Document:

Exhibit 10.39

 

TECHNOLOGY
SUBLICENSE AGREEMENT

Jazz Advanced Technology

 

THIS TECHNOLOGY SUBLICENSE AGREEMENT (this “Agreement”),
is made and entered into as of August 30th, 2003 (the “Effective Date”), by Jazz/Hua Hong,
LLC, a limited liability company organized under the laws of the State of
Delaware (“Licensor”), and Shanghai Hua
Hong NEC Electronics Company, Limited, a company organized under the laws of
the People’s Republic of China (“Licensee”)  and Newport Fab LLC, a Delaware limited
liability company d/b/a Jazz Semiconductor (“Jazz”).

 

Purpose and Background

 

Licensor-has been granted a license from Jazz, to the extent
that Jazz has the right to grant such license, of Jazz Technology and Jazz
Patent Rights (as defined below), in order for Licensee to be an option of Jazz’s
second source of requirements for 0.18um advanced RF CMOS wafers and 0.25um / 0.18um
SiGe BiCMOS wafers that include or embody any of the products listed on Exhibit C attached hereto (“Wafers”),
pursuant to the terms and conditions of a Technology License Agreement between
Jazz and Licensor (the “Jazz License Agreement”), which, among other things,
contemplates the sublicense of such license by Licensor to Licensee.

 

Licensee is the other member of Licensor and
Licensee has committed to provide Licensor with semiconductor products for sale
to Jazz utilizing manufacturing capacity at Licensee’s facility in Shanghai,
People’s Republic of China. This Agreement provides for the sublicense to
Licensee, to the extent that Licensor has the right to grant such license
pursuant to the Jazz License Agreement and subject to and in accordance with
the terms and conditions set forth herein and therein, of Jazz Technology (as described in Exhibit A
attached hereto)  and Jazz Patent Rights (as described in Exhibit B
attached hereto), in order for Licensee to meet Licensor’s requirements for
Wafers, and for no other purpose.

 

Agreement

 

NOW, THEREFORE, in consideration of the
foregoing premises, the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledge by each of the parties, the parties hereto agree as
follows:

 

1.                                       Definitions.

 

1.1                                 “Agreement” shall mean
this Technology Sublicense Agreement by and between Licensor and Licensee.

 

1.2                                 “Documentation” shall
mean written material(s) and/or manual(s) provided by Licensor to Licensee and
any on-line help files or other on-line materials regarding or related to the
Jazz Technology.

 

 

Confidential treatment is being requested for portions of this document.
This copy of the document filed as an exhibit omits the confidential
information subject to the confidentiality request. Omissions are designated by
the symbol [...***...]. A complete version of this document has been filed separately
with the Securities and Exchange Commission.

 

 

1.3                                 “Effective Date” shall
have the meaning given to it in the introductory paragraph hereof; provided,
that the effectiveness of this Agreement is subject to the pertinent terms and
conditions hereof.

 

1.4                                 “Intellectual Property
Rights” shall mean any and all right, title and interest in and to any and all
patents and all patent applications (including, without limitation, originals,
divisions, continuations, continuations-in-part, CPA’s, RCE’s, provisional,
extensions or reissues), design rights (whether registered or not and all
applications for the foregoing), copyrights, database rights, topography
rights, mask work rights, applications to register any of the aforementioned
rights, trade secrets, rights in unpatented know-how and show-how, information,
data, drawings, concepts, drawings, schematics, specifications, object code and
machine-readable copies of any software, source code relating to any software,
rights of confidence, rights of authorship, and any other intellectual or
industrial property rights of any nature whatsoever in any part of the
world and whether arising under the common law, state law, federal law or the
laws of any foreign country.

 

1.5                                 “Jazz Confidential
Information” as used herein means information about this Agreement and all its
Exhibits and Schedules, any amendment or addenda hereto or thereto, Licensor’s
business, assets or operations, including but not limited to Jazz Technology
and Intellectual Property Rights, and any other proprietary information
supplied to Licensee by Licensor or Jazz deemed by Jazz to be of value and not
commonly known to others within Jazz’s industry. Jazz Confidential Information
will not include information which Licensee demonstrates with documentary
evidence: (a) was filed with any governmental agency on a non-confidential
basis or was known to the public at the time of its disclosure, or becomes
known to the public after the disclosure through no action of Licensee; (b) was
in Licensee’s possession prior to the time of the disclosure (provided that
Licensee did not receive such information from a party that was subject to a
confidentiality agreement with Licensor or Jazz); (c) is subject to a
subpoena, summons or other legal process, or (d) was developed by Licensee
independent of the disclosure by Licensor or Jazz.

 

1.6                                 “Jazz License Agreement” shall have the meaning given to it in the above
Recitals.

 

1.7                                 “Jazz Patent Rights” shall mean those patent rights under which Licensor
is licensed by Jazz pursuant to the Jazz License Agreement during the term of
this Agreement.

 

1.8                                 “Jazz Technology” shall mean all proprietary information and
know-how obtained by Licensor from Jazz and provided to Licensee by Licensor,
no matter in what form provided and including without limitation
information and know-how identified in Confidential Information Transmittal
Report(s) (copies of which shall be provided to Licensee), that relate to Jazz’s
process(es) for the manufacture of Wafers, Jazz’s specifications for Wafers,
Jazz’s performance criteria for Wafers and all other matters relating to Wafers
and their manufacture, including, without limitation, information relating to
the products and processes identified in Exhibit A
attached hereto.

 

1.9                                 “Licensee”
shall mean Shanghai Hua Hong NEC Electronics Company, Limited, a
company organized
under the laws of the People’s Republic of China.

 

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1.10                           “Licensee’s Facility” shall mean Licensee’s facility located at No. 1188,
Chuan Qiao Rd, Pu Dong Shanghai, Peoples Republic of China or other
agreed facility.

 

1.11                           “Licensor” shall mean Jazz/ Hua Hong,
LLC, a limited liability company organized under the laws of the State of
Delaware.

 

1.12                           “LLC Agreement” shall mean the Limited Liability Company Agreement
of Licensor.

 

1.13                           “Process” shall mean Jazz’s process for the manufacture of Wafers
as communicated by Licensor to Licensee from time to time during the term of
this Agreement.

 

1.14                           “Wafer Acceptance Criteria” shall mean those written Wafer
specifications, engineering requirements, performance criteria, etc. provided
by Licensor to Licensee from time to time during the term of this Agreement.

 

1.15                           “Wafers” shall have the meaning given to it in the above Recitals.

 

2.                                       License; Limitations and Restrictions.

 

2.1                                 License
of Jazz Technology to Licensee. Licensor hereby grants to
Licensee, subject to compliance by Licensee with the terms and conditions of
this Agreement, an exclusive, nontransferable, royalty-free (except as
otherwise provided herein) license, without the right to sublicense to use the Jazz Technology to produce Wafers at
a HHNEC manufacturing facility within China exclusively for Licensor;
and shall only apply if (1)Licensee is satisfying the capacity requirements of
Licensor,;  and (2) Licensee is commercially
competitive on on-time delivery quality, and yield of Licensor products purchased under separate agreement
between Licensor and Licensee; and, provided, further, that such right of
exclusivity shall not apply to any existing contracts, agreements, or commitments
between Licensor and any third party entered into prior to the signing hereof,
which have been identified to Licensee. If Licensee fails to meet the
conditions set forth in this Section regarding the exclusivity, Licensor shall
notify the Licensee in writing of such failure and the Licensee, upon receiving
such notice, shall have ninety days (90) of grace period to correct such
failure. Subject to the foregoing, during the term of this Agreement said right
of exclusivity shall mean that Licensor shall not license the Licensed
Technology to any third party within China other than Licensee to make and
sell, Wafers to Licensor but Licensor shall be free to make and sell and license
any third party or parties to make and sell Wafers outside of China. It is also
understood that Licensor shall retain the right to use the Licensed Technology
to make or sell wafers at Licensor’s facilities without restriction.

 

2.2                                 No Other Licenses or Rights. This
license does not authorize any use other than that which is expressly set out
herein. No other license or right to sublicense or other right is granted, by
implication, estoppel or otherwise to Licensee under any Jazz Technology, Jazz
Patent Rights or any Intellectual Property Rights of Jazz and/or Jazz
Confidential Information now or hereafter owned or controlled by Jazz except
those expressly granted in this Agreement. Licensee agrees and acknowledges
that, except as otherwise set forth herein, Licensor, on behalf of Jazz,
reserves to itself all rights in all fields, territories and technologies under
or with respect to the Jazz Technology, Jazz Patent Rights and Intellectual
Property Rights of Licensor therein.

 

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2.3                                 No Transfer of Title or Ownership. This
license transfers to Licensee neither title nor any Intellectual Property
Rights to the Jazz Technology or Jazz Patent Rights (or any part or
element thereof), any Documentation (or any part or element thereof), or
any copyrights, patents, trade secrets, or trademarks, or other proprietary
rights embodied or used in connection therewith, except for the limited rights
expressly granted herein. Licensee hereby agrees and acknowledges that Jazz is
the sole owner of and shall retain all ownership right, title and interest in
and to the Jazz Technology and Jazz Patent Rights (and all Intellectual
Property Rights therein). Licensee hereby agrees that Licensee shall not
contest or oppose or otherwise participate in or support any challenge,
including without limitation a challenge to ownership, validity, scope or
enforceability of any Jazz Technology or Jazz Patent Rights (or any
Intellectual Property Rights therein), nor shall Licensee participate in or
support in any way any reissue, reexamination or reconsideration thereof. Licensee
shall sign or cause to be signed all documents necessary to perfect Jazz’s
ownership rights in Jazz Technology and Jazz Patent Rights, including all
Intellectual Property Rights therein, including without limitation all
necessary assignments and agreements with its employees, subcontractors or
agents.

 

2.4                                 License Restrictions. Licensee agrees
that it will not itself, or through any parent, subsidiary, affiliate, agent or
other third party: (a) manufacture or have manufactured any Wafers for any
person or entity other than for or on the behalf of Licensor or Jazz; (b) sell,
lease, rent, assign, transfer, license or sublicense the Jazz Technology or
Documentation; (c) use or manipulate the Jazz Technology or Documentation
(or any part or element thereof) in any manner or to any extent not
expressly contemplated by this Agreement; (d) provide, disclose, divulge
or make available to, or permit use of the Jazz Technology or Documentation (or
any part or element thereof) by any third party, except as otherwise
permitted in accordance with the terms and conditions hereof; or (e) take
any other action in derogation of Licensor’s Intellectual Property Rights.

 

2.5                                 Right to Audit. Licensee will keep
complete, true and accurate books of account, records of production,
engineering documents, etc. for the purpose of showing its compliance with the
terms of this Agreement. Such books, records and documents will be kept at
Licensee’s principal place of business at all times during the term of this
Agreement and for a period of at least two (2) years after termination or
expiration of this Agreement for any reason. Upon ten (10) days written
notice to Licensee, and no more often than twice per year, Licensor’s
designated representative, at Licensor’s expense, shall have the right to
inspect Licensee’s records relevant to this Agreement only and not business data of Licensee
that is irrelevant to this Agreement during
normal business hours solely for the purposes of verifying the compliance by
Licensee with the provisions of this Agreement. A final inspection shall occur
no later than two (2) years after the termination of this Agreement.

 

2.6                                 U.S. Export Control Approvals. Licensee
acknowledges and agrees that the effectiveness of this Agreement and grant of
such license is expressly conditioned upon Licensor and Licensee obtaining all
necessary and advisable approvals from the United States Department of Commerce
(Bureau of Industry and Security) and any and all other applicable U.S. and
foreign governmental agencies. (collectively, “Export
Control Approvals”).

 

2.7                                 Newly Developed Technology. During the
term of this Agreement, the Process may be improved, modified, refined or
otherwise altered by Licensee. Such improvements, modifications, refinements or
other alterations shall hereinafter be referred to as “Newly

 

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Developed Technology” and may, but need not necessarily, constitute one or
more inventions, whether patentable or not. Licensee agrees to promptly
disclose any Newly Developed Technology to Licensor. All Newly Developed
Technology and all Intellectual Property Rights therein shall be owned by Licensee.
Licensee may make any registrations or filings
with respect to any Newly Developed Technology with written notice to
Licensor. Licensee hereby grants to Licensor a worldwide, perpetual, non-exclusive,
non-transferable, royalty-free license in the
Newly Developed Technology and all Intellectual Property Rights therein to
make, sell, offer to sell, import and otherwise distribute products that
include or incorporate, in whole or in part, the Newly Developed Technology and
the Intellectual Property Rights therein. 

 

3.                                       Warranties; Disclaimers.

 

3.1                                 Limited Representation by Licensor. Licensor warrants only that, as of
the Effective Date, to the actual knowledge of Licensor, the Jazz Technology
and Jazz Patent Rights licensed to Licensee are owned, developed by Jazz or
Licensor, or have been licensed to Jazz or Licensor, and to Licensor’s actual
knowledge, does not infringe any intellectual property right of
any third party. Licensee’s exclusive remedy and Licensor’s sole obligation for
breach of this warranty are set forth in Section 4.1 (Indemnification).

 

3.2                                 SUBJECT
TO APPLICABLE CHINESE LAWS AND REGULATIONS REGARDING TECHNOLOGY TRANSFER, EXCEPT FOR THE
LIMITED REPRESENTATION MADE BY LICENSOR IN SECTION 3.1 ABOVE, THE
JAZZ CONFIDENTIAL INFORMATION, THE JAZZ TECHNOLOGY, THE JAZZ PATENT RIGHTS, THE
DOCUMENTATION, AND ALL INTELLECTUAL PROPERTY RIGHTS THEREIN AND ALL MATERIALS
RELATED THERETO AND THE USE THEREOF AND OF ANY HARDWARE, SOFTWARE OR OTHER
DOCUMENTATION DELIVERED HEREUNDER (IN ANY AND ALL FORMS) IS PROVIDED BY
LICENSOR AND IS ACCEPTED BY LICENSEE “AS IS” AND “WITH ALL FAULTS.” LICENSOR
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO SAME AND/OR THEIR
QUALITY, PERFORMANCE, MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A
PARTICULAR PURPOSE. FURTHER, THERE IS NO AFFIRMATION OF FACT, ACCURACY,
COMPLETENESS, CAPABILITY OR PERFORMANCE, EXPRESS OR IMPLIED, MADE BY LICENSOR
WITH RESPECT
TO THE JAZZ CONFIDENTIAL INFORMATION, THE JAZZ TECHNOLOGY, JAZZ PATENT RIGHTS,
DOCUMENTATION, THE INTELLECTUAL PROPERTY RIGHTS THEREIN AND ALL MATERIALS
RELATED THERETO OR THE USE THEREOF OR OF ANY HARDWARE, SOFTWARE OR OTHER
DOCUMENTATION DELIVERED HEREUNDER.

 

WITHOUT IN ANY WAY LIMITING THE GENERALITY OF
THE FOREGOING, LICENSOR DOES NOT WARRANT THAT THE JAZZ TECHNOLOGY IS COMPLETE
OR WILL OPERATE UNINTERRUPTED OR THAT IT WILL BE FREE FROM ANY DEFECTS OR
ERRORS OR THAT THE JAZZ TECHNOLOGY OR ANY PORTION THEREOF IS DESIGNED TO MEET
ANY OF LICENSEE’S TECHNICAL OR BUSINESS REQUIREMENTS. NO EMPLOYEE, AGENT,
REPRESENTATIVE OR AFFILIATE OF LICENSOR HAS AUTHORITY AT ANY TIME TO BIND
LICENSOR TO ANY ORAL OR WRITTEN REPRESENTATION OR WARRANTY CONCERNING ANY OF
THE JAZZ TECHNOLOGY.

 

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4.                                       Indemnification.

 

4.1                                 Indemnification by Licensor. Subject to Section 5.1
(Limitation of Liability), Licensor and/or Jazz hereby agrees to defend, at
Jazz’s and/or Licensor’s expense, and indemnify Licensee against damages
finally awarded by a court of proper jurisdiction in any intellectual property
infringement lawsuit brought by any third party against the products
manufactured by Licensee using the Jazz Technology hereunder, only to the
extent that such products are sold to Licensor and only to the extent that such
infringement action is based on using Jazz Technology hereunder.

 

Neither Jazz nor Licensor shall have any obligation under this Section 4.1,
unless Licensor and Jazz are promptly notified of claims, suits and actions by
such third party, given all known evidence in Licensee’s possession, and given reasonable assistance in,
and sole control of, the defense thereof and all negotiations for its
settlement or compromise. In the event of such a claim of infringement,
Licensor and/or Jazz may, at its option: (i) obtain a license for Licensee
to continue the use of the Jazz Technology hereunder, or (ii) replace or
modify the Process so as to be commercially substantially equal but
non-infringing. Neither Jazz nor Licensor shall have any liability for any
costs, loss or damages resulting from, and Licensee agrees to defend and
indemnify Licensor and Jazz for: (i) the use of the Jazz Technology
hereunder in combination with any other process not supplied by Licensor or Jazz, (ii) the use of the Jazz
Technology hereunder in a manner for which it was expressly restricted, (iii) the willful misconduct of Licensee, or (iv) any settlement or compromise incurred or made
by Licensee without Jazz’s prior written consent. THIS SECTION 4.1 STATES
LICENSOR’S AND JAZZ’S ENTIRE OBLIGATION TO LICENSEE OR ANY OTHER PARTY WITH
RESPECT TO ANY CLAIM OF INFRINGEMENT.

 

4.2                                 Indemnification by Licensee. Subject to Section 5.1
(Limitation of Liability), Licensee shall indemnify, defend
and hold harmless Licensor and Jazz
and each of their respective affiliates, subsidiaries, partners, principals, officers,
directors, employees, agents and permitted assigns against any costs, loss,
damages or liabilities that arise out of or in connection with  any breach by Licensee of this
Agreement, including any inaccuracy or breach of any representation, warranty or
covenant of Licensee contained herein and any modification or
alteration by Licensee (or any third party on behalf of Licensee) of the Jazz
Technology (or any part or element thereof), the Jazz Patent Rights (or
any part or element thereof), or any Jazz Confidential Information or
Documentation. Licensee, at its own expense, shall defend all suits or actions,
provided Licensee is promptly notified of such suits or actions, given all
evidence in Licensor’s and Jazz’s possession, and given reasonable assistance
by Licensor and Jazz in and sole control of defense thereof and all
negotiations for its settlement or compromise. Licensee shall have no liability
to Licensor or Jazz for any settlement or compromise incurred or made by
Licensor without Licensee’s prior written consent (which consent shall not
unreasonably be withheld or delayed).  

 

4.3                                 Notification; Cooperation. Each party
shall promptly notify the other, in writing, of each infringement claim of
which such party becomes aware, and such party shall reasonably cooperate with
the other party and make reasonably available to the other all information,
including but not limited to documents and witnesses, reasonably necessary to
conduct an adequate and appropriate defense to such infringement claim.

 

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5.                                       Limitation Of Liability.

 

5.1                                 No Liability for Special Damages.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER
PARTY SHALL, UNDER ANY CIRCUMSTANCES OR UNDER ANY LEGAL THEORY (INCLUDING,
WITHOUT LIMITATION, NEGLIGENCE, BREACH OF CONTRACT OR TORTIOUS CONDUCT), BE
LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECULATIVE, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES OF
ANY NATURE WHATSOEVER, OR FOR ANY DAMAGES ARISING OUT OF OR IN CONNECTION WITH
ANY MALFUNCTIONS, DELAYS, LOSS OF DATA, LOSS OF REVENUE OR PROFITS,
INTERRUPTION OF SERVICE OR LOSS OF BUSINESS OR ANTICIPATORY PROFITS, EVEN IF
SUCH OTHER PARTY HAS BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.

 

6.                                       Confidentiality.

 

6.1                                 Confidentiality. In connection with the
transactions contemplated by this Agreement, Licensee will obtain or have
access to Jazz Confidential Information. Jazz Confidential Information may be
disclosed by Licensee only to those persons within Licensee and Licensor who “need
to know” such information in order to perform their responsibilities under
this Agreement on behalf of Licensee. Licensee will, and will cause each of its
employees to: (a) keep in utmost confidence all Jazz Confidential
Information; (b) not use any Jazz Confidential Information for any purpose
other than the performance of this Agreement; (c) not disclose any Jazz
Confidential Information to any third party without Licensor’s prior written
consent; and (d) return all of the Jazz Confidential Information,
regardless of form and including, without limitation, all copies,
analyses, derivations and compilations of Jazz Confidential Information to
Licensor within thirty (30) days after the termination of this Agreement for
any reason and provide verification by a senior officer of Licensee that all
Jazz Confidential Information has been returned to Licensor. Without limiting
the foregoing, Licensee agrees to employ with regard to such Jazz Confidential
Information procedures no less restrictive than the strictest procedures used
by Licensee to protect its own confidential information, and in no case less
than a reasonable degree of care under the circumstances. Licensee shall
promptly notify Licensor of any known unauthorized use or disclosure of the
Jazz Confidential Information, and will cooperate with Licensor in any
litigation brought by Licensor against third parties to protect its proprietary
rights.

 

6.2                                 Equitable Relief. Licensee agrees that,
because the breach or threatened breach of any of the terms of this Article 6
by Licensee will result in immediate and irreparable injury to Licensor,
Licensor shall be entitled to an injunction restraining Licensee from any such
breach to the fullest extent allowed by law without the necessity of posting
any bond. Any such right of equitable relief granted to Licensor shall not be
deemed to preclude Licensor from seeking money damages or any other remedy, subject to section 8.1 from
Licensee and/or its agents in the event of such a breach.

 

6.3                                 Confidentiality of Agreement. The terms
and conditions of this Agreement are deemed to be confidential, and each party
will maintain such terms and conditions in strict confidence. The terms of this
Agreement may be disclosed only to (i) those persons within Licensor’s
and Licensee’s respective organizations who “need to know” such information in
order to perform their work responsibilities on behalf of their employer; (ii) as
required by any court or

 

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other
governmental body or agency (including without limitation the Rules and
Regulation promulgated by the Securities Exchange Commission), (iii) as
otherwise required by law, and (iv) to legal counsel of the parties,
accountants and other professional advisors.

 

7.                                       Term and Termination.

 

7.1                                 Term. The Term of this Agreement shall
commence on the Effective Date and continue for a period of twenty (20) years therefrom (the “Initial Term”), unless terminated earlier in
accordance with Section 7.2. Upon expiration of the Initial Term, this
Agreement will renew automatically for successive one-year periods unless
terminated by either party with ninety (90) days written notice prior to the
expiration of any such period. At the expiration of the term of the Agreement,
both parties agree to reasonably cooperate with each other to return any
materials or equipment required to be so returned.

 

7.2                                 Termination. In addition to the
provisions of Section 7.1 and the other provisions pertaining to the
effectiveness of this Agreement set forth elsewhere herein, this Agreement may be
terminated by either party (i) after the Initial Term with ninety (90)
days written notice to the other party, (ii) after the material breach of
this Agreement by the other party which is not cured within thirty (30) days
after the non-breaching party provides the breaching party with written notice
of such breach, (iii) upon the filing of a petition by the other party
seeking to take advantage of any laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition for
adjustment of debts after thirty (30) days written notice to the other party;
or (iv) upon the dissolution of Licensee. Upon termination of this Agreement
for any reason: (a) except as set forth herein, Licensee shall have no
right to use, manufacture or have manufactured, offer for sale, sell, export or
import Wafers or any other product incorporating or manufactured in accordance
with Jazz Technology, Jazz Patent Rights or the Process and shall discontinue
use of the Process; (b) Licensee shall immediately cease using and remove
all Jazz Technology from the Process at Licensee’s facility; (c) Licensee
shall return all of the Jazz Technology, regardless of form and including,
without limitation, all copies, analyses, derivations and compilations of Jazz
Technology to Licensor within thirty (30) days after the termination of this
Agreement for any reason and provide written verification by a senior officer
of Licensee that all Jazz Technology has been returned to Licensor and that the
Process is no longer in use by Licensee; and (d) at any time and from time
to time during the two (2) year period following the termination of this
Agreement and upon ten (10) days prior written notice, Licensee shall
permit Licensor to inspect Licensee’s facility to insure compliance with the
obligations of this Agreement.

 

7.3                                 Breach; Remedy: Subject to section 8.1 if any party
committed a material breach of its obligations under this Agreement, the
non-breaching party shall first give written notice of breach to the breaching
party and request the breaching party to correct the breach within thirty (30)
days from the date of its receipt of the notice unless expressly provided
otherwise in this Agreement, including but not limited to Section 6. In
the event that the breaching party failed to correct the breach within the
curing period, the non-breaching party shall then be entitled to claim damages
from the breaching party. The remedies under this Section 7.3 shall be in
addition to any other remedies available to the non-breaching party.

 

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8.                                       Dispute Resolution.

 

8.1                                 Arbitration.
Any dispute arising from, out of the implementation
of, or in connection with this Agreement shall be settled through friendly
consultation between the parties. In the event that no settlement of the
dispute can be reached through consultation within sixty (60) days following
the date on which a written request for consultation by any party, the dispute
shall be submitted by the claimant (the “Claimant”) to the Arbitration
Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden and be
finally settled by arbitration in accordance with the Rules of the
Arbitration Institute of the Stockholm Chamber of Commerce as in effect on the
date of arbitration.

 

(a)                                  The arbitration tribunal shall consist of three (3) arbitrators. The
Claimant and the respondent (the “Respondent”) shall select one (1) arbitrator.
The third arbitrator, who shall be chairman of the arbitration tribunal, shall
be selected jointly by the Claimant and the Respondent. If the Claimant and the
Respondent are unable to agree as to the selection of the third arbitrator
within thirty (30) days, then the third arbitrator shall be selected by the
Arbitration Institute of the Stockholm Chamber of Commerce.

 

(b)                                 All the proceedings in any such arbitration will be conducted in English.

 

(c)                                  The arbitration award shall be final and binding upon all parties. The
arbitration costs shall be paid according to the award as fixed by the
arbitration tribunal.

 

(d)                                 During the period when a dispute is being resolved, the parties shall in
all other respects continue to exercise their remaining respective rights and
fulfill their respective obligations under this Agreement except for such
rights, obligations and other matters which are subject to the arbitration.

 

8.2                                 Extension of Deadlines. All deadlines
in this Article 8 may be extended by mutual agreement of the parties.

 

8.3                                 Equitable Relief. Notwithstanding
anything to the contrary herein, each party shall be entitled to seek
injunctive relief (but not money damages, which is subject only to the
mediation and arbitration procedures above) in any appropriate court of law to
prevent or stop a violation of the terms and conditions contained herein.

 

9.                                       Additional Terms.

 

9.1                                 Governing Law; Language. This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of California, United States of America, without regard for its choice
and or conflict of laws provisions and without regard to the United Nations
Convention on Contracts for the International Sale of Goods and is subject to
all other applicable governmental laws and regulations, including but not
limited to applicable regulations and requirements of any regulatory agency
concerning the export or import of Wafers and the export of Jazz Technology and
Jazz Patent Rights from the United States of America. This Agreement has been
made in the English language and all documents and communications (including
any arbitration or mediation proceedings and any documents or communications
delivered in connection therewith) between the parties hereto shall be in the
English language. Any 

 

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translations
of this Agreement or any documents relating to this Agreement shall be for
convenience purposes only and the parties hereto agree that the English
language version of this Agreement and the documents relating hereto shall
govern and control for all purposes.

 

9.2                                 Compliance With Laws. In exercising its
rights and meeting its obligations under this license, Licensee shall fully
comply with the requirements of any and all applicable laws, regulations, rules and
orders of any domestic or foreign governmental body having jurisdiction over
the exercise of rights under this license. Licensee further agrees to indemnify
and hold Licensor harmless from and against any costs, expenses, attorney’s
fees, citation, fine, penalty and liability of any kind which might be imposed
by reason of any asserted or established violation of any such laws, order, rules or
regulations.

 

9.3                                 Successors and Assigns. This Agreement
will be binding upon the parties and will inure to their benefit and the
benefit of their permitted successors and assigns. Licensee shall not assign or
subcontract this Agreement or any of its interests, rights or obligations
hereunder without the prior written consent of Licensor.

 

9.4                                 Relationship of the Parties. Each party
hereto is contracting independently with the other and neither party shall be
deemed to be an agent, representative or a partner of the other Licensors as a result of any provision of this
Agreement. Neither party shall have the right or authority to assume or create
any obligation or responsibility, whether express or implied, on behalf of or
in the name of the other party or to bind the other party in any manner for any
purpose.

 

9.5                                 Headings and Captions. The headings and
captions used in this Agreement are inserted for convenience only and shall not
affect the construction or interpretation of the respective provisions of this
Agreement.

 

9.6                                 Export Controls. Licensee agrees to
comply with all United States’ and The People’s Republic of China’s (and/or any
other appropriate jurisdiction’s) export regulations in connection with this
Agreement. In this regard, Licensee may not export or re export the Jazz
Technology or Jazz Patent Rights or any portion thereof without the prior
written consent of Licensor and without the appropriate United States and
foreign government licenses. Neither the Jazz Technology or Jazz Patent Rights,
nor any technical data contained therein or produced thereby, nor any portion
thereof may be exported or re-exported (i) into (or to a national or
resident of) Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria, or any other
country to which the United States has embargoed goods; or (ii) to anyone
on the United States Treasury Department’s list of Specially Designated
Nationals or the U.S. Commerce Department’s Table of Deny Orders. Licensee
hereby represents and warrants that it is not located in, under the control of,
or a national or resident of any such country or on any such list. Each of Licensor and Licensee
further agrees to indemnify and hold harmless the other party and Jazz and their respective officers,
directors, shareholders, employees, agents and representatives against any and
all costs, liabilities, damages, losses or expenses (including, without
limitation, attorneys’ fees) arising from, or relating to any established knowing or
intentional violation by such party of any of the applicable laws and administrative regulations of the
United States of America,
the People’s Republic of China or other foreign governmental agencies
relating to the control of exports of commodities and technical data. This Section shall
survive the expiration or termination of this Agreement for any reason.

 

10

 

9.7                                 Interpretation. Each party, represented
by counsel, has cooperated in the drafting and preparation of this Agreement.
Accordingly, this Agreement shall not be construed against any party on the
basis that such party was the drafter.

 

9.8                                 No Modifications. No modifications,
changes or waivers of this Agreement shall be valid unless made in writing and
signed by authorized representatives of both Licensor and Licensee.

 

9.9                                 No Waiver. The failure or delay of a
party to exercise its rights here under or any custom or practice of a party in
variance with the terms hereof shall not constitute a waiver by the relevant
party of the terms of this Agreement and the rights granted to the relevant
party herein are to the right of the relevant party to demand exact compliance
with the terms hereof. Waiver by a party of any particular default by the other
party shall not constitute a waiver of any subsequent default of the same or
different nature.

 

9.10                           Partial Invalidity. If any provision of
this Agreement shall be declared void, voidable, illegal or unenforceable by
any court of competent jurisdiction, administrative body or arbitration panel,
such declaration or finding shall not void or cancel the other provisions of
this Agreement which shall remain binding upon the parties. Any provision of
this Agreement if found invalid, illegal or unenforceable shall be renegotiated
by the parties to accomplish so far as possible the business purpose of this
Agreement.

 

9.11                           Entire Agreement. This Agreement and the
Exhibits attached hereto constitutes the entire and complete agreement of the
parties with respect to the subject matter hereof and supersedes any and all
prior understandings, promises, representations and agreements, oral or
written. The parties further intend that this Agreement and the Exhibits
attached hereto constitute the complete and exclusive statement of its terms
and that no extrinsic evidence whatsoever may be introduced in any
judicial or other proceeding, if any, involving this Agreement. Neither party
shall be bound by or liable to the other for any representation, promise, or
inducement, whether prior to or concurrent with, made by any agent or person in
the other’s employ, not embodied in this Agreement or the Exhibits attached
hereto.

 

9.12                           Exhibits. Each of the exhibits referred
to herein and attached hereto is an integral part of this Agreement and is
incorporated herein by this reference.

 

9.13                           Survival of Certain Provisions. The
obligations set forth in Sections 2.3, 2.5, 2.6, 2.9 and 3.1 and Articles 4, 5,
6, 7, 8 and 9 shall survive and remain in effect beyond any termination or
expiration of this Agreement and shall apply to either party’s permitted
successors and assigns.

 

9.14                           Force Majeure. Neither party shall be
held liable or responsible for delay or failure to perform any of such
party’s obligations under this Agreement occasioned by any cause beyond its
reasonable control, including but not limited to war, acts of God, acts of
terrorism, civil disturbance, fire, flood, earthquake, epidemic, quarantine
restrictions, unusually severe weather, acts or defaults of common carriers,
freight embargoes, strike or other labor trouble, lack of or inability to
obtain raw materials, transportation, labor, fuel or supplies; power outages, governmental
laws, acts, regulations, embargoes, or orders (whether or not such later prove
to be invalid), or any other cause, contingency or circumstance within or
without the United States not

 

11

 

subject
to such party’s reasonable control (a “Force Majeure Event”). The party suffering a
Force Majeure Event shall promptly notify the other party of such Force Majeure
Event. A party shall be excused from its performance to the extent caused by
such Force Majeure Event; provided that such party (i) gives notice of the
Force Majeure Event to the other party promptly after its occurrence, (ii) uses
its reasonable efforts (including executing any disaster plan) to overcome,
mitigate and remove the cause of the event preventing or delaying performance, (iii) continues
the performance of all its obligations under this Agreement that are not
prevented or delayed and (iv) upon cessation of the Force Majeure Event,
promptly performs or completes performance of the obligations which were
prevented or delayed. If Licensee’s inability to perform continues for
sixty (60) days or more from notification to Licensor of the Force Majeure
Event, Licensor shall have the right to terminate its obligations to Licensee
with no further liability under this Agreement upon prompt written notice.

 

9.15                           Notices. Any notices required to be
given from one party to the other shall be in writing and in the English
language and shall be deemed to have been properly given and effective on the
date of delivery if delivered by hand, telegram, cable, or facsimile provided
the delivery is confirmed in writing and sent by mail. If mailed, by First Class Mail,
Registered or Certified if necessary, Return-Receipt, postage pre-paid. One (1) business
day after deposit of a recognized express courier and addressed to the accurate
address, including postcode as given below of the addressee or to such address
that shall be designed by timely written notice to the other party as follows:

 

	
  To Licensor:

  	
   

  	
  Jazz/ Hua
  Hong, LLC

  
	
   

  	
   

  	
  4321 Jamboree Road

  
	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
   

  	
   

  	
  Attn: Mr. Shu Li

  
	
   

  	
   

  	
  Fax No.:                         

  
	
   

  	
   

  	
   

  
	
  With copies
  to:

  	
   

  	
  Carolyn
  Follis, Esq.

  
	
   

  	
   

  	
  Jazz
  Semiconductor

  
	
   

  	
   

  	
  4321
  Jamboree Road

  
	
   

  	
   

  	
  Newport
  Beach, CA 92660

  
	
   

  	
   

  	
  Fax No.:                         

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James B. O’Neal, Esq.

  
	
   

  	
   

  	
  Rutan &
  Tucker, LLP

  
	
   

  	
   

  	
  611 Anton
  Blvd., Suite 1400

  
	
   

  	
   

  	
  Costa Mesa,
  CA 92626-1931

  
	
   

  	
   

  	
  Fax No.:
  (714) 546-9035

  
	
   

  	
   

  	
   

  
	
  To Licensee:

  	
   

  	
  Shanghai Hua Hong NEC Electronics Company, Limited

  
	
   

  	
   

  	
  18F
  Jiushifuxing Building No. 918

  
	
   

  	
   

  	
  Middle
  Huaihai Road

  
	
   

  	
   

  	
  Shanghai,
  People’s Republic of China

  
	
   

  	
   

  	
  Attn: Chairman

  
	
   

  	
   

  	
  Fax No.: 86-21-50310510

  

 

12

 

	
  With a copy
  to:

  	
   

  	
  Shanghai Hua Hong NEC Electronics Company, Limited

  
	
   

  	
   

  	
  No. 1188, Chuan Qiao Rd, Pu
  Dong Shanghai, Peoples

  
	
   

  	
   

  	
  Republic of
  China

  
	
   

  	
   

  	
  Attn: Mr. William Wang

  
	
   

  	
   

  	
  Fax No.:86-21-50310510

  
	
   

  	
   

  	
   

  
	
  To Jazz:

  	
   

  	
  Jazz Semiconductor

  
	
   

  	
   

  	
  4321 Jamboree Road

  
	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
   

  	
   

  	
  Attn: Mr. Shu Li

  
	
   

  	
   

  	
  Fax
  No.:                         

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Carolyn Follis, Esq.

  
	
   

  	
   

  	
  Jazz Semiconductor

  
	
   

  	
   

  	
  4321 Jamboree Road

  
	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
   

  	
   

  	
  Fax
  No.:                         

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James B. O’Neal, Esq.

  
	
   

  	
   

  	
  Rutan & Tucker, LLP

  
	
   

  	
   

  	
  611 Anton Blvd., Suite 1400

  
	
   

  	
   

  	
  Costa Mesa, CA 92626-1931

  
	
   

  	
   

  	
  Fax No.: (714) 546-9035

  

 

9.16                           Time is of the Essence. Time is of the
essence with respect to this Agreement, as are the provisions relating to
ownership, confidential information and payments.

 

9.17                           Further Assurances. Each party to this
Agreement, upon the request of the other party, agrees to perform all
further acts and execute, acknowledge, and deliver any documents that may be
reasonably necessary, appropriate, or desirable to carry out the provisions of
this Agreement.

 

9.18                           Publicity. Neither party shall make a
press release, advertisement, public statement or disclosure to any third party
concerning the existence of this Agreement or its contents without the express
written consent of the other party not to be unreasonably withheld or delayed.

 

9.19                           Registration. Upon the request of
Licensor, this Agreement shall be registered with the appropriate governmental
authorities in the People’s Republic of China.

 

9.20                           Counterparts. This Agreement may be
signed in counterparts, which when taken together, shall constitute one and the
same instrument.

 

13

 

9.21                           Jazz agrees that it shall be jointly and
severally liable for any default in the performance of obligations by Licensor
under this Agreement.

 

9.22                           Proceedings. Notwithstanding anything
to the contrary set forth herein, each party to this Agreement may enforce
its rights and remedies hereunder against any other party to this agreement
without first having to proceed against both other parties or against any one
particular party.

 

9.23                           EFFECTIVENESS This Contract/Agreement shall become
effective upon the effectiveness of the JOINT VENTURE CONTRACT ON THE
ESTABLISHMENT AND OPERATION OF SHANGHAI HUA HONG NEC ELECTRONICS COMPANY,
LIMITED Dated August 30, 2003

 

[SIGNATURES
CONTAINED ON THE FOLLOWING PAGE]

 

14

 

IN WITNESS WHEREOF, the parties hereby have
executed this Agreement as of the last date indicated below to be effective as
of the Effective Date by their duly authorized representatives.

 

 

	
  Jazz/ Hua Hong, LLC,

  	
   

  	
  Shanghai Hua Hong NEC Electronics

  
	
  a Delaware
  limited liability company

  	
   

  	
  Company, Limited, a company organized
  under

  
	
   

  	
   

  	
  the laws of
  the People’s Republic of China

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  \s\ Jeff R.
  McHenry

  	
   

  	
  By:

  	
  \s\ K.
  Shimakura

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Jeff R.
  McHenry

  	
   

  	
  Name:

  	
  K. Shimakura

  
	
  Title:

  	
  Executive
  Director of Marketing

  	
   

  	
  Title:

  	
   

  
	
  Date:

  	
  August 30,
  2003

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Newport Fab LLC, a Delaware limited liability company

  d/b/a Jazz Semiconductor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  \s\ Shu Li

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Shu Li

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  	
   

  
	
  Date:

  	
  August 30, 2003

  	
   

  	
   

  
												

 

15

 

EXHIBIT “A”

TO TECHNOLOGY LICENSE AGREEMENT

 

DESCRIPTION OF JAZZ TECHNOLOGY

 

[...***...].

 

16

 

EXHIBIT “B”

TO TECHNOLOGY LICENSE AGREEMENT

 

DESCRIPTION OF PATENTS

 

General
Description:

 

In this
section, the patents related to the licensed technology are listed below.

 

List of
patents to which this Agreement relates:

 

[...***...]

 

17

 

EXHIBIT “C”

TO TECHNOLOGY LICENSE AGREEMENT

 

WAFERS

 

[...***...]

 

Such other applications as
mutually agreed by the Parties

 

18Exhibit
10.40

 

TECHNOLOGY LICENSE AND TRANSFER AGREEMENT

 

THIS TECHNOLOGY LICENSE
AND TRANSFER AGREEMENT
(this “Agreement”), is made and entered into as of August 30th, 2003 (the “Effective Date”), by Newport
Fab LLC, a Delaware limited liability company d/b/a Jazz Semiconductor (“Licensor”),
and Shanghai Hua Hong NEC
Electronics Company, Limited, a company organized under the laws of
the People’s Republic of China(“Licensee”).

 

Purpose and Background

 

Licensor owns and/or has
certain rights with respect to existing foundry compatible process technology
and design kits for 0.25
um digital, analog and RF CMOS wafers, 0.25um
high voltage analog CMOS, 0.18um digital, analog and RF CMOS wafers, 0.15um digital CMOS and 0.13um digital CMOS wafers (“Wafers”),
as more particularly described in Appendix A
attached hereto (the “Design Kits”). Licensor also owns and/or has certain
rights to process technology related thereto in connection with the conduct of
a foundry business for the production of Wafers.

 

Subject to and in
accordance with the terms and conditions set forth herein, Licensee desires to
obtain (i) a license from Licensor, to the extent that Licensor has the right
to grant such license, to use the Design Kits to the extent necessary solely in
conjunction with the conduct by Licensee of a foundry business to produce
Wafers, and (ii) a license, to the extent that Licensor has the right to grant
such license, to use the Jazz Technology (as described in Appendix F
attached hereto) and Jazz Patent Rights (as described in Appendix B
attached hereto) for foundry
business purposes at HHNEC only
in order for Licensee to be able to conduct a foundry business for the
production of Wafers.

 

Agreement

 

NOW, THEREFORE, in
consideration of the foregoing premises, the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged by each of the parties, the parties
hereto agree as follows:

 

1.             Definitions.

 

1.1           “Agreement” shall mean this
Technology License and Transfer
Agreement by and between Licensor and Licensee.

 

1.2           “Design Kits” shall have the meaning
given to it in the above Recitals.

 

1.3           “Documentation” shall mean written
material(s) and/or manual(s) provided by Licensor to Licensee and any on-line
help files or other on-line materials regarding or related to the Design Kits
or the Jazz Technology.

 

Confidential treatment is
being requested for portions of this document. 
This copy of the document filed as an exhibit omits the confidential
information subject to the confidentiality request.  Omissions are designated by the symbol
[...***...].  A complete version of this
document has been filed separately with the Securities and Exchange Commission.

 

 

1.4           “Effective Date” shall have the
meaning given to it in the introductory paragraph hereof; provided, that the
effectiveness of this Agreement is subject to the pertinent terms and
conditions hereof.

 

1.5           “Intellectual Property Rights” shall
mean any and all right, title and interest in and to any and all patents and
all patent applications (including, without limitation, originals, divisions,
continuations, continuations-in-part, CPA’s, RCE’s, provisional, extensions or
reissues), design rights (whether registered or not and all applications for
the foregoing), copyrights, database rights, topography rights, mask work
rights, applications to register any of the aforementioned rights, trade
secrets, rights in unpatented know-how and show-how, information, data,
drawings, concepts, drawings, schematics, specifications, object code and
machine-readable copies of any software, source code relating to any software,
rights of confidence, rights of authorship, and any other intellectual or
industrial property rights of any nature whatsoever in any part of the world
and whether arising under the common law, state law, federal law or the laws of
any foreign country.

 

1.6           “Jazz Confidential Information” as
used herein means information about this Agreement and all its Appendices
and Schedules, any amendment or addenda hereto or thereto, Licensor’s business,
assets or operations, including but not limited to the Design Kits, the Jazz
Technology and Intellectual Property Rights, and any other proprietary
information supplied to Licensee by Licensor deemed by Licensor to be of value
and not commonly known to others within Licensor’s industry. Jazz Confidential
Information will not include information which Licensee demonstrates with
documentary evidence: (a) was filed with any governmental agency on a
non-confidential basis or was known to the public at the time of its
disclosure, or becomes known to the public after the disclosure through no
action of Licensee; (b) was in Licensee’s possession prior to the time of the
disclosure (provided that Licensee did not receive such information from a
party that was subject to a confidentiality agreement with Licensor); (c) is
subject to a subpoena, summons or other legal process, or (d) was developed by
Licensee independent of the disclosure by Licensor.

 

1.7           “Jazz Patent Rights” shall mean
those patent rights that Licensor owns or under which it has rights during the
term of this Agreement with respect to the Process.

 

1.8           “Jazz Technology” shall mean all
proprietary information and know-how provided to Licensee by Licensor, no
matter in what form provided, that relate to the Process, including, without
limitation, information relating to the products and processes identified in Appendix F attached hereto.

 

1.9           Licensee” shall mean Shanghai Hua Hong NEC Electronics Company, Limited, a company
organized under the laws of the People’s Republic of China.

 

1.10         Licensee’s Facility” shall mean
Licensee’s Facility located at No. 1188, Chuan Qiao Rd, Pu Dong Shanghai,
Peoples Republic of China or other agreed
facility.

 

1.11         “Licensor” shall mean Newport Fab
LLC, a Delaware limited liability company d/b/a Jazz Semiconductor.

 

2

 

1.12         “LLC Agreement” shall mean the
Limited Liability Company Agreement of Jazz/Hua Hong LLC, a limited liability company organized by Licensor and
Licensee under the laws of the State of Delaware.

 

1.13         “Process” shall mean the process,
procedures and methods identified [and defined] by the Design Kits that enable
the conduct of a foundry for the production of Wafers as communicated by
Licensor to Licensee from time to time during the term of this Agreement.

 

1.14         “Manufacturing Territory”
shall mean the People’s Republic of China, including Hong Kong and Macau.

 

1.15         “Wafers” shall have the meaning
given to it in the above Recitals.

 

2.             License; Limitations and Restrictions.

 

2.1 License to Licensee Licensor hereby grants to Licensee, subject to
compliance by Licensee with the terms and conditions of this Agreement, (i) an
exclusive, nontransferable, royalty-free (except as otherwise provided herein)
license, without the right to sublicense except in the distribution in
compliance with the terms of Sections 6.1, 9.2 
and 9.6 herein to customers and potential customers whether or not within
the Manufacturing Territory solely to enable customers to design for
manufacturing at a HHNEC facility
within the territory (“Manufacturing Territory”), to the extent that
Licensor can grant such license to Licensee (including the Intellectual Property
Rights of Licensor therein), to use the Design Kits to the extent necessary
solely in conjunction with the conduct by Licensee of a foundry business to
produce Wafers at a HHNEC manufacturing
facility within the territory;
and (ii) an exclusive, nontransferable, royalty-free (except as otherwise
provided herein) license within the
territory, without the right to sublicense, to use the Jazz Technology
and Jazz Patent Rights within the
territory, to the extent that Licensor can grant such license to Licensee
(including the Intellectual Property Rights of Licensor therein), for business
purposes only in order for Licensee to be able to engage customers and to conduct a foundry business for the
production of Wafers at a HHNEC facility within the Territory; provided,
however, that such right of exclusivity within the Territory shall only apply
if (1)Licensee is satisfying the capacity requirements of Licensor,;  and
(2) Licensee is commercially competitive on on-time delivery, quality, and yield of Licensor products purchased under separate agreement
between Licensor and Licensee; and, provided, further, that such right of
exclusivity shall not apply to any existing contracts, agreements, or
commitments between Licensor and any third party entered into prior to the
signing hereof, which have been
identified to Licensee. If
Licensee fails to meet the conditions set forth in this Section regarding the
exclusivity, Licensor shall notify the Licensee in writing of such failure and
the Licensee, upon receiving such notice, shall have ninety days(90) of grace
period to correct such failure. Subject to the foregoing, during the
term of this Agreement said right of exclusivity shall mean that Licensor shall
not license the Licensed Technology to any third party within the Manufacturing
Territory other than Licensee to make and sell, Wafers to foundry customers but Licensor shall be free to make and sell
and license any third party or parties to make and sell Wafersoutside of the
Territory and Licensee’s right to sell Wafers outside the Territory shall be
non-exclusive, it is also understood
that Licensor shall retain the right to use the Licensed Technology to make or
sell wafers at Licensor’s facilities without restriction..

 

3

 

2.2 No Other Licenses or Rights. This license
does not authorize any use other than that which is expressly set out herein. No
other license or right to sublicense or other right is granted, by implication,
estoppel or otherwise to Licensee with respect to the Design Kits, any Jazz
Technology, Jazz Patent Rights or any Intellectual Property Rights of Licensor
and/or Confidential Information in regard thereto now or hereafter owned or
controlled by Licensor except those expressly granted in this Agreement.
Licensee agrees and acknowledges that, except as otherwise set forth herein,
Licensor reserves to itself all rights in all fields, territories and
technologies under or with respect to the Jazz Technology, Jazz Patent Rights
and Intellectual Property Rights of Licensor therein.

 

2.3 No Transfer of Title or Ownership. This
license transfers to Licensee neither title nor any Intellectual Property
Rights to the Design Kits, the Jazz Technology or Jazz Patent Rights (or any
part or element thereof), or any Documentation (or any part or element
thereof), or any copyrights, patents, trade secrets, or trademarks, or other
proprietary rights embodied or used in connection therewith, except for the
limited licenses expressly granted herein. Licensee hereby agrees and
acknowledges that Licensor is the sole owner of and shall retain all ownership
right, title and interest in and to the Design Kits, the Jazz Technology and
Jazz Patent Rights (and all Intellectual Property Rights therein). Licensee
hereby agrees that Licensee shall not contest or oppose or otherwise
participate in or support any challenge, including without limitation a
challenge to ownership, validity, scope or enforceability of any of the Design
Kits, the Jazz Technology or Jazz Patent Rights (or any Intellectual Property
Rights therein), nor shall Licensee participate in or support in any way any
reissue, reexamination or reconsideration thereof. Licensee shall sign or cause
to be signed all documents necessary to perfect Licensor’s ownership rights in
the Design Kits, the Jazz Technology and Jazz Patent Rights, including all
Intellectual Property Rights of Licensor therein, including without limitation
all necessary assignments and agreements with its employees, subcontractors or
agents.

 

2.4 License Restrictions. Licensee agrees that
it will not itself, or through any parent, subsidiary, affiliate, agent or
other third party: (a) sell,
lease, rent, assign, transfer, license or sublicense any of the Design Kits,
the Jazz Technology, the Jazz Patent Rights or Documentation; (b) use or manipulate any of the
Design Kits, the Jazz Technology, the Jazz Patent Rights or any Documentation
(or any part or element thereof) in any manner or to any extent not
contemplated by this Agreement; (c)
provide, disclose, divulge or make available to, or permit use of the Design
Kits, the Jazz Technology, the Jazz Patent Rights or Documentation (or any part
or element thereof) by any third party, except as otherwise expressly permitted
in accordance with the terms and conditions hereof; or (d) take any other
action in derogation of Licensor’s Intellectual Property Rights.

 

2.5           Right to Audit. Licensee will keep
complete, true and accurate books of account, records of production,
engineering documents, etc. for the purpose of showing its compliance with the
terms of this Agreement. Such books, records and documents will be kept at
Licensee’s principal place of business at all times during the term of this
Agreement and for a period of at least two (2) years after termination or
expiration of this Agreement for any reason. Upon ten (10) days written notice
to Licensee, and no more often than twice per year, Licensor’s designated
representative, at Licensor’s expense, shall have the right to inspect Licensee’s
records relevant to this Agreement only and
not business data of Licensee that is irrelevant to this Agreement during normal business hours solely
for the purposes of verifying

 

4

 

the compliance by Licensee with the provisions of this
Agreement. A final inspection shall occur no later than two (2) years after the
termination of this Agreement.

 

2.6           Third Party Software, Licenses, Consents and
Agreements. Licensee acknowledges and understands that
utilization of the Design Kits and/or Jazz Technology requires third party
software and software licenses that are not included in the Design Kits, as
more particularly set forth on Appendix C
attached hereto, and that Licensor is not purporting to assign or sublicense
any rights to such third party software. In addition, Licensee acknowledges
that the utilization of the Design Kits and/or Jazz Technology is subject to
the terms and conditions of certain agreements between Licensor and certain
third parties including without limitation, those third parties set forth on Appendix D attached hereto, which agreements require the
prior written consent of such third parties, a sublicense of Licensor’s rights
under its agreements with such third parties and/or a separate agreement
between Licensee and one or more of such third parties to permit Licensee to
use the Design Kits and/or Jazz Technology and which may also require the
payment of royalties or other recurring fees or charges to such third parties.
Licensee acknowledges and agrees that the effectiveness of this Agreement and
grant of the license herein is expressly conditioned upon obtaining such
consents, sublicenses and/or separate agreements, as applicable, and that
Licensee is responsible for obtaining at its own expense, and shall obtain,
such consents, sublicenses and/or separate agreements, as applicable, and the
third party software and software licenses set forth on Appendix C
attached hereto in order to utilize the Design Kits and/or Jazz Technology.
Although Licensor shall use its commercially reasonable efforts to assist
Licensee in obtaining such consents, sublicenses and/or separate agreements, as
applicable, and such third party software and software licenses, and assist in
negotiating with such third parties a cost-effective means of utilizing such
licenses and the likely recurring fees and charges payable to such third
parties, no assurance is or can be given by Licensor that Licensee will be able
to obtain any or all of such consents, sublicenses and/or separate agreements, as
applicable, or that Licensee will be able to obtain such third party software
and software licenses. Licensee further acknowledges and agrees that Licensee
shall be responsible for the payment of any fees, royalties and other charges
payable to such third parties pursuant to such consents, sublicenses and/or
separate agreements, as applicable, and such third party software and software
licenses. Furthermore, Licensee acknowledges and understands that Licensee may
select to obtain and utilize certain optional views with respect to the Design
Kits as Licensee may deem appropriate in its reasonable discretion and at its
sole expense, as more particularly set forth on Appendix E
attached hereto.

 

2.7           Export Control Approvals. Licensee
acknowledges and agrees that the effectiveness of this Agreement and grant of
the foregoing licenses is expressly conditioned upon Licensor and Licensee
obtaining all necessary and advisable approvals from the United States
Department of Commerce (Bureau of Industry and Security) and any and all other
applicable U.S., People’s Republic of China and other foreign governmental
agencies (collectively, “Export Control Approvals”).

 

2.8          Newly Developed
Technology. During the term of this Agreement, the Process may be
improved, modified, refined or otherwise altered by Licensee. Such
improvements, modifications, refinements or other alterations shall hereinafter
be referred to as “Newly

 

5

 

Developed Technology”
and may, but need not necessarily, constitute one or more inventions, whether
patentable or not. Licensee agrees to promptly disclose any Newly Developed
Technology to Licensor. All Newly Developed Technology and all Intellectual
Property Rights therein shall be owned by Licensee. Licensee may make
any registrations or filings with respect to any Newly Developed Technology with written notice to Licensor.
Licensee hereby grants to Licensor a worldwide, perpetual, non-exclusive, non-transferable, royalty-free license in the Newly Developed
Technology and all Intellectual Property Rights therein to make, sell, offer to
sell, import and otherwise distribute products that include or incorporate, in
whole or in part, the Newly Developed Technology and the Intellectual Property
Rights therein.

 

3      Support; 
Warranties; Disclaimers.

 

3.1           Support by Licensor. Licensor
agrees to provide technology transfer (process) support, as well as foundry
manufacturing operation service and know-how for foundry compatible process to
Licensee, as more particularly described on Appendix G
attached hereto.

 

3.2          Support
by Licensee. Licensee shall provide engineering support, photo masks
and engineering wafers to support the performance of this Agreement by the
parties, as more particularly described on Appendix G
attached hereto.

 

3.3           Limited
Representation by Licensor. Licensor represents and
warrants only that, as of the Effective Date, to the actual knowledge of
Licensor the Design Kits, Jazz Technology and Jazz Patent Rights licensed to
Licensee hereunder are owned,
developed by Licensor, or have been licensed to Licensor, and to
Licensor’s actual knowledge, does not
infringe any intellectual property
right of any third party. Licensee’s exclusive remedy and Licensor’s sole
obligation for breach of this warranty are set forth in Section 4.1
(Indemnification).

 

3.4           SUBJECT TO APPLICABLE CHINESE LAWS AND
REGULATIONS REGARDING TECHNOLOGY TRANSFER, EXCEPT FOR THE LIMITED
REPRESENTATION MADE BY LICENSOR IN SECTION 3.3 ABOVE, THE JAZZ CONFIDENTIAL
INFORMATION, THE DESIGN KITS, THE JAZZ TECHNOLOGY, THE JAZZ PATENT RIGHTS, THE
DOCUMENTATION, AND ALL INTELLECTUAL PROPERTY RIGHTS THEREIN AND ALL MATERIALS
RELATED THERETO AND THE USE THEREOF AND OF ANY HARDWARE, SOFTWARE OR OTHER
DOCUMENTATION DELIVERED HEREUNDER (IN ANY AND ALL FORMS) IS PROVIDED BY
LICENSOR AND IS ACCEPTED BY LICENSEE “AS IS” AND “WITH ALL FAULTS.” LICENSOR
MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO SAME AND/OR THEIR
QUALITY, PERFORMANCE, MERCHANTABILITY, NON-INFRINGEMENT, OR FITNESS FOR A PARTICULAR
PURPOSE. FURTHER, THERE IS NO AFFIRMATION OF FACT, ACCURACY, COMPLETENESS,
CAPABILITY OR PERFORMANCE, EXPRESS OR IMPLIED, MADE BY LICENSOR WITH RESPECT TO
THE JAZZ CONFIDENTIAL INFORMATION, THE DESIGN KITS, THE JAZZ TECHNOLOGY, JAZZ
PATENT RIGHTS, DOCUMENTATION, THE INTELLECTUAL PROPERTY RIGHTS THEREIN AND ALL
MATERIALS RELATED THERETO OR THE USE THEREOF OR OF ANY HARDWARE, SOFTWARE OR
OTHER DOCUMENTATION DELIVERED HEREUNDER.

 

6

 

WITHOUT IN ANY WAY LIMITING
THE GENERALITY OF THE FOREGOING, LICENSOR DOES NOT WARRANT THAT ANY OF THE
DESIGN KITS OR THE JAZZ TECHNOLOGY IS COMPLETE OR WILL OPERATE UNINTERRUPTED OR
THAT IT WILL BE FREE FROM ANY DEFECTS OR ERRORS OR THAT THE JAZZ TECHNOLOGY OR
ANY PORTION THEREOF IS DESIGNED TO MEET ANY OF LICENSEE’S OR ANY OF ITS
CUSTOMERS’ TECHNICAL OR BUSINESS REQUIREMENTS. NO EMPLOYEE, AGENT,
REPRESENTATIVE OR AFFILIATE OF LICENSOR HAS AUTHORITY AT ANY TIME TO BIND
LICENSOR TO ANY ORAL OR WRITTEN REPRESENTATION OR WARRANTY CONCERNING ANY OF
THE DESIGN KITS OR THE JAZZ TECHNOLOGY.

 

4 Indemnification.

 

4.1          Indemnification by
Licensor.

 

Subject
to Section 5.1
(Limitation of Liability), Jazz
hereby agrees to (1) defend, at Jazz’s
expense, and fully indemnify
the HHNEC against damages
finally awarded by a court of proper jurisdiction in any intellectual property
infringement lawsuit brought by any third party against the products
manufactured by HHNEC based on the
solely use of Jazz’s Process, only to the extent that such products are
sold to Jazz and only to the
extent that such infringement action is based on using Jazz’s Process; and (2) for products not sold to Jazz, Jazz shall defend, at
Jazz’s expense, and indemnify
HHNEC in such intellectual property infringement lawsuit brought by such
third party against the products manufactured by HHNEC based solely on the use of Jazz’s Process. Under
this circumstance (2) the
cumulative amount of indemnifications recoverable by HHNEC, and/or to be expended by
Jazz, shall not exceed, in the aggregate, Five Million US Dollars ($5,000,000).

 

In the
event of such a claim of infringement, Jazz may, at its option: (i) obtain a
license for HHNEC to continue the use of the Jazz’s Process, or (ii) replace or
modify the Jazz’ Process so as to be commercially substantially equal but non-infringing.
Jazz shall have no liability for any costs, loss or damages resulting from, and
HHNEC agrees to defend and indemnify Jazz for: (i) the use of the Jazz’s
Process in combination with any other process not supplied by Jazz, (ii) the
use of the Jazz’s Process in a manner for which it was expressly restricted, (iii) the
willful mis-conduct of HHNEC,
or (iv) any settlement or compromise incurred or made by HHNEC without Jazz’s
prior written consent.

 

Jazz
has no obligation under Subsection 4.1 herein, unless Jazz is promptly notified of claims, suits and
actions by such third party, given all known
evidence in HHNEC possession, and given reasonable assistance in, and
sole control of, the defense thereof and all negotiations for its settlement or
compromise.

 

THIS
SECTION 4.1
STATES JAZZ’S ENTIRE OBLIGATION TO HHNEC WITH RESPECT TO ANY CLAIM OF
INFRINGEMENT.

 

7

 

4.2
Indemnification by Licensee.
Subject to Section 5.1 (Limitation of Liability) Licensee shall indemnify,
defend and hold harmless Licensor and each of Licensor’s affiliates,
subsidiaries, partners, principals, officers, directors, employees, agents and
permitted assigns against any damages or liabilities that arise out of or in
connection with any breach by Licensee of this Agreement, including any
inaccuracy or breach of any representation, warranty or covenant of Licensee
contained herein and any modification or alteration by Licensee (or any third
party on behalf of Licensee) of the Design Kits (or any part or element
thereof), the Jazz Technology (or any part or element thereof), the Jazz Patent
Rights (or any part or element thereof), or any Jazz Confidential Information
or Documentation. Except for
otherwise defined in this agreement, Licensee, at its own expense, shall
defend all suits or actions, provided Licensee is promptly notified of such
suits or actions, given all evidence in Licensor’s possession, and given
reasonable assistance by Licensor in and sole control of defense thereof and
all negotiations for its settlement or compromise. Licensee shall have no
liability to Licensor for any settlement or compromise incurred or made by
Licensor without Licensee’s prior written consent (which consent shall not
unreasonably be withheld or delayed).

 

4.3 Notification; Cooperation. Each party
shall promptly notify the other, in writing, of each infringement claim of
which such party becomes aware, and such party shall reasonably cooperate with
the other party and make reasonably available to the other all information,
including but not limited to documents and witnesses, reasonably necessary to
conduct an adequate and appropriate defense to such infringement claim.

 

5              Limitation Of
Liability.

 

5.1 No Liability for Special Damages.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER
PARTY SHALL, UNDER ANY CIRCUMSTANCES OR UNDER ANY LEGAL THEORY (INCLUDING,
WITHOUT LIMITATION, NEGLIGENCE, BREACH OF CONTRACT OR TORTIOUS CONDUCT), BE
LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECULATIVE, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES OF
ANY NATURE WHATSOEVER, OR FOR ANY DAMAGES ARISING OUT OF OR IN CONNECTION WITH
ANY MALFUNCTIONS, DELAYS, LOSS OF DATA, LOSS OF REVENUE OR PROFITS,
INTERRUPTION OF SERVICE OR LOSS OF BUSINESS OR ANTICIPATORY PROFITS, EVEN IF
SUCH OTHER PARTY HAS BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.

 

6              Confidentiality.

 

6.1 Confidentiality. In connection with the
transactions contemplated by this Agreement, Licensee will obtain or have
access to Jazz Confidential Information. Jazz Confidential Information may be
disclosed by Licensee only to those persons within Licensee who “need to know”
such information in order to perform their responsibilities under this
Agreement on behalf of Licensee. Licensee will, and will cause each of its
employees to: (a) keep in utmost confidence all Jazz Confidential Information;
(b) not use any Jazz Confidential Information for any purpose other than the
performance of this Agreement; (c) not disclose any Jazz Confidential
Information to any third party without Licensor’s prior written consent except
in the distribution to customers and potential customers for usual and
customary foundry business purposes; provided, that each such customer and
potential customer shall have first entered into a

 

8

 

confidentiality agreement
in regard to such Jazz Confidential Information containing provisions
protective of Licensor’s rights therein that are at least as protective as
those set forth herein, the form of which confidentiality agreement shall have
been approved in advance by Licensor; and (d) return all of the Jazz Confidential Information, regardless
of form and including, without limitation, all copies, analyses, derivations
and compilations of Jazz Confidential Information to Licensor within thirty
(30) days after the termination of this Agreement for any reason and provide
verification by a senior officer of Licensee that all Jazz Confidential
Information has been returned to Licensor. Without limiting the foregoing,
Licensee agrees to employ with regard to such Jazz Confidential Information
procedures no less restrictive than the strictest procedures used by Licensee
to protect its own confidential information, and in no case less than a
reasonable degree of care under the circumstances. Licensee shall promptly
notify Licensor of any known unauthorized use or disclosure of the Jazz Confidential
Information, and will cooperate with Licensor in any litigation brought by
Licensor against third parties to protect its proprietary right.

 

With respect to the Newly
Developed Technology (and Intellectual Property Rights therein), each of
Licensor and Licensee will, and will cause each of its employees to: (a) keep
in utmost confidence all Newly Developed Technology (and Intellectual Property
Rights therein); and (b) not disclose any Newly Developed Technology (or
Intellectual Property Rights therein) to any third party without the prior
written consent of the other party. Without limiting the foregoing, each of
Licensor and Licensee agrees to employ with regard to such Newly Developed
Technology (and Intellectual Property Rights therein) procedures no less
restrictive than the strictest procedures used by such party to protect its own
confidential information, and in no case less than a reasonable degree of care
under the circumstances. Each of Licensor and Licensee shall promptly notify
the other party of any known unauthorized use or disclosure of any Newly
Developed Technology (and any Intellectual Property Rights therein), and will
cooperate with the other party in any litigation brought by the other party
against third parties to protect its proprietary right.

 

6.2 Equitable Relief. Licensee, agrees that,
because the breach or threatened breach of any of the terms of this Article 6
by Licensee will result in immediate and irreparable injury to Licensor,
Licensor shall be entitled to an injunction restraining Licensee from any such
breach to the fullest extent allowed by law without the necessity of posting
any bond. Any such right of equitable relief granted to Licensor shall not be
deemed to preclude Licensor from seeking money damages or any other remedy, subject to section 8.1, from
Licensee and/or its agents in the event of such a breach.

 

9

 

6.3 Confidentiality
of Agreement. The terms and conditions of this Agreement are
deemed to be confidential, and each party will maintain such terms and
conditions in strict confidence. The terms of this Agreement may be disclosed
only to (i) those persons within Licensor’s and Licensee’s respective
organizations who “need to know” such information in order to perform their
work responsibilities on behalf of their employer; (ii) as required by any
court or other governmental body or agency (including, without limitation, the
United States Bureau of Industry and Security and the Securities Exchange
Commission), (iii) as otherwise required by law, and (iv) to legal counsel of
the parties, accountants and other professional advisors.

 

7              Term and Termination.

 

7.1 Term. The Term of this Agreement shall
commence on the Effective Date and continue for a period of twenty (20) years there from (the “Initial
Term”), unless terminated earlier in accordance with Section 7.2.
Upon expiration of the Initial Term, this Agreement will renew automatically
for successive one-year periods unless terminated by either party with ninety
(90) days written notice prior to the expiration of any such period. At the
expiration of the term or upon the
termination of the Agreement, both parties agree to reasonably cooperate
with each other to return any materials required to be so returned.

 

7.2 Termination. In addition to the provisions
of Section 7.1 and the other provisions pertaining to the effectiveness of this
Agreement set forth elsewhere herein, this Agreement may be terminated by
either party (i) after the Initial Term with ninety (90) days written notice to
the other party, (ii) after the material breach of this Agreement by the other
party which is not cured within thirty (30) days after the non-breaching party
provides the breaching party with written notice of such breach, (iii) upon the
filing of a petition by the other party seeking to take advantage of any laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or composition for adjustment of debts after thirty (30) days
written notice to the other party, or (iv) with respect to any Design Kit, Jazz
Technology, Jazz Patent Right, Jazz Confidential Information or Documents (or
any portion thereof), if an Export Control Approval relating to such Design
Kit, Jazz Technology, Jazz Patent Right, Jazz Confidential Information or
Documents (or any portion thereof) expires, is revoked or otherwise terminates
for any reason; provided, that this Agreement shall continue with respect to
any Design Kit, Jazz Technology, Jazz Patent Right, Jazz Confidential Information
or Documents (or any portion thereof) that is not affected by the expiration,
revocation or termination of such Export Control Approval. Upon termination of
this Agreement for any reason: (a) except as set forth herein, Licensee shall
have no right to use, disclose or distribute any of the Design Kits and no
right to use the Jazz Technology or Jazz Patent Rights and shall discontinue
the use thereof; (b) Licensee shall immediately cease using and remove all
Design Kits and Jazz Technology from Licensee’s Facility; (c) Licensee shall
return all copies of the Design Kits and all of the Jazz Technology, regardless
of form and including, without limitation, all copies, analyses, derivations
and compilations of the Design Kits and the Jazz Technology to Licensor within
thirty (30) days after the termination of this Agreement for any reason and
provide written verification by a senior officer of Licensee that all Design
Kits and Jazz Technology has been returned to Licensor and that the Process is
no longer in use by Licensee; and (d) at any time and from time to time during
the two (2) year period following the termination of this Agreement and upon
ten (10) days prior written notice, Licensee shall permit Licensor to inspect
Licensee’s Facility to insure compliance with the obligations of this
Agreement.

 

10

 

7.3              Breach; Remedy: Subject to section 8.1, if
any party committed a material breach of its obligations under this Agreement,
the non-breaching party shall first give written notice of breach to the
breaching party and request the breaching party to correct the breach within
thirty (30) days from the date of its receipt of the notice unless expressly
provided otherwise in this Agreement, including but not limited to section 6
and section 2.1. In the event that the breaching party failed to correct the
breach within the curing period, the non-breaching party shall then be entitled
to claim damages from the breaching party. The remedies under this Section 7.3
shall be in addition to any other remedies available to the non-breaching
party.

 

8              Dispute Resolution.

 

8.1 Internal Mediation. .

 

Any dispute arising from,
out of the implementation of, or in connection with this Agreement shall be settled through
friendly consultation between the Parties. In the event that no settlement of
the dispute can be reached through consultation within sixty (60) days
following the date on which a written request for consultation by any Party,
the dispute shall be submitted by the claimant (the “Claimant”) to the
Arbitration Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden
and be finally settled by arbitration in accordance with the Rules of the
Arbitration Institute of the Stockholm Chamber of Commerce as in effect on the
date of arbitration.

 

(a)           The
arbitration tribunal shall consist of three (3) arbitrators. The Claimant and the respondent (the “Respondent”)
shall select one (1) arbitrator. The third arbitrator, who shall be chairman of
the arbitration tribunal, shall be selected jointly by the Claimant and the Respondent. If the Claimant
and the Respondent are unable to agree as to the selection of the third
arbitrator within thirty (30) days, then the third arbitrator shall be selected
by the Arbitration Institute of the Stockholm Chamber of Commerce.

 

(b)           All
the proceedings in any such arbitration will be conducted in English.

 

(c)           The
arbitration award shall be final and binding upon all Parties. The arbitration
costs shall be paid according to the award as fixed by the arbitration
tribunal.

 

(d)           During the
period when a dispute is being resolved, the Parties shall in all other
respects continue to exercise their remaining respective rights and fulfill
their respective obligations under this Agreement except for such rights,
obligations and other matters which are subject to the arbitration.

 

8.2 Extension of Deadlines. All deadlines in
this Article 8 may be extended by mutual agreement of the parties.

 

8.3 Equitable Relief. Notwithstanding anything
to the contrary herein, each party shall be entitled to seek injunctive relief
(but not money damages, which is subject only to the mediation and arbitration
procedures above) in any appropriate court of law to prevent or stop a
violation of the terms and conditions contained herein.

 

9              Additional Terms.

 

9.1 Governing Law, Language. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California,
United States of America, without

 

11

 

regard for its choice and
or conflict of laws provisions and without regard to the United Nations
Convention on Contracts for the International Sale of Goods and is subject to
all other applicable governmental laws and regulations, including but not
limited to applicable regulations and requirements of any regulatory agency
concerning the export or import of any Design Kits and the export of Jazz
Technology and Jazz Patent Rights from the United States of America. This
Agreement has been made in both the English and
Chinese languages and
the texts of both languages shall be equally authentic for the purpose of any
interpretation. All documents and communications
(including any arbitration or mediation proceedings and any documents or communications
delivered in connection therewith) between the parties hereto shall be in the
English language.

 

9.2 Compliance With Laws. In exercising its
rights and meeting its obligations under this license, each of Licensor and
Licensee shall fully comply with the requirements of any and all applicable
laws, regulations, rules and orders of any domestic or foreign governmental
body having jurisdiction over the exercise of rights under this Agreement. Each
of Licensor and Licensee further agrees to indemnify and hold harmless the
other party and its officers, directors, shareholders, employees, agents and
representatives against any and all costs, liabilities, damages, losses or
expenses (including, without limitation, attorneys’ fees), citation, fine,
penalty and liability of any kind which might be imposed by reason of any
established knowing or intentional violation of any such laws, order, rules or
regulations by such party. This Section shall survive the expiration or
termination of this Agreement for any reason.

 

9.3 Successors and Assigns. This Agreement
will be binding upon the parties and will inure to their benefit and the
benefit of their permitted successors and assigns in conjunction with the purchase of the Party in total and as an on
going enterprise which is not in conjunction with the filing of a
petition by the other party seeking to take advantage of any laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, otherwise, neither party shall
assign this Agreement or any of its interests hereunder without the prior
written consent of the other.

 

9.4 Relationship of the Parties. Each party
hereto is contracting independently with the other and neither party shall be
deemed to be an agent, representative or a partner of the other Licensors as a result of any provision of this
Agreement. Neither party shall have the right or authority to assume or create
any obligation or responsibility, whether express or implied, on behalf of or
in the name of the other party or to bind the other party in any manner for any
purpose.

 

9.5 Headings and Captions. The headings and
captions used in this Agreement are inserted for convenience only and shall not
affect the construction or interpretation of the respective provisions of this
Agreement.

 

9.6 Export Controls. Licensee agrees to comply
with all United States’ and The People’s Republic of China’s (and/or any other
appropriate jurisdiction’s) export regulations in connection with this
Agreement. In this regard, Licensee may not export or re export the Design
Kits, the Jazz Technology or Jazz Patent Rights or any portion thereof without
the prior written consent of Licensor and without the appropriate United States
and foreign government licenses. Neither the Design Kits, the Jazz Technology or
the Jazz Patent Rights, nor any technical data contained therein or produced
thereby, nor any portion thereof may be exported or re-exported (i) into (or to
a national or resident of) Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria,
or any

 

12

 

other country to which
the United States has embargoed goods; or (ii) to anyone on the United States
Treasury Department’s list of Specially Designated Nationals or the U.S.
Commerce Department’s Table of Deny Orders. Licensee hereby represents and
warrants that it is not located in, under the control of, or a national or
resident of any such country or on any such list. Each of Licensor and Licensee
further agrees to indemnify and hold harmless the other party and its officers,
directors, shareholders, employees, agents and representatives against any and
all costs, liabilities, damages, losses or expenses (including, without
limitation, attorneys’ fees) arising from, or relating to any established
knowing or intentional violation by such party of any of the applicable laws
and administrative regulations of the United States of America, the People’s
Republic of China or other foreign governmental agencies relating to the
control of exports of commodities and technical data. This Section shall
survive the expiration or termination of this Agreement for any reason.

 

9.7 Interpretation. Each party, represented by
counsel, has cooperated in the drafting and preparation of this Agreement.
Accordingly, this Agreement shall not be construed against any party on the
basis that such party was the drafter.

 

9.8 No Modifications. No modifications,
changes or waivers of this Agreement shall be valid unless made in writing and
signed by authorized representatives of both Licensor and Licensee.

 

9.9 No Waiver. The failure or delay of a party
to exercise its rights here under or any custom or practice of a party in
variance with the terms hereof shall not constitute a waiver by the relevant
party of the terms of this Agreement and the rights granted to the relevant
party herein are to the right of the relevant party to demand exact compliance
with the terms hereof. Waiver by a party of any particular default by the other
party shall not constitute a waiver of any subsequent default of the same or
different nature.

 

9.10 Partial Invalidity. If any provision of
this Agreement shall be declared void, voidable, illegal or unenforceable by
any court of competent jurisdiction, administrative body or arbitration panel,
such declaration or finding shall not void or cancel the other provisions of
this Agreement which shall remain binding upon the parties. Any provision of
this Agreement if found invalid, illegal or unenforceable shall be renegotiated
by the parties to accomplish so far as possible the business purpose of this
Agreement.

 

9.11 Entire Agreement. This Agreement and the Appendices
attached hereto constitutes the entire and complete agreement of the parties
with respect to the subject matter hereof and supersedes any and all prior
understandings, promises, representations and agreements, oral or written. The
parties further intend that this Agreement and the Appendices attached hereto
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial or other
proceeding, if any, involving this Agreement. Neither party shall be bound by
or liable to the other for any representation, promise, or inducement, whether
prior to or concurrent with, made by any agent or person in the other’s employ,
not embodied in this Agreement or the Appendices attached hereto.

 

9.12 Appendices. Each of the Appendices referred to herein and attached hereto is an integral part of
this Agreement and is incorporated herein by this reference.

 

13

 

9.13 Survival of Certain Provisions. The
obligations set forth in Sections 2.3, 2.5, 2.6, and 3.3 and Articles 4, 5, 6,
7, 8 and 9 shall survive and remain in effect beyond any termination or
expiration of this Agreement and shall apply to either party’s permitted
successors and assigns.

 

9.14 Force Majeure. Neither party shall be
held liable or responsible for delay or failure to perform any of such party’s
obligations under this Agreement occasioned by any cause beyond its reasonable
control, including but not limited to war, acts of God, acts of terrorism,
civil disturbance, fire, flood, earthquake, epidemic, quarantine restrictions,
unusually severe weather, acts or defaults of common carriers, freight embargoes,
strike or other labor trouble, lack of or inability to obtain raw materials,
transportation, labor, fuel or supplies; power outages, governmental laws,
acts, regulations, embargoes, or orders (whether or not such later prove to be
invalid), or any other cause, contingency or circumstance within or without the
United States not subject to such party’s reasonable control (a “Force Majeure Event”). The party
suffering a Force Majeure Event shall promptly notify the other party of such
Force Majeure Event. A party shall be excused from its performance to the
extent caused by such Force Majeure Event; provided that such party (i) gives
notice of the Force Majeure Event to the other party promptly after its
occurrence, (ii) uses its reasonable efforts (including executing any disaster
plan) to overcome, mitigate and remove the cause of the event preventing or
delaying performance, (iii) continues the performance of all its obligations
under this Agreement that are not prevented or delayed and (iv) upon cessation
of the Force Majeure Event, promptly performs or completes performance of the
obligations which were prevented or delayed. If Licensee’s inability to perform
continues for sixty (60) days or more from notification to Licensor of the
Force Majeure Event, Licensor shall have the right to terminate its obligations
to Licensee with no further liability under this Agreement upon prompt written
notice.

 

9.15 Notices. Any notices required to be given
from one party to the other shall be in writing and in the English language and
shall be deemed to have been properly given and effective on the date of
delivery if delivered by hand, telegram, cable, or facsimile provided the
delivery is confirmed in writing and sent by mail. If mailed, by First Class
Mail, Registered or Certified if necessary, Return-Receipt, postage pre-paid.
One (1) business day after deposit of a recognized express courier and
addressed to the accurate address, including postcode as given below of the
addressee or to such address that shall be designed by timely written notice to
the other party as follows:

 

	
  To Licensor:

  	
   

  	
  Jazz Semiconductor

  
	
   

  	
   

  	
  4321 Jamboree Road

  
	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
   

  	
   

  	
  Attn: Mr. Shu Li

  
	
   

  	
   

  	
  Fax No.:
                              

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Carolyn Follis, Esq.

  
	
   

  	
   

  	
  Jazz Semiconductor

  
	
   

  	
   

  	
  4321 Jamboree Road

  
	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
   

  	
   

  	
  Fax No.:                             

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  

 

14

 

	
   

  	
   

  	
  James B. O’Neal, Esq.

  
	
   

  	
   

  	
  Rutan & Tucker, LLP

  
	
   

  	
   

  	
  611 Anton Blvd., Suite
  1400

  
	
   

  	
   

  	
  Costa Mesa, CA
  92626-1931

  
	
   

  	
   

  	
  Fax No.: (714) 546-9035

  
	
   

  	
   

  	
   

  
	
  To Licensee:

  	
   

  	
  Shanghai Hua Hong NEC Electronics Company, Limited

  
	
   

  	
   

  	
  No. 1188, Chuan Qiao Rd, Pu Dong
  Shanghai, People’s

  Republic of China

  
	
   

  	
   

  	
  Attn: Chairman

  
	
   

  	
   

  	
  Fax No.: 86-21-50310510

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Shanghai Hua Hong NEC Electronics Company, Limited

  
	
   

  	
   

  	
  No. 1188, Chuan Qiao Rd, Pu Dong
  Shanghai, People’s

  Republic of China

  
	
   

  	
   

  	
  Attn: Mr. William Wang

  
	
   

  	
   

  	
  Fax No.:86-21-50310510

  

 

9.16 Time is of the Essence. Time is of the
essence with respect to this Agreement, as are the provisions relating to
ownership, confidential information and payments.

 

9.17 Further Assurances. Each party to this
Agreement, upon the request of the other party, agrees to perform all further
acts and execute, acknowledge, and deliver any documents that may be reasonably
necessary, appropriate, or desirable to carry out the provisions of this
Agreement.

 

9.18 Publicity. Neither party shall make a
press release, advertisement, public statement or disclosure to any third party
concerning the existence of this Agreement or its contents without the express
written consent of the other party not to be unreasonably withheld or delayed.

 

9.19 Registration. Upon the request of
Licensor, this Agreement shall be registered with the appropriate governmental
authorities in the People’s Republic of China.

 

9.20 Counterparts. This Agreement may be
signed in counterparts, which when taken together, shall constitute one and the
same instrument.

 

9.21 EFFECTIVENESS  This Contract/Agreement shall become
effective upon the effectiveness of the JOINT VENTURE CONTRACT ON THE
ESTABLISHMENT AND OPERATION OF SHANGHAI HUA HONG NEC ELECTRONICS COMPANY,
LIMITED Dated August 30, 2003

 

 

[SIGNATURES CONTAINED ON
THE FOLLOW PAGE]

 

15

 

IN WITNESS WHEREOF, the
parties hereby have executed this Agreement as of the last date indicated below
to be effective as of the Effective Date by their duly authorized
representatives.

 

	
  Newport Fab LLC,
  a Delaware limited liability

  company d/b/a Jazz Semiconductor

  	
   

  	
  Shanghai Hua Hong NEC Electronics

  Company, Limited

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   \s\ Shu Li

  	
   

  	
   

  	
  By:

  	
   \s\ K. Shimakura

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   Shu Li

  	
   

  	
   

  	
  Name:

  	
   K. Shimakura

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   CEO

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   8/30/03

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
													

 

16

 

APPENDIX “A”

TO TECHNOLOGY LICENSE AND TRANSFER
AGREEMENT

 

DESCRIPTION OF DESIGN
KITS

 

[...***...]

 

17

 

APPENDIX “B”

TO TECHNOLOGY LICENSE AND TRANSFER
AGREEMENT

 

DESCRIPTION OF PATENTS

 

General
Description:

 

In
this section, the patents related to the licensed technology are listed below.

 

List of
patents to which this Agreement relates:

 

[...***...]

 

18

 

APPENDIX “C”

TO TECHNOLOGY LICENSE AND TRANSFER
AGREEMENT]

 

THIRD PARTY SOFTWARE AND
SOFTWARE LICENSES

 

The following
third party software and software licenses are not included in the Design Kits,
but will be required to use the Design Kits (the number of licenses indicated
in the third column below are estimates provided for the convenience of
Licensee, and are not to construed as any representation, warranty or other
assurance concerning the number of licenses that Licensee will actually need,
which will depend in part on how Licensee decides to use this third-party
software and the type of licenses offered by the vendors of this third-party
software in the future:

 

[...***...]

 

19

 

APPENDIX “D”

TO TECHNOLOGY LICENSE AND TRANSFER
AGREEMENT]

 

THIRD PARTY CONSENTS,
SUBLICENSES AND/OR AGREEMENTS

 

[...***...]

 

20

 

APPENDIX “E”

TO TECHNOLOGY LICENSE AND TRANSFER
AGREEMENT]

 

OPTIONAL VIEWS AVAILABLE
FROM OTHER THIRD PARTIES

 

[...***...]

 

21

 

APPENDIX “F”

TO TECHNOLOGY LICENSE AND TRANSFER
AGREEMENT]

 

DESCRIPTION OF JAZZ TECHNOLOGY

 

1 TECHNOLOGY LICENSE AND SUPPORT

 

1.1    Licensor
licenses following process technologies including related design kits and
patents to licensee. The technology valuation and transfer payment schedule is depicted
in the following table

 

[...***...]

 

1.2    Licensor
technical support

 

Licensor agrees to provide full technical support as described in more
details in APPENDIX G at licensor’s own cost.

 

2. Process details of licensed technologies:

 

[...***...]

 

3.
Technical specification of licensed technologies: 

 

3.1 Key Process features

 

[...***...]

 

3.2 Analog process add –in modules

 

[...***...]

 

3.3 RF CMOS add-in modules

 

[...***...]

 

3.4 Critical Design Rules

 

[...***...]

 

3.5 Core transistors specification

 

[...***...]

 

22

 

APPENDIX “G”

TO TECHNOLOGY LICENSE AND TRANSFER
AGREEMENT]

 

PROCESS TRANSFER AND
QUALIFICATION

 

1.     Scope:

 

In this document a
guideline of technology transfer and qualification plan is presented, which include transfer
team, technology transfer schedule, technology
transfer flow charts, technology transfer contents from
licensor, technical support
from licensor, training, process
qualification and acceptance.

 

2.     Technology transfer team:

 

In
this section, technology transfer team from licensor and licensee is
identified. The Responsibility of technology transfer team is to exert commercially reasonably effort to ensurea
successful technology transfer. Working areas and minimum number of engineers /man-days for each full CMOS technology transfer from licensor to
licensee’s fab 1 are defined in table 2.1. For further process transfer from licensee’s fab 1 to fab 2, licensor
will provide support with half of the number of engineers defined in table 2.1.

 

	
  Areas

  	
   

  	
  No. of
  persons

  Licensor

  	
   

  	
  No. of
  persons

  Licensee

  
	
  Project leader

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Fab layout &
  industrial engineering

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Module process
  engineering

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Module equipment
  engineering

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Device and Process
  integration

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Product and yield
  engineering

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Production and material
  planning

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Quality and reliability

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Total persons

  	
   

  	
  [...***...]

  	
   

  	
  [...***...]

  
	
  Total Man-days

  	
   

  	
  [...***...]

  	
   

  	
   

  

 

Table 2.1  Technology transfer
team for each full CMOS process

 

3.     Technology transfer schedule:

 

[...***...]

 

4.     Technology
transfer flow chart

 

The whole
technology transfer procedure is illustrated by following flow chart as a
guideline for each technology

 

23

 

[...***...]

 

5.     Technology transfer contents from licensor

 

[...***...]

 

6.     Technical support from licensor

 

[...***...]

 

7.     Training

 

[...***...]

 

8.     Process qualification

 

[...***...]

 

9.     Acceptance

 

[...***...]

 

24

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