Amendment Number Five to the Amended and Restated Wafer Supply Agreement between Power Integrations International, Ltd. and X-FAB Dresden GmbH & Co. KG, dated December 23, 2009
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT POWER INTEGRATIONS INC. TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDMENT NUMBER FIVE
TO
WAFER SUPPLY AGREEMENT
This Amendment Number Five (the “Amendment”), effective as of December 1, 2009 (the “Amendment Effective Date”), amends the Wafer Supply Agreement effective as of May 23, 2003 (as previously amended) (the “Agreement”), by and between X-FAB Dresden GmbH & Co. KG (successor in interest to ZMD Analog Mixed Signal Services GmbH & CoKG) a German corporation (the “Company”) and Power Integrations International, Ltd. (“PI”) a Cayman Islands corporation having its principal place of business at 4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O. Box 32322, Grand Cayman KY1-1209. Unless specifically designated otherwise, capitalized terms used herein shall have the same meanings given them in the Agreement.
RECITALS
WHEREAS, pursuant to the terms of the Agreement, PI grants to Company licenses of certain of PI’s intellectual property for the sole purpose of PI acquiring from Company the fabrication and supply of wafers of certain power IC products; and
WHEREAS, PI and Company desire to amend the terms of the Agreement; and
WHEREAS, in accordance with Section 18.10 of the Agreement, the Agreement may be amended only by an instrument in writing duly executed by authorized officers of Company and PI.
NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby amend the Agreement as follows:
AGREEMENT
1. | Section 2.3 of the Agreement is deleted in its entirety and replaced with the following: |
PI must order at least the quantity of WAFERS by WAFER TYPE forecasted in all [***] months of the PI MONTHLY FORECAST unless SUPPLIER agrees to any change.
2. | The following Section 2.4 is added to the Agreement: |
The PI MONTHLY FORECAST will be either [***] whole weeks for each forecasted month so as to align with SUPPLIER’s manufacturing calendar. The PI MONTHLY FORECAST will be (a) no less than [***] WAFERS per week during the [***] of calendar year 2010 and no less than [***] WAFERS per week during the [***] of calendar year 2010 (the total annual amount of WAFERS, the “2010 Wafer Commitment”) and (b)
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT POWER INTEGRATIONS INC. TREATS AS PRIVATE OR CONFIDENTIAL.
no more than the FOUNDRY CAPACITY (i.e., the CURRENT FOUNDRY CAPACITY or INCREASED FOUNDRY CAPACITY, as applicable in accordance with Exhibit A).
Notwithstanding the foregoing, to the extent SUPPLIER is unable to fulfill any PO from PI because of quality or any other issues (“Unfulfilled Wafers”), then (a) PI will have no obligation to purchase the Unfulfilled Wafers, and (b) the number of Unfulfilled Wafers will count towards PI’s satisfaction of the 2010 Wafer Commitment (i.e., the 2010 Wafer Commitment will be decreased by the number of Unfulfilled Wafers).
Both parties agree to negotiate in good faith any changes in the terms, for calendar years after 2010, regarding the PI MONTHLY FORECAST and the FOUNDRY CAPACITY, at least [***] months prior to any such changes becoming effective.
3. | Section 13.1 of the Agreement is deleted in its entirety and replaced with the following: |
This Agreement shall continue in full force and effect from the Effective Date until December 31, 2012, unless earlier terminated as provided herein (“Term”).
4. | The Agreement covers PI’s acquisition of wafer fabrication and supply services from SUPPLIER based on [***] inch [***] WAFERS. It is recognized by the parties that the Wafer Supply Agreement amended by this Amendment number five shall not apply to the development and manufacture of [***] inch [***] WAFERS. The parties agree to negotiate in good faith regarding PI’s potential acquisition of additional WAFER fabrication and supply services for [***] inch [***] WAFERS from SUPPLIER under a new and separate Wafer Supply Agreement as early as agreeable but no later than [***] ([***] Wafer Supply Agreement”). If, in the process of negotiating the [***] Wafer Supply Agreement, both parties agree that subordination of or modifications to the Agreement are required, then such subordination or modifications to the Agreement will be negotiated in good faith. |
5. | [***] Machine |
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT POWER INTEGRATIONS INC. TREATS AS PRIVATE OR CONFIDENTIAL.
(a) The difference of (i) the [***] minus (ii) the [***] under this Agreement after the Rebate Milestone Date, times (b) [***] U.S. dollars (U.S. $[***]). For example, but without limitation, if PI has accepted [***] WAFERS between the Rebate Milestone Date and the termination date, then SUPPLIER shall pay PI ([***] – [***]) x ($[***]) = $[***].
If this Agreement expires before SUPPLIER delivers and PI accepts the Rebate Number of Wafers, SUPPLIER will have no obligation to pay PI any funds under this Section 5(k), provided the quantity of WAFERS delivered by SUPPLIER was not materially adversely affected by SUPPLIER’S quality, production, or delivery problems.
6. | Exhibit A to the Agreement is deleted in its entirety and replaced with Exhibit A attached hereto. |
7. | Exhibit B to the Agreement is deleted in its entirety and replaced with Exhibit B attached hereto. Exhibit B attached hereto shall apply to all POs submitted by PI on or after the Amendment Effective Date. |
8. | Effective as of the Amendment Effective Date, all references in the Agreement to the “Agreement” or “this Agreement” shall mean the Agreement as amended by this Amendment. Except as expressly amended herein, the terms of the Agreement continue unchanged and shall remain in full force and effect. This Amendment may be executed in one or more counterparts, each of which shall be considered an original, but all of which counterparts together shall constitute one and the same instrument. |
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives, effective as of the Amendment Effective Date.
X-FAB DRESDEN GMBH & CO. KG | POWER INTEGRATIONS INTERNATIONAL, LTD. |
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By:/s/ Chris Forster Name:Chris Forster Title:Chief Financial Officer | By:/s/ John Tomlin Name:John Tomlin Title:President |
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By:/s/ TH Hariung Name:TH Hariung Title:Vice President, Marketing & Sales | |
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT POWER INTEGRATIONS INC. TREATS AS PRIVATE OR CONFIDENTIAL.
Exhibit A
SUPPLIER FOUNDRY CAPACITY AND PI ANNUAL FORECAST
1.SUPPLIER FOUNDRY CAPACITY
a.The following FOUNDRY CAPACITY of [***] WAFERS per week will be committed effective from [***] through [***] (the “CURRENT FOUNDRY CAPACITY”). The FOUNDRY CAPACITY will change to [***] WAFERS per week effective from [***] onwards. The FOUNDRY CAPACITY will be increased to the INCREASED FOUNDRY CAPACITY (defined below). PI may request and SUPPLIER may approve an increase in the monthly CURRENT FOUNDRY CAPACITY in addition to the limits above via the PI MONTHLY FORECAST. Notwithstanding anything to the contrary in Section 2.1 of the Agreement, in no event will the FOUNDRY CAPACITY exceed the CURRENT FOUNDRY CAPACITY or INCREASED FOUNDRY CAPACITY (as applicable) unless the parties agree otherwise in writing.
b.The parties hereby agree to use commercially reasonable efforts to increase the FOUNDRY CAPACITY up to [***] WAFERS per week or the actual increase in FOUNDRY CAPACITY finally achieved, (the “INCREASED FOUNDRY CAPACITY”) on or before the end of [***], and in any event as early as possible, in accordance with this Section. Such efforts will include purchase, installation, qualification and implementation of a new [***] machine, as well as analysis and elimination of other potential equipment-based limits to FOUNDRY CAPACITY. SUPPLIER will promptly notify PI in writing when the INCREASED FOUNDRY CAPACITY is available.
c.SUPPLIER will take all reasonable measures, including without limitation those described in this Exhibit A, to expand its FOUNDRY CAPACITY to the INCREASED FOUNDRY CAPACITY, BUT SUPPLIER DOES NOT WARRANT, NEITHER IMPLIED NOR EXPRESSLY, THAT SUCH MEASURES WILL BE SUCCESSFUL AND LEAD TO THE INCREASED FOUNDRY CAPACITY.
d.If the parties enter into an [***] Wafer Supply Agreement, the parties will re-negotiate in good faith the FOUNDRY CAPACITY for [***] WAFERS that would be replaced by [***] wafers.
2.PI’s projected PI ANNUAL FORECAST of WAFER orders
The table below summarizes the PI ANNUAL FORECAST for the next three years. Except for the 2010 Wafer Commitment, the PI ANNUAL FORECAST are non-binding estimates. Estimated volume for calendar year 2010 is comprised of the 2010 Wafer Commitment, and some number of WAFERS above the 2010 Wafer Commitment, dependent upon the PI MONTHLY FORECAST and the availability of the INCREASED FOUNDRY CAPACITY.
SUPPLIER (FY) | 2009 | 2010 | 2011 | 2012 |
WAFERS | [***] | [***] (inclusive of [***] 2010 Wafer Commitment) | [***] | [***] |
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT POWER INTEGRATIONS INC. TREATS AS PRIVATE OR CONFIDENTIAL.
Exhibit B
PRICES
[***] Inch DC/DS PROCESS WAFER
Price: [***] layers less than [***]$[***]
[***] - [***]$[***]
[***] - [***]$[***]
[***] - [***]$[***]
[***]$[***]
Pricing [***].
Delivery times:[***] days / layerDC PROCESS
ENGINEERING WAFER
Price:Std. and non-std. run$[***]
Hot run$[***]
Minimum wafer lot size [***] wafers
Delivery times:
Standard run [***]
Hot run [***]
Non-Standard run [***]
MASK TOOLING SET
Price:[***] mask set
([***] masks)
([***] masks)$[***]
Individual masks
[***] mask $[***]
[***] mask $[***]
Vendors:[***]
THE ABOVE PRICES ARE FOR [***]. ALL PRICES ABOVE FOR [***] WILL BE NEGOTIATED IN THE [***] OF THE [***] BEGINNING IN [***] AND PAID IN US DOLLARS. IF THE PARTIES ARE UNABLE TO AGREE ON PRICING FOR [***] PRIOR TO THE [***] OF THE [***], THEN THE PRICING FROM THE [***] WILL APPLY FOR SUCH [***].
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