Document:

Exhibit 10.37

 

HHNEC WAFER SUPPLY AGREEMENT

 

THIS
AGREEMENT, is made and entered into this 29 day of August, 2003 (“Effective Date”) by and between JAZZ/HUA HONG, LLC, a limited liability company organized
in the State of Delaware (the “LLC”),
NEWPORT FAB, LLC, a Delaware limited liability company d/b/a Jazz Semiconductor
(“Jazz”) and SHANGHAI  HUA HONG NEC
ELECTRONICS COMPANY., LIMITED., a corporation formed under the laws
of the Peoples Republic of China (“HHNEC”)
(hereinafter LLC Jazz and HHNEC may each be
referred to as a “party” and may be jointly referred to as “parties”).

 

PURPOSES

 

HHNEC is a member of the
LLC and has committed to provide the LLC with semiconductor products utilizing
manufacturing capacity at HHNEC’s facility in Shanghai, Peoples Republic of
China. This Agreement provides the terms and conditions for the manufacture of
such products by HHNEC for the LLC, including the use of the information and
know-how of Newport Fab LLC d/b/a Jazz Semiconductor (“Jazz”)
in order to meet LLC’s needs for Wafers and dies, and for no other purpose.

 

In consideration of the
mutual promises of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, do hereby agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

In this Agreement, unless
otherwise defined or the context otherwise requires, the following words and
expressions shall have the following meanings:

 

1.1           “CMOS” and “BiCMOS” shall
refer to complementary metal oxide semiconductor devices and bipolar
complementary metal oxide semiconductor devices, respectively.

 

1.2           “Delivery Date”
shall mean a date for delivery of an agreed upon quantity of Wafers ordered by
LLC as set forth in any LLC order.

 

1.3           “HHNEC’s Facility”
shall mean HHNEC’s facility located at No. 1188 Chuan Qiao Road,
Pu Dong, Shanghai, Peoples Republic of China.

 

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

 

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.

 

 

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           “Lead-time” shall mean the estimated
amount of time required from order placement to delivery as agreed to by the
parties.

 

1.6           “Jazz Advanced Technology” shall mean
all proprietary information and know-how, no matter what form, and without
limitation, related to Jazz’s .18um advanced RF CMOS process including but not
limited to advanced features such [...***...] and .25um /.18um SiGe BiCMOS process
and improvements thereto.

 

1.7           “Jazz Technology” shall mean all
proprietary information and know-how obtained by LLC from Jazz and provided to
HHNEC by LLC, no matter what form and including without limitation information
and know-how identified in Confidential Information Transmittal Report(s)
(copies of which shall be provided to LLC), that relate to Jazz’s process(es)
for the manufacture of Wafers, Jazz’s specifications for Wafers, Jazz’s
performance criteria for Wafers and all other matters relating to Wafers and
their manufacture., which has been
provided to HHNEC by Jazz for the specific purpose of manufacturing wafers.

 

1.8           “Jazz Patent Rights” shall mean those
patent rights under which LLC is licensed by Jazz during the term of this
Agreement.

 

1.9           “General
Licensed Process”
shall mean qualified process for the manufacture of Wafers as communicated by
LLC to HHNEC from time to time during the term of this Agreement, which has been general licensed to HHNEC,
as set forth in Technology Transfer Agreement, to enable HHNEC to do foundry
business.

 

a)            [...***...] RF CMOS,

 

b)           [...***...] RF CMOS,

 

c)            [...***...] CMOS

 

d)           [...***...] CMOS

 

1.10         “Process” shall
mean qualified process for the manufacture of Wafers as communicated by LLC to
HHNEC from time to time during the term of this Agreement, which has been general licensed to HHNEC,

 

1.11         “Have Made Licensed Process”
shall mean qualified process
referenced in section 1.6 above, for the manufacture of Wafers as
communicated by LLC to HHNEC from time to time during the term of this
Agreement to be used by HHNEC for Jazz’s
second source requirements,

 

1.12         “SiGe” (when used without an indication of performance)
shall refer to silicon germanium semiconductor devices, generally.

 

1.13         “Term” shall have the meaning
ascribed to it in Article 13.

 

1.14         “Wafers” shall mean wafers that have
been manufactured or processed according to the Process so as to include or
embody any of the products listed on Exhibit A
attached hereto.

 

2

 

1.15         “Wafer Acceptance Criteria” shall mean those written Wafer
specifications, engineering requirements, performance criteria, etc. provided
by LLC to HHNEC and mutually agreed by LLC and HHNEC, from time to time during the term of
this Agreement.

 

1.16         “WIP”
shall mean work in process and includes all wafer and dies not yet delivered to
LLC.

 

Capitalized terms not defined herein shall have the same
meaning ascribed to them in the Limited Liability Company Agreement of Jazz/Hua
Hong, LLC (the “LLC Agreement”), the License Agreements and the Supply Agreements
between Jazz/Hua Hong, LLC and Jazz Semiconductor.

 

ARTICLE 2

 

PURCHASE
OF WAFERS; PURCHASE FORECASTS, ETC.

 

2.1           HHNEC
shall manufacture Wafers utilizing the Process for LLC. LLC will purchase
Wafers manufactured by HHNEC in accordance with the terms of this Agreement.

 

2.2           For
the term of this Agreement, LLC shall provide to HHNEC on or before the [...***...], a
six (6) month rolling forecast setting forth its estimated requirements by
month for Wafers.

 

Solely
to allow for the well balanced loading in HHNEC’s facility(ies), both parties
shall review the next six months loading plan commencing from the first loading,
twice per year. Subject to Section 2.4, The loading  plan shall constitute a binding
commitment of LLC to HHNEC to
buy a minimum 50% of the loading plan,
from Q42004 till the end of 2005, and a binding commitment of HHNEC to
manufacture in accordance to loading plan all wafers ordered by the LLC

 

Commencing
January 1, 2006, for each fixed 6 month period during the term of this
agreement HHNEC’s capacity commitment to the LLC shall be based on the average
loading of the prior three months [For example the HHNEC capacity commitment
for the period January 1 – June 30, 2006 shall be based on the loading average
of October 1, 2005 through December 31, 2005.] Such
loading  plan
shall constitute a binding commitment of
LLC to HHNEC to buy minimum 50%
of the loading plan and a binding commitment of HHNEC to manufacture in
accordance to loading plan all wafers ordered by the LLC. The LLC may inform
HHNEC of its requirements for additional loading above the loading plan, and
provided the LLC commits to purchase [...***...] of such additional loading,  HHNEC
shall perform its commercially best effort to supply wafers for LLC to support
such upside demand requests

 

In the event of order cancellation after wafer
starts, following penalty charges apply:

[...***...]

 

2.3           LLC
shall place its purchase order for Wafers with HHNEC in accordance with the
Lead-time.

 

2.4           The
LLC agrees, provided the processes/products are qualified on time, and Jazz
customers have approved sourcing through HHNEC, to order a minimum of [...***...]
wafers per month commencing October 1, 2004, and for all of 2005.

 

2.5           Except
as expressly stated in this Article, nothing herein shall be construed as an
obligation on the part of LLC to purchase any quantity of Wafers from HHNEC.

 

3

 

ARTICLE 3

 

ORDERS

 

3.1           LLC
shall place orders for the Wafers by mail or by facsimile to HHNEC or in
another mutually agreed upon way by
the [...***...] of calendar month for wafers outs in the calendar month [...***...] hence, except for
[...***...] processes which will be placed [...***...] hence. HHNEC shall, within [...***...] after receipt of such orders, send LLC an acknowledgement
of such orders. [...***...].

 

3.2           The
terms of this Agreement shall supersede the terms of any LLC purchase order
and/or HHNEC’s acknowledgment/acceptance of such purchase order. Although it is
recognized that the parties may, for their respective convenience, desire to
use standardized purchase order forms, 
acknowledgment forms and other documents which may contain terms in
addition to or at variance with the terms of this Agreement, no purchase order
or acknowledgement will amend this Agreement and all purchase order or
acknowledgements shall be subject to the terms and conditions of this Agreement
regardless of statements to the contrary contained within the purchase order or
acknowledgment.

 

3.3           All
matters designated herein as subject to agreement of the parties must be agreed
upon in a writing signed by authorized representatives of both parties for such
agreement to be effective. All issues that arise during the Term that are not
addressed by the terms herein shall be resolved in accordance with Article 15
below.

 

ARTICLE 4

 

MANUFACTURE
OF WAFERS, ETC.

 

4.1           HHNEC
shall manufacture Wafers only according to the Process.

 

4.2           HHNEC
shall, at its own expense, install all equipment necessary to support a minimum
of 5,000 wafer starts per month
of 0.18 um CMOS wafer production capacity commencing by December 2004 and additional 5000 by the end of 1H2005
for a total of 10,000 wafer starts per month.

 

4.3           Further,
HHNEC shall install, at its own expense, all equipment necessary to support the
manufacture of Jazz 0.18 um CMOS/SiGe Wafers, and qualify Jazz 0.18 RF
CMOS/SiGE by the end of the third quarter 2004.

 

4.4           HHNEC
shall guarantee capacity on a first right of refusal basis, provided Jazz
forecasts with 6 months advanced notice, up to eight thousand (8,000) wafers
per month commencing October 1,
2004, and up to ten thousand (10,000) wafers per month commencing January 1,
2005 for the term of this agreement and any extension thereof; and HHNEC shall
perform its commercially best effort to supply wafers for Jazz upside demand
beyond such levels.

 

4.5           Within a reasonable time after the Effective
Date, LLC shall provide HHNEC with Jazz Technology and other technical
assistance to enable HHNEC to implement the Process to manufacture Wafers. Prior
to the commercial production of Wafers, LLC shall verify that HHNEC is
utilizing the Process in accordance with LLC’s specifications to produce Wafers
meeting the Wafer Acceptance Criteria. Absent prior approval and subsequent
verification by LLC, HHNEC shall not deviate from the Process once the process
at HHNEC’s Facility is verified.

 

4

 

4.6           HHNEC
shall provide authorized personnel of LLC and/or Jazz with access to the HHNEC
Facility in order to assist HHNEC in implementing the Process and, thereafter,
to periodically verify that HHNEC is manufacturing Wafers according to the
Process, that Wafers meet Wafer Acceptance Criteria and as otherwise necessary
in LLC’s or Jazz’s discretion to inspect the Process and/or HHNEC’s Facility
for compliance with the terms of this Agreement. LLC and/or Jazz shall give
reasonable notice of its intent to inspect HHNEC’s Facility.

 

4.7           LLC
and/or Jazz shall help HHNEC to qualify
the suppliers to HHNEC of major equipment, chemicals and other components
required to manufacture the Wafers in accordance with the Process and the terms
hereof upon required by HHNEC.

 

4.8           LLC
shall provide HHNEC with advance written notice of changes in Process and Jazz
Technology relating thereto. With assistance from LLC and/or Jazz, HHNEC shall
change its process to comply with any changes, verify the Process as changed
and assist LLC in verifying the Process as changed. LLC and/or Jazz will be responsible for the wafer price increase based
upon actual cost and re-qualification cost due to such mentioned Process change
only if requested by Jazz.

 

4.9           A)
Costs associated with the general process production:  Each party shall use its commercially
reasonable efforts to complete, and shall bear its own expenses in connection
with, the actions associated with enabling HHNEC to utilize the processes
identified in the Technology License and Transfer Agreement, or general process
production, verifying HHNEC’s process, implementing changes to Process and
ensuring that Wafers meet Wafer Acceptance Criteria, however, Jazz will be
responsible for the cost associated with lab work and testing of the product,
and HHNEC shall provide engineering support, photo masks, and engineering
wafers to support the technology transfer identified herein. The technology
transfer completes at the time of process qualification defined by meeting the
Fabless Semiconductor Association standards.

 

B)
Costs associated with Have Made production: 
Each party shall use its commercially reasonable efforts to
complete, and shall bear its own expenses in connection with, the actions
associated with enabling HHNEC to utilize the Have Made Licensed Process, implementing changes to Have Made Licensed Process and
ensuring that Wafers meet Wafer Acceptance Criteria, however, Jazz and/or its customer will be
responsible for the cost associated with
photo masks, lab work and testing of the product, and HHNEC shall
provide engineering support, and engineering wafers to support the technology
transfer identified herein. The technology transfer completes as defined by the
Technology License and Transfer Agreement.

 

C) HHNEC guarantees a wafer yield no
less than [...***...].

 

4.10         Without expressed written consent by Jazz, HHNEC
shall not use Process,- Jazz
Technology, or Jazz Advanced Technology,
at any location other than HHNEC’s Facility or for any purpose other than as
provided for in the Technology License and Transfer Agreement and the
Technology Sublicense Agreements.

 

4.11         LLC
may at any time request HHNEC to halt the manufacture of Wafers still
in-process and HHNEC shall effect production stoppage. Such mentioned manufacturing halt shall not exceed [...***...], and LLC
acknowledges that there will be [...***...] based on the halt date and characteristics
of Wafers. The manufacture of Wafers shall remain on hold pending
written 

 

5

 

directions from LLC. HHNEC
shall re-start the manufacture of Wafers within [...***...] after
receipt of LLC’s written request, subject to LLC’s agreement to [...***...].

 

ARTICLE 5

 

PRICES
AND PAYMENT

 

5.1           Prices for LLC’s purchases of Wafers, are
provided herein, and HHNEC guarantees that wafer prices shall be [...***...].

 

5.2           HHNEC
and the LLC shall review wafer pricing annually and adjust pricing downward
consistent with market price decline but in no event more than a [...***...]
downward adjustment per annum.

 

5.3           [...***...].

 

5.4           All
prices are stated in U.S. Dollars. All prices include all taxes, export duties,
and other charges imposed by the Peoples Republic of China and any local
governments in the Peoples Republic of China but are exclusive of all federal,
state or local sales, use, excise, or similar taxes imposed by the United
States of America and any local governments within the United States of America.
Any such tax(es) shall be separately itemized on HHNEC’s invoice(s) and paid by
LLC, or, in lieu thereof, LLC shall furnish HHNEC a properly executed tax
exemption certificate prior to shipment.

 

5.5           HHNEC
shall invoice LLC upon HHNEC’s shipment of such Wafers to LLC. Payments from
LLC shall be due [...***...] from the date of HHNEC’s invoice, LLC shall pay the Invoices by wire transfer or check, payable
in U.S. Dollars. LLC shall make any wire transfer payment requested by HHNEC to
the account designated below or as otherwise directed by HHNEC in writing:

 

Name: Shanghai Hua Hong NEC Electronics Co., Ltd.

[...***...]

 

Intermerdiary Bank’s Name & Account No.:

[...***...]

 

ARTICLE 6

 

TERMS OF
DELIVERY, PACKING

 

6.1           The
terms of delivery are FOB Shanghai
Pudong airport as defined in Incoterms 2000.

 

6.2           Wafers
shall be packed in accordance with LLC’s packing instructions in accordance
with Jazz or HHNEC specifications
[NPB PS-0414], and which shall be
mutually agreed by HHNEC and LLC from time to time. Prices for Wafers
include the cost of packing. Each delivery of Wafers to LLC must include a
packing list that contains at least LLC Order number, the quantity of Wafers
shipped; the Process Control Monitor (PCM) data of the shipped Wafers (either
as hard copy or 

 

6

 

location of web-based data); the date of shipment and
the results of any testing performed on the Wafers pursuant to the Wafer
Acceptance Criteria.

 

6.3           HHNEC
shall be responsible for complying with all regulations and paying for all
duties relating to the export from the Peoples Republic of China. LLC shall
have obligation to HHNEC with respect to any regulation or duty relating to the
import of Wafers. HHNEC shall be responsible for meeting all customs
requirements relating to Wafers in the Peoples Republic of China. LLC and HHNEC shall at all times take
necessary steps to expedite all shipments of Wafers through customs.

 

6.4           HHNEC
shall be responsible for meeting all import and export controls relating to
Wafers both in the Peoples Republic of China and the United States of America. LLC
shall provide reasonable assistance in meeting import and export control
requirements. Prices for Wafers include the cost of export control compliance.

 

6.5           LLC will
promptly notify HHNEC concerning any visible damage to Wafers or shipping
containers from shipment. LLC agrees to reasonably assist HHNEC in asserting any claim for such
loss or damage against HHNEC’s carrier for the loss or damaged involved.

 

ARTICLE 7

 

DELIVERY
DATES

 

7.1           HHNEC
will make best efforts to schedule the Delivery Dates consistent with HHNEC’s
Lead-time. The Delivery Date shall be specified in LLC’s order. HHNEC shall
deliver Wafers according to such Delivery Dates.

 

7.2           Unless
otherwise notified by HHNEC, all orders will be delivered complete. HHNEC will
give LLC prompt notice if it reasonably expects a delay in a Delivery Date or
if only a portion of the Wafers will be available for delivery to meet a
Delivery Date. For partial shipments, HHNEC will deliver the available Wafers
unless directed by LLC to reschedule a delivery.

 

7.3           If
HHNEC cannot deliver the Wafers in accordance with the Delivery Dates due to HHNEC’s fault, then HHNEC
shall, as soon as HHNEC becomes aware of the delay, inform LLC thereof and
HHNEC shall propose a new date for delivery (the “New
Date”‘) using HHNEC
commercially reasonable best effort to expedite the delivery and mitigate any
delay caused by such default. In the event the New Date is unacceptable
to LLC, LLC shall none the less grant
HHNEC [...***...] of grace period. In the event HHNEC fail to deliver the Wafers within
such grace period, HHNEC acknowledges that there will be reasonable charge
based on the delay period:

 

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

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

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

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

 

7.4           HHNEC
shall provide WIP data to LLC via electronic file extracts from its shop floor
manufacturing system.

 

7.5           HHNEC
and LLC will collaborate and establish cycle time and delivery performance
metrics.

 

7

 

7.6           Within
[...***...]
after the mass production starts,
HHNEC shall prepare and submit to LLC a plan to reduce Leadtime. HHNEC shall
review the Leadtime improvement plan in each quarterly business review meeting to reasonably reduce cycle time of manufacturing.

 

7.7           HHNEC
shall notify LLC in writing at least [...***...] in advance of end of life on any
product or process technology to allow LLC to meet LLC’s requirement for such continuously loading product.

 

ARTICLE 8

 

INSPECTIONS,
QUALITY REQUIREMENTS AND ACCEPTANCE

 

8.1           Wafers
furnished hereunder shall be inspected and/or tested by HHNEC prior to shipment
for conformance with the Wafer Acceptance Criteria. No Wafers shall be shipped
by HHNEC that fail to meet the Wafer Acceptance Criteria.

 

8.2           LLC,
at its option, may inspect and/or test Wafers after receipt for conformance
with the Wafer Acceptance Criteria.

 

8.3           LLC
shall accept or reject the Wafers in each shipment within [...***...] of
its receipt of Wafers.

 

8.4           HHNEC
shall be responsible for meeting LLC quality specification and any extended
requirements as may be mutually agreed between the parties.

 

8.5           HHNEC
shall establish internal quality and reliability requirements to meet or exceed
LLC’s quality and reliability specification.

 

8.6           HHNEC
shall maintain process monitor data for each device for [...***...].

 

8.7           HHNEC
shall demonstrate to LLC that there is a traceability system defining unique
lot and wafer number markings on each wafer. HHNEC must maintain the
traceability records for [...***...].

 

ARTICLE 9

 

WAFER
WARRANTY AND RETURNS

 

9.1           HHNEC
warrants that all Wafers furnished under this Agreement will be free from
defects in material and workmanship and in conformity with the Wafer Acceptance
Criteria. Prior to shipment to LLC, in the event that HHNEC discovers that any
of the Wafers do not meet any one of the Wafer Acceptance Criteria, HHNEC shall
as soon as reasonably possible effect the rectification or replacement of the
Wafers. Following the delivery to LLC, HHNEC will, at LLC’s option, credit or
replace any Wafers that, in LLC’s discretion, do not conform to this warranty,
provided HHNEC is notified of the nonconforming Wafers within thirty (30) days
after LLC becomes aware of the nonconformity. HHNEC shall credit amounts paid
by LLC for any Wafers that do not conform to this warranty against the account
of LLC. All returns shall be shipped Ex Works, at LLC’s or its designee’s
business address.

 

8

 

9.2           Shipping
and insurance charges for any Wafers returned by LLC to HHNEC due to HHNEC’s fault shall be at HHNEC’s expense.

 

9.3           The
warranty provided herewith shall be void in the event (a) the Wafers fail,
malfunction or are damaged as a result of improper handling, storage,
processing, test, or packaging by LLC or (b) the Wafers are altered or damaged
by LLC.

 

ARTICLE
10

 

REPRESENTATIONS
AND WARRANTIES

 

10.1         HHNEC
represents and warrants to LLC as follows:

 

(a)           HHNEC
has the full right, power and authority to enter into and perform its
obligations under this Agreement and this Agreement constitutes a legal, valid
and binding obligation of HHNEC, enforceable against HHNEC in accordance with
its terms.

 

(b)           The
execution, delivery and performance of this Agreement by HHNEC will not result
in the breach of any terms of, or constitute a default under, or conflict with
any obligation of HHNEC.

 

(c)           In the performance and delivery of wafers to
the LLC or Jazz hereunder, the execution, delivery and performance of
this Agreement by HHNEC will not violate any applicable law, rule, statute or
regulation.

 

(d)            HHNEC’s
use of Processes in the manufacture, offer of sale, sale and or importation
into the United States of America of Wafers does not knowingly infringe upon or
violate any patent, copyright, trade secret or other intellectual property or
industrial rights of a third party,  this
warrantee does not extend to and is expressly disclaimed for Processes and
Intellectual Property Rights that have been contributed, or licensed to HHNEC
by the LLC or Jazz.

 

(e)           HHNEC will retain sufficient capacity at
HHNEC’s Facility to meet its obligations to manufacture Wafers under this Agreement.

 

(f)            HHNEC will not, nor will any entity or
employee or agent of HHNEC, make unauthorized use of Jazz Technology.

 

10.2         LLC
represents and warrants to HHNEC as follows:

 

(a)           LLC
has the full right, power and authority to enter into and perform its
obligations under this Agreement and this Agreement constitutes a legal, valid
and binding obligation of LLC, enforceable against LLC in accordance with its
terms.

 

(b)           The
execution, delivery and performance of this Agreement by LLC will not result in
the breach of any terms of, or constitute a default under, or conflict with any
obligation of LLC.

 

(c)           The
execution, delivery and performance of this Agreement by LLC will not violate
any applicable law, rule, statute or regulation.

 

9

 

(d)           To
LLC’s knowledge, it has the right to use and to license others to use the Jazz Advanced Technology so as to
manufacture Wafers or to have Wafers manufactured by others on behalf of LLC in
accordance with the Process.

 

(e)           LLC
will order sufficient production volume at HHNEC’s Facility to meet its
obligations to load Wafers under this agreement.

 

10.3         EXCEPT AS PROVIDED IN THIS AGREEMENT, THERE ARE NO EXPRESS WARRANTIES,
REPRESENTATIONS, UNDERTAKINGS, OR CONDITIONS (STATUTORY OR OTHERWISE) BY EITHER
PARTY, AND THERE ARE NO IMPLIED WARRANTIES, REPRESENTATIONS, UNDERTAKINGS, OR
CONDITIONS (STATUTORY OR OTHERWISE) BY EITHER PARTY, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY, USAGE OF TRADE, PAST PRACTICES, FITNESS FOR A
PARTICULAR PURPOSE, TITLE IN THIS AGREEMENT.

 

ARTICLE
11

 

INDEMNIFICATION,
LIMITATION OF LIABILITY

 

11.1         Each party shall defend, indemnify
and hold harmless the other party
from any costs, loss, damage and liability, except indirect and consequential
damages, which may be incurred by non-breaching
party on account of (a) any breach by breaching party of this Agreement, including any inaccuracy or
breach of any representation or warranty of each party contained herein, or (b) the manufacture of the
Wafers, including, without limitation any claims for injury, death or property
damage related to any alleged defect in any Wafers or the failure of any Wafers
to conform to Wafer Acceptance Criteria.

 

Subject to
Section 11-3 (Limitation of Liability), Jazz hereby agrees to defend, at Jazz ‘s
expense, and indemnify HHNEC against damages finally awarded by a court of
proper jurisdiction in any intellectual property infringement lawsuit brought
by any third party against the products manufactured by HHNEC using the Jazz
Process Technology to the extent that such products are sold to the LLC or Jazz
and only to the extent that such infringement action is based solely on using
Jazz’s Process.

 

Jazz has no obligation under this section, unless Jazz is
promptly notified of claims, suits and actions by such third party, given all known evidence in the HHNEC 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,
Jazz may, at its option: (i) obtain a license for the HHNEC to continue the use
of the Jazz’s Process, or (ii) replace or modify the Jazz’ Process so as to be
commercially substantially equal but non-infringing. Party C shall have no
liability for any costs, loss or damages resulting from, and the HHNEC agrees
to defend and indemnify the LLC and or Jazz for: (i) the use of the Jazz’s
Process in combination with any other process not supplied by Jazz,  (ii) the use of the Jazz’s Process in a
manner for which it was expressly restricted, (iii) the willful misconduct of
HHNEC, or (iv) any settlement or compromise incurred or made by the HHNEC
without the LLC or Jazz’s prior written consent. THIS ARTICLE 11 STATES JAZZ ‘S ENTIRE OBLIGATION TO THE JVC WITH RESPECT
TO ANY CLAIM OF INFRINGEMENT.

 

Except
for the claim of infringement stipulated above in this Section 11.1,each party,
at its own expense, shall defend all suits or actions, provided it is promptly notified of such suits
or 

 

10

 

actions, given all evidence
in the other party’s
possession, and given reasonable assistance in and sole control of defense
thereof and all negotiations for its settlement or compromise. Each party shall have no liability to
the other party for any
settlement or compromise incurred or made by the other party without each
party’s prior written consent.

 

11.2         Each
party’s obligation to the other party related to a claim that any portion of
the Process employed by LLC or HHNEC in the manufacture of the Wafers infringes
any United States patent or trade secret rights is set forth in the JVC
Agreement.

 

11.3         NOTWITHSTANDING ANYTHING TO THE CONTRARY ELSEWHERE HEREIN, NEITHER
PARTY SHALL BE LIABLE (WHETHER BASED UPON CONTRACT, TORT, STATUTORY OR
EQUITABLE THEORIES) TO THE OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL,
REMOTE OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOSS OF REVENUE
OR PROFITS) ARISING OUT OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES OR IF SUCH DAMAGES ARE FORESEEABLE.

 

ARTICLE 12

 

CONFIDENTIALITY

 

12.1         In
connection with the transactions contemplated by this Agreement, HHNEC will
obtain or have access to LLC Confidential Information, including but not
limited to Jazz Advanced Technology IP, and design IP of the customers of Jazz
Semiconductor. HHNEC guarantees the absolute protection of Jazz Advanced
Technology, as well as any and all design IP of the customers of Jazz
Semiconductor. LLC Confidential Information may be disclosed by HHNEC only to
those persons within HHNEC who “need to know” such information in order to
perform their responsibilities under this Agreement on behalf of HHNEC. HHNEC
will, and will cause each of its employees to: (a) keep in confidence all LLC
Confidential Information; (b) not use any LLC Confidential Information for any
purpose other than the performance of this Agreement; (c) not disclose any LLC
Confidential Information to any third party without LLC’s prior written
consent; and (d) return all of LLC Confidential Information, regardless of form
and including, without limitation, all copies, analyses, derivations and
compilations of LLC Confidential Information to LLC within thirty (30) days
after the termination of this Agreement for any reason and, therefore, provide
verification by an officer of HHNEC that all Confidential Information has been
returned to LLC.

 

12.2         As
used herein, the term “LLC Confidential
Information” means information about the business, assets or
operations of LLC and Jazz, including but not limited to Jazz Technology,
deemed by Jazz to be of value and not commonly known to others within LLC’s or
Jazz’s industry. LLC Confidential Information will not include information
which HHNEC demonstrates with documentary evidence: (a) was known to the public
at the time of its disclosure, or becomes known to the public after the
disclosure through no action of the receiving party; (b) was in its possession
prior to the time of the disclosure (provided that HHNEC did not receive such
information from a party that was subject to a confidentiality agreement with
Jazz or LLC); or (c) was developed by HHNEC independent of the disclosure by
LLC.

 

12.3         HHNEC
agrees that, because the breach or threatened breach of any of the terms of
this Article 12 by HHNEC will result in immediate and irreparable injury to
LLC, LLC shall be entitled to an injunction restraining HHNEC from any such
breach to the fullest extent allowed by law. Any such right of equitable relief
granted to LLC shall not be deemed to preclude LLC from seeking money damages
or any other remedy from LLC and/or its agents in the event of such a breach.

 

11

 

12.4         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 those persons within HHNEC’s and LLC’s
organizations who “need to know” such information in order to perform their
work responsibilities on behalf of their employer.

 

ARTICLE 13

 

EFFECTIVE DATE, TERM,
TERMINATION

 

13.1         The
Term of this Agreement shall commence on the Effective Date and continue for a
period of five (5) years therefrom (the “Initial Term”),
unless terminated earlier in accordance with Section 13.2. Upon expiration of
the Initial Term, this Agreement will renew automatically for successive
one-year periods unless terminated by either party with 90 days  written notice prior to the
expiration of any such period.

 

13.2         In
addition to the provisions of Section 13.1, and as otherwise set forth in this
Agreement, this Agreement may be terminated by either party (a) after the
Initial Term with 90 days  written notice to the other
party, (b) 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 (other than a failure of LLC
to pay HHNEC for Wafers due to bona fide disputes concerning the acceptance,
delivery or quality of any Wafers produced hereunder), (c) 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, (d) after twelve (12) consecutive months in which LLC does not
place an order for Wafers from HHNEC, (e) upon termination of the Technology
License Agreement between Jazz and LLC, (f) upon termination of the Supply
Agreement between Jazz and LLC, or (g) upon termination of the Limited
Liability Company Agreement of LLC dated as of the date hereof.

 

13.3         Upon
termination of this Agreement for any reason:

 

(a)           HHNEC
shall return Jazz Technology to LLC
(other than the information provided in the Technology License and Transfer
Agreement entered into by the Parties contemporaneously herewith)
pursuant to Section 12.1.

 

(b) HHNEC shall
immediately cease using and remove all Jazz Advanced Technology from the Have Made Licensed Process at HHNEC’s
Facility and certify to LLC in writing that Process is no longer in use.

 

(c)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, HHNEC shall permit LLC
to inspect HHNEC’s Facility to insure compliance with the obligations of this
Agreement.

 

13.4         The
expiration or termination of this Agreement shall not affect the delivery or
payment for Wafers that have been ordered and confirmed prior to such
termination.

 

13.5         The obligations set forth in Articles 5, 9,
10, 11, 12, 13, 15, 16 and 17 shall survive any cancellation or termination of
this Agreement as described in this Article 13.

 

12

 

13.6         Breach;
Remedy: If any party committed a material breach of its obligations under this
Agreement, the non-breaching party shall first give written notice of breach to
the breaching party and request the breaching party to correct the breach
within thirty (30) days from the date of its receipt of the notice unless
expressly provided otherwise in this Agreement, including but not limited to
section 12. In the event that the breaching party failed to correct the breach
within the curing period, the non-breaching party shall then be entitled to
claim damages from the breaching party. The remedies under this Section 7.3
shall be in addition to any other remedies available to the non-breaching
party.

 

ARTICLE 14

 

MARKETING
PLAN

 

14.1         The Parties agree to work further towards a marketing plan

 

ARTICLE 15

 

SETTLEMENT OF DISPUTES
AND APPLICABLE LAW

 

15.1         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
each 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. The third arbitrator shall not be a citizen of
PRC.

 

(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.

 

15.2         All deadlines in this Article may be
extended by mutual agreement.

 

15.3         This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California,
United States of America, without regard for its choice and or conflict of laws
provisions and without regard to the United Nations Convention on Contracts for
the International Sale of Goods and is subject to all other applicable
governmental laws and regulations, including but not limited to applicable
regulations and requirements of any United States regulatory agency concerning
the import of Wafers into the United States of America and the export of Jazz Technology
from the United States of America. This Agreement has been made in the English 

 

13

 

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.

 

15.4         The rights
and obligations of the LLC under this Agreement shall inure to the benefit of
Jazz, its representatives, successors and assigns.

 

ARTICLE
16

 

FORCE
MAJEURE

 

16.1         Neither
LLC nor HHNEC shall be liable in damages for failure to deliver or for delay in
delivery or performance arising out of causes beyond its reasonable control
including, but not limited to, war, acts of God, acts of terrorism, civil
disturbance, fire, flood, earthquake, epidemic, quarantine restrictions,
unusually severe weather, acts or defaults of common carriers, freight
embargoes, strike or other labor trouble, lack of or inability to obtain raw
materials, transportation, labor, fuel or supplies; power outages, governmental
laws, acts, regulations, embargoes, or orders (whether or not such later prove
to be invalid), or any other cause, contingency or circumstance within or
without the United States not subject to such party’s reasonable control (a “Force Majeure Event”). The party
suffering a Force Majeure Event shall promptly notify the other party of such
Force Majeure Event. A party shall be excused from its performance to the
extent caused by such Force Majeure Event; provided that such party (i) gives
notice of the Force Majeure Event to the other party promptly after its
occurrence, (ii) uses its reasonable efforts (including executing any disaster
plan) to overcome, mitigate and remove the cause of the event preventing or
delaying performance, (iii) continues the performance of all its obligations
under this Agreement that are not prevented or delayed and (iv) upon cessation
of the Force Majeure Event, promptly performs or completes performance of the
obligations which were prevented or delayed. In the event HHNEC’s inability to
perform continues for one hundred
twenty (120) days,  or more from notification to LLC of the Force
Majeure Event, LLC shall have the right to terminate its obligations to HHNEC
with no further liability under this Agreement upon prompt written notice. The take or pay obligations of Jazz shall
be suspended upon the date of the Force Majeure until the Force Majeure is
cured, and if cured with 120 days of the first date of the Force Majeure the
Jazz take or pay obligations shall extend to cover the amounts not received
during such suspension.

 

ARTICLE
17

 

ACCOUNTING
AND RECORDS

 

17.1         HHNEC
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
HHNEC’s principal place of business for at least five (5) years (seven (7)
years for process monitor data) after the end of the quarter to which they
pertain, and will be open at all reasonable times for inspection by a
representative of LLC. The representative will be obliged to treat as
confidential all relevant matters. Such inspections shall be at the expense of
LLC, unless a variation or error exceeding [...***...] of the total value for the period of audit,
is discovered in the course of any such inspection, whereupon HHNEC
shall pay all audit fee
relating thereto. HHNEC will promptly 

 

14

 

pay to LLC the full
amount of any underpayment, together with interest thereon at the maximum rate
of interest allowed by law.

 

ARTICLE 18

 

COMPLIANCE WITH
LAWS

 

18.1         In exercising its rights and meeting
its obligations under this license, each party 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. Each Party
further agrees to indemnify and hold the other party
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.

 

ARTICLE 19

 

MISCELLANEOUS

 

19.1         Each party hereto is contracting
independently with the other and there is no agency, employment or other
relationship except as may be expressly set forth herein. Neither party is
authorized nor has the power to obligate or bind the other party by contract,
agreement, warranty, representation or otherwise in any matter whatsoever.

 

19.2         The headings used in this Agreement
are inserted for convenience only and shall not affect the interpretation of
the respective provisions of this Agreement.

 

19.3         HHNEC
shall not assign or subcontract its rights and obligations under this Agreement
without the prior written consent of LLC.

 

19.4         The following persons shall act as
the representatives of the parties regarding notices, performance, extension,
dispute resolution, termination and changes in respect of this Agreement:

 

If to HHNEC:

 

Chairman of Board

Shanghai Hua Hong
NEC Electronics Company, Limited.

No. 1188, Chuan Qiao Road, Pu Dong,

Shanghai, Peoples
Republic of China

 

If to LLC:

 

Mr. Shu Li

Jazz/Hua Hong, LLC

4321 Jamboree Road

Newport Beach, CA
92660

 

If to Jazz:  Jazz
Semiconductor

Address:4321
Jamboree Road, Newport Beach, California, USA 92630

	
  Attention:

  	
  President

  	
   

  
	
  Facsimile:

  	
  1-949-435-8455

  	
   

  

 

15

 

with copies to:

 

Carolyn Follis,
Esq.

Newport Fab, LLC

4321 Jamboree Road

Newport Beach, CA
92660

 

and

 

James B. O’Neal,
Esq.

Rutan & Tucker
LLP

611 Anton
Boulevard, Suite 1400

Costa Mesa,
CA  92626

 

19.5         No failure or delay of either party
in exercising its rights hereunder (including but not limited to the right to
require performance of any provision of this Agreement) shall be deemed to be a
waiver of such rights unless expressly made in writing by the party waiving its
rights.

 

19.6         In the event that any provision of
this Agreement shall be held invalid or unenforceable as contrary to any law,
statute or regulation in that regard, the invalidity or unenforceability of
such provision shall in no way affect the validity of any other provision of
this Agreement, and each and every provision shall be severable from each and
every other.

 

19.7         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.

 

19.8         Neither
party will be deemed the drafter of this Agreement (or its Exhibits), which
Agreement will be deemed to have been jointly prepared by the parties. If this
Agreement is ever construed, whether by a court or by an arbitrator, such court
or arbitrator will not construe this Agreement or any provision hereof against
any party as drafter.

 

19.9         This Agreement embodies the entire
agreement between the parties hereto and supersedes all other prior agreements
between the parties in connection with the sale of goods described herein. This
Agreement cannot be modified or supplemented except in writing and signed by
both parties. 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.

 

19.10       Time is of the essence of this
Agreement, as are the provisions relating to ownership, warranties,
confidential information and payments.

 

19.11       This Agreement may be executed in
counterparts, which together shall constitute one and the same Agreement.

 

19.12       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.

 

16

 

19.13       Upon
the request of Jazz or LLC, this Agreement shall be registered with the
appropriate governmental authorities in the People’s Republic of China.

 

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

 

19.15       Notwithstanding anything to
the contrary set forth herein, LLC’s rights and remedies against HHNEC
hereunder may be enforced by Jazz directly against HHNEC.

 

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

 

[SIGNATURES
FOLLOW ON NEXT PAGE]

 

17

 

IN WITNESS
WHEREOF, the
parties have caused this Agreement to be signed by their duly authorized
representatives.

 

 

	
   

  	
  SHANGHAI HUA HONG NEC ELECTRONICS COMPANY., LIMITED.

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  \s\ K. Shimakura

  
	
   

  	
  Name:  K. Shimakura

  
	
   

  	
  Title:

  
	
   

  	
  JAZZ/HUA HONG, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:  NEWPORT FAB, LLC, its Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    \s\
  Jeff McHenry

  
	
   

  	
  Name:  Jeff McHenry

  
	
   

  	
  Title:    Executive Director of Marketing

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NEWPORT FAB, LLC d/b/a

  JAZZ SEMICONDUCTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    \s\ Shu Li

  
	
   

  	
  Name:  Shu Li

  
	
   

  	
  Title:    CEO

  

 

18

 

EXHIBIT A

 

Wafers

 

All wafer products to be
manufactured by HHNEC including but not limited to the following:

 

 

1.             .18 um
advanced RF CMOS including advanced features such as [...***...].

2.             .25
um/.18 um SiGe BiCMOS

 

19Exhibit 10.38

 

LLC
WAFER SUPPLY
AGREEMENT

 

THIS
AGREEMENT, is made and entered into this 30th day of August, 2003 (“Effective Date”) by and between JAZZ/HUA HONG, LLC, a
limited liability company organized in the State of Delaware (the “LLC”), NEWPORT FAB, LLC, a Delaware limited liability
company d/b/a Jazz Semiconductor (“Jazz”) and SHANGHAI HUA HONG NEC ELECTRONICS
COMPANY, LIMITED, a corporation formed under the laws of the Peoples Republic
of China (“HHNEC”) (hereinafter LLC, Jazz and HHNEC may each be
referred to as a “party” and may be jointly referred to as “parties”).

 

PURPOSES

 

The
LLC has committed to provide JAZZ with semiconductor products utilizing
manufacturing capacity secured through HHNEC’s facility in Shanghai, Peoples
Republic of China. This Agreement provides the terms and conditions for the supply of such products manufactured by HHNEC and supplied from the LLC to JAZZ, including the
use of the information and know-how of Newport Fab LLC d/b/a Jazz Semiconductor
(“Jazz”) in order to meet Jazz’s needs for Wafers and dies, and
for no other purpose.

 

In
consideration of the mutual promises of the parties hereto, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby
agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

In
this Agreement, unless otherwise defined or the context otherwise requires, the
following words and expressions shall have the following meanings:

 

1.1                                 “CMOS” and “BiCMOS”
shall refer to complementary metal oxide semiconductor devices and bipolar
complementary metal oxide semiconductor devices, respectively.

 

1.2                                 “Delivery
Date” shall mean a date for delivery of an agreed upon quantity
of Wafers ordered by Jazz as set forth in any Jazz order.

 

1.3                                 “HHNEC’s
Facility” shall mean HHNEC’s facility located at No. 1188
Chuan Qiao Road, Pu Dong, Shanghai, Peoples Republic of China.

 

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

 

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

 

 

1.5                                 “Lead-time” shall mean the estimated
amount of time required from order placement to delivery as agreed to by the
parties.

 

1.6                                 “Jazz Advanced Technology” shall mean
all proprietary information and know-how, no matter what form, and without
limitation, related to Jazz’s .18um advanced RF CMOS process including but not
limited to advanced features such as [...***...],
and .25um /.18um SiGe BiCMOS process and improvements thereto.

 

1.7                                 “Jazz Technology” shall mean all
proprietary information and know-how obtained by LLC from Jazz and provided to
HHNEC by LLC, no matter what form and including without limitation
information and know-how identified in Confidential Information Transmittal
Report(s) (copies of which shall be provided to LLC), that relate to Jazz’s
process(es) for the manufacture of Wafers, Jazz’s specifications for Wafers,
Jazz’s performance criteria for Wafers and all other matters relating to Wafers
and their manufacture., which has been
provided to HHNEC by Jazz for the specific purpose of manufacturing wafers.

 

1.8                                 “Jazz Patent Rights” shall mean those
patent rights under which LLC is licensed by Jazz during the term of this
Agreement.

 

1.9                                 “General
Licensed Process” shall mean qualified
process for the manufacture of Wafers as communicated by LLC to HHNEC from time
to time during the term of this Agreement, which has been general licensed to HHNEC, as set forth in Technology
Transfer Agreement, to enable HHNEC to do foundry business.

 

a)                                   [...***...] RF CMOS,

b)                                  [...***...] RF CMOS,

c)                                   [...***...] CMOS

d)                                  [...***...] CMOS

 

1.10                          “Process” shall
mean qualified process for the manufacture of Wafers as communicated by LLC to
HHNEC from time to time during the term of this Agreement, which has been general licensed to HHNEC,

 

1.11                           “Have Made Licensed Process”
shall mean qualified process
referenced in section 1.6 above, for the manufacture of Wafers as
communicated by LLC to HHNEC from time to time during the term of this
Agreement to be used by HHNEC for Jazz’s
second source requirements,

 

1.12                           “SiGe” (when used without an indication of performance)
shall refer to silicon germanium semiconductor devices, generally.

 

1.13                           “Term” shall have the meaning
ascribed to it in Article 13.

 

1.14                           “Wafers” shall mean wafers that have
been manufactured or processed according to the Process so as to include or
embody any of the products listed on Exhibit A
attached hereto.

 

1.15                           “Wafer Acceptance Criteria” shall mean those written Wafer
specifications, engineering requirements, performance criteria, etc. provided
by LLC to HHNEC and mutually agreed by LLC and HHNEC, from time to time during the term of
this Agreement.

 

2

 

1.16                           “WIP”
shall mean work in process and includes all wafer and dies not yet delivered to
LLC.

 

Capitalized terms not defined
herein shall have the same meaning ascribed to them in the Limited Liability
Company Agreement of Jazz/Hua Hong NEC, LLC (the “LLC Agreement”), the License
Agreements and the Supply Agreements between Jazz/Hua Hong NEC, LLC and Jazz
Semiconductor.

 

ARTICLE 2

 

PURCHASE OF WAFERS; PURCHASE FORECASTS, ETC.

 

2.1                                 Jazz will purchase from LLC Wafers manufactured by HHNEC
in accordance with the terms of this Agreement.

 

2.2.1                        For the term of this Agreement, Jazz shall
provide to LLC on or before the
[...***...],
a six (6) month rolling forecast setting forth its estimated requirements
by month for Wafers.

 

Solely to allow for the
well balanced loading in HHNEC’s facility(ies), both parties shall review the
next six months loading plan commencing from the first loading, twice per year.
Subject to Section 2.4, The loading  plan shall constitute a binding commitment of Jazz to LLC to buy a minimum 50%
of the loading plan, from Q4 2004 till the end of 2005, and a binding
commitment of LLC to supply the Wafers manufactured by HHNEC in accordance to
loading plan all wafers ordered by Jazz.

 

Commencing January 1,
2006, for each fixed 6 month period during the term of this agreement the LLC
commitment of supply of the Wafers to Jazz shall be based on the average
loading of the prior three months Such loading  plan shall constitute a binding
commitment of Jazz to LLC to buy a minimum 50% of the loading plan and a binding commitment of HHNEC to
manufacture in accordance to loading plan all wafers ordered by Jazz. Jazz may inform LLC
of its requirements for additional loading above the loading plan, and provided
Jazz commits to purchase [...***...] of such additional loading, shall
perform its commercially best effort to supply wafers for LLC to support
such upside demand requests

 

In the event of order cancellation
after wafer starts, following penalty charges apply:

[...***...]

 

2.3                                 Jazz shall place its purchase order
for Wafers with LLC in
accordance with the Lead-time.

 

2.4                                 Jazz agrees, provided the
processes/products are qualified on time, and Jazz customers have approved sourcing
through HHNEC, to order a minimum of [...***...] wafers per month commencing October 1,
2004, and for all of 2005.

 

2.5                                 Except
as expressly stated in this Article, nothing herein shall be construed as an
obligation on the part of Jazz to
purchase any quantity of Wafers from LLC.

 

3

 

ARTICLE 3

 

ORDERS

 

3.1                                 Jazz shall place orders for the
Wafers by mail or by facsimile to the LLC
or in another mutually agreed upon way
by the [...***...] of calendar month for wafers outs in the calendar month [...***...] hence, except for
[...***...] processes which will be placed [...***...] hence. LLC shall, within [...***...] after receipt of such orders, send Jazz an acknowledgement of such orders. [...***...].

 

3.2                                 The
terms of this Agreement shall supersede the terms of any Jazz purchase order and/or LLC’s acknowledgment/acceptance of
such purchase order. Although it is recognized that the parties may, for their
respective convenience, desire to use standardized purchase order forms,  acknowledgment forms and other documents
which may contain terms in addition to or at variance with the terms of
this Agreement, no purchase order or acknowledgement will amend this Agreement
and all purchase order or acknowledgements shall be subject to the terms and conditions
of this Agreement regardless of statements to the contrary contained within the
purchase order or acknowledgment.

 

3.3                                 All
matters designated herein as subject to agreement of the parties must be agreed
upon in a writing signed by authorized representatives of both parties for such
agreement to be effective. All issues that arise during the Term that are not
addressed by the terms herein shall be resolved in accordance with Article 15
below.

 

ARTICLE 4

 

MANUFACTURE OF WAFERS, ETC.

 

4.1                               Jazz hereby agrees that LLC shall outsource
the manufacture of Wafers to HHNEC in accordance with the HHNEC Wafer Supply
Agreement entered into by and between LLC and HHNEC for the purpose of supply
of Wafers by LLC to Jazz.

 

ARTICLE 5

 

PRICES AND PAYMENT

 

5.1                                Prices
for Jazz’s purchases of Wafers,
are provided in Exhibit A, and LLC
guarantees that wafer prices shall be [...***...].

 

5.2                                 Jazz and LLC shall review wafer
pricing annually and adjust pricing downward consistent with market price
decline but in no event more than [...***...] downward adjustment per annum.

 

5.3                                 [...***...].

 

5.4                                 All
prices are stated in U.S. Dollars. All prices include all taxes, export duties,
and other charges imposed by the Peoples Republic of China and any local
governments in the Peoples Republic of China but are exclusive of all federal,
state or local sales, use, excise, or similar taxes imposed by the United
States of America and any local governments within the United States of America.

 

4

 

Any such
tax(es) shall be separately itemized on the LLC’s invoice(s) and paid by Jazz, or, in lieu thereof, Jazz shall furnish LLC a properly executed tax exemption
certificate prior to shipment.

 

5.5                                 The LLC shall invoice Jazz upon HHNEC’s shipment of such
Wafers to LLC. Payments to the LLC shall be due [...***...] from the date of LLC’s invoice, Jazz shall pay
the Invoices by wire transfer or check, payable in U.S. Dollars. Jazz shall make any wire transfer
payment requested by LLC to the
account designated below or as otherwise directed by LLC in writing:

 

Bank Name and Account No.:

 

ARTICLE 6

 

TERMS OF DELIVERY, PACKING

 

6.1                                 The
terms of delivery are FOB Shanghai
Pudong airport as defined in Incoterms 2000.

 

6.2                                 Wafers
shall be packed in accordance with
Jazz’s packing instructions in accordance with Jazz or LLC specifications [NPB PS-0414],
and which shall be mutually agreed by
LLC and Jazz from time
to time. Prices for Wafers include the cost of packing. Each delivery of Wafers
to Jazz must include a packing
list that contains at least Jazz Order
number, the quantity of Wafers shipped; the Process Control Monitor (PCM) data
of the shipped Wafers (either as hard copy or location of web-based data); the
date of shipment and the results of any testing performed on the Wafers
pursuant to the Wafer Acceptance Criteria.

 

6.3                                 Prices
for Wafers include the cost of export control compliance.

 

6.5                                 Jazz will promptly notify LLC concerning any visible damage to
Wafers or shipping containers from shipment. Jazz agrees to reasonably assist LLC in asserting
any claim for such loss or damage against HHNEC’s carrier for the loss or
damaged involved.

 

ARTICLE 7

 

DELIVERY DATES

 

7.1                                 LLC will make best efforts to schedule the
Delivery Dates consistent with LLC’s
Lead-time. The Delivery Date shall be specified in Jazz’s order. The LLC shall deliver Wafers according to such
Delivery Dates.

 

7.2                                 Unless
otherwise notified by Jazz, all
orders will be delivered complete. LLC
will give Jazz prompt
notice if it reasonably expects a delay in a Delivery Date or if only a portion
of the Wafers will be available for delivery to meet a Delivery Date. For
partial shipments, LLC will
deliver the available Wafers unless directed by Jazz to reschedule a delivery.

 

7.3                                 If
LLC cannot deliver the Wafers
in accordance with the Delivery Dates
due to LLC’s fault, then LLC shall,
as soon as LLC becomes aware of
the delay, inform Jazz
thereof and LLC shall propose a
new date for delivery (the “New Date”‘) using LLC commercially reasonable best
effort to expedite the delivery and mitigate any delay caused by such default. In
the event the New Date is unacceptable to Jazz, Jazz shall none the less grant LLC [...***...] of grace period. In the event LLC fail to
deliver the Wafers within such grace period, LLC acknowledges that there will
be reasonable charge based on the delay period:

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

 

5

 

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

 

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

 

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

 

7.4                                 LLC shall provide WIP data to Jazz via electronic file extracts

 

7.5                                 Jazz and LLC will collaborate and
establish cycle time and delivery performance metrics.

 

7.6                                 Within
[...***...]
after the mass production of HHNEC
starts, LLC shall
prepare and submit to Jazz a
plan to reduce Leadtime. LLC shall
review the Leadtime improvement plan in each quarterly business review meeting to reasonably reduce cycle time of manufacturing.

 

7.7                                 LLC shall notify Jazz in writing at least [...***...] in
advance of end of life on any product or process technology to allow Jazz to meet Jazz’s requirement for such continuously loading product.

 

ARTICLE 8

 

INSPECTIONS, QUALITY REQUIREMENTS AND ACCEPTANCE

 

8.1                                 Wafers
furnished hereunder shall be inspected and/or tested by LLC prior to shipment for conformance with the Wafer Acceptance
Criteria. No Wafers shall be supplied
by LLC that fail to meet the
Wafer Acceptance Criteria.

 

8.2                                 Jazz, at its option, may inspect
and/or test Wafers after receipt for conformance with the Wafer Acceptance
Criteria.

 

8.3                                 Jazz shall accept or reject the
Wafers in each shipment within [...***...] of its receipt of Wafers.

 

8.4                                 LLC shall be responsible for meeting Jazz quality specification and any
extended requirements as may be mutually agreed between the parties.

 

8.5                                 LLC shall establish internal quality
and reliability requirements to meet or exceed Jazz’s quality and reliability specification.

 

8.6                                 LLC shall maintain process monitor
data for each device for [...***...].

 

8.7                                 LLC shall demonstrate to Jazz that there is a traceability
system defining unique lot and wafer number markings on each wafer. LLC must maintain the traceability
records for [...***...].

 

ARTICLE 9

 

WAFER WARRANTY AND RETURNS

 

9.1                                 LLC warrants that all Wafers
furnished under this Agreement will be free from defects in material and
workmanship and in conformity with the Wafer Acceptance Criteria. Prior to
shipment to Jazz, in the event
that LLC discovers that any of
the Wafers do not meet any one of the Wafer

 

6

 

Acceptance
Criteria, LLC
shall as soon as reasonably possible effect the rectification or replacement of
the Wafers. Following the delivery to Jazz,
LLC will, at Jazz’s option, credit or replace any
Wafers that, in Jazz’s
discretion, do not conform to this warranty, provided LLC is notified of the nonconforming
Wafers within thirty (30) days after Jazz
becomes aware of the nonconformity. LLC
shall credit amounts paid by Jazz
for any Wafers that do not conform to this warranty against the account of Jazz. All returns shall be shipped
Ex Works, at Jazz’s or its
designee’s business address.

 

9.2                                 Shipping
and insurance charges for any Wafers returned by Jazz to LLC due to LLC’s
fault shall be at LLC’s
expense.

 

9.3                                 The
warranty provided herewith shall be void in the event (a) the Wafers fail,
malfunction or are damaged as a result of improper handling, storage,
processing, test, or packaging by Jazzor
(b) the Wafers are altered or damaged by Jazz.

 

ARTICLE 10

 

REPRESENTATIONS AND WARRANTIES

 

10.1                           LLC represents and warrants to Jazz as follows:

 

(a)                                  LLC
has the full right, power and authority to enter into and perform its
obligations under this Agreement and this Agreement constitutes a legal, valid
and binding obligation of LLC, enforceable against LLC in accordance with its
terms.

 

(b)                                 The
execution, delivery and performance of this Agreement by LLC will not result in
the breach of any terms of, or constitute a default under, or conflict with any
obligation of LLC.

 

(c)                                  In the performance and delivery of wafers to
Jazz hereunder, the execution, delivery and performance of this
Agreement by LLC will not violate any applicable law, rule, statute or
regulation.

 

(d)                                    LLC’s use of Processes in the manufacture,
offer of sale, sale and or importation into the United States of America of
Wafers does not knowingly infringe upon or violate any patent, copyright, trade
secret or other intellectual property or industrial rights of a third
party,  this warrantee does not extend to
and is expressly disclaimed for Processes and Intellectual Property Rights that
have been contributed, or licensed to LLC by Jazz.

 

(e)                                  LLC
will not, nor will any entity or employee or agent of LLC, make unauthorized
use of Jazz Technology.

 

10.2                           Jazz represents and warrants to LLC as follows:

 

(a)                                  JAZZ
has the full right, power and authority to enter into and perform its
obligations under this Agreement and this Agreement constitutes a legal, valid
and binding obligation of JAZZ, enforceable against JAZZ in accordance with its
terms.

 

7

 

(b)                                 The
execution, delivery and performance of this Agreement by JAZZ will not result
in the breach of any terms of, or constitute a default under, or conflict with
any obligation of JAZZ.

 

(c)                                  The
execution, delivery and performance of this Agreement by JAZZ will not violate
any applicable law, rule, statute or regulation.

 

(d)                                 To
JAZZ’s knowledge, it has the right to use and to license others to use the Jazz
Advanced Technology so as to
manufacture Wafers or to have Wafers manufactured by others on behalf of JAZZ
in accordance with the Process.

 

(e)                                  JAZZ will order sufficient production volume
to meet its obligations to load Wafers under this agreement.

 

10.3                           EXCEPT AS PROVIDED IN THIS AGREEMENT, THERE ARE NO EXPRESS WARRANTIES,
REPRESENTATIONS, UNDERTAKINGS, OR CONDITIONS (STATUTORY OR OTHERWISE) BY EITHER
PARTY, AND THERE ARE NO IMPLIED WARRANTIES, REPRESENTATIONS, UNDERTAKINGS, OR
CONDITIONS (STATUTORY OR OTHERWISE) BY EITHER PARTY, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY, USAGE OF TRADE, PAST PRACTICES, FITNESS FOR A
PARTICULAR PURPOSE, TITLE IN THIS AGREEMENT.

 

ARTICLE 11

 

INDEMNIFICATION, LIMITATION OF LIABILITY

 

11.1                      Each party shall defend, indemnify
and hold harmless the other party
from any costs, loss, damage and liability, except indirect and consequential
damages, which may be incurred by non-breaching
party on account of (a) any breach by breaching party of this Agreement, including any inaccuracy or
breach of any representation or warranty of each party contained herein, or (b) the manufacture of the
Wafers, including, without limitation any claims for injury, death or property
damage related to any alleged defect in any Wafers or the failure of any Wafers
to conform to Wafer Acceptance Criteria.

 

Subject to Section 11-3 (Limitation of Liability), Jazz
hereby agrees to defend, at Jazz ‘s expense, and indemnify the LLC against damages finally awarded by a court of proper
jurisdiction in any intellectual property infringement lawsuit brought by any
third party against the products supplied
by LLC and manufactured
by the HHNEC using the Jazz Process Technology to the extent that such products
are sold to Jazz and only to the extent that such infringement action is based
solely on using Jazz’s Process.

 

Jazz has no obligation under this
section, unless Jazz is promptly notified of claims, suits and actions by such
third party, given all known
evidence in the
HHNEC 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, Jazz may, at its option: (i) obtain
a license for the HHNEC to continue the use of the Jazz’s Process, or (ii) replace
or modify the Jazz’ Process so as to be commercially substantially equal but
non-infringing. Party C shall have no liability for any costs, loss or damages
resulting from, and the HHNEC agrees to defend and indemnify the LLC and or
Jazz for: (i) the use of the Jazz’s Process in combination with any other
process not supplied by Jazz,  (ii) the
use of the Jazz’s Process in a manner for which it was expressly restricted, (iii) the
willful misconduct of HHNEC, or (iv) any settlement or

 

8

 

compromise incurred or made by the
HHNEC without the LLC or Jazz’s prior written consent. THIS ARTICLE 11 STATES JAZZ ‘S ENTIRE OBLIGATION TO THE JVC WITH RESPECT
TO ANY CLAIM OF INFRINGEMENT.

 

Except for the claim of infringement stipulated
above in this Section 11.1,each party, at its own expense, shall
defend all suits or actions, provided it is promptly notified of such suits or actions, given all
evidence in the other party’s
possession, and given reasonable assistance in and sole control of defense
thereof and all negotiations for its settlement or compromise. Each party shall have no liability to
the other party for any
settlement or compromise incurred or made by the other party without each
party’s prior written consent.

 

11.2                           Each
party’s obligation to the other party related to a claim that any portion of
the Process employed by LLC in the manufacture of the Wafers infringes any
United States patent or trade secret rights is set forth in the JVC Agreement.

 

11.3                           NOTWITHSTANDING ANYTHING TO THE CONTRARY ELSEWHERE HEREIN, NEITHER
PARTY SHALL BE LIABLE (WHETHER BASED UPON CONTRACT, TORT, STATUTORY OR
EQUITABLE THEORIES) TO THE OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL,
REMOTE OR CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOSS OF REVENUE
OR PROFITS) ARISING OUT OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES OR IF SUCH DAMAGES ARE FORESEEABLE.

 

ARTICLE 12

 

CONFIDENTIALITY

 

12.1                           In
connection with the transactions contemplated by this Agreement, LLC will obtain or have access to Jazz Confidential Information,
including but not limited to Jazz Advanced Technology IP, and design IP of the
customers of Jazz Semiconductor. LLC guarantees
the absolute protection of Jazz Advanced Technology, as well as any and all
design IP of the customers of Jazz Semiconductor. Jazz Confidential Information may be disclosed by LLC only to those persons within LLC who “need to know” such
information in order to perform their responsibilities under this
Agreement on behalf of LLC. LLC will, and will cause each of its
employees to: (a) keep in 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
LLC Confidential Information to any third party without Jazz’s prior written consent; and (d) return all of Jazz Confidential Information,
regardless of form and including, without limitation, all copies,
analyses, derivations and compilations of Jazz Confidential Information to Jazz within [...***...] after the termination of this Agreement for any reason
and, therefore, provide verification by an officer of LLC that all Confidential Information has been returned to LLC.

 

12.2                           As
used herein, the term “Jazz Confidential Information” means information about
the business, assets or operations of LLC and Jazz, including but not limited
to Jazz Technology, deemed by Jazz to be of value and not commonly known to
others within LLC’s or Jazz’s industry. LLC Confidential Information will not
include information which LLC demonstrates
with documentary evidence: (a) was known to the public at the time of its
disclosure, or becomes known to the public after the disclosure through no
action of the receiving party; (b) was in its possession prior to the time
of the disclosure (provided that LLC did
not receive such information from a party that was subject to a confidentiality
agreement with Jazz); or (c) was developed by LLC independent of the disclosure by Jazz.

 

9

 

12.3                           LLC agrees that, because the breach
or threatened breach of any of the terms of this Article 12 by LLC will
result in immediate and irreparable injury to Jazz, Jazz shall
be entitled to an injunction restraining LLC from any such breach to the fullest extent allowed by law. Any
such right of equitable relief granted to Jazz shall not be deemed to preclude Jazz from seeking money damages or any other remedy from LLC and/or its agents in the event of
such a breach.

 

12.4                           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 those persons within LLC’s and Jazz’s organizations who “need to know” such information in order
to perform their work responsibilities on behalf of their employer.

 

ARTICLE 13

 

EFFECTIVE DATE,
TERM, TERMINATION

 

13.1                           The
Term of this Agreement shall commence on the Effective Date and continue for a
period of five (5) years therefrom (the “Initial
Term”), unless terminated earlier in accordance with Section 13.2.
Upon expiration of the Initial Term, this Agreement will renew automatically
for successive one-year periods unless terminated by either party with 90 days  written notice prior to the
expiration of any such period.

 

13.2                           In
addition to the provisions of Section 13.1, and as otherwise set forth in
this Agreement, this Agreement may be terminated by either party (a) after
the Initial Term with 90 days  written notice to the other
party, (b) 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 (other than a
failure of Jazz to pay LLC for Wafers due to bona fide
disputes concerning the acceptance, delivery or quality of any Wafers produced
hereunder), (c) 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, (d) after twelve
(12) consecutive months in which Jazz does
not place an order for Wafers from LLC,
(e) upon termination of the Technology License Agreement between Jazz and
LLC, or (g) upon termination of the Limited Liability Company Agreement of
LLC dated as of the date hereof.

 

13.3                           Upon
termination of this Agreement for any reason:

 

(a) HHNEC shall return Jazz Technology
to LLC (other than the
information provided in the Technology License and Transfer Agreement entered
into by the Parties contemporaneously herewith) pursuant to Section 12.1.

 

(b) HHNEC
shall immediately cease using and remove all Jazz Advanced Technology from the Have Made Licensed Process at HHNEC’s
Facility and certify to LLC in writing that Process is no longer in use.

 

(c) 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, HHNEC shall permit LLC to inspect HHNEC’s Facility to insure compliance
with the obligations of this Agreement.

 

10

 

13.4                           The
expiration or termination of this Agreement shall not affect the delivery or
payment for Wafers that have been ordered and confirmed prior to such
termination.

 

13.5                          The
obligations set forth in Articles 5, 9, 10, 11, 12, 13, 15, 16 and 17 shall
survive any cancellation or termination of this Agreement as described in this Article 13.

 

13.6                          Breach; Remedy: If any party committed a
material breach of its obligations under this Agreement, the non-breaching
party shall first give written notice of breach to the breaching party and
request the breaching party to correct the breach within thirty (30) days from
the date of its receipt of the notice unless expressly provided otherwise in
this Agreement, including but not limited to section 12. In the event that
the breaching party failed to correct the breach within the curing period, the
non-breaching party shall then be entitled to claim damages from the breaching
party. The remedies under this Section 7.3 shall be in addition to any
other remedies available to the non-breaching party.

 

ARTICLE 14

 

MARKETING PLAN

 

14.1                           The Parties agree to work further towards a
marketing plan

 

ARTICLE 15

 

SETTLEMENT OF
DISPUTES AND APPLICABLE LAW

 

15.1                           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 each 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. The third arbitrator shall not be a citizen of
PRC.

 

(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.

 

15.2                           All deadlines in this Article may be
extended by mutual agreement.

 

11

 

15.3                           This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California,
United States of America, without regard for its choice and or conflict of laws
provisions and without regard to the United Nations Convention on Contracts for
the International Sale of Goods and is subject to all other applicable
governmental laws and regulations, including but not limited to applicable
regulations and requirements of any United States regulatory agency concerning
the import of Wafers into the United States of America and the export of Jazz Technology
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.

 

ARTICLE 16

 

FORCE MAJEURE

 

16.1                           Neither
LLC nor Jazz shall be liable in
damages for failure to deliver or for delay in delivery or performance arising
out of causes beyond its reasonable control including, but not limited to, war,
acts of God, acts of terrorism, civil disturbance, fire, flood, earthquake,
epidemic, quarantine restrictions, unusually severe weather, acts or defaults
of common carriers, freight embargoes, strike or other labor trouble, lack of
or inability to obtain raw materials, transportation, labor, fuel or supplies;
power outages, governmental laws, acts, regulations, embargoes, or orders
(whether or not such later prove to be invalid), or any other cause, contingency
or circumstance within or without the United States not subject to such party’s
reasonable control (a “Force Majeure Event”).
The party suffering a Force Majeure Event shall promptly notify the other party
of such Force Majeure Event. A party shall be excused from its performance to
the extent caused by such Force Majeure Event; provided that such party (i) gives
notice of the Force Majeure Event to the other party promptly after its
occurrence, (ii) uses its reasonable efforts (including executing any
disaster plan) to overcome, mitigate and remove the cause of the event
preventing or delaying performance, (iii) continues the performance of all
its obligations under this Agreement that are not prevented or delayed and (iv) upon
cessation of the Force Majeure Event, promptly performs or completes
performance of the obligations which were prevented or delayed. In the event LLC’s inability to perform continues
for one hundred twenty (120) days,  or more from
notification to Jazz of the
Force Majeure Event, Jazz shall
have the right to terminate its obligations to LLC with no further liability under this Agreement upon prompt
written notice. The take or pay
obligations of Jazz shall be suspended upon the date of the Force Majeure until
the Force Majeure is cured, and if cured with 120 days of the first date of the
Force Majeure the Jazz take or pay obligations shall extend to cover the
amounts not received during such suspension.

 

ARTICLE 17

 

ACCOUNTING AND RECORDS

 

17.1                           LLC 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 LLC’s principal place of business for at least five (5) years
(seven (7) years for process monitor data) after the end of the quarter to
which they

 

12

 

pertain,
and will be open at all reasonable times for inspection by a representative of Jazz. The representative will be
obliged to treat as confidential all relevant matters. Such inspections shall
be at the expense of Jazz,
unless a variation or error exceeding [...***...] of the total value for the period of audit,
is discovered in the course of any such inspection, whereupon LLC shall pay all audit fee relating thereto. LLC will promptly pay to Jazz the full amount of any
underpayment, together with interest thereon at the maximum rate of interest
allowed by law.

 

ARTICLE 18

 

COMPLIANCE WITH LAWS

 

18.1                          In exercising its rights and meeting
its obligations under this license, each party 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. Each
Party further agrees to indemnify and hold the other party
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.

 

ARTICLE 19

 

MISCELLANEOUS

 

19.1                           Each party hereto is contracting
independently with the other and there is no agency, employment or other
relationship except as may be expressly set forth herein. Neither party is
authorized nor has the power to obligate or bind the other party by contract,
agreement, warranty, representation or otherwise in any matter whatsoever.

 

19.2                           The headings used in this Agreement
are inserted for convenience only and shall not affect the interpretation of
the respective provisions of this Agreement.

 

19.3                           LLC shall not assign or subcontract
its rights and obligations under this Agreement without the prior written
consent of Jazz.

 

19.4                           The following persons shall act as
the representatives of the parties regarding notices, performance, extension,
dispute resolution, termination and changes in respect of this Agreement:

 

If to HHNEC:

 

Chairman of Board

Shanghai Hua Hong NEC Electronics Company, Limited.

No. 1188, Chuan Qiao
Road, Pu Dong,

Shanghai, Peoples Republic of China

 

	
  If
  to Jazz:  Jazz Semiconductor

  
	
  Address:4321
  Jamboree Road, Newport Beach, California, USA 92630

  
	
  Attention:

  	
  President

  	
   

  
	
  Facsimile:

  	
  1-949-435-8455

  	
   

  

 

13

 

If to LLC:

Mr. Shu Li

Jazz/Hua Hong, LLC

4321 Jamboree Road

Newport Beach, CA 92660

 

with copies to:

 

Carolyn Follis, Esq.

Newport Fab, LLC

4321 Jamboree Road

Newport Beach, CA 92660

 

and

 

James B. O’Neal, Esq.

Rutan & Tucker LLP

611 Anton Boulevard, Suite 1400

Costa Mesa, CA 92626

 

19.5                           No failure or delay of either party
in exercising its rights hereunder (including but not limited to the right to
require performance of any provision of this Agreement) shall be deemed to be a
waiver of such rights unless expressly made in writing by the party waiving its
rights.

 

19.6                           In the event that any provision of
this Agreement shall be held invalid or unenforceable as contrary to any law,
statute or regulation in that regard, the invalidity or unenforceability of
such provision shall in no way affect the validity of any other provision of
this Agreement, and each and every provision shall be severable from each and
every other.

 

19.7                           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.

 

19.8                           Neither
party will be deemed the drafter of this Agreement (or its Exhibits), which
Agreement will be deemed to have been jointly prepared by the parties. If this
Agreement is ever construed, whether by a court or by an arbitrator, such court
or arbitrator will not construe this Agreement or any provision hereof against
any party as drafter.

 

19.9                           This Agreement embodies the entire
agreement between the parties hereto and supersedes all other prior agreements
between the parties in connection with the sale of goods described herein. This
Agreement cannot be modified or supplemented except in writing and signed by
both parties. 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.

 

19.10                     Time is of the essence of this
Agreement, as are the provisions relating to ownership, warranties,
confidential information and payments.

 

19.11                     This Agreement may be executed
in counterparts, which together shall constitute one and the same Agreement.

 

14

 

19.12                     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.

 

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

 

19.15                     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.

 

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

 

[SIGNATURES FOLLOW ON NEXT PAGE]

 

15

 

IN WITNESS
WHEREOF, the
parties have caused this Agreement to be signed by their duly authorized
representatives.

 

 

[CORPORATE SEAL]

 

	
   

  	
  JAZZ/HUA HONG,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  NEWPORT FAB,
  LLC, its Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  \s\ Jeff McHenry

  
	
   

  	
  Name:

  	
  Jeff McHenry

  
	
   

  	
  Title:

  	
  Executive
  Director of Marketing

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEWPORT FAB, LLC
  d/b/a

  
	
   

  	
  JAZZ
  SEMICONDUCTOR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  \s\ Shu Li

  
	
   

  	
  Name:

  	
  Shu Li

  
	
   

  	
  Title:

  	
  President &
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SHANGHAI HUA
  HONG NEC ELECTRONICS COMPANY, LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  \s\ K. Shimakura

  
	
   

  	
  Name:

  	
  K. Shimakura

  
	
   

  	
  Title:

  	
   

  
				

 

16

 

EXHIBIT A

 

Wafers and Wafer Pricing

 

All
wafer products to be manufactured by HHNEC including but not limited to the
following:

 

	
  1.

  	
   

  	
  .18
  um advanced RF CMOS including advanced features such as [***].

  
	
  2.

  	
   

  	
  .25 um/.18 um SiGe Bi CMOS

  

 

17

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