner prior to
\ndisclosure by the Disclosing Party to the Receiving Party.<\/p>\n
9. DEGREE OF CARE, AGREEMENTS BINDING ON OFFICERS, EMPLOYEES,
\n ETC.<\/p>\n
Receiving Party agrees (a) that it shall hold all Confidential
\nInformation it receives from the Disclosing Party in strict confidence and with
\nthe same degree of care that Receiving Party gives to Receiving Party’s own
\nproprietary and confidential information, but not less than a reasonable degree
\nof care, (b) Receiving Party’s covenants and agreements set forth in this
\nAgreement shall be<\/p>\n
L-3
\n PURCHASE AGREEMENT<\/p>\n
76
\nbinding upon its officers, directors, employees, representatives and agents; and
\n(c) the Receiving Party shall cause its officers, directors, employees,
\nrepresentatives and agents to abide by the provisions of this Agreement.<\/p>\n
10. WAIVERS<\/p>\n
It is understood and agreed that no failure or delay by the
\nDisclosing Party in exercising any right, power or privilege hereunder shall
\noperate as a waiver thereof, nor shall any single or partial exercise thereof
\npreclude any or further exercise or the exercise of any right, power or
\nprivilege hereunder.<\/p>\n
11. SEVERABILITY<\/p>\n
The invalidity or unenforceability of any provision of this
\nAgreement shall not affect the validity or enforceability of any other provision
\nof this Agreement, which shall remain in full force and effect.<\/p>\n
12. GOVERNING LAW<\/p>\n
This Agreement shall be governed by and construed in
\naccordance with the laws of Delaware.<\/p>\n
13. DURATION<\/p>\n
This Agreement shall become effective upon execution and
\ndelivery hereof and shall continue in full force and effect for so long as the
\nDisclosing Party shall exist; provided, however, that the obligation of the
\nReceiving Party under paragraphs 3, 4, 5, 6, 7, 8, 9, 12, 14 and 15 shall
\nsurvive indefinitely.<\/p>\n
14. ENTIRE AGREEMENT; SURVIVAL; SUCCESSORS AND ASSIGNS<\/p>\n
This Agreement contains the entire understanding of the
\nparties hereto concerning the subject matter hereof and supersedes any prior
\nagreement or understanding of the parties. This Agreement may not be modified
\nexcept in writing, duly signed by the party against whom enforcement is sought.
\nThis Agreement shall inure to the benefit of and be binding upon each of the
\nparties hereto and their respective heirs, successors, assigns and personal
\nrepresentatives.<\/p>\n
15. The Company and TSMC are third-party beneficiaries under this
\nAgreement. Further, the parties intend the Indemnitees, other than the
\nDisclosing Party, to be third-party beneficiaries of the provisions of paragraph
\n6.<\/p>\n
L-4
\n PURCHASE AGREEMENT<\/p>\n
77
\n 16. COUNTERPARTS.<\/p>\n
This Agreement is expected to be executed in one or more
\ncounterparts, each of which shall be deemed to be an original, but all of which
\ntogether shall constitute one and the same instrument. The facsimile signature
\nof a party to this Agreement is and shall be deemed to be an original execution
\nand is binding.<\/p>\n
IN WITNESS WHEREOF, the parties have executed and delivered
\nthis Agreement as of the date first written above.<\/p>\n
DISCLOSING PARTY: RECEIVING PARTY:<\/p>\n
– ———————————– ————————————<\/p>\n
By: By:
\n ——————————– ———————————
\n Name: Name:
\n ———————— ————————-
\n Title: Title:
\n ———————– ————————<\/p>\n
Address for Notices: Address for Notices:<\/p>\n
– ———————————– ————————————
\n– ———————————– ————————————
\nTelephone: Telephone:
\n ————————- ————————–
\nFacsimile: Facsimile:
\n ————————- ————————–<\/p>\n
L-5
\n PURCHASE AGREEMENT<\/p>\n
78
\n EXHIBIT “M”<\/p>\n
FORM OF INDEMNITY AGREEMENT<\/p>\n
INDEMNITY AGREEMENT<\/p>\n
This Indemnity Agreement (“Agreement”) is entered into as of
\n______________ by [Buyer] , a ________________ corporation, as indemnifying
\nparty hereunder (“Indemnitor”), and Taiwan Semiconductor Manufacturing Co., Ltd.
\n(“TSMC”), a corporation organized under the laws of Taiwan, Republic of China,
\nand WaferTech LLC, a Delaware limited liability company (the “Company”), as
\nindemnified parties (collectively “Indemnitees”).<\/p>\n
RECITALS<\/p>\n
A. Indemnitor and TSMC, among others, are parties, to that
\ncertain Purchase Agreement, dated June 25, 1996 (the “Purchase Agreement”).<\/p>\n
B. Capitalized terms not otherwise defined in this Agreement have
\nthe meanings given them in the Purchase Agreement.<\/p>\n
C. Pursuant to the Purchase Agreement, TSMC will sell and the
\nother parties will buy semiconductor wafers produced by the Company at the
\nFoundry.<\/p>\n
D. Under Section 5.10 of the Purchase Agreement, if Indemnitor
\norders Products from TSMC that require the grant of non-exclusive Intellectual
\nProperty Rights relating to the Products’ manufacture or sale, Indemnitor must,
\nas a condition to TSMC’s ordering such Products from the Foundry, either grant
\nthe necessary Intellectual Property Rights to TSMC and\/or the Company or enter
\ninto this Agreement. Indemnitor wishes to order Products under the Purchase
\nAgreement from TSMC and declines to obtain and grant to TSMC and\/or the Company
\nnon-exclusive rights in Intellectual Property Rights relating to such Products.
\nAccordingly, Indemnitor desires to enter into this Agreement.<\/p>\n
E. The Product\/Products covered by this Agreement is\/are as
\nfollows:
\n– ——————————————————————————–
\n– ——————————————————————————–
\n– —————————————————————————–.<\/p>\n
NOW, THEREFORE, in consideration of the premises and covenants
\nherein and other good and valuable consideration, the receipt and sufficiency of
\nwhich are acknowledged, the parties hereto agree as follows:<\/p>\n
1. Except as expressly otherwise provided in Section 11.1 of the
\nPurchase Agreement, Indemnitor shall indemnify, defend, and hold harmless TSMC,
\nthe Company, and their respective<\/p>\n
M-1
\n PURCHASE AGREEMENT<\/p>\n
79
\nAffiliates, employees, officers, directors, shareholders, partners, members, and
\nagents (collectively, “Indemnified Persons”), against or from any Claim of
\ninfringement or misappropriation of a third party’s Intellectual Property Rights
\narising out of, related to, or connected with the Product or Products described
\nin Recital E above.<\/p>\n
2. This Agreement shall be governed by Section 10.2(a) of the
\nPurchase Agreement.<\/p>\n
3. Any payment hereunder shall be made in U.S. dollars. Any
\namount due and payable to an Indemnified Person under paragraph 1 and not paid
\nwithin 30 days of written demand for payment shall accrue interest compounded
\nannually at a rate equal to the lesser of (a) the sum of (i) the prime or
\nreference rate for commercial borrowing announced by the Bank of America
\nN.T.&S.A. from time to time and (ii) 5% or (b) the maximum rate of interest
\npermitted by applicable law.<\/p>\n
4. Indemnitor’s obligation to an Indemnitee under paragraph 1
\nshall be conditioned upon:<\/p>\n
a. Indemnitee’s giving Indemnitor prompt notice in
\nwriting of any Claims subject to the indemnity of paragraph 1 and of which
\nIndemnitee is aware;<\/p>\n
b. Indemnitee’s permitting Indemnitor, through counsel
\nof Indemnitor’s choice and reasonably acceptable to Indemnitee, to defend
\nagainst, contest or settle the same; and<\/p>\n
c. Indemnitee’s reasonably cooperating with Indemnitor
\nand reasonably providing it with information and assistance to enable it to
\ndefend, contest or settle same.<\/p>\n
5. The indemnity of paragraph 1 shall be interpreted and
\nconstrued as indemnifying Indemnitee against its negligence, whether active or
\npassive.<\/p>\n
6. Time is of the essence with respect to each provision of this
\nAgreement in which time is a factor.<\/p>\n
7. This Agreement shall be governed by and construed in
\naccordance with the internal laws of the State of Delaware, United States of
\nAmerica.<\/p>\n
8. This Agreement integrates all the terms and conditions
\nmentioned herein or incidental hereto and supersedes all oral negotiations and
\nprior writings in respect to the subject matter hereof. This Agreement may be
\nmodified, supplemented, superseded or canceled only by an instrument signed by
\nthe parties hereto.<\/p>\n
9. If any provision of this Agreement is or becomes or is deemed
\ninvalid, illegal or unenforceable in any jurisdiction, such provision shall be
\ndeemed amended to conform to applicable laws so as to be valid and enforceable
\nor, if it cannot be so amended without materially altering the intention of the
\nparties, it shall be stricken and the remainder of this Agreement shall remain
\nin full force and effect.<\/p>\n
M-2
\n PURCHASE AGREEMENT<\/p>\n
80
\n 10. No waiver of any provision hereof shall be effective unless
\nand until made in writing and signed by the party to be charged. No waiver,
\nforbearance or failure by any party hereto of its right to enforce any provision
\nof this Agreement shall constitute a waiver or estoppel of such party’s right to
\nenforce any other provision of this Agreement or a continuing waiver by such
\nparty of compliance with any provision.<\/p>\n
11. In the event of any litigation, arbitration, judicial
\nreference or other proceeding involving the parties hereto to enforce any
\nprovision hereof, to enforce any remedy available upon default hereunder, or
\nseeking a declaration of the rights of a party hereunder, the prevailing party
\nshall be entitled to recover from the other such attorneys’ fees and costs as
\nmay be reasonably incurred, including the cost of reasonable investigation,
\npreparation and professional or expert consultation incurred by reason of such
\nlitigation, arbitration, judicial reference or other proceeding. Notwithstanding
\nthe foregoing, (a) in an arbitration proceeding the award of attorneys’ fees
\nshall be governed by the provisions of Section 17.6 in the Purchase Agreement;
\nand (b) in a mediation under Section 17.2 of the Purchase Agreement, each Party
\nshall pay its own attorneys’ fees and expenses in accordance with said Section
\n17.2.<\/p>\n
12. With the exception of Section 17.7, the dispute resolution and
\narbitration provisions of Article 17 of the Purchase Agreement are incorporated
\nby reference herein; provided that the term “Parties” as used in said Article 17
\nrefer to Indemnitor and Indemnitees hereunder.<\/p>\n
13. This Agreement shall be binding upon and inure to the benefit
\nof the parties hereto and their respective successors, transferees, and assigns.<\/p>\n
14. Each party hereto irrevocably consents to the jurisdiction of
\nthe state and Federal courts located in San Jose, California; agrees, subject to
\nthe provisions of Article 17 of the Purchase Agreement, that any action, suit or
\nproceeding by or between the parties may be brought in any such court sitting in
\nSan Jose, California; and waives any objection which the party may now or
\nhereafter have concerning jurisdiction and venue, whether based on
\nconsiderations of personal jurisdiction, forum non conveniens or on any other
\nground. Each party hereby irrevocably designates, appoints and empowers the
\nSecretary of State of California to receive for and on behalf of such party
\nservice of process in the State of California and further irrevocably consents
\nto the service of process outside of the territorial jurisdiction of said courts
\nby mailing copies thereof by registered or certified United States mail, postage
\nprepaid, to such party’s last known address as established in accordance with
\nthe Purchase Agreement with the same effect as if the Party were a resident of
\nthe State of California and had been lawfully served in such state. Any process
\nserved on the California Secretary of State in accordance with the preceding
\nsentence shall also be noticed to the party’s last known address established in
\naccordance with the Purchase Agreement. Nothing in this Agreement shall affect
\nthe right to service of process in any other manner permitted by law. Each party
\nfurther agrees that final judgment against it in any such action or proceeding
\nshall be conclusive and may be enforced in any other jurisdiction within or
\noutside the State of California by suit on the judgment, a certified or
\nexemplified copy of which shall be conclusive evidence of the fact and the
\namount of such judgment.<\/p>\n
15. This Agreement may be executed in one or more counterparts,
\neach of which shall be deemed to be an original, but all of which together shall
\nconstitute one and the same instrument.<\/p>\n
M-3
\n PURCHASE AGREEMENT<\/p>\n
81
\n IN WITNESS WHEREOF, the parties hereto have executed this
\nAgreement as of the date first written above.<\/p>\n
INDEMNITOR:<\/p>\n
_____________________________________________,
\n a ___________________ corporation<\/p>\n
By: ____________________________________
\n Name: ____________________________________
\n Title: ____________________________________<\/p>\n
INDEMNITEES:<\/p>\n
TAIWAN SEMICONDUCTOR
\n MANUFACTURING CO., LTD., a corporation
\n incorporated under the laws of the Republic of
\n China<\/p>\n
By: ____________________________________
\n Name: ____________________________________
\n Title: ____________________________________<\/p>\n
WAFERTECH, LLC, a Delaware limited
\n liability company<\/p>\n
By: ____________________________________
\n Name: ____________________________________
\n Title: ____________________________________<\/p>\n
M-4<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6643,6696],"corporate_contracts_industries":[9512],"corporate_contracts_types":[9613,9619],"class_list":["post-42709","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-altera-corp","corporate_contracts_companies-analog-devices-inc","corporate_contracts_industries-technology__semiconductors","corporate_contracts_types-operations","corporate_contracts_types-operations__sales"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42709","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42709"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42709"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42709"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42709"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}