This Foundry Agreement (the "Agreement") is entered into this 22nd day of November, 2005 (the "Effective Date") by and between Pixel plus Co. Ltd., with offices at 5th Floor, Intellige 1, KINS Tower, 25-1 Jeongja-dong, Bundang-gu, Seongnam-si, Gyeonggi-do 463-811, Korea ("Pixelplus"), on behalf of itself and its wholly-owned subsidiaries Pixel plus Semiconductor, Inc., and Pixel plus Shanghai Co., Limited (collectively, "Buyer"); and United Microelectronics Corporation, an ROC Corporation with a principal place of business at No. 3, Li-Hsin Rd., Science-Based Industrial Park, Hsin-Chu City, Taiwan 30077, ROC ("Seller" or "Manufacturer").
RECITALS
A. WHEREAS, Seller is in the business of furnishing semiconductor wafers manufactured by United Microelectronics Corporation, a corporation organized under the laws of the Republic of China ("Manufacturer");
B. WHEREAS, Buyer desires to have Seller furnish to it semiconductor wafers manufactured by Manufacturer;
C. WHEREAS, Seller, a wholly-owned subsidiary of Manufacturer, guarantees the performance of those of Seller’s obligations hereunder which would logically be performed by Manufacturer;
NOW, THEREFORE, in consideration of the following covenants and conditions the parties agree:
1 DEFINITIONS
1.1 "Acceptance Criteria" shall include without limitation process control monitors on a process-by-process basis, and other wafer acceptance criteria and visual inspection specifications pertaining to a particular Product or process, and each relevant accept/reject criteria, regardless whether such matters are embodied in a Pilot Run Agreement, a Pre Production Agreement, a Mass Production Agreement, or some other form, and shall constitute the definitive authority with respect to determination of whether a particular Product meets the parties’ agreed-upon technical specifications. No Acceptance Criteria shall be binding until in a writing signed by Seller and Buyer which clearly and specifically identifies the Products (by mask or product number) and processes (by Seller’s process designation) involved.
1.2 "Products" shall mean the products to be manufactured pursuant to this Agreement as specified in Quotation (s).
1.3 "Quotation (s)" shall mean the quotations attached hereto as Exhibit A. xx and such further quotations as are signed by Seller and accepted by Buyer. Placing a Purchase Order pursuant to a Quotation shall constitute acceptance of such Quotation and of the pricing and terms therein. Each such Quotation shall describe the Products to be manufactured, prices, fees and charges for the Products. A reference to a Product in a quotation shall be deemed to incorporate by reference the Acceptance Criteria for such referenced Product. Prices shall be separately itemized for mask sets, processed wafers, wafer probe, assembly and final test, to the extent such services are contemplated in connection with the particular Product.
2 PRODUCTION PROCEDURES
2.1 Product Prototype Approval. No Product prototypes shall be manufactured except pursuant to a Quotation. For each Quotation for a new Product agreed upon by the parties, Buyer will deliver a data file on tape or by electronic transmission (e. g., ftp) in GDS II format or, subject to agreement with Seller, a mask set. If Buyer provides its design in the form of a data file, then upon receipt of the data from Buyer, Seller will arrange the logistics of having a mask set produced on Buyer’s behalf with a mask shop of Buyer’s choice, provided such mask shop meets Seller’s qualifications, unless otherwise instructed by Buyer. In either case, Seller will produce one or more pilot wafer runs according to the schedule and at the price set forth in the Quotation. Within ninety (90) days after receipt of pilot run wafers for a new Product, Buyer may return any claimed non-conforming pilot wafers to Seller with a written rejection statement specifying the alleged failure or failures of the pilot wafers to meet the applicable Acceptance Criteria. If Buyer does not return the pilot wafers with a written rejection statement within such ninety (90) day period, then the process and pilot wafers shall be deemed to have been approved by Buyer. If any pilot wafer does not meet the Acceptance Criteria for reasons attributable to Seller and is rejected by Buyer, Seller shall at Seller’s expense use commercially reasonable efforts to rerun the pilot wafers and resubmit the results in a manner that complies with the Acceptance Criteria. If Seller, within ninety (90) days after receipt of Buyer’s timely written rejection report, is unable to supply Buyer with conforming pilot wafers, then either party may by written notice to the other terminate this Agreement as to such Product and Quotation, and if so terminated, Buyer will not owe Seller any amounts for the pilot wafers involved unless (1) otherwise provided in the Quotation, or (2) the noncompliance was attributable to Buyer.
2.2 Engineering Change Notices ("ECNs")
2.2.1 Buyer ECNs. After initial qualification, Buyer shall have the right to make such changes as it deems appropriate to the design of Products to be fabricated for it by Seller, provided however that each such change must be timely documented by Buyer through written change notices. Notwithstanding anything to the contrary, after process qualification runs for a particular design have been made and approved by Seller and Buyer, any Buyer-requested changes to design, process or materials for such Products shall be subject to Seller’s consent (which will not be unreasonably withheld) and payment by Buyer of applicable reasonable costs, if any, related to such change.
2.2.2 Seller ECNs. For changes that Seller desires to make, the following procedure shall apply:
2.2.2.1 Mandatory Changes. Seller may at any time make changes in the processes used to manufacture Products when required for purposes of safety and/or compliance with applicable law or regulations, provided that Seller shall provide prompt written notice of such changes to Buyer.
2.2.2.2 Proposed Changes.
2.2.2.2.1 For changes to processes other than those described under subsection 2.2.2.1 above, including but not limited to process obsolescence, Seller shall follow the procedures, including but not limited to the notification requirements, stated in the then-current revision of the Process Change Notification (PCN) Procedure, Spec. No. GG-Q00-002, and shall issue a Proposed Change Notification if required by such Spec.
2.2.2.2.2 Such Proposed Change Notification shall describe the nature of the proposed change (s), including reasons for the change (s), the anticipated schedule for implementation of the change (s), and other relevant technical and logistic considerations, including without limitation quality and reliability data to the extent available.
2.2.2.2.3 Buyer shall approve or disapprove any such proposed change promptly, but in no event may any such change be disapproved later than ten (10) business days after receipt of the Proposed Change Notification.
2.2.2.2.4 If Buyer disapproves such proposed change within the ten business day period allowed, Seller shall continue to manufacture and deliver to Buyer unchanged Products in accordance with the applicable Agreements for a minimum of six (6) months from the date Seller issues the Proposed Change Notification or until Buyer’s approval is received, whichever comes first. If Buyer’s disapproval results solely from Buyer’s inability to timely assess the effect of the change proposed in the Proposed Change Notification, Buyer shall continue, following issuance of disapproval, to devote reasonable efforts to such assessment, and shall approve the proposed change as soon as Buyer has determined that such change will not adversely affect Products.
2.2.2.2.5 Upon the expiration of three months after the following Proposed Change Notification, if Buyer disapproves the Proposed Change Notification, Seller, in its discretion and by then giving a minimum of three months prior written notice to the Buyer, may stop manufacture and delivery of all Products involved without liability.
2.2.3 Change Verification. In connection with a Seller-initiated change, no additional quality assurance requirements or measurements (whether cv plots, metal step coverage analysis, SEM analysis, or other) will be required except upon Seller’s written agreement as to the step or measurement to be performed, and Buyer’s written commitment to pay Seller’s stated costs.
2.3 Production Runs, Pilot Runs, etc. Exhibit B sets forth additional terms applicable to Engineering/Pilot Runs and Production Runs.
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