Document:

Exhibit 10.41

 

TECHNOLOGY
LICENSE AGREEMENT

 

Jazz Advanced
Technology

 

THIS TECHNOLOGY LICENSE 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
Jazz / Hua
Hong, LLC, a limited liability company organized under
the laws of the State of Delaware (“Licensee”), and Shanghai Hua Hong NEC Electronics
Company Limited, a company organized under the laws of the People’s Republic of
China (“HHNEC”).

 

Purpose and
Background

 

Licensor is a member of Licensee and Licensee has committed to provide
Licensor with semiconductor products utilizing manufacturing capacity at the
facility of the manufacturer of the semiconductor products. This Agreement
provides for the license to Licensee, to the extent that Licensor has the right
to grant such license and subject to and in accordance with the terms and
conditions set forth herein, 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 be an option of Licensor’s for the 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”), 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
License 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.

 

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

 

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.

 

 

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 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.

 

1.6           “Jazz Patent Rights” shall mean those
patent rights that Licensor owns or under which it is licensed during the term
of this Agreement with respect to the Process identified in Exhibit B attached hereto.

 

1.7           “Jazz Technology” shall mean all
proprietary information and know-how 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 Licensor’s process(es)
for the manufacture of Wafers, Licensor’s specifications for Wafers, Licensor’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.

 

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

 

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

 

1.10         “LLC Agreement” shall mean the Limited
Liability Company Agreement of Licensee.

 

1.11         “Manufacturer” shall mean Licensee or
any other entity that manufactures and from whom Licensee obtains Wafers for
customers.

 

1.12         “Manufacturer’s Facility” shall mean the
facility as approved by Licensor in writing at which Wafers are to be
manufactured.

 

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1.13         “Process” shall mean Licensor’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, a non-exclusive, nontransferable,
royalty-free license to use the Jazz Technology and Jazz Patent Rights that can
be licensed by Licensor (including the Intellectual Property Rights of Licensor
therein), for internal business purposes only to manufacture Wafers solely on
the behalf of Licensor. With the prior written consent of Licensor, Licensee
may grant a non-exclusive or an exclusive,
, non-transferable, royalty-free sublicense to a third party to manufacture
Wafers at Manufacturer’s Facility. This sublicense shall not be exercised at
any facility other than Manufacturer’s Facility, or for the manufacture of
Wafers for any other entity other than Licensor. The parties agree that such
sublicense shall be exercised to provide for Shanghai Hua Hong
NEC Electronics Company, Limited, the other member of Licensee,
to be the Manufacturer and that the sublicense shall be exercised only at the
facility of Shanghai
Hua Hong NEC Electronics Company,
Limited located at No. 1188, Chuan Qiao Rd, Pu Dong
Shanghai, Peoples Republic of China or
other agreed facility. Upon termination of this Agreement, the license
and any sublicense granted pursuant to this Agreement shall terminate
automatically.

 

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 Licensor and/or Jazz
Confidential Information 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 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 Licensor
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 Licensor’s

 

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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 Licensor and/or on the behalf of Licensor; (b)
sell, lease, rent, assign, transfer, license or sublicense (except as otherwise
expressly permitted herein) 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, shall have the right to inspect Licensee’s records relevant 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”).

 

3.             Warranties;
Disclaimers.

 

3.1           Limited
Representation of Licensor. Licensor represents and warrants only that, as of
the Effective Date, to the actual knowledge of Licensor, the Jazz Technology
and Jazz Patent Rights licensed to Licensee hereunder do not infringe any
patent, copyright or other proprietary intellectual property right of any third
party.

 

3.2           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,

 

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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.

 

4.             Indemnification.

 

4.1           Subject
to Section 5.1 (Limitation of Liability), Licensor hereby agrees to defend, at
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 or on behalf of
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.

 

Licensor has no obligation under this Section
4.1, unless Licensor is promptly notified of claims, suits and actions by such
third party, given all 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 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. Licensor shall have
no liability for any costs, loss or damages resulting from, and Licensee agrees
to defend and indemnify Licensor for: (i) the use of the Jazz Technology
hereunder in combination with any other process not supplied by Licensor, (ii)
the use of the Jazz Technology hereunder in a manner for which it was expressly restricted, (iii)
the willful mis-conducts of
Licensee, or (iv) any settlement or compromise incurred or made by Licensee
without Licensor’s prior written consent. THIS SECTION 4.1 STATES LICENSOR’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 each of Licensor’s
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

 

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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; 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

 

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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 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 Manufacturer’s Facility and from Licensee’s facility (if different
from Manufacturer’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

 

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Licensor and that the
Process is no longer in use by Licensee or any Manufacturer; 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.

 

8.             Dispute
Resolution.

 

8.1           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

 

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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 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
this Agreement or any of its interests 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 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

 

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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 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

 

10

 

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James B. O’Neal, Esq.

  
	
   

  	
   

  	
  Rutan & Tucker, LLP

  
	
   

  	
   

  	
  611 Anton Blvd., Suite 1400

  
	
   

  	
   

  	
  Costa Mesa, CA 92626-1931

  
	
   

  	
   

  	
  Fax No.: (714) 546-9035

  

 

11

 

	
  To Licensee:

  	
   

  	
  Jazz / Hua Hong, LLC

  
	
   

  	
   

  	
  4321 Jamboree Road

  
	
   

  	
   

  	
  Newport Beach, CA 92660

  
	
   

  	
   

  	
  Attn: Mr. Shu Li

  
	
   

  	
   

  	
  Fax No.:                                     

  
	
   

  	
   

  	
   

  
	
  To
  HHNEC:

  	
   

  	
  Shanghai
  Hua Hong NEC Electronics Company, Limited

  
	
   

  	
   

  	
  18F
  Jiushifuxing Building No. 918

  
	
   

  	
   

  	
  Middle
  Huaihai Road

  
	
   

  	
   

  	
  Shanghai,
  People’s Republic of China

  
	
   

  	
   

  	
  Attn:
  Mr. Zhang Wenyi

  
	
   

  	
   

  	
  Fax
  No.:
  86-21-50310510

  
	
   

  	
   

  	
   

  
	
  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

  

 

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         HHNEC agrees that it shall be jointly and
severally liable for any default in the performance of obligations by Licensee
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

 

12

 

[SIGNATURES
CONTAINED ON THE FOLLOWING PAGE]

 

13

 

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

  	
   

  	
  Jazz
  / Hua Hong LLC, 

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:  \s\ Shu Li

  	
   

  	
   

  	
  By:

  	
   \s\
  Jeff R. McHenry

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:  Shu Li

  	
   

  	
   

  	
  Name:

  	
   Jeff
  R. McHenry

  	
   

  
	
  Title:  CEO

  	
   

  	
   

  	
  Title:

  	
   Executive Director of Marketing

  	
   

  
	
  Date:  8/30/03

  	
   

  	
   

  	
  Date:

  	
   August 30, 2003

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Shanghai Hua Hong NEC Electronics

  Company, Limited, a company organized under

  the laws of the People’s Republic of China

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 
  \s\ K. Shimakura

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:  K. Shimakura

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

14

 

EXHIBIT “A”

TO TECHNOLOGY LICENSE AGREEMENT

 

DESCRIPTION OF JAZZ TECHNOLOGY

 

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

 

15

 

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:

 

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

 

16

 

EXHIBIT “C”

TO TECHNOLOGY LICENSE AGREEMENT

 

WAFERS

 

[...***...]

 

Such
other
applications as mutually agreed by the Parties

 

17Exhibit 10.42

 

 

 

WAFER
SUPPLY AND SERVICES AGREEMENT

 

among:

 

Jazz Semiconductor

 

a Delaware limited liability
company

 

and

 

Skyworks Solutions, Inc.

 

a Delaware corporation 

 

 

 

Dated as of May 2, 2003

 

 

 

 

 

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.

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  “Affiliate”

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  “Basic Price”

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  “Capacity”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  “Conexant Spin-off”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.5

  	
  “Contract Price”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  “Current Average
  Probe Yield

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.7

  	
  “Delivery Note”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.8

  	
  “Engineering
  Wafers”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.9

  	
  “Fab Yield”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.10

  	
  “Lot”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.11

  	
  “Maximum Capacity”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.12

  	
  “Move”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.13

  	
  “MPD”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.14

  	
  “Non-Specialty
  Wafers”

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.15

  	
  “Party”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.16

  	
  “Pizza Mask
  Wafers”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.17

  	
  “Photomasks”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.18

  	
  “Planning Yield
  Assumption”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.19

  	
  “Probe Services”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.20

  	
  “Probe Yield”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.21

  	
  “Process Failure”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.22

  	
  “Production
  Wafers”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.23

  	
  “Purchase Order”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.24

  	
  “Purchase Order
  Release

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.25

  	
  “Quality
  Specifications”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.26

  	
  “Risk Materials”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.27

  	
  “Segment”

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.28

  	
  “Specialty Wafers”

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.29

  	
  “Specifications”

  	
  4

  

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  1.30

  	
  “Third-Party
  Requirement

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.31

  	
  “Uncommitted
  Available Capacity”

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.32

  	
  “Wafers”

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.33

  	
  “Wafer Volume
  Commitment”

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.34

  	
  “WOPD”

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.35

  	
  “WSPD”

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  PURCHASE AND SUPPLY OBLIGATIONS

  	
  4

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Skyworks Purchase Obligations

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Company Supply Obligations

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  WAFER PURCHASES

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Scope

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Forecasts

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Purchase Orders; Purchase Order Releases;
  Specialty Wafers

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Acceptance and Acknowledgement

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Wafer Lots; Expedited Services

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  Pizza Mask Wafers

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.7

  	
  Cancellation and Modifications to Orders

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.8

  	
  Materials

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.9

  	
  Risk Materials

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.10

  	
  NRE Services

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  PROBE SERVICES AND RE-PROBE SERVICES

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Scope

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Purchase Orders

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Acknowledgement and Acceptance

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Changes, Cancellation and Modifications to
  Orders

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Removal of Test Equipment from the Fab

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  DELIVERY AND LOGISTICS

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Delivery

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2

  	
  Storage

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Transition Services Agreement

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  PRICING; CREDITS; AND PAYMENTS

  	
  16

  

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Costs

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3

  	
  Taxes

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  TRACKING; REPORTING; AND AUDITS

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Wafer Tracking

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Reporting Requirements

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  WARRANTY AND DISCLAIMER

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Wafer Warranty

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Process Failure

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Disclaimers

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  INDEMNIFICATION

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Skyworks Indemnification Obligations

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Company Indemnification Obligations

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3

  	
  Conditions

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4

  	
  Sole and Exclusive Remedy

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  CONFIDENTIALITY

  	
  19

  
	
   

  	
   

  	
   

  
	
  11.

  	
  LIMITATIONS OF LIABILITY

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Disclaimer

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2

  	
  Basis of Bargain

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  TERM; TERMINATION

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Term

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2

  	
  Termination

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3

  	
  Effect of Termination

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  GENERAL

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Agency

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2

  	
  Governing Law; Venue and Jurisdiction

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3

  	
  Dispute Resolution

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.4

  	
  Injunctive Relief

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.5

  	
  Third-Party Beneficiaries

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.6

  	
  Compliance with Law

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.7

  	
  Force Majeure

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.8

  	
  Amendment; Later Agreement

  	
  23

  

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  13.9

  	
  Notices

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.10

  	
  Assignment

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.11

  	
  Waiver

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.12

  	
  Severability

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.13

  	
  Counterparts and Facsimile

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.14

  	
  Rules of Construction

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.15

  	
  Entire Agreement

  	
  24

  

 

iv

 

	
  EXHIBIT A

  	
  PRICING

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  WAFER VOLUME COMMITMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 1

  	
  FORECAST

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 2

  	
  WAFER MOVES TABLE

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  RULES OF CHANGE, OPERATION, AND RELEASE
  PROCEDURES

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  NEWPORT BEACH FAB CAPACITY

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
  WAFER CYCLE TIMES

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
  QUALITY SPECIFICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT G

  	
  DELIVERY AND LOGISTICS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT H

  	
  REPORTS

  	
   

  
				

 

v

 

CONFIDENTIAL

 

Wafer
Supply and Services Agreement

 

This Wafer
Supply and Services Agreement (the “Supply Agreement”)
is entered into as of May 2, 2003 (the “Skywork Effective Date”) by and between Jazz Semiconductor
a Delaware limited liability company (“Jazz” or “Company”) and Skyworks Solutions, Inc.
a Delaware corporation (“Skyworks”).

 

Recitals

 

A.            Conexant Systems, Inc.
(“Conexant”),
Company, and Carlyle Capital Investors, L.L.C. entered into a Contribution
Agreement dated February 23, 2002 (the “Contribution Agreement”)pursuant to which
Conexant contributed to Company the assets used to provide specialty process
foundry services and to manufacture semiconductor wafers at a facility in
Newport Beach, California (the “Newport Beach Fab”).

 

B.            Skyworks began
operations in June 2002, following the completion of the merger between Alpha
Industries, Inc. and Conexant Systems, Inc.’s wireless communications business.

 

C.            A Wafer Supply and Services
Agreement was entered into as of March 30, 2002 (the “CNXT Effective Date”)
by and between Conexant
Systems, Inc., a Delaware corporation (“Conexant”) and Specialtysemi, Inc. a Delaware corporation now known as Jazz Semiconductor,
Inc. (the “CNXT Supply
Agreement”)  The CNXT
Supply Agreement contains Section 2.1 (f) 
(iii) stating each Conexant Spin-off (a “Participating Spin-off”) may enter into
a separate agreement with Company containing all of the terms and conditions of
the CNXT Supply Agreement, in which case the Participating Spin-off will order
Wafers directly from Company.

 

D.            Skyworks desires to
enter into such Supply Agreement, to purchase from Company semiconductor wafers
and related foundry, manufacturing, and probe services.  Company is willing to supply such wafers and
services to Skyworks on the terms and conditions of this Supply Agreement.

 

Now,
Therefore, in consideration of the mutual covenants
and agreements contained in this Supply Agreement, the Parties agree as
follows:

 

Agreement

 

1.             Definitions. Capitalized terms not
expressly defined elsewhere in this Supply Agreement have the following
meanings:

 

1.1          “Affiliate”  means any entity that at any time during the
term of this Supply Agreement controls, is controlled by, or is under common
control with a Party, where control means direct or indirect ownership of fifty
percent (50%) or more of the outstanding voting stock or other equity interests
ordinarily having voting rights.

 

1.2          “Basic Price”  is defined in Exhibit A (Pricing).

 

1

 

1.3          “Capacity”  means, as of any date for any period, the
number of MPD capable of being completed at the Newport Beach Fab during such
period, based on available equipment, tools, and personnel, without additional
capital spending, equipment purchases, or hiring of personnel.

 

1.4          “Conexant Spin-off” means
any entity that is a successor of any portion of the business of Conexant
resulting from a spin-off, sale, or divestiture of such business, regardless of
whether Conexant retains an equity or ownership interest in such entity.  Without limiting the foregoing, the Parties
agree and acknowledge that Mindspeed Technologies and Conexant’s wireless
business (formerly referred to within Conexant as “LeaderCo”, herein referred
to as “Skyworks”) are, or upon the date of divestiture will be, Conexant
Spin-offs.

 

1.5          “Contract Price” is defined in Exhibit
A (Pricing).

 

1.6          “Current Average Probe Yield means,
for a particular type of Wafer, the Probe Yield established by averaging the
Probe Yield for two hundred (200) Wafers of such type in each of the three
previous Segments.

 

1.7          “Delivery Note” means the delivery
instructions provided by Skyworks to Company for Wafers ordered by Skyworks.

 

1.8          “Engineering Wafers” means
non-production Wafers manufactured by Company for qualification or testing and
may include Pizza Mask Wafers. 

 

1.9          “Fab Yield” means the percentage
deviation between a particular number of Wafers for which fabrication is
commenced at the Newport Beach Fab, and the number of such Wafers for which
fabrication is successfully completed, irrespective of probe results.

 

1.10        “Lot” means a single
lot of Wafers that are processed together at the Newport Beach Fab.  Each Lot of Production Wafers, Pizza Mask
Wafers (other than Engineering Wafers), or Risk Materials shall consist of
twenty-five (25) Wafers.  Each Lot of
Engineering Wafers shall consist of no less than five (5) and no more than
twenty-five (25) Wafers.

 

1.11        “Maximum Capacity” means, as of any
date for any period, the maximum number of MPD capable of being completed at
the Newport Beach Fab during such period based on available equipment, tools,
and personnel, without additional capital spending or equipment purchases.  Maximum Capacity as of the Effective Date is
reflected in Exhibit D (Newport Beach Fab Capacity).

 

1.12        “Move” means completion with respect
to a single Lot of an individual stage in any of the processes required in
fabricating Wafers at the Newport Beach Fab, as described in Exhibit B,
Schedule 2.

 

1.13        “MPD” means Moves per day at the
Newport Beach Fab.

 

1.14         “Non-Specialty Wafers” means all
Wafers of all types other than Specialty Wafers.

 

2

 

1.15        “Party” means either Skyworks or
Company, as the context requires, and “Parties” means
Skyworks and Company collectively.

 

1.16        “Pizza Mask Wafers” means multiple
device designs on a single Wafer. 

 

1.17        “Photomasks” means precision
photographic quartz or glass plates containing microscopic images of integrated
circuits for use as master images to transfer circuit patterns onto
semiconductor wafers during the fabrication of integrated circuits and other
semiconductor products.

 

1.18        “Planning Yield Assumption” means, for
any given type of Wafer, the expected percentage deviation between the number
of Wafers specified for delivery in a Purchase Order and the total number of
Wafers actually delivered, as set forth in Exhibit B, Schedule 2 as such
exhibit may be updated from time to time upon written notice from Company. 

 

1.19        “Probe Services” means electrical
testing of individual semiconductor wafers on a substrate.

 

1.20        “Probe Yield” means the percentage
deviation between a particular number of Wafers for which probing is conducted
at the Newport Beach Fab, and the number of such Wafers that probe
successfully.

 

1.21        “Process Failure” means a fault or
flaw in the performance of any process within the fabrication operation that is
not due to designs, specifications, Photomasks, or instructions provided by
Skyworks or Conexant.

 

1.22        “Production Wafers” means Wafers
manufactured by Company at the Newport Beach Fab after successful qualification
and approval for mass production. 

 

1.23        “Purchase Order” means a written
blanket order for the purchase of a specified quantity of Wafers or Probe
Services submitted by Skyworks to Company. 

 

1.24        “Purchase Order Release“ means a
written release issued by Skyworks authorizing Company to commence processing
of the Wafers under a Purchase Order.

 

1.25        “Quality Specifications” means the
Wafer quality standards and criteria set forth in Exhibit F (Quality
Specifications), as may they be modified by written agreement of the Parties
from time to time.

 

1.26         “Risk Materials” means Wafers
specifically identified by Skyworks in a Purchase Order as “Risk Materials”
that are to be manufactured by Company pursuant to Skyworks’ Specifications,
but for which compliance with the Quality Specifications is specifically
waived.  “Risk Materials” may include the
following: unverified mask sets, unverified process changes, no supporting
qualification data, and known design rule violations.

 

1.27        “Segment” means any one of the
following two-calendar month periods: April-May, June-July, August-September,
October-November, December-January, and

 

3

 

February-March.  Segments shall
be numbered sequentially during the term of this Supply Agreement, commencing
with Segment 1, which began April 2002, the first full Segment following the
CNXT Effective Date.

 

1.28         “Specialty Wafers” means Bipolar,
Bi-CMOS, and SiGe Wafers.

 

1.29        “Specifications” means the technical
specifications for the Wafers in effect at the Newport Beach Fab immediately
prior to the CNXT Effective Date, as they may be modified from time to time by
written agreement of the Parties, or if such technical specifications did not
exist as of the CNXT Effective Date, then those technical specifications
mutually agreed to in writing by the Parties for such Wafers, as they may be
modified from time to time written agreement of the Parties.

 

1.30        “Third-Party Requirement means any
oral or written commitment from a customer (other than Conexant or a Conexant
Spin-Off or a Conexant Affiliate) to engage Company to manufacture Wafers or
provide related services for such customer at the Newport Beach Fab, which
commitment is reasonably likely to result in a binding obligation.

 

1.31        “Uncommitted Available Capacity” means,
at any given time, the Capacity remaining at the Newport Beach Fab after
excluding all Capacity necessary to fulfill the Company’s commitments under
this Supply Agreement and Third-Party Requirements.

 

1.32        “Wafers” means semiconductor wafers to
be processed and prepared for shipping by Company at the Newport Beach Fab
including Engineering Wafers, Production Wafers, Pizza Mask Wafers, and Risk
Materials.

 

1.33        “Wafer Volume Commitment” is defined
in Section 2.1(a) (Volume Commitments). 

 

1.34        “WOPD” means a number of Wafers for
which the fabrication process is completed at the Newport Beach Fab in a single
day.

 

1.35        “WSPD” means a number of Wafers for
which the fabrication process is commenced at the Newport Beach Fab in a single
day.

 

2.             Purchase and Supply Obligations.

 

2.1          Skyworks
Purchase Obligations.

 

(a)           Volume
Commitments.  Subject to the terms
and conditions of this Supply Agreement and in accordance with the procedures
set forth in Section 3.3 (Purchase Orders; Purchase Order Releases;
Specialty Wafers), Skyworks will submit Purchase Orders to Company for the
manufacture of, and will purchase pursuant to such Purchase Orders, Wafers in
volumes sufficient to meet the minimum MPD purchase commitments set forth in Exhibit
B, Schedule 1 (the “Wafer
Volume Commitments”), at the prices set forth below.

 

4

 

(b)           Segments
1 Through 6.  During Segments 1
through 6:

 

(i)            Skyworks
shall meet the Wafer Volume Commitment corresponding to the current Period set
forth in Exhibit B, Schedule 1.

 

(ii)           For
any of Segments 1 through 6 in which the number of Wafers purchased by Skyworks
at the end of the Segment is less than the greater of (i) the Wafers ordered in
the Purchase Order for such Segment described in Section 3.3(a) and (ii) the
Wafer Volume Commitment for such Segment, in addition to the amounts paid for
Wafers purchased, Skyworks shall pay the following in respect of the shortfall
in the Wafers purchased compared to the greater of (i) the Wafers ordered in
the Purchase Order for such Segment described in Section 3.3(a) and (ii) the
Wafer Volume Commitment (the “Shortfall”):

 

(1)           [. . . *** . . .]
of the Contract Price for the Shortfall up to the difference between the
Wafer Volume Commitment and the Wafers ordered in the Purchase Order described
in Section 3.3(a) (unless the
number of Wafers ordered in the Purchase Order described in Section 3.3(a)
equals or exceeds the Wafer Volume Commitment, in which case this portion will
be equal to [. . . *** . . .]);
plus

 

(2)           [. . . *** . . .]
of the Contract Price for the portion of the Shortfall not covered in Section
2.1(b)(ii)(1) above (if any), up to the lesser of (i) the difference
between (A) the number of Wafers purchased in the Working Segment and (B) the
Wafer Volume Commitment (unless the number of Wafers purchased exceeds the
Wafer Volume Commitment, in which case this amount will be equal to [. . . *** . . .]);
and (ii) the difference between the Wafers covered in Section 2.1(b)(ii)(1)
and [. . . *** . . .]
of the Wafer Volume Commitment; plus

 

(3)           [. . . *** . . .]
of the Contract Price for the portion of the Shortfall not covered in Section
2.1(b)(ii)(1) or in Section 2.1(b)(ii)(2) above (if any).

 

Example 1. 
The Wafer Volume Commitment is [. . . *** . . .]
WSPD. 
Thirty days prior to the beginning of the Working Segment,
Conexant/Skyworks orders the Wafer equivalent of [. . . *** . . .]
WSPD for the Working Segment.  At the end of the Segment, Conexant/Skyworks
purchases the Wafer equivalent of [. . . *** . . .]
WSPD. 
The Shortfall is the Wafer equivalent of [. . . *** . . .]
WSPD. 
Conexant/Skyworks pays [. . . *** . . .]
on a Wafer equivalent of [. . . *** . . .]
WSPD, [. . . *** . . .]
on a Wafer equivalent of [. . . *** . . .]
WSPD, and [. . . *** . . .]
on a Wafer equivalent of [. . . *** . . .]
WSPD.

 

Example 2. 
The Wafer Volume Commitment is [. . . *** . . .]
WSPD. 
Thirty days prior to the beginning of the Working Segment,
Conexant/Skyworks orders the Wafer equivalent of [. . . *** . . .]
WSPD for the Working Segment.  At the end of the Segment, Conexant/Skyworks
purchases the Wafer equivalent of [. . . *** . . .]
WSPD. 
The Shortfall is the Wafer equivalent of [. . . *** . . .]
WSPD. 
Conexant/Skyworks pays [. . . *** . . .]
on a Wafer equivalent of [. . . *** . . .]
WSPD, and [. . . *** . . .]
on the Wafer equivalent of [. . . *** . . .]
WSPD.

 

(iii)         If, in any of Segments 1 through 6,
Skyworks fails to meet the Wafer Volume Commitment or to purchase Wafers
ordered in the Purchase Order for such Segment described in Section 3.3(a), and
as a result pays any amounts pursuant to Section 2.1(b)(ii), and,

 

5

 

prior to the end of Segment 6, purchases Wafers in excess of the Wafer
Volume Commitment for the Working Segment, then Skyworks shall be required to
pay only [. . . *** . . .]
of the Contract Price for all Wafers purchased in such Working Segment
in excess of the Wafer Volume Commitment, until the total number purchased up
to that time equals the greater of (A) the average of the total Wafer Volume
Commitment for Segments 1 through 6, pro-rated to the time in question; or (B)
the average of the total Wafers ordered in Purchase Orders pursuant to Section
3.3(a) during Segments 1 through 6 for which Skyworks paid amounts pursuant
to Section 2.1(b)(ii), pro-rated to the time in question.  Skyworks will pay the Contract Price, Basic
Price, or other price specified in this Supply Agreement, as appropriate, for
any additional Wafers purchased in the Working Segment thereafter.

 

(c)           Segments
7 Through 18.  During Segments 7
through 18:

 

(i)            Skyworks
shall meet the Wafer Volume Commitment for such period set forth in Exhibit
B, Schedule 1.

 

(ii)           In
the event that the number of Wafers purchased under the Purchase Order(s) for
any Working Segment is less than the greater of (i) the Wafers ordered in the
Purchase Order for such Segment described in Section 3.3(a) and (ii) the Wafer
Volume Commitment for the Working Segment, Skyworks shall pay to Company, in
addition to the Contract Price for the Wafers actually purchased, an amount
equal to one hundred percent (100%) of the total Contract Price for the
Shortfall for such Segment.

 

(d)           Requirements
in Excess of the Wafer Volume Commitment.

 

(i)            Non-Specialty
Wafers.  During Segments 1 through
24, except to the extent that it has any preexisting obligations as of the CNXT
Effective Date to purchase Non-Specialty Wafers from third parties, (and, only
during Segments 18 through 24, upon the additional condition that Company is
competitive on cost, service, yield and technology for those Non-Specialty
Wafers), Skyworks shall submit all requirements for Non-Specialty Wafers that
are in excess of the Wafer Volume Commitment to Company, which, provided that
it has sufficient Uncommitted Available Capacity, shall be obligated to produce
such Wafers, and Skyworks shall be obligated to purchase such Wafers at the
Contract Price, except during Segments 13 through 24.  During Segment 13 and the first month of
Segment 14 (“Quarter 9”),
Skyworks will purchase such Wafers at a price equal to the sum of the Contract
Price and [. . . *** . . .]
of the difference between the Contract Price and the Basic Price.  During the second month of Segment 14 and
Segment 15 (“Quarter 10”),
Skyworks will purchase such Wafers at a price equal to the sum of the Contract
Price and [. . . *** . . .]
of the difference between the Contract Price and the Basic Price.  During Segment 16 and the first month of
Segment 17 (“Quarter 11”),
Skyworks will purchase such Wafers at a price equal to the sum of the Contract
Price and [. . . *** . . .]
of the difference between the Contract Price and the Basic Price (in
each of Quarters 9, 10, and 11, the prices described for each respective
Quarter shall be referred to as the “Stepped Price”).  During Segments 18 through 24, Skyworks will
purchase such Wafers at the Basic Price.

 

(ii)           Specialty
Wafers.  During Segments 1 through
12, Skyworks may submit its requirements for Specialty Wafers in excess of the
Wafer Volume Commitment to

 

6

 

Company, which, provided that it has sufficient Uncommitted Available
Capacity, shall be obligated to produce such Wafers.  Skyworks shall purchase such Wafers at the
Contract Price.

 

(e)           Surge
Capacity.  At any time after Skyworks’
submission of a Purchase Order for any Working Segment, Skyworks may request to
increase the number of Wafers to be purchased in such Working Segment (an “Increase Notice”).    

 

(i)            Segments
1 through 18.  During Segments 1
through 18, the following terms will apply:

 

(1)           Commitment
Surge.  If Skyworks submits an
Increase Notice with at least [. . . *** . . .]
advance notice for additional Wafers in order to meet a Wafer Volume
Commitment (“Commitment
Surge Wafers”), Company will fabricate and sell to Skyworks a
number of Commitment Surge Wafers equal to the lesser of (A) [. . . *** . . .];
or (B) the equivalent of no more than [. . . *** . . .]
WSPD.  Company will use
commercially reasonable efforts to deliver the Commitment Surge Wafers as soon
as possible.  Skyworks will pay the [. . . *** . . .]
for all Commitment Surge Wafers.

 

(2)           Beyond
Commitment Surge.  If Skyworks
submits an Increase Notice with at least [. . . *** . . .]
advance notice for additional Wafers that either (A) [. . . *** . . .];
or (B) represent the equivalent of more than [. . . *** . . .]
WSPD (“Additional
Wafers”), Company will use commercially reasonable efforts to
fabricate and sell to Skyworks the number of Additional Wafers ordered by
Skyworks.  Skyworks will pay [. . . *** . . .]
for all Additional Wafers.

 

(ii)           After
Segment 18.  After Segment 18, at any
time after Skyworks’ submission of a Purchase Order for any Working Segment,
Skyworks may submit an Increase Notice to Company.  If Company has Uncommitted Available Capacity,
Company will fabricate and sell to Skyworks such additional Wafers, or as many
as can be fabricated in light of the Uncommitted Available Capacity.  Skyworks will pay [. . . *** . . .] for all such
additional Wafers purchased after Segment 18.

 

(f)            Cooperation.  Skyworks shall cooperate with Company in
furtherance of the purposes hereof by timely furnishing all design information,
Photomasks, specifications, intellectual property, and other items and
information needed to fabricate the Wafers ordered by Skyworks, and by
providing reasonable technical advice and assistance in such efforts.

 

(g)           Payment;
Remedy.  All determinations of
whether Wafer Volume Commitments have been met during any Working Segment shall
be determined at the end of such Working Segment, and all amounts to be paid in
respect of portions of the Wafer Volume Commitment not purchased in accordance
with this Section will be tracked monthly, and reconciled and paid at the end
of each Working Segment.  Skyworks’
payment of the foregoing amounts shall be Company’s sole and exclusive remedy,
and Skyworks’ entire liability, for Skyworks’ failure to meet any Wafer Volume
Commitment hereunder or to purchase any Wafers ordered in Purchase Orders
pursuant to Section 3.3(a) during Segments 1 through 18.

 

7

 

2.2          Company
Supply Obligations.

 

(a)           Commitment;
Requests for Increased Capacity.  Company shall be able to provide the Capacity
to satisfy the Wafer Volume Commitments set forth in Exhibit B, Schedule 1
during each Segment of the term of this Supply Agreement, and will accept and
fulfill all Purchase Orders that are submitted pursuant to the [. . . *** . . .]
Purchase Order requirements set forth in Section 3.3 (Purchase
Orders; Purchase Order Releases; Specialty Wafers) up to the applicable Wafer
Volume Commitments.  In addition, upon
Skyworks’ request, Company will increase (and maintain for a period of time
specified by Skyworks) Capacity up to the Maximum Capacity of the Newport Beach
Fab, provided that (i) Company will have no less than three (3) Segments in
which to accomplish such increase; (ii) in no event will Company be required to
increase Capacity by an increment equivalent to more than fifty (50) WSPD for
any three (3) Segment period; and (iii) at the time of its request, Skyworks
submits binding Purchase Orders for a total number of Wafers sufficient to
utilize the requested increase in Capacity for the period of the desired
increase.

 

(b)           Notice
Requirements.  If at any time Company
believes or becomes aware that it would be unable to satisfy the Wafer
requirements of Skyworks contained in the latest Order Forecast, then Company
will promptly notify Skyworks in writing.

 

(c)           Wafer
Processes.  This Supply Agreement
applies to all processes currently available or in development at the Newport
Beach Fab.  Future processes that are
developed by the Company may be added to this Supply Agreement by mutual
consent.  Subject to the restrictions in
this Section 2.2(c), Company may terminate the use of a Wafer process at
the Newport Beach Fab.  At least [. . . *** . . .]
prior to the date of the discontinuance of any process with respect to
any Wafers, Company shall provide Skyworks with written notice of its intent to
terminate such Wafer process and shall cooperate with Skyworks on a transition
plan with respect to Skyworks’ supply of Wafers.  If the projected or actual volume on any
process decreases to less than the equivalent of [. . . *** . . .] WSPD over [. . . *** . . .]
consecutive Segments, Company may phase out such process without such [. . . *** . . .]
notice, provided that
Skyworks and Company will in such case cooperate to phase out such process in a
timely manner through an end-of-life buy. 
Company will perform the transition in accordance with the plan and will
use commercially reasonable efforts to ensure a smooth transition.

 

(d)           Closing
of Newport Beach Fab.  Company shall
notify Skyworks at least [. . . *** . . .]
prior to the date that Company intends to commence any closure, in whole
or in part, of the Newport Beach Fab. Company shall prepare and obtain Skyworks’
written approval on a transition plan to transfer the Wafer processing
technologies requested by Skyworks to a foundry or foundries designated by
Skyworks and specifically designed to ensure that there is no interruption in
Skyworks’ supply of Wafers. The time to prepare and approve the transition plan
will be completed in parallel with the [. . . *** . . .]
notification period. Both Parties will use commercially reasonable
efforts to (i) transfer the Wafer processing technology in accordance with the
Skyworks-approved plan and (ii) ensure a smooth transition of Wafer processing
including making available Company engineers to assist the designated foundry
or foundries in implementing and qualifying the Wafer processing technology and
to promptly respond to inquiries regarding the use of such processes or
technology.  Skyworks shall reimburse
Company

 

8

 

for the actual out-of-pocket expenses incurred by Company, and
pre-approved by Skyworks, in transitioning such technology to the designated
foundry or foundries. Skyworks will have the right, until such time as the
designated foundry or foundries is operational and qualified to process the
Wafers, to continue to submit Purchase Orders for Wafers to Company. Company
will continue to manufacture, supply, and provide to Skyworks, in accordance
with the Wafer purchase procedures in Section 3 (Wafer Purchases), any
such Wafers that are ordered. The foregoing obligations are in addition to
Company’s other obligations under this Supply Agreement. 

 

(e)           Supply
Interruptions.  If at any time
Company experiences a Material Interruption (as defined below), Skyworks’ Wafer
Volume Commitments shall be reduced by the number of Wafers Company is unable
to supply for the actual duration of such Material Interruption, provided,
however, that if such Material Interruption results from Conexnat’s failure to
provide any services that Conexant is obligated to provide under the
Information Technology Service Agreement of even date herewith by and between
Company and Conexant, then Skyworks’ Wafer Volume Commitment shall not be
reduced as a result of such Material Interruption.  If an unintended interruption in Company’s
ability to fulfill its supply obligations occurs that is not a Material
Interruption, Skyworks shall remain obligated to satisfy its obligations
hereunder to purchase Wafers, provided, that if, due to such interruption,
Company is unable to deliver a number of Wafers ordered to fulfill a portion of
a Wafer Volume Commitment prior to the end of the Segment, then Skyworks will
be excused from that portion of the Wafer Volume Commitment for that Segment,
and such portion will be rolled over to be fulfilled by the end of the
following Segment.     This provision
shall not limit any other rights or remedies Skyworks or Company may have for a
breach of this Supply Agreement or otherwise, and nothing in this provision is
intended to supersede, restrict, or otherwise limit either party’s rights under
Section 13.7 (Force Majeure).  For
purposes of this Section, “Material Interruption” means an unintended
interruption in Company’s ability to produce Wafers that (i) endures for more
than a period of [. . . *** . . .],
and (ii) causes a reduction in Capacity of [. . . *** . . .]
or more WSPD.

 

3.             Wafer Purchases.

 

3.1          Scope.
Upon receipt of an applicable Purchase Order Release (as described in Section
3.3(b) (Purchase Order Releases) below), Company shall produce Wafers and
provide Probe Services for Skyworks. 
Wafers may include Production Wafers, Engineering Wafers, and Risk
Materials from any semiconductor wafer process in production, or released to
production, at the Newport Beach Fab on or after the Effective Date.  For new Wafers or processes requested by
Skyworks, Skyworks will provide Company with the documentation substantially
similar to the document(s) set forth in Exhibit C (Rules of Change,
Operation and Release Procedures), as applicable to the requested process.  Both Parties agree to cooperate to provide
all necessary information as described in Exhibit C.

 

3.2          Forecasts.  On or about the last day of each calendar
month during the term of this Supply Agreement, Skyworks will provide to
Company a rolling forecast, covering a minimum period of [. . . *** . . .]
of Skyworks’ expected order volumes for Wafers in the coming [. . . *** . . .]
(the “Order
Forecast”).  The Order
Forecasts are for planning purposes only and will not bind Skyworks or the
Company in any respect.  No deviation of
actual volumes from the forecasted volumes will relieve Skyworks or Company of
their respective responsibilities and

 

9

 

obligations under this Supply Agreement or affect the pricing
established under this Supply Agreement. 
Subject to the requirements of Section 2.1 (Skyworks Purchase
Obligations), Skyworks may change or update the forecasts delivered hereunder
at any time upon notice to Company. 

 

3.3          Purchase
Orders; Purchase Order Releases; Specialty Wafers.

 

(a)           Purchase
Order.  Not later than [. . . *** . . .]
prior to the first business day of each Segment during the term of this
Supply Agreement (other than Segment 1), Skyworks shall submit to Company a
written Purchase Order setting forth the specific volume and mix of Wafers [. . . *** . . .]
it intends to purchase under this Supply Agreement during the following
Segment (the “Working
Segment”), expressed as total WSPD per type of Wafer.  Skyworks shall not load the Newport Beach Fab
by a number of WSPD in each day of the Working Segment set forth in such
Purchase Order that deviates by more than plus or minus [. . . *** . . .] WSPD from the
average number of WSPD per day for the entire Working Segment, as determined by
dividing the total number of WSPD for the entire Working Segment set forth in
such Purchase Order by sixty and two-thirds (60 2/3) days.  The Purchase Order for Segment 1 will be
submitted to Company within three (3) business days after the Effective Date.

 

(b)           Purchase
Order Releases  Skyworks will submit [. . . *** . . .]
Purchase Order Releases against outstanding Purchase Orders, to be
submitted by close of business on the [. . . *** . . .]
for Wafers to be released [. . . *** . . .].  Each Purchase Order Release for Wafers will
specify the applicable Purchase Order, Wafer part number and revision level,
quantity, additional component parts required by Skyworks, price, delivery
date, ship-to address, and other applicable information as determined by
Skyworks.  Purchase Order Releases shall
not deviate from the volumes and mixes specified for the corresponding period
of time in the applicable Purchase Order, except that Skyworks may (i) modify
the volume of Wafers by no more than plus or minus [. . . *** . . .] WSPD from the
specified volume for the applicable period of time in the applicable Purchase
Order; and (ii) [. . . *** . . .],
subject to available Capacity at the Newport Beach Fab. Notwithstanding the
receipt of a Purchase Order, Company will not commence manufacturing of the
Wafers under a Purchase Order until Skyworks has issued a Purchase Order
Release.

 

(c)           Reserved
SiGe Wafers.  If, at any time Company
receives a written order (a “SiGe Order”) from a third party customer for the purchase
of SiGe Wafers, and Company lacks sufficient Capacity to fill the SiGe Order
because it is obligated to reserve such Capacity for SiGe Wafers that have been
ordered but not yet released by Skyworks pursuant to Section 3.3(b)
(Purchase Order Releases) above (the “Reserved SiGe Wafers”), Company may notify
Skyworks of the SiGe Order and require Skyworks to confirm that it will issue a
Purchase Order Release for such Reserved SiGe Wafers.

 

(i)            If
Skyworks confirms that it will issue a Purchase Order Release for the Reserved
SiGe Wafers and later does so, then Company will fill the Purchase Order
Release for the Reserved SiGe Wafers [. . . *** . . .].

 

10

 

(ii)           If
Skyworks confirms that it will issue a Purchase Order Release for the Reserved
SiGe Wafers and later fails to do so, then Skyworks will pay to Company an
amount equal to [. . . *** . . .],
up to the number of SiGe Wafers made unavailable due to Skyworks’ failure to
cancel the unreleased Reserved SiGe Wafers.

 

(iii)         If Skyworks agrees to cancel the Reserved
SiGe Wafers, then (A) Company will be relieved of any further obligation to
hold the Capacity for the Reserved SiGe Wafers or deliver the Reserved SiGe
Wafers to Skyworks; and (B) Company may utilize the previously reserved Capacity
to fill the SiGe Order.

 

3.4          Acceptance
and Acknowledgement  All Purchase
Orders submitted at least [. . . *** . . .]
prior to the start of the Working Segment for Wafers shall be accepted
by Company up to the Wafer Volume Commitment and as specified in Section
2.1(d) (Requirements in Excess of the Wafer Volume Commitment), and may be
accepted by Company in all other cases. 
Subject to the terms of this Supply Agreement, once Company accepts a
Purchase Order, it will be obligated to produce and deliver the Wafers in the
volumes specified in the Purchase Order (subject to the applicable Planning
Yield Assumption), and Skyworks will be obligated to purchase such Wafers in
the volumes specified in the Purchase Order. 
Within [. . . *** . . .]
after receipt of each Purchase Order or Purchase Order Release or, if
received on a non-business day or on the day prior to a non-business day,
within [. . . *** . . .],
Company will acknowledge such Purchase Order or Purchase Order Release in
writing by either fax or e-mail notice to Skyworks’ purchasing agent identified
on the face of the Purchase Order or Purchase Order Release.  Such acknowledgement will include Company’s
projected delivery date for the order; provided that, in establishing such
delivery date, Company shall use reasonable efforts to comply with the delivery
dates specified in Skyworks’ Purchase Order Release.  The Wafer process cycle times set forth in Exhibit
E (Wafer Cycle Times) shall be updated each Segment.  If at any time during the production of such
Wafers Company believes or becomes aware that the delivery may be delayed by
more than [. . . *** . . .],
Company shall provide Skyworks with written notice of such change in the
delivery schedule and the quantity of Wafers affected.  Such report shall be referred to as an “Exception Report”
and any Wafer Lots not specifically identified in an Exception Report shall be
delivered by Company no later than the delivery date specified in the Purchase
Order Release.  Purchase Orders or
Purchase Order Releases not acknowledged or rejected by Company within such
time will be deemed accepted by Company.

 

3.5          Wafer
Lots; Expedited Services.  Unless
otherwise agreed to in writing by the Parties, Production Wafers shall be
ordered by Skyworks and delivered by Company in Lots of twenty-five (25) Wafers
(subject to the applicable Planning Yield Assumptions) and Engineering Wafers
shall be ordered by Skyworks and delivered by Company in Lots of five (5) to
twenty-five (25) Wafers (subject to the applicable Planning Yield
Assumptions).  At Skyworks’ request,
Company will use commercially reasonable efforts to process Production Wafer
Lots, Engineering Wafer Lots, and Risk Materials on an expedited basis; provided that Company shall have no liability
for failure to actually provide priority processing.  Company shall provide up to the Allowable
Number (as defined below) of priority Lots to be processed at any one time [. . . *** . . .]
and if the number of expedited Lots requested by Skyworks and provided
on an expedited basis by Company exceeds the Allowable Number of Lots in
process at any given time, the cost of Wafers in excess of the Allowable Number
shall be:

 

11

 

	
  P1 Lots

  	
  [. . . *** . . .]
  multiplied by the Contract
  Price or Basic Price (or other applicable price)

  
	
   

  	
   

  
	
  HVL Lots

  	
  [. . . *** . . .]
  multiplied by the Contract
  Price or Basic Price (or other applicable price)

  

 

The “Allowable
Number” shall be determined as follows:  in Segments 1-6, the Allowable Number of
expedited Lots shall be [. . . *** . . .]
of which may be HVL), in Segments 7-12, the Allowable Number shall be [. . . *** . . .]
of which may be HVL), and in Segments 13-18, the Allowable Number shall
be [. . . *** . . .]
([. . . *** . . .]
of which may be HVL); provided,
that, for every [. . . *** . . .]
WSPD contained in any Purchase Order in excess of the Wafer Volume
Commitment for any Working Segment, the Allowable Number shall be increased by [. . . *** . . .]
for that Segment.

 

3.6          Pizza
Mask Wafers.  Skyworks may submit
Purchase Orders and Purchase Order Releases for Pizza Mask Wafers, and Company
shall fulfill such orders to the extent required to fill such orders under Section
2.2 (Company Supply Obligations), provided that (i) the only testing of
Pizza Mask Wafers required to be performed by Company will be parametric
testing; and (ii) Company will deliver Pizza Mask Wafers in wafer form.  The price of the Pizza Mask Wafer will be [. . . *** . . .].

 

3.7          Cancellation
and Modifications to Orders. Skyworks may modify or reschedule a Purchase
Order Release (in whole or in part) as set forth in this Section 3.7;
provided that Skyworks meets its Wafer Volume Commitments.

 

(a)           Cancellation
Before Process Start  Except as set
forth in Section 3.3(b) (Purchase Order Releases), for each Purchase
Order Release for which processing of the Wafers has not yet begun, Skyworks
may cancel or modify a Purchase Order Release (in whole or in part) [. . . *** . . .]
by delivering to Company a written notice of cancellation or
modification, provided that
Skyworks replaces within a reasonable time any Moves reduced or eliminated
through such cancellation or modification with the same number of Moves with
respect to replacement products.

 

(b)           Rescheduling.  For each Purchase Order Release, Skyworks may
reschedule delivery [. . . *** . . .]
by delivering to Company a written notice rescheduling such delivery; provided that Skyworks shall be
responsible for payment for all completed Wafers in accordance with the
original delivery schedule, and that such delays shall be subject to Section
5.2 (Storage) regarding storage of completed Wafers.

 

(c)           Cancellation
After Process Start  If Skyworks
cancels a Purchase Order Release (in whole or in part) after the date the
processing of such Wafers has been started, then either, (i) if so instructed
by Skyworks, Company will not complete the cancelled Wafers and will deliver
the incomplete Wafers to a location designated by Skyworks, in which case the
Wafers will not count against the Wafer Volume Commitment, and Skyworks will
pay the Pro-Rated Price, as defined below; or (ii) unless otherwise instructed
pursuant to clause (i) of this Section, complete

 

12

 

the cancelled Wafers and hold the resulting Wafers in finished goods
inventory where they will be stored in accordance with Section 5.2
(Storage), in which case the Wafers will count against the Wafer Volume
Commitment and Skyworks will pay the applicable Price for completed
Wafers.  The “Pro-Rated Price”
means the greater of (A) [. . . *** . . .]
percent ([. . . *** . . .]%)
of the price that would have been paid for the completed Wafers (either the
Contract Price, the Basic Price, or other applicable price, as the case may be)
and (B) such applicable price for completed Wafers multiplied by the ratio
obtained by dividing (i) the number of Moves completed with respect to the Lots
for which the Purchase Order Release is cancelled as of the time the
cancellation notice is received by Company by (ii) the total number of Moves
that would have been required to process the Lots in question.

 

(d)           Rework
Requests  If for any reason other
than a Process Failure it becomes necessary to, or Skyworks otherwise requests
Company to, modify any part of the fabrication process with respect to Wafers
for which a Purchase Order has already been accepted or for which the
fabrication process has already started, Company may agree to such changes if
technically feasible and if Company has available Capacity, in which case
Skyworks will be obligated to pay the applicable price for rework services set
forth in Exhibit A (Pricing).  In
the event that Company does not accept such changes, then Skyworks may cancel
the Purchase Order Release in question, subject to this Section 3.7.

 

3.8          Materials.  Company shall be responsible for
procuring all materials required to manufacture the quantity of Wafers ordered
by Skyworks.  Skyworks shall be
responsible for obtaining and furnishing to Company all Photomasks, or any
other products with similar functional characteristics, required to manufacture
or support the Wafers ordered by Skyworks. 
Company shall be responsible for repair or replacement of any of
Skyworks’ Photomasks damaged while in Company’s possession.

 

3.9          Risk
Materials.  At Skyworks’ request and
subject to Section 2.1 (Skyworks Purchase Obligations) and to an
applicable Purchase Order, Company shall process and provide Risk Materials to
Skyworks.  With all Purchase Orders for
Risk Materials, Skyworks shall provide a written statement setting forth the
risk factors or any special circumstances related to the Risk Materials and
specifying the quantity of Risk Materials to be provided.  Company’s acknowledgement of a Purchase Order
for Risk Materials shall be deemed an acknowledgement of such risks or
circumstances.

 

3.10        NRE
Services  At Skyworks’ request,
Company shall negotiate to provide non-recurring engineering services for new
Wafers, provided that the Parties
reach agreement concerning the terms and conditions of provision of such
services.  The Parties shall negotiate in
good faith the terms and conditions and any applicable costs associated with
such engineering services.

 

4.             Probe Services and Re-probe Services. 

 

4.1          Scope.  Company shall provide Probe Services for all
Wafers produced for Skyworks by the Company that are included in the Wafer
Volume Commitment, at no additional charge. 
For other Wafers provided by Company, the Parties will agree upon
whether the Basic

 

13

 

Price will include Probe Services. 
Company may also provide Probe Services for Wafers from other sources
provided by Skyworks, subject to agreement by the Parties on terms and
conditions for such Probe Services.  Probe
Services to be provided under this Supply Agreement shall be limited to Probe
Services in conjunction with Wafer production, and do not include Engineering
Probe or Probe Card Services, which are subject to the separate Transition
Services Agreement between the Parties. 
Probe Services may be provided using testers owned by Company or
Skyworks, as specified by Skyworks in the applicable Purchase Order.  Skyworks will provide all of the
documentation and test parameters necessary to complete Probe Services prior to
issuing a Purchase Order Release.

 

4.2          Purchase
Orders. Subject to the agreement of the Parties on the terms for Probe
Services (other than for Wafers produced by Company), Skyworks will submit
blanket Purchase Orders to Company for Skyworks’ expected requirements for
Probe Services.  Skyworks will then
submit [. . . *** . . .]
Purchase Order Releases to such Purchase Orders.  Notwithstanding the receipt of a Purchase
Order, Company will not commence performance of Probe Services under a Purchase
Order until Skyworks has issued a Purchase Order Release.  Each Purchase Order Release for Probe
Services will specify the applicable Purchase Order, applicable wafers provided
by Skyworks, testers to be used, price, delivery date, ship-to address, and other
applicable information as determined by Skyworks.

 

4.3          Acknowledgement
and Acceptance. Within [. . . *** . . .]
after receipt of each Purchase Order or Purchase Order Release or, if
received on a non-business day or on the day prior to a non-business day, [. . . *** . . .],
Company will acknowledge such Purchase Order or Purchase Order Release in
writing by either fax or e-mail notice to Skyworks’ purchasing agent identified
on the face of the Purchase Order or Purchase Order Release.  Purchase Orders or Purchase Order Releases
not acknowledged or rejected by Company within such time will be deemed
accepted by Company.

 

4.4          Changes,
Cancellation and Modifications to Orders.

 

(a)           Changes.
Skyworks may submit documentation changes for Probe Services at any time.  In the event such change requires a
substantial change in the scope of work, Company shall promptly notify Skyworks
in writing as to whether Company accepts such change, and, if accepted, of the
impact of the change on cost and delivery prior to implementing the
change.  Upon receipt of Skyworks’
written approval of the change, Company shall adjust the price and delivery for
the Probe Services to be performed and implement the requested change

 

(b)           Cancellations.  For each Purchase Order Release for which
Probe Services has not yet been started, Skyworks may cancel or modify a
Purchase Order Release (in whole or in part) [. . . *** . . .]
by delivering to Company a written notice of cancellation or
modifications.

 

(c)           Rescheduling.  For each Purchase Order Release, Skyworks may
reschedule the Probe Services [. . . *** . . .]
by delivering to Company a written notice rescheduling such Probe
Services, which schedule change shall be subject to Company’s approval
depending on Capacity and available resources

 

14

 

(d)           Holds
and Cancellations After Process Start. 
Skyworks may put on hold any Probe Services to be provided under a
Purchase Order Release for up to [. . . *** . . .]
Lots at a time; provided that no Lot will remain on hold for longer than
[. . . *** . . .],
after which the Probe Services shall be deemed cancelled and Company shall, as
Company’s sole remedy, invoice Skyworks for the Probe Services actually
performed by Company prior to date of the hold. 
If Skyworks cancels a Purchase Order Release (in whole or in part) after
the date the Probe Services have been started, then Company will either, at
Skyworks’ sole discretion (i) not complete the cancelled Probe Services and
hold the wafers in a processing location designated by Skyworks; or (ii)
complete the cancelled Probe Services. 
As Skyworks’ sole liability, and Company’s sole remedy, for such
cancellation, Skyworks will pay to Company an amount equal to the price for the
Probe Services actually performed by Company prior to the date of cancellation.

 

(e)           Excess
Service Requirements.  If Skyworks’
demand exceeds the Company’s Probe Services capacity in Newport Beach, Skyworks
shall offer any available Probe Services capacity to Company at a Skyworks
facility and assure this capacity is offered at the same cost or less then the
cost that would have been incurred by Company had the Probe Services been
performed at the Company. 

 

4.5          Removal
of Test Equipment from the Fab.  The
Parties acknowledge that certain probe and test equipment owned by Skyworks is
located in the Newport Beach Fab, and that Company is entitled to use and
access such equipment pursuant to the Transition Services Agreement between
Skyworks and Company, dated March 12, 2002. 
Skyworks may not remove any of the test equipment from the Probe floor
during the first three (3) year period during the term of this Supply
Agreement.  At any time following the
third anniversary of this Supply Agreement, Skyworks may deliver a written
notice of removal to Company with respect to any test device owned by it, and
may remove such test device after six (6) months following receipt by Company
of such notice.  Notwithstanding the
foregoing, at any time following the first anniversary of this Supply Agreement,
Skyworks may deliver a written notice of removal to Company with respect to the
HP 84000 equipment owned by it, and may remove such HP 84000 equipment after
three (3) months following receipt by Company of such notice.

 

5.             Delivery and Logistics.

 

5.1          Delivery.  All Wafers delivered to Skyworks shall be
delivered F.O.B. the Company’s facility at the Newport Beach Fab, as requested
in the applicable Delivery Note.  Title
and risk of loss shall pass from Company to Skyworks upon delivery, which shall
be deemed made upon transfer of possession to the shipping carrier or to
storage if not shipped immediately. 
Skyworks shall be responsible for all freight, handling and insurance
charges subsequent to such delivery. 
Except in accordance with the applicable delivery terms set forth in
this Supply Agreement, Company shall not have any liability in connection with
shipment, nor shall the shipping carrier be deemed to be an agent of Company.

 

5.2          Storage.  Following delivery to Skyworks, Company shall
provide storage of up to [. . . *** . . .]
Lots of completed Wafers [. . . *** . . .],
provided that no Lot shall remain
in such storage for longer than [. . . *** . . .].

 

15

 

5.3          Transition
Services Agreement  Shipping and
handling of finished Wafers will be in accordance with the applicable
provisions of the Transition Services Agreement between Skyworks and Company,
dated March 12, 2002.

 

6.             pricing; credits; and payments.

 

(a)           Wafers.  Company will invoice Skyworks for all
Wafers upon completion of production of each Lot, at the applicable Wafer price
calculated pursuant to Exhibit A (Pricing) in effect on the date of the
invoice, less any applicable Wafer Credits (as defined in Section 6.2
(Wafer Credits) below).  For Lots of
Engineering Wafers, Company will invoice Skyworks at the end of each month for
all Moves completed with respect to such Engineering Wafers during such month,
and upon completion of production for Engineering Wafers for any completed
Moves not previously invoiced.  Each
invoice submitted to Company shall specifically set forth the Wafer Credits, if
any, applied to such invoice.  In
Segments 1 through 6, Skyworks shall pay any amounts due on such invoices
within [. . . *** . . .]
of the receipt of the invoice and in all subsequent Segments such
payments shall be made within [. . . *** . . .]
of receipt of the invoice. 
Notwithstanding any other provision hereof, neither Party may offset any
amounts owed by such Party to the other Party against any amounts from such
other Party, without such other Party’s express written agreement to such
offset in each case.

 

(b)           Probe
Services and Re-probe Services. 
Company will invoice Skyworks for Probe Services and any other services
specified in this Supply Agreement on a monthly basis.  Pricing for such services shall be in
accordance with Exhibit A (Pricing). 
All invoice costs include, without limitation, the labor for services
actually performed, materials, material burden, and costs associated with any
changes approved in writing by Skyworks

 

6.2          Costs.  Except as otherwise provided herein or agreed
to in writing by the Parties, each Party will be solely responsible for the
costs and expenses it incurs in performing its obligations under this Supply Agreement.

 

6.3          Taxes.  Skyworks will be responsible for payment of
any and all taxes or related governmental charges (“Taxes”) imposed on
or arising from Skyworks’ purchase of Wafers or Probe Services under this
Supply Agreement, excluding any Taxes on the net income or net worth of
Company, provided that such taxes are specifically identified by Company as a
separate line item on Company’s invoices provided pursuant to Section 6.1
(Pricing and Invoices).  Company will
provide Skyworks with copies of official receipts for the payment of any such
Taxes, and any other information and documents Skyworks may reasonably request
in order to verify the payment of such amounts to the appropriate governmental
entity.

 

7.             Tracking; Reporting; and Audits. 

 

7.1          Wafer
Tracking. All Wafers manufactured and delivered by Company to Skyworks
shall have backward and forward trace ability sufficient to enable Company to
identify (i) the processes and materials used in the manufacture of such
Wafers; (ii) the batches or lots of such materials; and (iii) other Wafers in
the same or sequential lots.  Such
information shall be provided to Skyworks, upon Skyworks’ request.

 

16

 

7.2          Reporting
Requirements.  Company shall provide
Skyworks with the reports specified in Exhibit G (Reports) in accordance
with frequency or schedule set forth therein. 
All such reports shall be in writing and provided to Skyworks in the
form (e.g., electronic form)
specified in Exhibit G or otherwise mutually agreed to in writing by the
Parties.

 

8.             Warranty and Disclaimer. 

 

8.1          Wafer
Warranty. For a period of [. . . *** . . .]
from the date of delivery (the “Wafer Warranty Period”), Company
warrants that the Wafers, other than Risk Materials, delivered hereunder will
conform to the applicable Specifications, will be manufactured in accordance
with the Quality Standards, and will be free from defects in material,
manufacturing and workmanship.  If,
during the Wafer Warranty Period, a breach of the warranty is discovered in the
Wafers, then Company shall promptly begin production to replace the defective
Wafer and work with Skyworks on a timely basis to determine the cause of such
defect and appropriate corrective measures. 
For the avoidance of doubt, a breach of the foregoing warranty will not
give rise to any termination provision under Section 12 (Term;
Termination) provided that Company provides the foregoing express remedy.

 

8.2          Process
Failure.  In the event that, (a) the
Fab Yield of any Lot of Production Wafers is [. . . *** . . .]
percent ([. . . *** . . .]%)
or less of the applicable Planning Yield Assumption due to a Process Failure or
(b) during Segments 12 through 30, the Probe Yield of any Lot of Production
Wafers purchased at the Basic Price is [. . . *** . . .]
percent ([. . . *** . . .]%)
or less of the Current Average Probe Yield (applied to the applicable Planning
Yield Assumption) due to a Process Failure, then Company will notify Skyworks
and will dispose of such Lot and/or start a new Lot in accordance with Skyworks’
directions. 

 

8.3          Disclaimers.  EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH
IN THIS SUPPLY AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED OR OTHERWISE, IN CONNECTION WITH THIS SUPPLY
AGREEMENT OR ANY WAFERS OR SERVICES PROVIDED UNDER THIS SUPPLY AGREEMENT, AND
EACH PARTY SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES AND CONDITIONS OF
MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE AND NONINFRINGEMENT.

 

9.             Indemnification.

 

9.1          Skyworks
Indemnification Obligations. 
Skyworks agrees to indemnify, hold harmless and defend at its own
expense any liability or cost associated with any claim, suit, or action
(collectively, “Claims”)
asserted or brought against Company, its Affiliates and its subsidiaries, and
their officers, directors, employees, agents, and representatives by a third
party to the extent that such Claim alleges that Skyworks’ specifications or
designs used in the production of Wafers infringe on any patent, copyright, or
any other intellectual property right (a “Skyworks Infringement Claim”).  Skyworks will pay such damages awarded
against Company by a court of competent jurisdiction, or agreed to in a
monetary settlement of any such Claim by Skyworks, to the extent that such
damages are directly attributable to a Skyworks Infringement Claim.  Skyworks’ indemnification obligation will not
apply to Skyworks Infringement Claims to the

 

17

 

extent they result from or are attributable to (a) any modifications,
combinations, or improvements made to the design or specification as furnished
to Company by Skyworks that are not agreed to by Skyworks; or (b) use of the
design or specification by Company for any purpose other than providing Wafers or
Probe Services to Skyworks.

 

9.2          Company
Indemnification Obligations.  Company
agrees to indemnify, hold harmless and defend at its own expense any liability
or cost associated with any claim, suit, or action (collectively, “Claims”) asserted or
brought against Skyworks, or any of their respective Affiliates and
subsidiaries, and their officers, directors, employees, agents, and
representatives by a third party to the extent that such Claim alleges that
Company’s use of technology, equipment, processes, or methods to manufacture
the Wafers or provide the Probe Services infringes upon any patent, copyright,
or any other intellectual property right (a “Company Infringement Claim”).  Company will pay such damages awarded against
Skyworks by a court of competent jurisdiction, or agreed to in a monetary
settlement of any such Claim by Company, to the extent that such damages are
directly attributable to a Company Infringement Claim.  Company’s indemnification obligation
hereunder will not apply to Company Infringement Claims alleging infringement
by any technology, equipment, processes, or methods that were (a) in use by
Company upon the CNXT Effective Date; or (b) provided by Skyworks or Skyworks
to Company.  For the avoidance of doubt,
if Company modifies, improves, or combines any such technology equipment,
processes, or methods, the foregoing indemnification obligation will apply to
the extent that Company Infringement Claims are directed at the modifications,
improvements, or combinations, except for modifications, improvements, or
combinations performed at the direction of Skyworks, or its Affiliates
including but not limited to Skyworks.

 

9.3          Conditions.  The obligations of the indemnifying Party
(the “Indemnifying Party”)
under Section 9.1 (Skyworks Indemnification Obligations) or Section
9.2 (Company Indemnification Obligations) with respect to a Skyworks
Infringement Claim or Company Infringement Claim (as applicable) (an “Infringement Claim”)
are subject to the following conditions: (a) the indemnified Party (the “Indemnified Party”)
must promptly notify the Indemnifying Party in writing of such Infringement
Claim; (b) the Indemnifying Party must have sole control of the defense and
settlement of the Infringement Claim; and (c) the Indemnified Party must fully
cooperate with and provide reasonable assistance to the Indemnifying Party in
the defense and settlement of such Infringement Claim (which includes
furnishing to the Indemnifying Party all evidence in the possession of the
Indemnified Party that is relevant to such Infringement Claim). The
Indemnifying Party will not accept a settlement or stipulated judgment of any
Skyworks Infringement Claim or Company Infringement Claim (as applicable)
without the prior written consent of the Indemnified Party, which consent will
not be unreasonably withheld. The Indemnifying Party will have no liability
under this Section 9 (Indemnification) for any costs, losses,
liabilities, or damages resulting from the willful acts of the Indemnified
Party or any settlement or compromise incurred or made by the Indemnified Party
without the Indemnifying Party’s prior written consent. The Indemnified Party
will have the right to participate, at its own expense, in the defense or
settlement of the Infringement Claim. 

 

9.4          Sole
and Exclusive Remedy. This Section 9 (Indemnification) states the
Indemnifying Party’s entire liability and the Indemnified Party’s sole remedy
with respect to the infringement, violation, or misappropriation of any
intellectual property rights of any third party

 

18

 

arising from or relating to this Supply Agreement, other than any
rights to indemnification provided for in the Contribution Agreement.  Each Party’s obligations under this Section
9 (Indemnification) are subject to the limitations of liability set forth
in Section 11 (Limitations of Liability).

 

10.          Confidentiality. The Parties acknowledge that any
nonpublic information disclosed or provided by one Party to another Party in
connection with this Agreement will be subject to the Confidentiality Agreement
between the Parties dated February 23, 2002. 
The terms and conditions of this Supply Agreement (including the pricing
information contained herein) will be considered to be the Confidential
Information (as defined in the Confidentiality Agreement) of both parties. 

 

11.          Limitations
of Liability.

 

11.1        Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS SUPPLY AGREEMENT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR LOST PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL,
OR EXEMPLARY DAMAGES ARISING FROM THE SUBJECT MATTER OF THIS SUPPLY AGREEMENT,
REGARDLESS OF THE TYPE OF CLAIM AND EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.

 

11.2        Basis
of Bargain.  EACH PARTY ACKNOWLEDGES
THAT THE MUTUAL LIMITATIONS OF LIABILITY CONTAINED IN THIS SECTION 11
(LIMITATIONS OF LIABILITY) REFLECT THE ALLOCATION OF RISK SET FORTH IN THIS
SUPPLY AGREEMENT AND THAT EACH PARTY WOULD NOT ENTER INTO THIS SUPPLY AGREEMENT
WITHOUT THESE LIMITATIONS ON LIABILITY.

 

12.          Term;
Termination.

 

12.1        Term  This Supply Agreement will take effect on the
CNXT Effective Date and will remain in effect for a period of five (5) years
from the CNXT Effective Date (the “Initial Term”), unless earlier terminated in
accordance with this Section 12 (Term; Termination).  Following the Initial Term, this Supply
Agreement may be renewed for additional one-year renewal terms (each a “Renewal Term”), upon
mutual agreement of the Parties.   

 

12.2        Termination.  This Supply Agreement may be terminated at
any time as follows:  

 

(a)           by
written agreement of the Parties;

 

(b)           by
either Party, at its discretion upon written notice to the other Party, if the
other Party materially breaches any provision of this Supply Agreement and such
breach is not cured within sixty (60) days after written notice of such breach
is furnished by the non-breaching Party; 

 

(c)           by
either Party, at its discretion upon written notice to the other Party, if
within any period of twelve (12) months there are five (5) or more material
breaches by the other

 

19

 

Party that would constitute grounds for termination pursuant to this Section
12.2 (without giving effect to cure periods), regardless of whether such
breaches were cured within the applicable cure periods; or

 

(d)           by
either Party, at its discretion, if (i) the other Party becomes insolvent,
admits in writing its inability to pay its debts as they become due, or files
or has filed against it any proceeding in bankruptcy or for reorganization
under any federal bankruptcy law or similar state law, or has any receiver
appointed for all or a substantial part of such Party’s assets or business, or
makes any assignment for the benefit of its creditors, or enters into any other
proceeding for debt relief, and such proceeding is not dismissed within sixty
(60) days of filing; (ii) the other Party dissolves, liquidates, or institutes
any proceedings for the liquidation or winding up of its business.

 

12.3        Effect
of Termination.  The rights and
obligations under Sections 1 (Definitions), 8 (Warranty and
Disclaimer), 9 (Indemnification), 10 (Confidentiality),
11 (Limitations of Liability), 12.4 (Effect of Termination),
and 13 (General) will survive termination or expiration of this Supply
Agreement for any reason. 

 

13.          General.

 

13.1        Agency.  Under this Supply Agreement (i) each Party
will be deemed to be an independent contractor and not an agent, joint
venturer, or representative of the other Party; (ii) neither Party may create
any obligations or responsibilities on behalf of or in the name of the other
Party; and (iii) neither Party will hold itself out to be a partner, employee,
franchisee, representative, servant, or agent of the other Party.

 

13.2        Governing
Law; Venue and Jurisdiction.  This
Supply Agreement will be governed by, subject to, and construed in accordance
with the internal laws of the State of Delaware, as such laws apply to
contracts between Delaware residents performed entirely within Delaware.  The Parties agree that the United Nations
Convention on Contracts for the International Sale of Goods will not apply to
this Supply Agreement.

 

13.3        Dispute
Resolution. The Parties will act in good faith and use commercially
reasonable efforts to promptly resolve any claim, dispute, controversy or
disagreement arising out of or relating to or in connection with this Supply
Agreement or the breach, termination or validity hereof (each a “Dispute”) between
the Parties under or related to this Supply Agreement or any of the
transactions contemplated hereby. 

 

(a)           Upon
the written request (a “Request”)
of a Party, the other Party shall commence good faith negotiations with the
goal of resolving the Dispute on a mutually satisfactory basis.  If the Dispute has not been resolved to the
satisfaction of the Parties within fifteen (15) days after the date on which
the Request is delivered, the Dispute shall immediately be referred to senior
officers of each Party.  The senior
officers of each Party (e.g.,
chief executive officer and/or chief executive officer of international
business) shall meet immediately, and in no case later than thirty (30) days
after the date on which the Request is delivered, for a minimum of two (2)
Business Days with a mutually selected mediator and attempt in good faith to
negotiate a resolution of the Dispute. 
If the Parties are unable to resolve the Dispute within thirty-five (35)

 

20

 

days after the date on which the Request is delivered, then any
relevant Party may submit the Dispute to arbitration as the exclusive means of
resolving it in accordance with the procedures set forth in this Section
13.3.

 

(b)           Except
as otherwise specified in this Section 13.3, any Dispute not resolved
through the procedure set forth above shall be finally settled by arbitration
in accordance with the International Rules and Procedures of the American
Arbitration Association (the “Arbitration Rules”), which are deemed to be
incorporated by reference herein except as otherwise modified herein. 

 

(c)           The
arbitration situs shall be Wilmington, Delaware, and the laws of the State of
Delaware shall be applied.

 

(d)           In
the event of arbitration, there shall be one arbitrator who shall be jointly nominated
by such parties. If the Parties fail to so nominate the arbitrators within
thirty (30) days from the date when the Dispute is submitted to arbitration
pursuant to this Section 13.3, at the request of any Party, the
arbitrator(s) shall be appointed in accordance with the Arbitration Rules.

 

(e)           The
arbitration hearing shall commence no later than ninety (90) days following the
appointment of the sole arbitrator, as the case may be, and the final award
shall be rendered no later than thirty (30) days following the close of the
hearing.

 

(f)            Consistent
with the expedited nature of arbitration, each Party will, upon the written
request of the other Party, provide the other with copies of documents relevant
to the issue raised by any claim or counterclaim.  Other discovery may be ordered by the
arbitrator to the extent the arbitrator deems additional discovery relevant and
appropriate, and any dispute regarding discovery, relevance or scope thereof,
shall be determined by the arbitrator, which determination shall be conclusive.

 

(g)           By
agreeing to arbitration, the Parties do not intend to deprive any court of its
jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment,
injunctive or other equitable relief or an order in aid of arbitration proceedings
and the enforcement of any award. 
Without prejudice to such provisional remedies in aid of arbitration as
may be available under the jurisdiction of a national court, the arbitral
tribunal shall have full authority to grant provisional remedies and to award
damages for the failure of any party to respect the arbitral tribunal’s orders
to that effect.

 

(h)           The
award shall be final and binding upon the Parties, and shall be the sole and
exclusive remedy between the Parties regarding any claims, counterclaims,
issues, or accounting presented to the arbitral tribunal in connection with the
Dispute.  Judgment upon any award may be
entered in any court having competent jurisdiction thereof.

 

(i)            The
costs of the arbitration shall be borne as determined in accordance with the
Arbitration Rules; provided, however,
that to the extent a Party is non-prevailing or unsuccessful on a claim in an
arbitration proceeding under this Section 13.3 as determined by the
arbitrator, that Party shall pay the prevailing or successful Party’s costs and
expenses incurred in

 

21

 

connection with the arbitration of that Dispute, including attorneys’
fees and arbitration expenses, whether or not such Dispute is prosecuted to
award or judgment.

 

(j)            Subject
to the receipt of any applicable governmental approval, any monetary award
shall be made and promptly payable in U.S. dollars, if due in U.S. dollars,
free of any deduction or offset, and the arbitral tribunal shall be authorized
in its discretion to grant pre-award and post-award interest at commercial
rates.  The arbitral tribunal shall have
the authority to award any remedy or relief proposed by the claimants or
respondents pursuant to this Supply Agreement, including without limitation, a
declaratory judgment, specific performance of any obligation created under this
Supply Agreement or the issuance of an injunction.

 

13.4        Injunctive
Relief. Company acknowledges and agrees that Skyworks would suffer
irreparable harm for which monetary damages would be an inadequate remedy if
there were a willful or intentional breach of any obligation of Company to
supply Wafers ordered against a Wafer Volume Commitment hereunder.  Accordingly, Company acknowledges and agrees
that equitable relief, including specific performance, would be appropriate to
protect Skyworks’ rights and interests if such a breach were to arise, were
threatened, or were asserted, and that Skyworks shall be entitled to obtain
such equitable relief without proving any additional elements.

 

13.5        Third-Party
Beneficiaries.  There are no
third-party beneficiaries of this Supply Agreement.  No provision of this Supply Agreement,
express or implied, is intended or will be construed to confer upon or give to
any customer or other person other than the Parties any rights, remedies, or
other benefits under or by reason of this Supply Agreement.

 

13.6        Compliance
with Law.  The Parties will at all
times comply with all applicable foreign, U.S., state, and local laws, rules
and regulations relating to the execution, delivery and performance of this
Supply Agreement.  Each Party agrees that
it will not export or reexport, resell, ship, or divert or cause to be exported
or reexported, resold, shipped, or diverted directly or indirectly any
software, documentation, or technical data incorporating any software to any
country for which the government (or any agency thereof) of the United States,
or any foreign sovereign government with competent jurisdiction requires an
export license or other governmental approval without first obtaining such
license or approval.

 

13.7        Force
Majeure. Neither Party shall be liable for failure or delay in performance
of its obligations under this Supply Agreement to the extent such failure or
delay is caused by an act of God, act of a public enemy, war or national
emergency, rebellion, insurrection, riot, epidemic, quarantine restriction,
fire, flood, explosion, storm, earthquake, interruption in the supply of
electricity, power, or energy, or other catastrophe, terrorist attack, labor
dispute or disruption of such Party’s suppliers, or other event beyond the
reasonable control of such Party.  If a
Party’s performance under this Supply Agreement is affected by a force majeure
event, such Party shall give prompt written notice of such event to the other
Party and shall at all times use its reasonable commercial efforts to mitigate
the impact of the force majeure event on its performance under this Supply
Agreement.  In the event of a force
majeure event as described in this Section that affects either or both Parties’
ability to perform under this Supply Agreement, the Parties agree to cooperate
in good faith in order to resume the transactions contemplated by this Supply
Agreement as soon as commercially possible to the extent commercially
reasonable. 

 

22

 

13.8        Amendment;
Later Agreement.  This Supply
Agreement may not be amended, modified, or supplemented by the Parties in any
manner, except by an instrument in writing signed by Skyworks and Company and
specifically reciting that it amends this Supply Agreement.  No purchase order or acknowledgement will
amend this Supply Agreement. All matters designated herein as subject to
agreement of the Parties must be agreed upon in a writing signed by authorized
representatives of both Parties for such agreement to be effective.

 

13.9        Notices.  Any notice, consent, approval, or other
communication intended to have legal effect to be given under this Supply
Agreement (other than a purchase order or invoice) must be in writing and will
be delivered (as elected by the Party giving such notice): (i) personally;
(ii) by postage prepaid registered or certified airmail, return receipt
requested; (iii) by express courier service; or (iv) by facsimile
with a confirmation copy deposited prepaid with an express courier
service.  Unless otherwise provided
herein, all notices will be deemed to have been duly given on: (y) the date of
receipt (or if delivery is refused, the date of such refusal) if delivered
personally, by mail, or by express courier; or (z) one (1) business day after
receipt by telecopy if the telecopy was accompanied by the mailing of the
notice via mail or courier service.  Each
Party may change its address for purposes hereof on not less than three (3)
days’ prior notice to the other Party. 
Notice hereunder will be sent to the following addresses (with a copy to
the legal department):

 

	
  If to Skyworks, to:

  	
  If to Company, to:

  
	
   

  	
   

  
	
  Skyworks Solutions, Inc.

  	
  Jazz Semiconductor

  
	
   

  	
   

  
	
  4311 Jamboree Road

  	
  c/o The Carlyle Group

  
	
   

  	
   

  
	
  Newport Beach, CA 92660

  	
  101 S. Tryon Street, 25th Floor

  
	
   

  	
   

  
	
  Attn: General Counsel

  	
  Charlotte, N.C. 28280

  
	
   

  	
   

  
	
  Telecopy: (949) 483-9576

  	
  Attn: Claudius E. Watts, IV

  
	
   

  	
   

  
	
   

  	
  Telecopy: (704) 632-0299

  

 

13.10      Assignment. Except as otherwise expressly
provided in this Supply Agreement, neither Party shall be permitted to assign
any of its rights or delegate any of its obligations under this Supply
Agreement without the prior written consent of the other Party; except that (i)
Company may, without such consent, assign all such rights to any Affiliate
controlling Company or to any Person providing cash financing to the Company as
collateral security for such financing provided that no such assignment shall
relieve Company from any of its obligations hereunder, (ii) Skyworks may,
without such consent, assign all such rights to any Affiliate controlling
Skyworks, provided that no such assignment shall relieve Skyworks from any of
its obligations hereunder, and (iii) either Party may, without the other Party’s
consent, assign all rights to any entity which acquires, directly or
indirectly, all or any substantial portion of the assets or securities of such
Party.  Any unauthorized assignment or
transfer shall be null and void.  This
Supply Agreement shall be binding upon and inure solely to the benefit of each
Party and its successors and permitted assigns.

 

23

 

13.11      Waiver.  If
a Party fails to insist on performance of any of the terms and conditions, or
fails to exercise any of its rights or privileges of this Supply Agreement,
such failure will not constitute a waiver of such terms, conditions, rights, or
privileges.

 

13.12      Severability. 
If the application of any provision or provisions of this Supply
Agreement to any particular facts or circumstances is held to be invalid or
unenforceable by any court of competent jurisdiction, then: (i) the
validity and enforceability of such provision or provisions as applied to any
other particular facts or circumstances and the validity of other provisions of
this Supply Agreement will not in any way be affected or impaired thereby; and
(ii) such provision or provisions will be reformed without further action
by the Parties and only to the extent necessary to make such provision or
provisions valid and enforceable when applied to such particular facts and
circumstances.

 

13.13      Counterparts and Facsimile  This Supply Agreement may be executed in
any number of counterparts, each of which when so executed and delivered will
be deemed an original, and such counterparts together will constitute one and
the same instrument.  The Parties intend
that each Party will receive a duplicate original of the counterpart copy or
copies executed by it.  For purposes
hereof, a facsimile copy of this Supply Agreement, including the signature
pages hereto, will be deemed to be an original. 

 

13.14      Rules of Construction..  As used in this Supply Agreement, all
terms used in the singular will be deemed to include the plural, and vice
versa, as the context may require.  The
words “hereof,” “herein,” and “hereunder” refer to this Supply Agreement as a
whole, including the attached exhibits, as the same may from time to time be
amended or supplemented, and not to any subdivision in this Supply
Agreement.  When used in this Supply
Agreement, unless otherwise expressly stated, “including” means “including,
without limitation” and “discretion” means sole discretion.  Unless otherwise expressly stated, when a
Party’s approval or consent is required under this Supply Agreement, such Party
may grant or withhold its approval or consent in its discretion.  References to “Section” or “Exhibit” will be
to the applicable section or exhibit of this Supply Agreement.  Descriptive headings are inserted for
convenience only and will not be utilized in interpreting the Supply
Agreement.  This Supply Agreement has
been negotiated by the Parties and reviewed by their respective counsel and
will be fairly interpreted in accordance with its terms and without any strict
construction in favor of or against either Party.

 

13.15      Entire Agreement. 
As to the subject matter hereof: (i) this Supply Agreement,
including its exhibits, sets forth the entire agreement between Skyworks and
Company; (ii) no promise, inducement, understanding, or agreement not
expressly contained herein has been made; and (iii) this Supply Agreement
merges and supersedes any and all previous agreements, understandings, and
negotiations between the Parties concerning the subject matter hereof.

 

 

[the remainder of this page is intentionally left blank]

 

24

 

In Witness
Whereof, the parties have executed this Supply
Agreement as of the Effective Date by the undersigned duly authorized
representatives of each party.

 

	
  Skyworks
  Solutions, Inc.,

  	
  Jazz
  Semiconductor,

  
	
  a Delaware corporation

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  \s\ Kevin Barber

  	
   

  	
  By:

  	
  \s\ Shu Li

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Kevin Barber

  	
   

  	
  Name:

  	
  Shu Li

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  S.V.P. Operations

  	
   

  	
  Title:

  	
  CEO & President

  	
   

  
										

 

25

 

Exhibit A -
Pricing

 

Wafer Pricing.

 

Contract Price.  For Wafers purchased by Skyworks to fulfill
its Wafer Volume Commitment and, except as set forth in this Supply Agreement,
for all additional Wafers purchased by Skyworks during Segments 1-6 and 7-12,
the price of the Wafers shall be calculated by multiplying the Moves in Exhibit
B - Schedule 2 by the Fab Cost per Move set forth below, plus the cost of
the raw wafer (the “Contract
Price”).

 

Fab Cost per Move                                               $[. . . *** . . .] per probed wafer

 

Basic Price. 
For Wafers purchased by Skyworks subsequent to
Segment 18, and as otherwise set forth in this Supply Agreement, the price of
the Wafers shall be the “Basic
Price,” determined as set forth below, less any applicable Wafer
Credit. For Wafers purchased by Skyworks in excess of the Wafer Volume
Commitment during Segments 13 through 18, the price of the Wafers will increase
from the Contract Price to the Basic Price on a stepped basis, as further
described in Section 2.1(d)(i).

 

The Basic Price for each type of Wafer shall be determined upon the
CNXT Effective Date and recalculated every six (6) months thereafter during the
term hereof, and shall be the lesser of (a) the most favorable per-Wafer price
offered by Company to any of its customers for comparable volumes and schedules
during the six (6) months immediately preceding the date of calculation; or (b)
the most favorable Wafer price offered by [. . . *** . . .]
over the previous six (6) months for Wafers manufactured using similar
process technology for comparable volumes and comparable schedules.  If no similar Wafers or terms provided by
these manufacturers can be found, (y) for Specialty Wafers, Company will
determine the Basic Price based on the average price per Move as sold to all
customers (other than, Conexant, Conexant Affiliates, or Conexant Spin-offs)
for the family of Company’s Specialty Wafer products most comparable to the
Wafers in question; and (z) for Non-Specialty Wafers, the Parties will agree upon
a reasonable Basic Price.

 

Wafer Rework Pricing.  Skyworks shall reimburse Company for any
rework requested by Skyworks in an amount determined by multiplying the
applicable Contract or Basic Price for the completed Wafers times a ratio
determined by dividing the number of additional Moves required as a result of
such rework by the total number of moves required for processing the Wafer, as
set forth in Exhibit B – Schedule 2.  

 

26

 

Probe Services and
Re-probe services.

 

Cost (based on FY02 standards)

 

	
   

  	
   

  	
  $/hour

  	
   

  
	
  Platform

  	
   

  	
  JV Tester

  	
   

  	
  Non-JV Tester

  	
   

  
	
  Trillium

  	
   

  	
  [. . . *** . . .]

  	
   

  	
  [. . . *** . . .]

  	
   

  
	
  Synchro

  	
   

  	
  [. . . *** . . .]

  	
   

  	
  [. . . *** . . .]

  	
   

  
	
  Catalyst

  	
   

  	
  [. . . *** . . .]

  	
   

  	
  [. . . *** . . .]

  	
   

  

 

These costs are based on
annual spend.  the actual cost will be
the greater of this number or the actual spend reconciled at the end of each
Segment. The current cost per probe has been calculated at $[. . . *** . . .]
on average.

 

27

 

Exhibit B -
Wafer Volume Commitments

 

Schedule 1

 

Skyworks will submit Purchase Orders to Company for the manufacture of
Wafers in volumes sufficient to sustain [. . . *** . . .]%
of the MPD purchases as follows, averaged over 364 days:  

 

	
  Period

  	
   

  	
  #
  of Work Days

  	
   

  	
  MPD

  	
   

  
	
  I (first 12 calendar month period from CNXT Effective Date)

  	
   

  	
  364

  	
   

  	
  [. . . *** . . .]

  	
   

  
	
  II (second 12 calendar month period from CNXT Effective Date)

  	
   

  	
  364

  	
   

  	
  [. . . *** . . .]

  	
   

  
	
  III (third 12 calendar month period from CNXT Effective Date)

  	
   

  	
  364

  	
   

  	
  [. . . *** . . .]

  	
   

  

 

Conexant’s fifteen (15) month original forecast is attached as Exhibit
B – Schedule 1.  Based on the
forecasted demand and the mix of Wafers specified therein, the average
conversion rate was established as [. . . *** . . .]
Moves per Wafer.  The Skywork
Wafer Volume Commitments, in MPD, are calculated as follows: 

 

Period I:  [. . . *** . . .]
WSPD x [. . . *** . . .]  = 45,000 MPD x [. . . *** . . .] % =  [. . . *** . . .]
SWKS MPD = [. . . *** . . .]
SWKS WSPD

 

Period II:  [. . . *** . . .]
WOPD x [. . . *** . . .]
= [. . . *** . . .]
MPD x [. . . *** . . .]
% = [. . . *** . . .]
SWKS MPD = [. . . *** . . .]
WOPD

 

Period III:  [. . . *** . . .]
WOPD x [. . . *** . . .]
= [. . . *** . . .]
MPD x [. . . *** . . .]
% =  [. . . *** . . .] SWKS MPD = [. . . *** . . .]
WOPD

 

These CNXT Wafer Volume Commitments includes up to [. . . *** . . .]
Engineering Wafers, of which [. . . *** . . .]
% of, are allocated to Skyworks.

 

For determining compliance with the Skyworks Wafer Volume Commitments,
the number of MPD utilized by Skyworks will be determined by converting the
total quantity and type of Wafers purchased by Skyworks during the calendar
year to moves based on the conversion table attached as Exhibit B – Schedule
2 and dividing this number by 364 days. 
The Parties agree that Wafers that are delivered after the end of the
Segment in which the original delivery date was scheduled as agreed by the
Parties through no fault of Skyworks shall count toward the Wafer Volume
Commitment for the Segment in which the original delivery date was scheduled as
agreed by the Parties.

 

28

 

Exhibit B

 

Schedule 2 

 

Wafer Moves
Table

 

[. . . *** . . .]

 

29

 

Exhibit C
-- Rules of Change, Operation and Release Procedures

 

[See Attached]

 

30

 

[. . . *** . . .]

 

31

 

Exhibit D –
Newport Beach Fab Capacity

 

Maximum Capacity:

 

	
  Process
  Family

  	
   

  	
  Nwpt
  Bch

  	
   

  
	
  8” Equiv. WSPD

  	
   

  	
  Cap. WSPD

  	
   

  
	
  1+
  micron

  	
   

  	
  [...***...]

  	
   

  
	
  0.8
  um

  	
   

  	
  [...***...]

  	
   

  
	
  0.6
  um

  	
   

  	
  [...***...]

  	
   

  
	
  0.5
  um

  	
   

  	
  [...***...]

  	
   

  
	
  0.35
  um

  	
   

  	
  [...***...]

  	
   

  
	
  0.25
  um

  	
   

  	
  [...***...]

  	
   

  
	
  0.18
  um & below

  	
   

  	
  [...***...]

  	
   

  
	
  Bipolar

  	
   

  	
  [...***...]

  	
   

  
	
  BiCMOS

  	
   

  	
  [...***...]

  	
   

  
	
  SiGe
  BiCMOS

  	
   

  	
  [...***...]

  	
   

  
	
  Subtotal WSPD

  	
   

  	
  [...***...]

  	
   

  
	
  ELOTS

  	
   

  	
  [...***...]

  	
   

  
	
  Total WSPD

  	
   

  	
  [...***...]

  	
   

  
	
  Total int vs. Ext

  	
   

  	
   

  	
   

  

 

32

 

Exhibit E –
Wafer Cycle Times

 

The following table sets forth the average Wafer process cycle time for
the Newport Beach Fab:

 

	
  PROCESS

  	
   

  	
  Days
  Per Layer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  
	
  [...***...]

  	
   

  	
  [...***...]

  	
   

  

 

All new or unidentified processes will be added to this table once at
least three (3) lots have been manufactured to set an average cycle time.  These cycle times are for planning purposes only and not an
obligation for delivery, but the Company will work to meet these cycle times.

 

33

 

Exhibit F -
Quality Specifications

 

I.              Released Material Specifications Report

 

A.            Released
Material Specifications as of 10-jan-2002 11:04 PM

 

34

 

EXHIBIT G - DELIVERY AND LOGISTICS

 

[To be expanded as
necessary.]

 

Processing Requirements.   

 

Company shall provide the following processing for all wafers:

 

1.     Handling
and packaging for delivery (packaging specification attached as Exhibit G –
Schedule 1).

 

2.     Box
and hold (if specified).

 

3.     Preparing
required shipping paperwork (airway bill, export documentation).

 

4.     Customs
clearance documentation, packing list, etc.

 

5.     Export
control clearance.

 

6.     Posting
delivery in [. . . *** . . .].

 

7.     Contacting
the specified carrier. 

 

8.     Handing product off to the specified carrier
at the appropriate location.

 

9.     Tape
and reel (when specified).

 

Handling and Receiving Services.  Company will provide
handling and receiving services to Skyworks at the Newport Beach Fab including
the following: 

 

1.             Returned
goods material authorization (RMA) receipt, notification and delivery to
Skyworks quality control (per log into the appropriate information system). 

 

2.             Receive,
count, notify and deliver documents and goods delivered to the subject shipping
locations for Skyworks personnel and functions.

 

3.             Receive
Skyworks production goods (wafers, die, and/or packaged parts) and either: (a)
transfer to another production location; (b) enter into Company’s Probe
Services; or (c) enter into Skyworks finished goods (system) and store in a
secure, physically separate and secure finished goods area as specified below. 

 

Finished Goods Storage.  Company will provide finished goods storage
for Skyworks on consistent with the following: 

 

1.     Product
storage consistent with IEEE (spec#?).

 

2.     Product
stored in a separate and secure storage location.

 

35

 

3.     Inventory
quantity maintained accurately in the appropriate system [. . . *** . . .]
including periodic cycle counts as required to maintain accuracy.

 

36

 

[. . . *** . . .]

 

37

 

EXHIBIT H - REPORTS

 

Company shall prepare and provide the following reports to
Skyworks.  Such reports shall be
comparable in form, substance, and content to those reports prepared by the
Newport Beach Fab as of the CNXT Effective Date and shall be provided in
accordance with the schedule and in the form specified below:

 

1.     Work
in process (WIP) reports – daily; electronic form

 

2.     E-Test
(WAT/PCM) data – upon request; electronic form

 

3.     In-line
control data – upon request; electronic or paper form

 

4.     Yield
trend charts – upon request; electronic or paper form

 

5.     Customer
line item performance (CLIP) – upon request; electronic or paper form

 

6.     On-time
delivery report – weekly; electronic form

 

7.     Commitment
to forecast – monthly; electronic form

 

8.     Scrap
reports – daily; electronic form

 

9.     Capacity
availability – quarterly; electronic form

 

10.  PPM
levels – upon request; electronic form

 

11.  Probe
data – upon request; electronic or paper form

 

12.  Test
data – upon request; electronic form

 

13.  SPC
(Cp/Cpk) data for key nodes – upon request; electronic form

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