Delaware | 3674 | 26-1815025 | ||
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification No.) |
Micheal J. Reagan
Khoa D. Do Peter M. Astiz DLA Piper LLP (US) 2000 University Avenue East Palo Alto, California 94303 Telephone: (650) 833-2000 Fax: (650) 833-2001 |
Kirk A. Davenport
Keith Benson Latham & Watkins LLP 885 Third Avenue New York, NY 10022-4834 Telephone: (212) 906-1200 Fax: (212) 751-4864 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Proposed Maximum
|
Amount of
|
|||||||||
Title of Each Class of
|
Aggregate
|
Registration
|
||||||||
Securities to be Registered | Offering Price(1) | Fee | ||||||||
Common Stock, par value $0.01 per share
|
$ | 250,000,000 | $ | 17,825.00 | ||||||
Depositary Shares(2)
|
||||||||||
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). Includes shares of common stock that the underwriters have an option to purchase. | |
(2) | All of the shares of common stock sold in this offering will be sold in the form of depositary shares. Each depositary share will be issued under a deposit agreement, will represent an interest in a share of common stock and will be evidenced by a depositary receipt. days after the effective date of this registration statement, each holder of depositary shares will be credited with a number of shares of common stock equal to the number of depositary shares held by such holder on that date, and the depositary shares will be canceled. Until such cancellation of the depositary shares, holders of depositary shares will be entitled to all proportional rights and preferences of the shares of common stock. |
The
information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
|
Per
|
||||||||||||
depositary share
|
Total
|
|||||||||||
Initial public offering price
|
$ | $ | ||||||||||
Underwriting discounts and commissions
|
$ | $ | ||||||||||
Proceeds, before expenses to MagnaChip Semiconductor Corporation
|
$ | $ | ||||||||||
Proceeds, before expenses to Selling Stockholders
|
$ | $ |
Goldman, Sachs & Co. | Barclays Capital | Deutsche Bank Securities |
Citi
|
UBS Investment Bank |
Mobile Application Television Application Computer Application |
MagnaChip Everywhere Analog and Mixed Signal Semiconductors and Manufacturing Services for High-Volume Applications |
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16
33
33
34
34
34
35
36
38
46
52
79
94
119
124
125
131
134
135
137
140
144
144
144
F-1
EX-3.1
EX-3.2
EX-3.3
EX-3.4
EX-3.5
EX-4.1
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-10.9
EX-10.10
EX-10.11
EX-10.12
EX-10.13
EX-10.14
EX-10.15
EX-10.16
EX-10.17
EX-10.18
EX-10.19
EX-10.20
EX-10.21
EX-10.22
EX-10.23
EX-10.24
EX-10.25
EX-10.26
EX-10.27
EX-10.28
EX-10.29
EX-10.30
EX-10.31
EX-10.32
EX-10.33
EX-10.34
EX-10.35
EX-10.36
EX-10.37
EX-10.38
EX-10.39
EX-10.40
EX-10.41
EX-10.42
EX-10.43
EX-10.44
EX-10.45
EX-10.46
EX-10.47
EX-10.48
EX-10.49
EX-21.1
EX-23.1
Table of Contents
1
Table of Contents
2
Table of Contents
Broad and advanced analog and mixed-signal semiconductor
technology and intellectual property platform that allows us to
develop new products and meet market demands quickly;
Established relationships and close collaboration with leading
global consumer electronics companies, which enhance our
visibility into new product opportunities, markets and
technology trends;
Longstanding presence of our management, personnel and
manufacturing base in Asia and proximity to our largest
customers and to the core of the global consumer electronics
supply chain, which allows us to respond rapidly and efficiently
to our customers needs;
Flexible, service-oriented culture and approach to customers;
Distinctive analog and mixed-signal process technology and
manufacturing expertise; and
Manufacturing facilities with specialty processes and a low-cost
operating structure, which allow us to maintain price
competitiveness across our product and service offerings.
Leverage our advanced analog and mixed-signal technology
platform to continuously innovate and deliver products with high
levels of performance and integration, as well as to expand our
technology offerings within our target markets, such as our
power management products;
Increase business with our global customer base of leading
consumer electronics original equipment manufacturers, or OEMs,
and fabless companies by collaborating on critical design,
product and manufacturing process development and leveraging our
deep knowledge of customer needs;
Broaden our customer base by expanding our global design centers
and local application engineering support and sales presence,
particularly in China and other high-growth regions;
Aggressively grow our power management product portfolio
business by introducing new products, expanding distribution and
cross-selling products to our existing customers;
Drive execution excellence in new product development,
manufacturing efficiency and quality, customer service and
personnel development; and
Optimize asset utilization and return on capital investments by
maintaining our focus on specialty process technologies that do
not require substantial investment in leading edge
3
Table of Contents
process equipment and by utilizing our manufacturing facilities
for both our display driver and power management businesses and
manufacturing services customers.
Closing our Imaging Solutions business, which had been a source
of substantial ongoing operating losses amounting to
$91.5 million and $51.7 million in 2008 and 2007,
respectively, and which required substantial ongoing capital
investment;
Reducing our indebtedness from $845 million immediately
prior to the effectiveness of our plan of reorganization to
$61.8 million as of December 31, 2009;
Streamlining our cost structure to reduce ongoing fixed and
variable expenses;
Entering into a hedging program to mitigate the impact of
currency fluctuation on our financial results; and
Focusing on major customers, key product lines, growth segments
and areas of competitive differentiation.
We have a history of losses and may not be profitable in the
future;
On June 12, 2009, we filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code and
our plan of reorganization became effective on November 9,
2009;
In connection with our audit for the ten-month period ended
October 25, 2009 and the two-month period ended
December 31, 2009, our auditors identified two control
deficiencies which represent a material weakness in our internal
control over financial reporting; if we fail to effectively
remediate this weakness, the accuracy and timing of our
financial reporting may be adversely affected;
The cyclical nature of the semiconductor industry may limit our
ability to maintain or increase net sales and profit levels
during industry downturns;
If we fail to develop new products and process technologies or
enhance our existing products and services in order to react to
rapid technological change and market demands, our business will
suffer;
4
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A significant portion of our sales comes from a relatively
limited number of customers and the loss of any of such
customers or a significant decrease in sales to any of such
customers would harm our revenue and gross profit;
The average selling prices of our semiconductor products have at
times declined rapidly and will likely do so in the future,
which could harm our revenue and gross profit; and
Upon completion of this offering, our largest stockholder,
consisting of affiliated funds of Avenue Capital Management II,
L.P., will control
approximately %
of our outstanding common stock, assuming no exercise by the
underwriters of their option to purchase additional shares.
5
Table of Contents
shares
in the form of depositary shares
shares
in the form of depositary shares
shares
in the form of depositary shares(1)
shares
in the form of depositary shares(1)
shares
Use of proceeds
We intend to use the net proceeds received by us in connection
with this offering to make employee incentive payments, to fund
working capital and for general corporate purposes. We will not
receive any proceeds from the sale of shares of common stock
offered by the selling stockholders, including upon the sale of
shares if the underwriters exercise their option to purchase
additional shares from the selling stockholder in this offering.
Risk factors
See Risk Factors and the other information included
in this prospectus for a discussion of the factors you should
consider carefully before deciding to invest in shares of our
common stock.
Dividend policy
We do not anticipate paying any cash dividends on our common
stock after this offering.
Depositary shares
All of the shares of common stock sold in this offering will be
sold in the form of depositary shares. Each depositary share
represents an ownership interest in one share of common stock.
On ,
2010 ( days after the date of this
prospectus), each holder of depositary shares will be credited
with a number of shares of common stock equal to the number of
depositary shares held by such holder on that date, and the
depositary shares will be canceled. Until the cancellation of
the depositary shares
on ,
2010, holders of depositary shares will be entitled to all
proportional rights and preferences of the shares of common
stock. This offering has been structured using depositary shares
to enable the selling stockholders to obtain the preferred
income tax treatment for the corporate conversion. For more
information regarding the depositary shares, see
Description of Depositary Shares.
Depositary
American Stock Transfer & Trust Company, LLC
MX
(1)
We have provided the underwriters an option to purchase up
to
additional depositary shares and the selling stockholders have
provided the underwriters an option to purchase up
to
6
Table of Contents
additional depositary shares. If the underwriters exercise their
option to purchase additional shares, we will not receive any of
the proceeds from the additional sale of depositary shares by
the selling stockholders.
reflects the consummation of the corporate conversion, pursuant
to which all of the outstanding common units of MagnaChip
Semiconductor LLC will be automatically converted into shares of
our common stock at a ratio
of
and all of the outstanding options and warrants to purchase
common units of MagnaChip Semiconductor LLC will be
automatically converted into options and warrants to purchase
shares of our common stock;
excludes shares
of our common stock reserved for issuance upon exercise of
warrants to purchase common units of MagnaChip Semiconductor LLC
outstanding as
of
at a weighted average exercise price
of
per share, assuming the conversion of all such warrants into
warrants to purchase shares of our common stock at a ratio
of ;
excludes shares
of our common stock reserved for issuance upon exercise of
options to purchase common units of MagnaChip Semiconductor LLC
outstanding as
of
at a weighted average exercise price
of
per share, assuming the conversion of all such options into
options to purchase shares of our common stock at a ratio
of ; and
excludes shares
of our common stock reserved as
of
for issuance pursuant to future grants under our 2010 Equity
Incentive Plan and 2010 Employee Stock Purchase Plan, which does
not include the additional shares which may become available for
issuance pursuant to the automatic share reserve increase
provisions of such plans described below.
assumes no exercise of the underwriters option to purchase
up
to
additional depositary shares from us and up
to
additional depositary shares from our selling
stockholders; and
assumes an initial public offering price of
$ per depositary share, which is
the midpoint of the range set forth on the front cover of this
prospectus.
7
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9
8
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Historical
Pro Forma(1)
Successor
Predecessor
Two- Month
Ten- Month
Year Ended
Period Ended
Period Ended
Years Ended
December 31,
December 31,
October 25,
December 31,
2009
2009
2009
2008
2007
(In millions, except per common unit/share data)
(Unaudited)
(Audited)
(Audited)
$
560.1
$
111.1
$
449.0
$
601.7
$
709.5
378.9
90.4
311.1
445.3
578.9
181.2
20.7
137.8
156.4
130.7
71.6
14.5
56.3
81.3
82.7
77.3
14.7
56.1
89.5
90.8
0.4
0.4
13.4
12.1
31.9
(8.6
)
25.0
(27.7
)
(54.9
)
9.4
1.3
31.2
76.1
60.3
52.8
9.3
43.4
(210.4
)
(4.7
)
804.6
43.4
8.1
816.8
(286.5
)
(65.0
)
$
75.2
$
(0.5
)
$
841.8
$
(314.3
)
$
(120.0
)
9.2
1.9
7.3
11.6
8.8
$
66.0
$
(2.5
)
$
834.5
$
(325.8
)
$
(128.8
)
0.5
6.6
(91.5
)
(51.7
)
(2.0
)
841.1
(417.3
)
(180.6
)
6.3
13.3
12.0
66.0
(2.5
)
828.2
(339.1
)
(140.9
)
$
(0.01
)
$
15.65
$
(6.43
)
$
(2.69
)
300.863
52.923
52.769
52.297
$
64.9
$
64.9
$
4.0
$
64.3
453.3
453.3
399.2
707.9
61.8
61.8
845.0
830.0
61.5
61.5
143.2
879.4
215.7
215.7
(787.8
)
(477.5
)
98.7
22.1
76.6
59.8
111.2
53.0
13.3
9.3
(71.7
)
(82.6
)
Table of Contents
(1)
Gives effect to the reorganization proceedings and related
events and the corporate conversion. For details regarding these
pro forma adjustments, see the notes to the unaudited pro forma
condensed consolidated financial information in Unaudited
Pro Forma Consolidated Financial Information.
(2)
Total indebtedness is calculated as long and short-term
borrowings, including the current portion of long-term
borrowings.
(3)
Long-term obligations include long-term borrowings, capital
leases and redeemable convertible preferred units.
(4)
We define Adjusted EBITDA as net income (loss) less income
(loss) from discontinued operations, net of taxes, adjusted to
exclude (i) depreciation and amortization associated with
continuing operations, (ii) interest expense, net,
(iii) income tax expense, (iv) restructuring and
impairment charges, (v) other restructuring charges,
(vi) abandoned IPO expenses, (vii) subcontractor claim
settlement, (viii) the increase in cost of sales resulting
from the fresh-start accounting inventory
step-up,
(ix) equity-based compensation expense,
(x) reorganization items, net, and (xi) foreign
currency gain (loss), net. See the footnotes to the table below
for further information regarding these items. In the case of
pro forma Adjusted EBITDA, we exclude the items above from
income (loss) from continuing operations. We present Adjusted
EBITDA as a supplemental measure of our performance because:
Adjusted EBITDA eliminates the impact of a number of items that
may be either one time or recurring that we do not consider to
be indicative of our core ongoing operating performance;
we believe that Adjusted EBITDA is an enterprise level
performance measure commonly reported and widely used by
analysts and investors in our industry;
we anticipate that our investor and analyst presentations after
we are public will include Adjusted EBITDA; and
we believe that Adjusted EBITDA provides investors with a more
consistent measurement of period to period performance of our
core operations, as well as a comparison of our operating
performance to that of other companies in our industry.
for planning purposes, including the preparation of our annual
operating budget;
to evaluate the effectiveness of our enterprise level business
strategies;
in communications with our board of directors concerning our
consolidated financial performance;
in certain of our compensation plans as a performance measure
for determining incentive compensation payments; and
to measure our compliance with certain covenants in our debt
agreements.
10
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(a)
This adjustment is comprised of all items included in the
restructuring and impairment charges line item on our
consolidated statements of operations, and eliminates the impact
of restructuring and impairment charges related to (i) for
2009, termination benefits and other related costs, for the
ten-month period ended October 25, 2009 in connection with
the closure of one of our research and development facilities in
Japan, (ii) for 2008, goodwill impairment triggered by the
significant adverse change in the revenue of our mobile display
solutions, or MDS reporting unit, and a reversal of a portion of
the restructuring accrual related to the closure of our Gumi
five-inch wafer fabrication facilities in 2007, and
(iii) for 2007, the closure of our Gumi five-inch wafer
fabrication facilities. We do not believe these restructuring
and impairment charges are indicative of our core ongoing
operating performance because we do not anticipate similar
facility closures and market driven events in our ongoing
operations, although we cannot guarantee that similar events
will not occur in the future.
(b)
This adjustment relates to certain restructuring charges that
are not included in the restructuring and impairment charges
line item on our consolidated statements of operations. These
items are included in selling, general and administrative
expenses in our consolidated statements of operations. These
charges are comprised of the following: (i) for 2009, a
charge of $13.3 million for restructuring-related
professional fees and related expenses and (ii) for 2008, a
charge of $6.2 million for restructuring-related
professional fees and related expenses. We do not believe these
other restructuring charges are indicative of our core ongoing
operating performance because these charges were related, in
significant part, to actions we took in response to the impacts
on our business resulting from the global
11
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economic recession that persisted through 2008 and 2009. We
cannot guarantee that similar charges will not be incurred in
the future.
(c)
This adjustment eliminates a $3.7 million charge in 2008
related to expenses incurred in connection with our abandoned
initial public offering in 2008. We do not believe that these
charges are indicative of our core operating performance. We
expect to incur similar costs in connection with this offering.
(d)
This adjustment eliminates a $1.3 million charge
attributable to a one-time settlement of claims with a
subcontractor. We no longer obtain services from this
subcontractor and do not expect to incur similar charges in the
future.
(e)
This adjustment eliminates the impact of largely non-cash
reorganization income and expense items directly associated with
our reorganization proceedings from our ongoing operations
including, among others, professional fees, the revaluation of
assets, the effects of the Chapter 11 reorganization plan
and fresh-start accounting principles and the write-off of debt
issuance costs. Included in reorganization items, net for the
period from January 1 to October 25, 2009 was our
predecessors gain recognized from the effects of our
reorganization proceedings. The gain results from the difference
between our predecessors carrying value of remaining
pre-petition liabilities subject to compromise and the amounts
to be distributed pursuant to the reorganization proceedings.
The gain from the effects of the reorganization proceedings and
the application of fresh-start accounting principles is
comprised of the discharge of liabilities subject to compromise,
net of the issuance of new common units and new warrants and the
accrual of amounts to be settled in cash. For details regarding
this adjustment, see note 5 to the consolidated financial
statements of MagnaChip Semiconductor LLC for the ten
months ended October 25, 2009 and the two months ended
December 31, 2009 included elsewhere in this prospectus. We
do not believe these items are indicative of our core ongoing
operating performance because they were incurred as a result of
our Chapter 11 reorganization.
(f)
This adjustment eliminates the one-time impact on cost of sales
associated with the write-up of our inventory in accordance with
the principles of fresh-start accounting upon consummation of
the Chapter 11 reorganization.
(g)
This adjustment eliminates the impact of non-cash equity-based
compensation expenses. Although we expect to incur non-cash
equity-based compensation expenses in the future, we believe
that analysts and investors will find it helpful to review our
operating performance without the effects of these non-cash
expenses, as supplemental information.
(h)
This adjustment eliminates the impact of non-cash foreign
currency translation associated with intercompany debt
obligations and foreign currency denominated receivables and
payables, as well as the cash impact of foreign currency
transaction gains or losses on collection of such receivables
and payment of such payables. Although we expect to incur
foreign currency translation gains or losses in the future, we
believe that analysts and investors will find it helpful to
review our operating performance without the effects of these
primarily non-cash gains or losses, as supplemental information.
Adjusted EBITDA does not reflect our cash expenditures, or
future requirements, for capital expenditures or contractual
commitments;
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
12
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Adjusted EBITDA does not reflect the interest expense, or the
cash requirements necessary to service interest or principal
payments, on our debt;
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements;
Adjusted EBITDA does not consider the potentially dilutive
impact of issuing equity-based compensation to our management
team and employees;
Adjusted EBITDA does not reflect the costs of holding certain
assets and liabilities in foreign currencies; and
other companies in our industry may calculate Adjusted EBITDA
differently than we do, limiting its usefulness as a comparative
measure.
(5)
We present Adjusted Net Income as a further supplemental measure
of our performance. We prepare Adjusted Net Income by adjusting
net income (loss) to eliminate the impact of a number of
non-cash expenses and other items that may be either one time or
recurring that we do not consider to be indicative of our core
ongoing operating performance. We believe that Adjusted Net
Income is particularly useful because it reflects the impact of
our asset base and capital structure on our operating
performance.
we use Adjusted Net Income in communications with our board of
directors concerning our consolidated financial performance;
we believe that Adjusted Net Income is an enterprise level
performance measure commonly reported and widely used by
analysts and investors in our industry; and
we anticipate that our investor and analyst presentations after
we are public will include Adjusted Net Income.
13
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(a)
This adjustment is comprised of all
items included in the restructuring and impairment charges line
item on our consolidated statements of operations, and
eliminates the impact of restructuring and impairment charges
related to (i) for 2009, termination benefits and other
related costs, for the ten-month period ended October 25,
2009 in connection with the closure of one of our research and
development facilities in Japan, (ii) for 2008, goodwill
impairment triggered by the significant adverse change in the
revenue of our MDS reporting unit and a reversal of a portion of
the restructuring accrual related to the closure of our Gumi
five-inch wafer fabrication facilities in 2007, and
(iii) for 2007, the closure of our Gumi five-inch wafer
fabrication facilities. We do not believe these restructuring
and impairment charges are indicative of our core ongoing
operating performance because we do not anticipate similar
facility closures and market driven events in our ongoing
operations, although we cannot guarantee that similar events
will not occur in the future.
(b)
This adjustment relates to certain
restructuring charges that are not included in the restructuring
and impairment charges line item on our consolidated statements
of operations. These items are included in selling, general and
administrative expenses in our consolidated statements of
operations. These charges are comprised of the following:
(i) for 2009, a charge of $13.3 million for
restructuring-related professional fees and related expenses,
and (ii) for 2008, a charge of $6.2 million for
restructuring-related professional fees and related expenses. We
do not believe these other restructuring charges are indicative
of our core ongoing operating performance because these charges
were related, in significant part, to actions we took in
response to the impacts on our business resulting from the
global economic recession that persisted through 2008 and 2009.
We cannot guarantee that similar charges will not be incurred in
the future.
(c)
This adjustment eliminates a $3.7
million charge in 2008 related to expenses incurred in
connection with our abandoned initial public offering in 2008.
We do not believe that these charges are indicative of our core
operating performance. We expect to incur similar costs in
connection with this offering.
(d)
This adjustment eliminates a $1.3
million charge attributable to a one-time settlement of claims
with a subcontractor. We no longer obtain services from this
subcontractor and do not expect to incur similar charges in the
future.
(e)
This adjustment eliminates the
impact of largely non-cash reorganization income and expense
items directly associated with our reorganization proceedings
from our ongoing operations including, among others,
professional fees, the revaluation of assets, the effects of the
Chapter 11 reorganization plan and fresh-start accounting
principles and the write-off of debt issuance costs. Included in
reorganization items, net for the ten-month period ended
October 25, 2009 was our predecessors gain recognized
from the effects of our reorganization proceedings. The gain
results from the difference between our predecessors
carrying value of remaining pre-petition liabilities subject to
compromise and the amounts to be distributed pursuant to the
reorganization proceedings. The gain from the effects of the
reorganization proceedings and the application of fresh-start
accounting principles is comprised of the discharge of
liabilities subject to compromise, net of the issuance of new
common units and new warrants and the accrual of amounts to be
settled in cash. For details regarding this adjustment, see
note 5 to the consolidated financial statements of
MagnaChip Semiconductor LLC for the ten months ended
October 25, 2009 and the two months ended December 31,
2009
14
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included elsewhere in this
prospectus. We do not believe these items are indicative of our
core ongoing operating performance because they were incurred as
a result of our reorganization proceedings.
(f)
This adjustment eliminates the
one-time impact on cost of sales associated with the write-up of
our inventory in accordance with the principles of fresh-start
accounting upon consummation of the Chapter 11
reorganization.
(g)
This adjustment eliminates the
impact of non-cash equity-based compensation expenses. Although
we expect to incur non-cash equity-based compensation expenses
in the future, we believe that analysts and investors will find
it helpful to review our operating performance without the
effects of these non-cash expenses, as supplemental information.
(h)
This adjustment eliminates the
non-cash impact of amortization expense for intangible assets
created as a result of the purchase accounting treatment of the
Original Acquisition and other subsequent acquisitions, and from
the application of fresh-start accounting in connection with the
reorganization proceedings. We do not believe these non-cash
amortization expenses for intangibles are indicative of our core
ongoing operating performance because the assets would not have
been capitalized on our balance sheet but for the application of
purchase accounting or fresh-start accounting, as applicable.
(i)
This adjustment eliminates the
impact of non-cash foreign currency translation associated with
intercompany debt obligations and foreign currency denominated
receivables and payables, as well as the cash impact of foreign
currency transaction gains or losses on collection of such
receivables and payment of such payables. Although we expect to
incur foreign currency translation gains or losses in the
future, we believe that analysts and investors will find it
helpful to review our operating performance without the effects
of these primarily non-cash gains or losses, as supplemental
information.
Adjusted Net Income does not reflect our cash expenditures, or
future requirements, for capital expenditures or contractual
commitments;
Adjusted Net Income does not reflect changes in, or cash
requirements for, our working capital needs;
Adjusted Net Income does not consider the potentially dilutive
impact of issuing equity-based compensation to our management
team and employees;
Adjusted Net Income does not reflect the costs of holding
certain assets and liabilities in foreign currencies; and
other companies in our industry may calculate Adjusted Net
Income differently than we do, limiting its usefulness as a
comparative measure.
15
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39
89
116
F-14
II-5
II-6
16
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17
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18
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our ability to offer cost-effective and high quality products
and services on a timely basis using our technologies;
our ability to accurately identify and respond to emerging
technological trends and demand for product features and
performance characteristics;
our ability to continue to rapidly introduce new products that
are accepted by the market;
our ability to adopt or adapt to emerging industry standards;
the number and nature of our competitors and competitiveness of
their products and services in a given market;
entrance of new competitors into our markets;
our ability to enter the highly competitive power management
market; and
19
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our ability to continue to offer in demand semiconductor
manufacturing services at competitive prices.
20
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21
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22
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23
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24
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pay substantial damages or indemnify customers or licensees for
damages they may suffer if the products they purchase from us or
the technology they license from us violate the intellectual
property rights of others;
stop our manufacture, use, sale or importation of infringing
products; expend significant resources to develop or acquire
non-infringing technologies;
discontinue processes; or
obtain licenses to the intellectual property we are found to
have infringed.
25
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26
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27
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28
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actual or anticipated variations in our results of operations
from quarter to quarter or year to year;
announcements by us or our competitors of significant
agreements, technological innovations or strategic alliances;
changes in recommendations or estimates by any securities
analysts who follow our securities;
addition or loss of significant customers;
recruitment or departure of key personnel;
changes in economic performance or market valuations of
competing companies in our industry;
price and volume fluctuations in the overall stock market;
market conditions in our industry, end markets and the economy
as a whole;
subsequent sales of stock and other financings;
litigation, legislation, regulation or technological
developments that adversely affect our business; and
the expiration of contractual
lock-up
agreements with our executive officers, directors and greater
than 1% stockholders.
29
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authorize our board of directors to issue, without stockholder
approval, preferred stock with such terms as the board of
directors may determine;
divide our board of directors into three classes so that only
approximately one-third of the total number of directors is
elected each year;
permit directors to be removed only for cause by a majority vote;
prohibit action by written consent of our stockholders;
30
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prohibit any person other than our board of directors, the
chairman of our board of directors, our Chief Executive Officer
or holders of at least 25% of the voting power of all then
outstanding shares of capital stock of the corporation entitled
to vote generally in the election of directors to call a special
meeting of our stockholders; and
specify advance notice requirements for stockholder proposals
and director nominations.
the transaction is approved by the board of directors before the
date the interested stockholder attained that status;
upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction
commenced; or
on or after such date, the business combination is approved by
the board of directors and authorized at a meeting of
stockholders, and not by written consent, by at least two-thirds
of the outstanding voting stock that is not owned by the
interested stockholder.
any merger or consolidation involving the corporation and the
interested stockholder;
any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder; or
the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
31
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32
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33
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approximately $12 million to fund incentive payments to all
of our employees; and
approximately $ million to fund
working capital and for general corporate purposes.
34
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the actual capitalization of MagnaChip Semiconductor LLC as of
December 31, 2009; and
our pro forma capitalization as of December 31, 2009 after
giving effect to (i) the corporate conversion, as adjusted
for (ii) the sale of shares of our common stock in this
offering at an initial public offering price of
$ per share (the midpoint of the
range set forth on the front cover of this prospectus), after
the deduction of the underwriting discounts and commissions and
the estimated offering expenses payable by us, and the
application of the related proceeds as described under Use
of Proceeds.
As of December 31, 2009
(in millions)
Pro Forma
$
61.8
$
61.8
55.1
168.7
(2.0
)
(6.2
)
215.7
$
277.4
(1)
A $1.00 decrease or increase in the assumed initial public
offering price would result in approximately a
$ million decrease or
increase in each of pro forma as adjusted additional paid-in
capital, total stockholders equity and total
capitalization, assuming the total number of shares offered by
us remains the same and after deducting the estimated
underwriting discounts and commissions and estimated offering
expenses payable by us.
35
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Shares
Total
Average
Purchased
Consideration
Price
(In millions, except share and % data)
%
$
%
$
%
$
%
$
(1)
Before deduction of the underwriting discounts and commissions
and estimated offering expenses payable by us.
36
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Average
Shares
Total
Price
Purchased
Consideration
Per
Number
%
Amount
%
Share
(In millions, except share and % data)
%
$
%
$
%
$
%
$
(1)
Before deduction of the underwriting discounts and commissions
and estimated offering expenses payable by us.
(2)
Includes shares of common stock issuable upon exercise of
options previously granted to our officers, directors and
employees and warrants issued in connection with our
reorganization proceedings.
37
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38
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Successor(1)
Predecessor
Two- Month
Ten- Month
Period Ended
Period Ended
Years Ended
December 31,
October 25,
December 31,
2009
2009
(Audited)
(In millions, except per common unit data)
$
111.1
$
449.0
$
601.7
$
709.5
$
683.9
$
774.3
90.4
311.1
445.3
578.9
580.4
591.1
20.7
137.8
156.4
130.7
103.4
183.2
14.5
56.3
81.3
82.7
76.1
119.4
14.7
56.1
89.5
90.8
87.2
96.1
0.4
13.4
12.1
1.7
36.1
(8.6
)
25.0
(27.7
)
(54.9
)
(61.6
)
(68.4
)
1.3
31.2
76.1
60.3
57.2
57.2
9.3
43.4
(210.4
)
(4.7
)
50.9
16.5
804.6
8.1
816.8
(286.5
)
(65.0
)
(6.3
)
(40.7
)
(0.5
)
841.8
(314.3
)
(120.0
)
(67.9
)
(109.1
)
1.9
7.3
11.6
8.8
9.1
2.0
(2.5
)
834.5
(325.8
)
(128.8
)
(76.9
)
(111.1
)
0.5
6.6
(91.5
)
(51.7
)
(152.4
)
10.2
$
(2.0
)
$
841.1
$
(417.3
)
$
(180.6
)
$
(229.3
)
$
(100.9
)
6.3
13.3
12.0
10.9
9.9
(2.5
)
828.2
(339.1
)
(140.9
)
(87.9
)
(121.1
)
$
(2.0
)
$
834.8
$
(430.6
)
$
(192.6
)
$
(240.2
)
$
(110.8
)
(0.01
)
15.65
(6.43
)
(2.69
)
(1.66
)
(2.29
)
0.12
(1.73
)
(0.99
)
(2.88
)
0.19
(0.01
)
15.77
(8.16
)
(3.68
)
(4.54
)
(2.10
)
300.863
52.923
52.769
52.297
52.912
52.898
$
64.9
$
4.0
$
64.3
$
89.2
$
86.6
453.3
399.2
707.9
770.1
1,040.6
61.8
845.0
830.0
750.0
750.0
61.5
143.2
879.4
867.4
856.7
215.7
(787.8
)
(477.5
)
(284.5
)
(46.5
)
22.1
76.6
59.8
111.2
13.3
9.3
(71.7
)
(82.6
)
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(1)
As of October 25, 2009, the fresh-start adoption date, we
adopted fresh-start accounting for our consolidated financial
statements. Because of the emergence from reorganization
proceedings and adoption of fresh-start accounting, the
historical financial information for periods after
October 25, 2009 is not fully comparable to periods before
October 25, 2009. See Managements Discussion
and Analysis of Financial Condition and Results of
Operations Recent Changes to Our Business.
(2)
Total indebtedness is calculated as long and short-term
borrowings, including the current portion of long-term
borrowings.
(3)
Long-term obligations include long-term borrowings, capital
leases and redeemable convertible preferred units.
(4)
We define Adjusted EBITDA as net income (loss) less income
(loss) from discontinued operations, net of taxes, adjusted to
exclude (i) depreciation and amortization associated with
continuing operations, (ii) interest expense, net,
(iii) income tax expenses, (iv) restructuring and
impairment charges, (v) other restructuring charges,
(vi) abandoned IPO expenses, (vii) subcontractor claim
settlement, (viii) the increase in cost of sales resulting
from the fresh-start inventory accounting
step-up,
(ix) equity-based compensation expense,
(x) reorganization items, net and (xi) foreign
currency gain (loss), net. See the footnotes to the table below
for further information regarding these items. We present
Adjusted EBITDA as a supplemental measure of our performance
because:
Adjusted EBITDA eliminates the impact of a number of items that
may be either one time or recurring items that we do not
consider to be indicative of our core ongoing operating
performance;
we believe that Adjusted EBITDA is an enterprise level
performance measure commonly reported and widely used by
analysts and investors in our industry;
we anticipate that our investor and analyst presentations after
we are public will include Adjusted EBITDA; and
we believe that Adjusted EBITDA provides investors with a more
consistent measurement of period to period performance of our
core operations, as well as a comparison of our operating
performance to that of other companies in our industry.
for planning purposes, including the preparation of our annual
operating budget;
to evaluate the effectiveness of our enterprise level business
strategies;
in communications with our board of directors concerning our
consolidated financial performance;
in certain of our compensation plans as a performance measure
for determining incentive compensation payments; and
to measure our compliance with certain covenants in our debt
agreements.
40
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Historical
Successor
Predecessor
Two- Month
Ten- Month
Period Ended
Period Ended
Years Ended
December 31,
October 25,
December 31,
(In millions)
$
(2.0
)
$
841.1
$
(417.3
)
$
(180.6
)
0.5
6.6
(91.5
)
(51.7
)
(2.5
)
834.5
(325.8
)
(128.8
)
11.2
37.7
63.8
152.2
1.3
31.2
76.1
60.3
1.9
7.3
11.6
8.8
0.4
13.4
12.1
13.3
6.2
3.7
1.3
(804.6
)
17.2
2.2
0.2
0.5
0.6
(9.3
)
(43.4
)
210.4
4.7
$
22.1
$
76.6
$
59.8
$
111.2
(a)
This adjustment is comprised of all items included in the
restructuring and impairment charges line item on our
consolidated statements of operations, and eliminates the impact
of restructuring and impairment charges related to (i) for
2009, termination benefits and other related costs, for the
ten-month period ended October 25, 2009 in connection with
the closure of one of our research and development facilities in
Japan, (ii) for 2008, goodwill impairment triggered by the
significant adverse change in the revenue of our mobile display
solutions, or MDS reporting unit, and a reversal of a portion of
the restructuring accrual related to the closure of our Gumi
five-inch wafer fabrication facilities in 2007, and
(iii) for 2007, the closure of our Gumi five-inch wafer
fabrication facilities. We do not believe these restructuring
and impairment charges are indicative of our core ongoing
operating performance because we do not anticipate similar
facility closures and market driven events in our ongoing
operations, although we cannot guarantee that similar events
will not occur in the future.
(b)
This adjustment relates to certain restructuring charges that
are not included in the restructuring and impairment charges
line item on our consolidated statements of operations. These
items are included in selling, general and administrative
expenses in our consolidated statements of operations. These
charges are comprised of the following: (i) for 2009, a
charge of $13.3 million for restructuring-related
professional fees and related expenses, and (ii) for 2008,
a charge of $6.2 million for restructuring-related
professional fees and related expenses. We do not believe these
other restructuring charges are indicative of our core ongoing
operating performance because these charges were related, in
significant part, to actions we took in response to the impacts
on our business resulting from the global economic recession
that persisted through 2008 and 2009. We cannot guarantee that
similar charges will not be incurred in the future.
41
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(c)
This adjustment eliminates a $3.7 million charge in 2008
related to expenses incurred in connection with our abandoned
initial public offering in 2008. We do not believe that these
charges are indicative of our core operating performance. We
expect to incur similar costs in connection with this offering.
(d)
This adjustment eliminates a $1.3 million charge
attributable to a one-time settlement of claims with a
subcontractor. We no longer obtain services from this
subcontractor and do not expect to incur similar charges in the
future.
(e)
This adjustment eliminates the impact of largely non-cash
reorganization income and expense items directly associated with
our reorganization proceedings from our ongoing operations
including, among others, professional fees, the revaluation of
assets, the effects of the Chapter 11 reorganization plan
and fresh-start accounting principles and the write-off of debt
issuance costs. Included in reorganization items, net for the
ten-month period ended October 25, 2009 was our
predecessors gain recognized from the effects of our
reorganization proceedings. The gain results from the difference
between our predecessors carrying value of remaining
pre-petition liabilities subject to compromise and the amounts
to be distributed pursuant to the reorganization proceedings.
The gain from the effects of the reorganization proceedings and
the application of fresh-start accounting principles is
comprised of the discharge of liabilities subject to compromise,
net of the issuance of new common units and new warrants and the
accrual of amounts to be settled in cash. For details regarding
this adjustment, see note 5 to the consolidated financial
statements of MagnaChip Semiconductor LLC for the ten
months ended October 25, 2009 and the two months ended
December 31, 2009 included elsewhere in this prospectus. We
do not believe these items are indicative of our core ongoing
operating performance because they were incurred as a result of
our Chapter 11 reorganization.
(f)
This adjustment eliminates the one-time impact on cost of sales
associated with the write-up of our inventory in accordance with
the principles of fresh-start accounting upon consummation of
the Chapter 11 reorganization.
(g)
This adjustment eliminates the impact of non-cash equity-based
compensation expenses. Although we expect to incur non-cash
equity-based compensation expenses in the future, we believe
that analysts and investors will find it helpful to review our
operating performance without the effects of these non-cash
expenses, as supplemental information.
(h)
This adjustment eliminates the impact of non-cash foreign
currency translation associated with intercompany debt
obligations and foreign currency denominated receivables and
payables, as well as the cash impact of foreign currency
transaction gains or losses on collection of such receivables
and payment of such payables. Although we expect to incur
foreign currency translation gains or losses in the future, we
believe that analysts and investors will find it helpful to
review our operating performance without the effects of these
primarily non-cash gains or losses, as supplemental information.
Adjusted EBITDA does not reflect our cash expenditures, or
future requirements, for capital expenditures or contractual
commitments;
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
Adjusted EBITDA does not reflect the interest expense, or the
cash requirements necessary to service interest or principal
payments, on our debt;
42
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although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and Adjusted EBITDA does not reflect any
cash requirements for such replacements;
Adjusted EBITDA does not consider the potentially dilutive
impact of issuing equity-based compensation to our management
team and employees;
Adjusted EBITDA does not reflect the costs of holding certain
assets and liabilities in foreign currencies; and
other companies in our industry may calculate Adjusted EBITDA
differently than we do, limiting its usefulness as a comparative
measure.
(5)
We present Adjusted Net Income as a further supplemental measure
of our performance. We prepare Adjusted Net Income by adjusting
net income (loss) to eliminate the impact of a number of
non-cash expenses and other items that may be either one time or
recurring that we do not consider to be indicative of our core
ongoing operating performance. We believe that Adjusted Net
Income is particularly useful because it reflects the impact of
our asset base and capital structure on our operating
performance.
we use Adjusted Net Income in communications with our board of
directors concerning our consolidated financial performance;
we believe that Adjusted Net Income is an enterprise level
performance measure commonly reported and widely used by
analysts and investors in our industry; and
we anticipate that our investor and analyst presentations after
we are public will include Adjusted Net Income.
43
Table of Contents
Historical
Successor
Predecessor
Two- Month
Ten- Month
Period Ended
Period Ended
Years Ended
December 31,
October 25,
December 31,
2009
2009
2008
2007
(In millions)
$
(2.0
)
$
841.1
$
(417.3
)
$
(180.6
)
0.5
6.6
(91.5
)
(51.7
)
(2.5
)
834.5
(325.8
)
(128.8
)
0.4
13.4
12.1
13.3
6.2
3.7
1.3
(804.6
)
17.2
2.2
0.2
0.5
0.6
5.6
8.8
20.0
27.5
(9.3
)
(43.4
)
210.4
4.7
$
13.3
$
9.3
$
(71.7
)
$
(82.6
)
(a)
This adjustment is comprised of all
items included in the restructuring and impairment charges line
item on our consolidated statements of operations, and
eliminates the impact of restructuring and impairment charges
related to (i) for 2009, termination benefits and other
related costs, for the ten-month period ended October 25,
2009 in connection with the closure of one of our research and
development facilities in Japan, (ii) for 2008, goodwill
impairment triggered by the significant adverse change in the
revenue of our MDS reporting unit and a reversal of a portion of
the restructuring accrual related to the closure of our Gumi
five-inch wafer fabrication facilities in 2007, and
(iii) for 2007, the closure of our Gumi five-inch wafer
fabrication facilities. We do not believe these restructuring
and impairment charges are indicative of our core ongoing
operating performance because we do not anticipate similar
facility closures and market driven events in our ongoing
operations, although we cannot guarantee that similar events
will not occur in the future.
(b)
This adjustment relates to certain
restructuring charges that are not included in the restructuring
and impairment charges line item on our consolidated statements
of operations. These items are included in selling, general and
administrative expenses in our consolidated statements of
operations. These charges are comprised of the following:
(i) for 2009, a charge of $13.3 million for
restructuring-related professional fees and related expenses,
and (ii) for 2008, a charge of $6.2 million for
restructuring-related professional fees and related expenses. We
do not believe these other restructuring charges are indicative
of our core ongoing operating performance because these charges
were related, in significant part, to actions we took in
response to the impacts on our business resulting from the
global economic recession that persisted through 2008 and 2009.
We cannot guarantee that similar charges will not be incurred in
the future.
(c)
This adjustment eliminates a $3.7
million charge in 2008 related to expenses incurred in
connection with our abandoned initial public offering in 2008.
We do not believe that these charges are indicative of our core
operating performance. We expect to incur costs in connection
with this offering.
(d)
This adjustment eliminates a $1.3
million charge attributable to a one-time settlement of claims
with a subcontractor. We no longer obtain services from this
subcontractor and do not expect to incur similar charges in the
future.
(e)
This adjustment eliminates the
impact of largely non-cash reorganization income and expense
items directly associated with our reorganization proceedings
from our ongoing operations including, among others,
professional fees, the revaluation of assets, the effects of the
Chapter 11 reorganization plan and fresh-start accounting
principles and the write-off of debt issuance costs. Included in
reorganization items, net for the ten-month period ended
October 25, 2009 was our predecessors gain recognized
from the effects of our reorganization proceedings. The gain
results from the difference between our predecessors
carrying value of remaining pre-petition liabilities subject to
compromise and the amounts to be distributed pursuant to the
reorganization proceedings. The gain from the effects of the
reorganization proceedings and the application of fresh-start
accounting principles is comprised of the discharge of
liabilities subject to compromise, net of the issuance of new
common units and new warrants and the accrual of amounts to be
settled in
44
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cash. For details regarding this
adjustment, see note 5 to the consolidated financial
statements of MagnaChip Semiconductor LLC for the ten-month
period ended October 25, 2009 and the two-month period
ended December 31, 2009 included elsewhere in this
prospectus. We do not believe these items are indicative of our
core ongoing operating performance because they were incurred as
a result of our reorganization proceedings.
(f)
This adjustment eliminates the
one-time impact on cost of sales associated with the write-up of
our inventory in accordance with the principles of fresh-start
accounting upon consummation of the Chapter 11
reorganization.
(g)
This adjustment eliminates the
impact of non-cash equity-based compensation expenses. Although
we expect to incur non-cash equity-based compensation expenses
in the future, we believe that analysts and investors will find
it helpful to review our operating performance without the
effects of these non-cash expenses, as supplemental information.
(h)
This adjustment eliminates the
non-cash impact of amortization expense for intangible assets
created as a result of the purchase accounting treatment of the
Original Acquisition and other subsequent acquisitions, and from
the application of fresh-start accounting in connection with the
reorganization proceedings. We do not believe these non-cash
amortization expenses for intangibles are indicative of our core
ongoing operating performance because the assets would not have
been capitalized on our balance sheet but for the application of
purchase accounting or fresh-start accounting, as applicable.
(i)
This adjustment eliminates the
impact of non-cash foreign currency translation associated with
intercompany debt obligations and foreign currency denominated
receivables and payables, as well as the cash impact of foreign
currency transaction gains or losses on collection of such
receivables and payment of such payables. Although we expect to
incur foreign currency translation gains or losses in the
future, we believe that analysts and investors will find it
helpful to review our operating performance without the effects
of these primarily non-cash gains or losses, as supplemental
information.
Adjusted Net Income does not reflect our cash expenditures, or
future requirements, for capital expenditures or contractual
commitments;
Adjusted Net Income does not reflect changes in, or cash
requirements for, our working capital needs;
Adjusted Net Income does not consider the potentially dilutive
impact of issuing equity-based compensation to our management
team and employees;
Adjusted Net Income does not reflect the costs of holding
certain assets and liabilities in foreign currencies; and
other companies in our industry may calculate Adjusted Net
Income differently than we do, limiting its usefulness as a
comparative measure.
45
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the reorganization proceedings and adoption of fresh-start
reporting; and
the corporate conversion
46
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Successor
October 25, 2009
$
67.6
69.3
110.5
158.4
55.2
24.5
485.5
0.5
123.9
61.3
81.5
267.2
$
218.4
Estimated
Fair Value
Useful lives
$
14.7
1-5
26.1
0.5-5
4.7
4
9.7
$
55.2
47
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Audited
Unaudited
Historical
Successor
Predecessor
Two-Month
Ten-Month
Period
Period
Pro Forma
Ended
Ended
Year Ended
December 31,
October 25,
December 31,
2009
2009
Adjustments
2009
(In millions, except common unit/share data)
$
111.1
$
449.0
$
$
560.1
90.4
311.1
(22.7
)(1)(2)
378.9
20.7
137.8
181.2
14.5
56.3
0.8
(1)
71.6
14.7
56.1
6.4
(1)
77.3
0.4
0.4
(8.6
)
25.0
31.9
1.3
31.2
(23.0
)(3)
9.4
9.3
43.4
52.8
804.6
(804.6
)(4)
8.1
816.8
43.4
(0.5
)
841.8
75.2
1.9
7.3
(5)
9.2
(2.5
)
834.5
66.0
6.3
(6.3
)(6)
(2.5
)
828.2
66.0
(0.01
)
15.65
300.863
52.923
48
Table of Contents
Audited
Unaudited
Historical
Pro Forma
As of
As of
December 31,
December 31,
2009
Adjustments
(In millions, except common
unit/share
data)
$
64.9
$
64.9
74.2
74.2
63.4
63.4
19.5
19.5
222.1
222.1
156.3
156.3
50.2
50.2
24.8
24.8
$
453.3
$
453.3
$
59.7
$
59.7
7.2
7.2
22.1
22.1
0.6
0.6
3.9
3.9
93.6
93.6
61.1
61.1
72.4
72.4
10.5
10.5
237.6
237.6
55.1
168.7
(2.0
)
(2.0
)
(6.2
)
(6.2
)
215.7
215.7
$
453.3
$
453.3
49
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50
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51
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AND RESULTS OF OPERATIONS
52
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53
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54
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Display Solutions:
Our Display
Solutions products include source and gate drivers and timing
controllers that cover a wide range of flat panel displays used
in LCD televisions and LED televisions and displays, mobile PCs
and mobile communications and entertainment devices. Our display
solutions support the industrys most advanced display
technologies, such as LTPS and AMOLED, as well as high-volume
display technologies such as TFT.
Power Solutions:
Our Power Solutions
segment produces power management semiconductor products
including discrete and integrated circuit solutions for power
management in high-volume consumer applications. These products
include MOSFETs, LED drivers, DC-DC converters, analog switches
and linear regulators, such as low-dropout regulators, or LDOs.
Our power solutions products are designed for applications such
as mobile phones, LCD televisions, and desktop computers, and
allow electronics manufacturers to achieve specific design goals
of high efficiency and low standby power consumption. Going
forward, we expect to continue to expand our power management
product portfolio.
Semiconductor Manufacturing
Services:
Our Semiconductor Manufacturing
Services segment provides specialty analog and mixed-signal
foundry services to fabless semiconductor companies that serve
the consumer, computing and wireless end markets. We manufacture
wafers based on our customers product designs. We do not
market these products directly to end customers but rather
supply manufactured wafers and products to our customers to
market to their end customers. We offer approximately 200
process flows to our manufacturing services customers. We also
often partner with key customers to jointly develop or customize
specialized processes that enable our customers to improve their
products and allow us to develop unique manufacturing expertise.
Our manufacturing services are targeted at customers who require
differentiated, specialty analog and mixed-signal process
technologies
55
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such as high voltage CMOS, embedded memory and power. These
customers typically serve high-growth and high-volume
applications in the consumer, computing and wireless end markets.
Adjusted EBITDA eliminates the impact of a number of items that
may be either one time or recurring that we do not consider to
be indicative of our core ongoing operating performance;
we believe that Adjusted EBITDA is an enterprise level
performance measure commonly reported and widely used by
analysts and investors in our industry;
we anticipate that our investor and analyst presentations after
we are public will include Adjusted EBITDA; and
we believe that Adjusted EBITDA provides investors with a more
consistent measurement of period to period performance of our
core operations, as well as a comparison of our operating
performance to companies in our industry.
we use Adjusted Net Income in communications with our board of
directors concerning our consolidated financial performance;
we believe that Adjusted Net Income is an enterprise level
performance measure commonly reported and widely used by
analysts and investors in our industry; and
we anticipate that our investor and analyst presentations after
we are public will include Adjusted Net Income.
56
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57
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58
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Rate
928:1
1,098:1
1,302:1
1,172:1
1,165:1
59
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60
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Successor
Predecessor Company
Company
Ten-Month
Two-Month
Period
Period
Ended
Years Ended
Ended December 31,
October 25,
December 31,
2009
2009
2008
2007
%of
%of
%of
%of
(In millions)
$
111.1
100.0
%
$
449.0
100.0
%
$
601.7
100.0
%
$
709.5
100.0
%
90.4
81.4
311.1
69.3
445.3
74.0
578.9
81.6
20.7
18.6
137.8
30.7
156.4
26.0
130.7
18.4
14.5
13.1
56.3
12.5
81.3
13.5
82.7
11.7
14.7
13.3
56.1
12.5
89.5
14.9
90.8
12.8
0.4
0.1
13.4
2.2
12.1
1.7
(8.6
)
(7.7
)
25.0
5.6
(27.7
)
(4.6
)
(54.9
)
(7.7
)
1.3
1.1
31.2
6.9
76.1
12.7
60.3
8.5
9.3
8.4
43.4
9.7
(210.4
)
(35.0
)
(4.7
)
(0.7
)
804.6
179.2
8.1
7.3
816.8
181.9
(286.5
)
(47.6
)
(65.0
)
(9.2
)
(0.5
)
(0.5
)
841.8
187.5
(314.3
)
(52.2
)
(120.0
)
(16.9
)
1.9
1.8
7.3
1.6
11.6
1.9
8.8
1.2
(2.5
)
(2.2
)
834.5
185.9
(325.8
)
(54.2
)
(128.8
)
(18.2
)
0.5
0.5
6.6
1.5
(91.5
)
(15.2
)
(51.7
)
(7.3
)
$
(2.0
)
(1.8
)%
$
841.1
187.3
%
$
(417.3
)
(69.4
)%
$
(180.6
)
(25.4
)%
$
51.0
46.0
%
$
231.9
51.6
%
$
304.1
50.5
%
$
331.7
46.7
%
4.7
4.3
7.6
1.7
5.4
0.9
54.8
49.3
206.7
46.0
287.1
47.7
321.0
45.2
0.5
0.5
2.8
0.6
5.0
0.8
56.8
8.0
$
111.1
100.0
%
$
449.0
100.0
%
$
601.7
100.0
%
$
709.5
100.0
%
61
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Successor
Company
Predecessor Company
Two-Month
Ten-Month
Period
Period
Year
Ended
Ended
Ended
December 31,
October 25,
December 31,
2009
2009
2008
%of
%of
%of
Change
(In millions)
$
111.1
100.0
%
$
449.0
100.0
%
$
601.7
100.0
%
$
(41.6
)
90.4
81.4
311.1
69.3
445.3
74.0
(43.7
)
20.7
18.6
137.8
30.7
156.4
26.0
2.1
14.5
13.1
56.3
12.5
81.3
13.5
(10.5
)
14.7
13.3
56.1
12.5
89.5
14.9
(18.6
)
0.4
0.1
13.4
2.2
(12.9
)
(8.6
)
(7.7
)
25.0
5.6
(27.7
)
(4.6
)
44.1
1.3
1.1
31.2
6.9
76.1
12.7
(43.7
)
9.3
8.4
43.4
9.7
(210.4
)
(35.0
)
263.2
804.6
179.2
804.6
8.1
7.3
816.8
181.9
(286.5
)
(47.6
)
1,111.5
(0.5
)
(0.5
)
841.8
187.5
(314.3
)
(52.2
)
1,155.5
1.9
1.8
7.3
1.6
11.6
1.9
(2.3
)
(2.5
)
(2.2
)
834.5
185.9
(325.8
)
(54.2
)
1,157.9
0.5
0.5
6.6
1.5
(91.5
)
(15.2
)
98.6
$
(2.0
)
(1.8
)%
$
841.1
187.3
%
$
(417.3
)
(69.4
)%
$
1,256.4
Successor
Company
Predecessor Company
Two-Month
Ten-Month
Period
Period
Ended
Ended
Year Ended
December 31,
October 25,
December 31,
2009
2009
2008
%of
%of
%of
Change
(In millions)
$
51.0
46.0
%
$
231.9
51.6
%
$
304.1
50.5
%
$
(21.2
)
4.7
4.3
7.6
1.7
5.4
0.9
6.9
54.8
49.3
206.7
46.0
287.1
47.7
(25.7
)
0.5
0.5
2.8
0.6
5.0
0.8
(1.7
)
$
111.1
100.0
%
$
449.0
100.0
%
$
601.7
100.0
%
$
(41.6
)
62
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63
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Successor
Company
Predecessor Company
Two-Month
Ten-Month
Period
Period
Ended
Ended
Year Ended
December 31,
October 25,
December 31,
2009
2009
2008
%of
%of
%of
Change
(In millions)
$
62.2
56.0
%
$
244.3
54.4
%
$
301.0
50.0
%
$
5.5
25.6
23.0
116.9
26.0
144.5
24.0
(2.0
)
6.5
5.8
31.6
7.0
79.9
13.3
(41.8
)
14.9
13.4
48.5
10.8
61.3
10.2
2.0
1.9
1.7
7.7
1.7
14.9
2.5
(5.4
)
$
111.1
100.0
%
$
449.0
100.0
%
$
601.7
100.0
%
$
(41.6
)
Successor
Company
Predecessor Company
Two-Month
Ten-Month
Period
Period
Ended
Ended
Year Ended
December 31,
October 25,
December 31,
2009
2009
2008
%of
%of
%of
Change
(In millions)
$
8.7
17.1
%
$
61.8
26.6
%
$
57.4
18.9
%
$
13.1
0.7
15.5
1.4
18.8
(4.3
)
(78.6
)
6.4
10.7
19.5
71.8
34.8
98.4
34.3
(15.9
)
0.5
100.0
2.8
100.0
4.9
97.3
(1.6
)
$
20.7
18.6
%
$
137.8
30.7
%
$
156.4
26.0
%
$
2.1
64
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65
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66
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Predecessor Company
Year Ended
Year Ended
December 31, 2008
December 31, 2007
% of
% of
Change
(In millions)
$
601.7
100.0
%
$
709.5
100.0
%
$
(107.8
)
445.3
74.0
578.9
81.6
(133.6
)
156.4
26.0
130.7
18.4
25.8
81.3
13.5
82.7
11.7
(1.4
)
89.5
14.9
90.8
12.8
(1.4
)
13.4
2.2
12.1
1.7
1.3
(27.7
)
(4.6
)
(54.9
)
(7.7
)
27.2
76.1
12.7
60.3
8.5
15.8
(210.4
)
(35.0
)
(4.7
)
(0.7
)
(205.7
)
(286.5
)
(47.6
)
(65.0
)
(9.2
)
(221.5
)
(314.3
)
(52.2
)
(120.0
)
(16.9
)
(194.3
)
11.6
1.9
8.8
1.2
2.8
(325.8
)
(54.2
)
(128.8
)
(18.2
)
(197.0
)
(91.5
)
(15.2
)
(51.7
)
(7.3
)
(39.7
)
$
(417.3
)
(69.4
)%
$
(180.6
)
(25.4
)%
$
(236.7
)
67
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Predecessor Company
Year Ended
Year Ended
December 31,
December 31,
2008
2007
% of
% of
Change
(In millions)
$
304.1
50.5
%
$
331.7
46.7
%
$
(27.6
)
5.4
0.9
5.4
287.1
47.7
321.0
45.2
(33.9
)
5.0
0.8
56.8
8.0
(51.8
)
$
601.7
100.0
%
$
709.5
100.0
%
$
(107.8
)
68
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Predecessor Company
Year Ended
Year Ended
December 31, 2008
December 31, 2007
Change
(In millions)
$
301.0
50.0
%
$
404.3
57.0
%
(103.3
)
144.5
24.0
155.5
21.9
(11.0
)
79.9
13.3
71.2
10.0
8.7
61.3
10.2
58.5
8.2
2.8
14.9
2.5
20.0
2.8
(5.1
)
$
601.7
100.0
%
$
709.5
100.0
%
(107.8
)
Predecessor Company
Year Ended
Year Ended
December 31, 2008
December 31, 2007
% of
% of
Change
(In millions)
$
57.4
18.9
%
$
41.5
12.5
%
$
15.9
(4.3
)
(78.6
)
(4.3
)
98.4
34.3
67.1
20.9
31.3
4.9
97.3
22.0
38.7
(17.1
)
$
156.4
26.0
%
$
130.7
18.4
%
$
25.8
69
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70
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71
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72
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Payments Due by Period
(In millions)
$
91.6
$
8.5
$
8.4
$
8.3
$
66.4
$
$
51.6
6.8
1.9
1.9
1.9
1.9
37.2
11.5
4.7
4.2
2.4
0.2
(1)
Includes principal as well as interest payments.
(2)
Assumes constant interest rate of 6-month LIBOR + 12% as of
December 31, 2009.
(3)
Assumes constant currency exchange rate for Korean won to
U.S. dollars of 1,168:1.
(4)
Includes license agreements and other contractual obligations.
73
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74
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75
Table of Contents
76
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77
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78
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79
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Broad Offering of Differentiated Products with Advanced
System-Level Features and Functions.
Leading
consumer electronics manufacturers seek to differentiate their
products by incorporating innovative semiconductor products that
enable unique system-level functionality and enhance
performance. These consumer electronics manufacturers seek to
closely collaborate with semiconductor solutions providers that
continuously develop new and advanced products, technologies,
and manufacturing processes that enable state of the art
features and functions, such as bright and thin displays, small
form factor and energy efficiency.
Fast Time to Market with New
Products.
As a result of rapid technological
advancements and short product lifecycles, our target customers
typically prefer suppliers who have a compelling pipeline of new
products and can leverage a substantial intellectual property
and technology base to accelerate product design and
manufacturing when needed.
Nimble, Stable and Reliable Manufacturing
Services.
Fabless semiconductor providers who
rely on external manufacturing services often face rapidly
changing product cycles. If these fabless companies are unable
to meet the demand for their products due to issues with their
manufacturing services providers, their profitability and market
share can be significantly impacted. As a result, they prefer
semiconductor manufacturing services providers who can increase
production quickly and meet demand consistently through periods
of constrained industry capacity. Furthermore, many fabless
semiconductor providers serving the consumer electronics and
industrial sectors need specialized analog and mixed-signal
manufacturing capabilities to address their product performance
and cost requirements.
Ability to Deliver Cost Competitive
Solutions.
Electronics manufacturers are
under constant pressure to deliver cost competitive solutions.
To accomplish this objective, they need strategic semiconductor
suppliers that have the ability to provide system-level
solutions, highly integrated products, a broad product offering
at a range of price points and have the design and manufacturing
infrastructure and logistical support to deliver cost
competitive products.
Focus on Delivering Highly Energy Efficient
Products.
Consumers increasingly seek longer
run time, environmentally friendly and energy efficient consumer
electronic products. In addition, there is increasing regulatory
focus on reducing energy consumption of consumer electronic
products. For instance, the California Energy Commission
recently adopted standards that require televisions sold in
California to consume 33% less energy by 2011 and 49% less
energy by 2013. As a result of global focus on more
environmentally friendly products, our customers are seeking
analog and mixed-signal semiconductor suppliers that
80
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have the technological expertise to deliver solutions that
satisfy these ever increasing regulatory and consumer power
efficiency demands.
Advanced Analog and Mixed-Signal Semiconductor Technology
and Intellectual Property Platform.
We
believe we have one of the broadest and deepest analog and
mixed-signal semiconductor technology platforms in the industry.
Our long operating history, large patent portfolio, extensive
engineering and manufacturing process expertise and wide
selection of analog and mixed-signal intellectual property
libraries allow us to leverage our technology and develop new
products across multiple end markets. Our product development
efforts are supported by a team of approximately 391 engineers.
Our platform allows us to develop and introduce new products
quickly as well as to integrate numerous functions into a single
product. For example, we were one of the first companies to
introduce a commercial AMOLED display driver for mobile phones.
Established Relationships and Close Collaboration with
Leading Global Electronics Companies.
We have
a long history of supplying and collaborating on product and
technology development with leading innovators in the consumer
electronics market, such as LG Display, Sharp and Samsung. Our
close customer relationships have been built based on many years
of close collaborative product development which provides us
with deep system level knowledge and key insights into our
customers needs. As a result, we are able to continuously
strengthen our technology platform in areas of strategic
interest for our customers and focus on those products and
services that our customers and end consumers demand the most.
Longstanding Presence in Asia and Proximity to Global
Consumer Electronics Supply Chain.
Our
presence in Asia facilitates close contact with our customers,
fast response to their needs and enhances our visibility into
new product opportunities, markets and technology trends.
According to Gartner, semiconductor consumption in Asia,
excluding Japan, has increased from 49% of global production in
2004 to 60% in 2009 and is projected to grow to 65% by 2013. Our
substantial manufacturing operations in Korea and design centers
in Korea and Japan place us close to many of our largest
customers and to the core of the global consumer electronics
supply chain. We have active applications, engineering, product
design, and customer support resources, as well as senior
management and marketing resources, in geographic locations
close to our customers. This allows us to strengthen our
relationship with customers through better service, faster
turnaround time and improved product design collaboration. We
believe this also helps our customers to deliver products faster
than their competitors and to solve problems more efficiently
than would be possible with other suppliers.
Broad Portfolio of Product and Service Offerings Targeting
Large, High-Growth Markets.
We continue to
develop a wide variety of analog and mixed-signal semiconductor
solutions for multiple high-growth consumer electronics end
markets. We believe our expanding product and service offerings
allow us to provide additional products to new and existing
customers and to cross-sell our products and services to our
established customers. For example, we have leveraged our
technology expertise and customer relationships to develop and
grow a new business offering power management solutions to
customers. Our power management solutions enable our customers
to increase system stability and reduce heat dissipation and
81
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energy use, resulting in cost savings for our customers, as well
as environmental benefits. We have been able to sell these new
products to our existing customers as well as expand our
customer base.
Distinctive Analog and Mixed-Signal Process Technology
Expertise and Manufacturing Capabilities.
We
have developed specialty analog and mixed-signal manufacturing
processes such as high voltage CMOS, power and embedded memory.
These processes enable us to flexibly ramp mass production of
display, power and mixed-signal products, and shorten the
duration from design to delivery of highly integrated,
high-performance analog and mixed-signal semiconductors. As a
result of the depth of our process technology, captive
manufacturing facilities and customer support capabilities, we
believe the majority of our top twenty manufacturing services
customers by revenue currently use us as their primary
manufacturing source for the products that we manufacture for
them.
Highly Efficient Manufacturing
Capabilities.
Our manufacturing strategy is
focused on maintaining the price competitiveness of our products
and services through our low-cost operating structure. We
believe the location of our primary manufacturing and research
and development facilities in Asia and relatively low required
ongoing capital expenditures provide us with a number of cost
advantages. We offer specialty analog process technologies that
do not require substantial investment in leading edge, smaller
geometry process equipment. We are able to utilize our
manufacturing base over an extended period of time and thereby
minimize our capital expenditure requirements. Our internal
manufacturing facilities serve both our solutions products and
manufacturing services customers, allowing us to optimize our
asset utilization and improve our operational efficiency.
Strong Financial Model with a Low-Cost
Structure.
We have executed a significant
restructuring over the last 18 months, which combined with
our relatively low capital investment requirements, has improved
our cash flow and profitability. By closing our Imaging
Solutions business, restructuring our balance sheet, and
refining our business processes and strategy, we believe we have
made significant structural improvements to our operating model
and have enabled better flexibility to manage the fluctuations
in the economy and our markets. In addition, the long lifecycles
of our manufacturing processes, equipment and facilities allow
us to keep our new capital requirements relatively low. We
believe that our low-cost but highly skilled design and support
engineers and manufacturing base position us favorably to
compete in the marketplace and provide operating leverage in our
operating model.
Leverage Our Advanced Analog and Mixed-Signal Technology
Platform to Innovate and Deliver New Products and
Services.
We intend to continue to utilize
our extensive patent and technology portfolio, analog and
mixed-signal design and manufacturing expertise and specific
end-market applications and system-level design expertise to
deliver products with high levels of performance by utilizing
our systems expertise and leveraging our deep knowledge of our
customers needs. For example, we have recently utilized
our extensive patent portfolio, process technologies and analog
and mixed-signal technology platform to develop cost-effective
Super Junction MOSFETs as well as low power integrated power
solutions for AC-DC offline switchers to address more of our
customers needs. In Display Solutions, we continue to
invest in research and development to introduce new technologies
to support our customers technology roadmaps such as their
transition to 240Hz 3D LED televisions. In Semiconductor
Manufacturing Services, we are developing cost-effective
processes that substantially reduce die size using deep trench
isolation.
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Increase Business with Existing
Customers.
We have a global customer base
consisting of leading consumer electronics OEMs such as LG
Display, Sharp and Samsung who sell into multiple end markets.
We intend to continue to strengthen our relationships with our
customers by collaborating on critical design and product
development in order to improve our design win rates. We will
seek to increase our customer penetration by more closely
aligning our product roadmap with those of our key customers and
by taking advantage of our broad product portfolio, our deep
knowledge of customer needs and existing relationships to sell
more existing and new products. For example, two of our largest
display driver customers have display modules in production
using our power management products. These power management
products have been purchased and evaluated via their key
subcontractors for LCD backlight units and LCD integrated power
supplies.
Broaden Our Customer Base.
We expect to
continue to expand our global design centers, local application
engineering support and sales presence, particularly in China,
Hong Kong, Taiwan and Macau, or collectively, Greater China, and
other high-growth geographies, to penetrate new accounts. In
addition, we intend to introduce new products and variations of
existing products to address a broader customer base. In order
to broaden our market penetration, we are complementing our
direct customer relationships and sales with an expanded base of
distributors, especially to aid the growth of our power
management business. We expect to continue to expand our
distribution channels as we broaden our power management
penetration beyond existing customers.
Aggressively Grow the Power
Business.
We have utilized our extensive
patent portfolio, process technologies, captive manufacturing
facilities and analog and mixed-signal technology platform to
develop power management solutions that expand our market
opportunity and address more of our customers needs. We
intend to increase the pace of our new power product
introductions by continuing to collaborate closely with our
industry-leading customers. For example, we recently began mass
production of our first integrated power solution for LCD
televisions at one of our major Korean customers. We also intend
to capitalize on the market needs and regulatory requirements
for power management products that reduce energy consumption of
consumer electronic products by introducing products that are
more energy efficient than those of competitors. We believe our
integrated designs, unique low-cost process technologies and
deep customer relationships will enable us to increase sales of
our power solutions to our current power solutions customers,
and as an extension of our other product offerings, to our other
customers.
Drive Execution Excellence.
We have
significantly improved our execution through a number of
management initiatives implemented under the direction of our
Chief Executive Officer and Chairman, Sang Park. As an example,
we have introduced new processes for product development,
customer service and personnel development. We expect these
ongoing initiatives will continue to improve our new product
development and customer service as well as enhance our
commitment to a culture of quick action and execution by our
workforce. In addition, we have focused on and continually
improved our manufacturing efficiency during the past several
years. As a result of our focus on execution excellence, we have
also meaningfully reduced our time from new product definition
to development completion. For example, we have improved our
average development turnaround time by over 40% over the last
three years for semiconductor manufacturing services by
implementing continuous business process improvement initiatives.
Optimize Asset Utilization, Return on Capital Investments
and Cash Flow Generation.
We intend to keep
our capital expenditures relatively low by maintaining our focus
on specialty process technologies that do not require
substantial investment in frequent upgrades to the latest
manufacturing equipment. We also believe our power management
business should increase our utilization and return on capital
as the manufacturing of these products primarily relies on our
0.35µm geometry and low-cost equipment. By utilizing our
manufacturing
83
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facilities for both our display solutions and power solutions
products and our semiconductor manufacturing services customers,
we will seek to maximize return on our capital investments and
our cash flow generation.
Resolution and Number of
Channels.
Resolution determines the level of
detail displayed within an image and is defined by the number of
pixels per line multiplied by the number of
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lines on a display. For large displays, higher resolution
typically requires more display drivers for each panel. Display
drivers that have a greater number of channels, however,
generally require fewer display drivers for each panel and
command a higher selling price per unit. Mobile displays,
conversely, are typically single chip solutions designed to
deliver a specific resolution. We cover resolutions ranging from
QVGA (240RGB x 320) to QHD (960RGB x 540).
Color Depth.
Color depth is the number
of colors that can be displayed on a panel. For example, for
TFT-LCD panels, 262 thousand colors are supported by 6-bit
source drivers; 16 million colors are supported by 8-bit
source drivers; and 1 billion colors are supported by
10-bit and 12-bit source drivers.
Operational Voltage.
Display drivers
are characterized by input and output voltages. Source drivers
typically operate at input voltages from 2.0 to 3.6 volts and
output voltages between 4.5 and 18 volts. Gate drivers typically
operate at input voltages from 2.0 to 3.6 volts and output
voltages of up to 40 volts. Lower input voltage results in lower
power consumption and electromagnetic interference, or EMI.
Gamma Curve.
The relationship between
the light passing through a pixel and the voltage applied to the
pixel by the source driver is referred to as the gamma curve.
The gamma curve of the source driver can correct some
imperfections in picture quality in a process generally known as
gamma correction. Some advanced display drivers feature up to
three independent gamma curves to facilitate this correction.
Driver Interface.
Driver interface
refers to the connection between the timing controller and the
display drivers. Display drivers increasingly require higher
bandwidth interface technology to address the larger data
transfer rate necessary for higher definition images. The
principal types of interface technologies are
transistor-to-transistor
logic, or TTL, reduced swing differential signaling, or RSDS,
advance intra panel I/F, or AIPI, and mini-low voltage
differential signaling, or m-LVDS.
Package Type.
The assembly of display
drivers typically uses
chip-on-film,
or COF, tape carrier package, or TCP, and COG package types.
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480 to 960 output channels
LCD monitors, including
6-bit (262 thousand colors),
widescreens
8-bit
(16 million colors), 10-bit
Mobile PCs, including
(1 billion colors)
netbooks
Output voltage ranging from
Digital televisions, including
3.3V to 18V
LED TVs
Low power consumption and
low EMI
Supports COF package types
Supports RSDS, m-LVDS,
AiPi interface technologies
Geometries of 0.18mum to
0.22µm
LCD monitors, including
Output voltage ranging up to
widescreens
40V
Mobile PCs, including
Supports COF and COG
netbooks
package types
Digital televisions, including
Geometries of 0.35µm
LED TVs
Product portfolio supports a
wide range of resolutions
widescreens
Supports m-LVDS interface
Mobile PCs, including
technologies
netbooks
Input voltage ranging from
2.3V to 3.6V
Geometries of 0.18µm
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Resolutions of QVGA,
Mobile phones
WQVGA, VGA, NHD, SVGA
Digital still cameras
Color depth ranging from 262
thousand to 16 million
MDDI, MIPI interface
EEPROM and logic-based
OTP, separated gamma
control
Resolutions of WQVGA,
Mobile phones
HVGA, NHD, WVGA, QHD
Game consoles
Color depth ranging from 262
Digital still cameras
thousand to 16 million
Personal digital assistants
Geometries of 0.11µm to
Portable media players
0.15µm
MDDI, MIPI interface
EEPROM and logic-based
OTP
ABC, ACL, Pentile
Resolutions of QVGA,
Mobile phones
WQVGA, HVGA, WVGA,
Game consoles
WSVGA, HD
Netbooks
Color depth ranging from 262
Portable navigation devices
thousand to 16 million
MDDI, MIPI interface
Content adaptive brightness
control, or CABC
LVDS,
I
2
C, DCDC
Separated gamma control
MOSFET.
Our MOSFETs include low-voltage
Trench MOSFETs, 20V to 100V, and high-voltage Planar MOSFETs,
400V through 600V. MOSFETs are used in applications to switch,
shape or transfer electricity under varying power requirements.
The key application segments are mobile phones, LCD televisions,
desktop computers and power supplies for consumer electronics
and industrial equipment. MOSFETs allow electronics
manufacturers to achieve specific design goals of high
efficiency and low standby power consumption. For example,
computing solutions focus on delivering efficient controllers
and MOSFETs for power management in VCORE, DDR and chipsets for
audio, video and graphics processing systems.
LED Drivers.
LED driver solutions serve
the fast-growing LCD panel backlighting market for LCD
televisions and mobile PCs. Our products are designed to provide
high efficiency and wide input voltage range as well as PWM
dimming for accurate white LED dimming control.
DC-DC Converters.
We plan to release
DC-DC converters targeting mobile applications and high power
applications like LCD televisions, set-top boxes, DVD/Blu-ray
players and display
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modules. We expect our DC-DC converters will meet customer green
power requirements by featuring wide input voltage ranges, high
efficiency and small size.
Analog Switches and Linear
Regulators.
We also provide analog switches
and linear regulators for mobile applications. Our products are
designed for high efficiency and low power consumption in mobile
applications.
V
ds
(V)
options of 20V100V
Mobile phones
R
ds
(on)
options of Max 5m
Desktop computers
Ω50m Ω at 10V
Mobile PCs
Advanced 0.35µm Trench
Digital TVs
MOSFET Process
High cell density of
268Mcell/inch
2
Advanced packages to enable
reduction of PCB mounting
area
Voltage options of 400, 500,
Power supplies for consumer
and 600V
electronics
Drain current options of
Industrial charger and
1A18A.
adaptors
R
ds
(on)
options of
0.22
~
8.0
Lighting (ballast, HID, LED)
Ω (typical)
Industrial equipment
R
2
FET
(rapid recovery) option
to shorten reverse diode
recovery time
Zenor FET option for
MOSFET protection for
abnormal input
Advanced 0.50µm Planar
MOSFET Process
High efficiency, wide input
LED backlights
voltage range
Proven 0.35mum BCDMOS
process
40V modular BCDMOS
OCP, SCP, OVP and UVLO
protections
Accurate LED current control
and multi-channel matching
Programmable current limit,
boost up frequency
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LCD TVs
Set-top boxes
DVD/Blu-ray players
USB Switches
0.35µm CMOS process
Audio Switches
0.35µm CMOS process
Mobile phones
0.35µm CMOS process
Mixed-Signal.
Mixed-signal process
technology is used in devices that require conversion of light
and sound into electrical signals for processing and display.
Our mixed-signal processes include advanced technologies such as
low noise process using triple gate, which uses less
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power at any given performance level. MEMS process technology
allows the manufacture of components that use electrical energy
to generate a mechanical response. For example, MEMS devices are
used in the accelerometers and gyroscopes of mobile phones.
Power.
Power process technology, such
as BCD, includes high voltage capabilities as well as the
ability to integrate functionality such as self-regulation,
internal protection, and other intelligent features. The unique
process features such as deep trench isolation are suited for
chip shrink and device performance enhancement.
High Voltage CMOS.
High voltage CMOS
process technology facilitates the use of high voltage levels in
conjunction with smaller transistor sizes. This process
technology includes several variations, such as bipolar
processes, which use transistors with qualities well suited for
amplifying and switching applications, mixed mode processes,
which incorporate denser, more power efficient FETs, and thick
metal processes.
Non-Volatile Memory.
Non-volatile
memory, or NVM, process technology enables the integration of
non-volatile memory cells that allow retention of the stored
information even when power is removed from the circuit. This
type of memory is typically used for long-term persistent
storage.
0.13-0.8µm
Consumer
Digital to analog converter
Wireless
Audio codec
Computing
Chipset
0.18-0.35µm
Consumer
Mobile PMIC
Wireless
LED drivers
Computing
0.13-2.0µm
Consumer
5V-250V
Wireless
0.18-0.5µm
Consumer
Touch screen controller
Medical
Electronic tag
Automotive
Hearing aid
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62
Chairman of the Board of Directors and Chief Executive Officer
53
Chief Operating Officer and President
48
Senior Vice President, Worldwide Sales
52
Senior Vice President and Chief Financial Officer
46
Senior Vice President and General Manager, Power Solutions
Division
47
Senior Vice President and General Manager, Corporate Engineering
43
Senior Vice President, General Counsel and Secretary
41
Director
44
Director
74
Director
64
Director
33
Director
51
Director
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Sang Park, Chairman of the Board of Directors and Chief
Executive Officer;
Tae Young Hwang, Chief Operating Officer and President;
Brent Rowe, Senior Vice President, Worldwide Sales;
Margaret Sakai, Senior Vice President and Chief Financial
Officer; and
John McFarland, Senior Vice President, General Counsel and
Secretary.
we maintain our ability to attract and retain superior
executives in critical positions;
our executives are incentivized and rewarded for aggressive
corporate growth, achievement of long-term corporate objectives
and individual performance that meets or exceeds our
expectations without encouraging unnecessary
risk-taking; and
compensation provided to critical executives remains competitive
relative to the compensation paid to similarly situated
executives of companies in the semiconductor industry.
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annual base salary;
short-term cash incentives;
long-term equity incentives;
a benefits package that is generally available to all of our
employees; and
expatriate and other executive benefits.
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Advanced Micro Devices
Applied Materials
ASML
Blizzard
Cisco Systems
CJ Internet
101
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Change in
Pension
Value
and Non-
qualified
Deferred
Compen-
All Other
Stock
Option
sation
Compen-
Name and Principal
Salary
Bonus
Awards
Awards
Earnings
sation
Total
Year
($)
($)
($)(1)
($)(1)
($)(2)
($)
($)
2009
376,980
613,893
1,769,600
488,070
314,785
(3)
3,563,328
2008
442,128
351,897
(4)
794,025
2007
450,148
309,330
244,468
(5)
1,003,946
2009
189,748
106,544
663,600
305,044
119,541
10,884
(6)
1,395,361
2008
212,307
99,095
20,293
(7)
331,695
2007
236,830
119,339
19,735
11,476
(8)
387,380
2009
293,054
176,000
(9)
442,400
183,026
12,231
(10)
1,106,711
2008
226,308
176,000
(11)
25,673
(12)
427,981
2007
220,846
176,000
(13)
142,191
(14)
539,037
2009
238,347
46,549
265,440
73,211
12,143
163,668
(15)
799,358
2008
250,934
37,683
180,025
(16)
468,642
2007
250,082
21,569
24,086
167,791
(17)
463,528
2009
172,229
44,764
265,440
48,807
14,369
99,615
(18)
645,224
2008
191,147
21,492
79,790
(19)
292,429
2007
201,839
75,930
23,195
22,802
97,334
(20)
421,100
2009
467,265
176,554
(21)
643,819
2008
468,426
820,236
(22)
1,288,662
2007
375,123
270,903
707,831
(23)
1,353,857
(1)
Represents grant date fair value
with respect to the fiscal year determined in accordance with
FASB ASC 718. See Note 4 Summary of Significant
Accounting Policies Unit-Based Compensation,
and Note 19 Equity Incentive Plans, to the
MagnaChip Semiconductor LLC audited consolidated financial
statements for the two months ended December 31, 2009, the
ten months ended October 25, 2009 and the years ended 2008
and 2007.
(2)
Consists of statutory severance
accrued during the two months ended December 31, 2009, ten
months ended October 25, 2009 and the years ended
December 31, 2008 and 2007, as applicable. See the section
subtitled Compensation Discussion and Analysis for a
description of the statutory severance benefit.
(3)
Includes the following personal
benefits paid to Mr. Park: (a) $125,073 equivalent to
one year prepayment of housing expenses for Mr. Parks
amended housing lease; (b) $28,386 for insurance premiums;
(c) $48,319 for other personal benefits (including
reimbursement of the use of a car, home leave flights, living
expenses and personal tax advisory expenses); and
(d) $89,252 of reimbursement for the difference between the
actual tax Mr. Park already paid and the hypothetical tax
he had to pay for the fiscal year 2008; and (e) $23,755 for
reimbursement of Korean tax.
(4)
Includes the following personal
benefits paid to Mr. Park: (a) $70,838 equivalent to
six months from $301,410 for prepayment of Mr. Parks
housing expenses for two years, $82,828 for seven months
rent for Mr. Parks new housing lease for two years
and $8,192 equivalent to housing expenses for six months
calculated from the key money deposit for Mr. Parks
new housing lease for two years; (b) $27,290 for insurance
premiums; (c) $35,787 for other personal benefits
(including reimbursement of the use of a car, home leave flights
and personal tax advisory expenses); (d) $78,913 of
reimbursement for the difference between the actual tax
Mr. Park already paid and the hypothetical tax he had to
pay for the fiscal year 2006 and 2007; (e) $24,962 for
Mr. Parks living expenses; and (f) $23,087 for
reimbursement of Korean tax and employee fringe benefits.
(5)
Includes the following personal
benefits paid to Mr. Park: (a) $154,798 equivalent to
one year prepayment of Mr. Parks housing expenses for
two years; (b) $42,684 for insurance premiums;
(c) $31,750 for other personal benefits (including personal
tax advisory expenses); (d) $1,188 of reimbursement in
relation to a Korean tax payment in 2006; and (e) $14,048
for reimbursement of Korean tax, the employee contribution
portion of the Korean national health insurance program and
employee fringe benefits.
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(6)
Includes the following personal
benefits paid to Mr. Hwang: (a) $7,832 for
reimbursement of the use of a car; and (b) $3,052 for
insurance premiums.
(7)
Includes the following personal
benefits paid to Mr. Hwang: (a) $9,541 for
reimbursement of the use of a car; (b) $9,070 for insurance
premiums; and (c) $1,682 for employee fringe benefits.
(8)
Includes the following personal
benefits paid to Mr. Hwang: (a) $11,056 for
reimbursement of the use of a car; and (b) $420 for
employee fringe benefits.
(9)
Under Mr. Rowes offer
letter (as supplemented), in 2007, Mr. Rowe elected to
receive a $528,000 advance on his first three years of potential
annual bonus payments at a rate of 80% of base pay. One-third of
this amount ($176,000) was earned in 2009.
(10)
Includes the following personal
benefits paid to Mr. Rowe: (a) $1,597 for
reimbursement of the use of a car; and (b) $10,634 for
insurance premiums.
(11)
Under Mr. Rowes offer
letter (as supplemented), in 2007, Mr. Rowe elected to
receive a $528,000 advance on his first three years of potential
annual bonus payments at a rate of 80% of base pay. One-third of
this amount ($176,000) was earned in 2008.
(12)
Includes the following personal
benefits paid to Mr. Rowe: (a) $1,983 for
reimbursement of the use of a car; (b) $13,027 for
insurance premiums; and (c) $10,663 for personal tax
advisory expenses.
(13)
Under Mr. Rowes offer
letter (as supplemented), in 2007, Mr. Rowe elected to
receive a $528,000 advance on his first three years of potential
annual bonus payments at a rate of 80% of base pay. One-third of
this amount ($176,000) was earned in 2007.
(14)
Includes the following personal
benefits paid to Mr. Rowe: (a) $121,826 of
Mr. Rowes relocation allowance when he returned to
the U.S. from an expatriate assignment in Korea; (b) $3,000
for contributions to a pension plan; (c) $4,967 for
personal tax advisory expenses; (d) $12,130 for insurance
premiums; and (e) $268 for reimbursement of the use of a
car.
(15)
Includes the following personal
benefits paid to Ms. Sakai: (a) $25,590 for four
months rent for Ms. Sakais new housing lease
and $32,650 equivalent to housing expenses for eight months
calculated from the key money deposit for Ms. Sakais
housing lease for two years; (b) $33,735 for reimbursement
of tuition expenses for Ms. Sakais children;
(c) $21,352 for Ms. Sakais home leave flights;
(d) $28,238 for insurance premiums; (e) $8,568 for
other personal benefits (including reimbursement of the use of a
car, personal tax advisory expenses, and communication
expenses); and (f) $13,535 for reimbursement of Korean tax.
(16)
Includes the following personal
benefits paid to Ms. Sakai: (a) $61,438 equivalent to
housing expenses for one year calculated from the key money
deposit for Ms. Sakais housing lease for two years;
(b) $38,046 for reimbursement of tuition expenses for
Ms. Sakais children; (c) $23,420 for
Ms. Sakais home leave flights; (d) $27,211 for
insurance premiums; (e) $21,460 for other personal benefits
(including reimbursement of the use of a car, personal tax
advisory expenses, and communication expenses); and
(f) $8,450 for reimbursement of Korean tax and employee
fringe benefits.
(17)
Includes the following personal
benefits paid to Ms. Sakai: (a) $72,661 equivalent to
housing expenses for one year calculated from the key money
deposit for Ms. Sakais housing lease for two years;
(b) $30,649 for reimbursement of tuition expenses for
Ms. Sakais children; (c) $18,709 for
Ms. Sakais home leave flights; (d) $28,140 for
insurance premiums; (e) $13,673 for other personal benefits
(including reimbursement of the use of a car, personal tax
advisory expenses, and communication expenses); and
(f) $3,959 for reimbursement of the employee contribution
portion of the Korean national health insurance program and
employee fringe benefits.
(18)
Includes the following personal
benefits paid to Mr. McFarland: (a) $23,351 for
reimbursement of tuition expenses for Mr. McFarlands
child; (b) $19,978 of reimbursement for the difference
between the actual tax Mr. McFarland already paid and the
hypothetical tax he had to pay for the fiscal year 2008;
(c) $20,227 for insurance premiums; (d) $1,089 for
other personal benefits (including reimbursement of the use of a
car and personal tax advisory expenses); and (e) $34,970
for reimbursement of Korean tax.
(19)
Includes the following personal
benefits paid to Mr. McFarland: (a) $21,334 for
reimbursement of tuition expenses for Mr. McFarlands
child; (b) $13,382 of reimbursement for the difference
between the actual tax Mr. McFarland already paid and the
hypothetical tax he had to pay for the fiscal year 2007;
(c) $19,736 for insurance premiums paid; (d) $12,296
for other personal benefits (including reimbursement of the use
of a car and personal tax advisory expenses); and
(e) $13,042 for reimbursement of Korean tax and employee
fringe benefits.
(20)
Includes the following personal
benefits paid to Mr. McFarland: (a) $35,837 for
reimbursement of tuition expenses for Mr. McFarlands
child; (b) $20,292 of reimbursement for the difference
between the actual tax Mr. McFarland already paid and the
hypothetical tax he had to pay for the fiscal year 2006;
(c) $23,534 for insurance premiums; (d) $5,050 for
other personal benefits (including reimbursement of the use of a
car and personal tax advisory expenses); and (e) $12,621
for reimbursement of Korean tax, the employee contribution
portion of the Korean national health insurance program and
employee fringe benefits.
(21)
Includes the following personal
benefits paid to Mr. Krakauer: (a) $145,460 for
Mr. Krakauers housing expenses; (b) $24,329 for
insurance premiums; and (c) $6,765 for other personal
benefits (including reimbursement of the use of a car and living
expenses).
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(22)
Includes the following personal
benefits paid to Mr. Krakauer: (a) $225,940 for
Mr. Krakauers housing expenses; (b) $97,827 for
reimbursement of living expenses; (c) $29,246 for
reimbursement of tuition expenses for Mr. Krakauers
children; (d) $23,860 for Mr. Krakauers home
leave flights; (e) $22,842 for insurance premiums;
(f) $22,404 for reimbursement of the use of two cars;
(g) $49,789 for personal tax advisory expenses;
(h) $248,302 of reimbursement for the difference between
the actual tax Mr. Krakauer already paid and the
hypothetical tax he had to pay for the fiscal year 2006, 2007
and 2008; (i) $29,604 for repatriation allowance paid to
Mr. Krakauer; and (j) $70,422 for reimbursement of
Korean tax and employee fringe benefits.
(23)
Includes the following personal
benefits paid to Mr. Krakauer: (a) $107,088 equivalent
to seven months from Mr. Krakauers old lease contract
and $101,874 equivalent to five months from $697,547 for
prepayment of his new lease contract for three years;
(b) $30,643 for reimbursement of living expenses;
(c) $71,683 for reimbursement of tuition expenses for
Mr. Krakauers children; (d) $20,242 for
Mr. Krakauers home leave flights; (e) $43,823
for insurance premiums; (f) $63,791 of reimbursement for
all commission and closing costs for the sale of
Mr. Krakauers house in the United States;
(g) $12,581 for personal tax advisory expenses;
(h) $21,748 for reimbursement of the use of two cars;
(i) $147,490 of reimbursement for the difference between
the actual tax Mr. Krakauer already paid and the
hypothetical tax he had to pay for the fiscal year 2006; and
(j) $86,868 for reimbursement of Korean tax, the employee
contribution portion of the Korean national health insurance
program and employee fringe benefits.
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All Other
All Other
Option
Stock
Awards:
Exercise or
Awards:
Number of
Base
Number of
Securities
Price of
Grant Date Fair
Shares of
Underlying
Option
Value of Stock
Stock or
Options
Awards
and Option
12/08/2009
2,240,000
$
1,769,600
12/08/2009
2,240,000
1.16
$
488,070
12/08/2009
840,000
$
663,600
12/08/2009
1,400,000
1.16
$
305,044
12/08/2009
560,000
$
442,400
12/08/2009
840,000
1.16
$
183,026
12/08/2009
336,000
$
265,440
12/08/2009
336,000
1.16
$
73,211
12/08/2009
336,000
$
265,440
12/08/2009
224,000
1.16
$
48,807
(1)
The vesting schedule applicable to each award is set forth below
in the section entitled Outstanding Equity Awards at
Fiscal Year End 2009.
(2)
Exceeds the per share fair market value of our common stock on
the grant date ($0.79), as determined by our board of directors
on such date based on various factors, including independent
third party valuations of our common stock.
(3)
Represents ASC 718 grant date fair value. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations Accounting
for Unit-based Compensation for a description of how we
valued our units as a private company.
Outstanding Equity Awards at Fiscal Year End 2009(1)
Option Awards
Stock Awards
Number of
Market
Number of
Number of
Shares or
Value of
Securities
Securities
Units of
Shares or
Underlying
Underlying
Stock That
Units of
Unexercised
Unexercised
Option
Option
Have Not
Stock That
Options (#)
Options (#)
Exercise
Expiration
Vested
Have Not
2,240,000
1.16
12/8/2019
1,478,400
1,167,936
1,400,000
1.16
12/8/2019
554,400
437,976
840,000
1.16
12/8/2019
369,600
291,984
336,000
1.16
12/8/2019
221,760
175,190
224,000
1.16
12/8/2019
221,760
175,190
(1)
All of our outstanding common and preferred units and
outstanding options as of November 9, 2009 were terminated
as of November 9, 2009 pursuant to our reorganization
proceedings.
(2)
An installment of 34% of the common units subject to the options
will vest and become exercisable on December 8, 2010, an
additional 9% of the options vest on the completion of the next
period of three months, an additional 8% of the options vest
upon the completion of each of
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the next three-month periods, an additional 9% of the options
vest upon the completion of the next quarter, and an additional
8% of the options vest upon the completion of each of the next
three quarters.
(3)
The restrictions on the units lapse on December 8, 2010 as
to 33% of the total amount of restricted common units originally
awarded and on December 8, 2011 as to 33% of the total
amount of restricted common units originally awarded.
(4)
During fiscal year 2009, there was no established public trading
market for our outstanding common equity. The reported value
represents the product of multiplying the number of unvested
restricted units by the value of our units of $0.79 as of
December 31, 2009, the last day of our fiscal year. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations Accounting
for Unit-based Compensation for a description of how we
valued our units while as a private company.
(5)
Mr. Krakauer resigned as our President, Chief Financial
Officer and director on April 10, 2009.
(1)
All of our outstanding common and preferred units and
outstanding options as of November 9, 2009 were terminated
as of November 9, 2009 pursuant to our reorganization
proceedings.
(2)
The restrictions on the units lapsed on December 8, 2009 as
to 34% of the total amount of restricted common units originally
awarded.
(3)
During fiscal year 2009, there was no established public trading
market for our outstanding common equity. The reported value
represents the product of multiplying the number of vested units
by the value of our units of $0.79 as of the date of vesting.
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any accrued benefits that were earned and payable as of
December 31, 2009, including any short-term cash incentive
amounts earned by, or any discretionary bonus amounts payable
to, the executive officer for 2009 performance; or
payments and benefits to the extent they are provided generally
to all salaried employees and do not discriminate in scope,
terms or operation in favor of the named executive officers.
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Value of
Cash
Equity
Severance
Continuation
Award
Payment
of Benefits
Acceleration
Total
Event
($)(1)
($)(2)
($)(3)
($)
(a
)(4)
450,000
314,785
(5)
583,968
1,348,753
(b
)(4)
900,000
629,570
(6)
1,167,936
2,697,506
(c
)
1,167,936
1,167,936
(c
)
437,976
437,976
(a
)
110,000
110,000
(c
)
291,984
291,984
(a
)
130,000
81,834
(7)
211,834
(c
)
175,190
175,190
(a
)
94,210
49,808
(8)
144,018
(c
)
175,190
175,190
(a)
Termination without cause in absence of change in control
(b)
Termination without cause within 9 months following a
change in control
(c)
Change in control
(1)
Represents cash severance payments payable to our named
executive officers pursuant to our employment agreements with
them, prior to giving effect to the terms thereof relating to
the Employee Retirement Benefit Security Act of Korea. Other
than Mr. Rowe, who is entitled to a lump sum cash severance
payment, cash severance payments are paid monthly in accordance
with our regular payroll procedures.
Pursuant to the Employee Retirement Benefit Security Act,
Mr. Hwang, Ms. Sakai and Mr. McFarland are
entitled to certain statutory severance benefits from us upon
the termination of their employment with us for any reason. See
Management Compensation Discussion and
Analysis Perquisites and Other Benefits for
additional information. For these executives, the amounts
reflected in this column would be reduced to the extent we are
obligated to make these statutory severance payments.
(2)
Calculated assuming the continuation of benefits for the
applicable period at the same dollar value of 2009 benefits.
(3)
Reflects the aggregate value of the accelerated vesting of the
named executive officers unvested stock options and
restricted common units, as applicable.
Because all of our options to purchase common units outstanding
as of December 31, 2009 have an exercise price greater than
the fair market value of our common units of $0.79 as of
December 31, 2009, no additional value is represented by
the acceleration of outstanding unvested common units subject to
such awards and therefore, the value of accelerated vesting of
unvested stock options is $0.00.
Because all of our restricted common units issued under the 2009
Plan outstanding as of December 31, 2009 were issued
without any required monetary payment, the amounts were
calculated by multiplying (i) the number of outstanding
restricted common units subject to award vesting on
December 31, 2009 by (ii) the fair market value of our
common units of $0.79 as of December 31, 2009.
(4)
Reflected benefits are also payable in connection with
Mr. Parks resignation for good reason. See
Management Agreements with Executives and
Potential Payments Upon Termination or Change in
Control Sang Park.
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(5)
Represents the aggregate value of the continuation of health
insurance benefits for Mr. Park and his eligible dependents
for twelve months following the date of termination.
Mr. Park is also entitled to tax equalization benefits, tax
preparation services, the reimbursement of costs associated with
one home leave flight and, for a period of twelve months
post-termination, international health insurance benefits, paid
housing and the use of a car and a driver.
(6)
Represents the aggregate value of the continuation of health
insurance benefits for Mr. Park and his eligible dependents
for twenty-four months following the date of termination.
Mr. Park is also entitled to tax equalization benefits, tax
preparation services, the reimbursement of costs associated with
two home leave flights and, for a period of twenty-four months
post-termination, international health insurance benefits, paid
housing and the use of a car and a driver.
(7)
Represents the aggregate value of the continuation of health
insurance benefits for Ms. Sakai and her eligible
dependents for six months following the date of termination.
Ms. Sakai is also entitled to tax equalization benefits,
tax preparation services, reimbursement of costs associated with
one home leave flight and, for a period of six months
post-termination, paid housing, the use of a car and a driver
and child tuition benefits.
(8)
Represents the aggregate value of continuation of health
insurance benefits for Mr. McFarland and his eligible
dependents for six months following the date of termination.
Mr. McFarland is also entitled to tax equalization, tax
preparation services and, for a period of six months
post-termination, child tuition benefits.
Number
Present
Payments
of Years
Value of
During
of Credited
Accumulated
the Last
Statutory Severance with
Multiplier for Partial Period
14
686,058
Statutory Severance
3
68,155
Statutory Severance
5
81,129
(1)
Actual present value of the accumulated benefit, as if the
employment of the named executive officer had been terminated on
the last day of our fiscal year ended December 31, 2009.
Fees
Earned
or Paid
Option
All Other
in Cash
Awards
Compensation
Total
($)
($)(1)
($)
($)
50,000
25,751(4
)
75,751
50,000
50,000
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(1)
All of our common and preferred units and outstanding options,
including grants made to our directors outstanding prior to the
effective date of our Chapter 11 reorganization of
November 9, 2009, were terminated as of such date pursuant
to our reorganization proceedings.
(2)
Resigned as a director effective November 9, 2009.
(3)
Consists of annual retainer of $50,000 paid to non-employee
directors prior to our reorganization proceedings.
(4)
Represents payments for insurance premiums.
(5)
Each of our non-employee directors appointed to our board of
directors subsequent to the effective date of our
Chapter 11 reorganization did not receive any compensation
in 2009.
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*
Less than one percent.
(1)
Includes any outstanding shares of common stock held and, to the
extent applicable, shares issuable upon the exercise or
conversion of any securities that are exercisable or convertible
within 60 days
of ,
2010.
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Amount and
Nature of
Name and Address
Beneficial
Percent of
218,927,386
70.3
%
23,555,229
7.7
%
20,710,045
6.7
%
2,240,000
*
840,000
*
560,000
*
336,000
*
336,000
*
*
*
*
*
*
*
*
4,760,000
1.6
%
*
Less than one percent.
(1)
Includes any outstanding common units held and, to the extent
applicable, shares issuable upon the exercise or conversion of
any securities that are exercisable or convertible within
60 days of December 31, 2009.
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(2)
The following entities and person are collectively referred to
in this table as the Avenue Capital Group:
(i) Avenue Investments, L.P. (Avenue
Investments), (ii) Avenue International Master, L.P.
(Avenue International Master), (iii) Avenue
International, Ltd. (Avenue International), the sole
limited partner of Avenue International Master, (iv) Avenue
International Master GenPar, Ltd. (Avenue International
GenPar), the general partner of Avenue International
Master, (v) Avenue Partners, LLC (Avenue
Partners), the general partner of Avenue Investments and
the sole shareholder of Avenue International GenPar,
(vi) Avenue-CDP Global Opportunities Fund, L.P. (CDP
Global), (vii) Avenue Global Opportunities
Fund GenPar, LLC (CDP Global GenPar), the
general partner of CDP Global, (viii) Avenue Special
Situations Fund IV, L.P. (Avenue Fund IV),
(ix) Avenue Capital Partners IV, LLC (Avenue Capital
IV), the general partner of Avenue Fund IV,
(x) GL Partners IV, LLC (GL IV), the managing
member of Avenue Capital IV, (xi) Avenue Special Situations
Fund V, L.P. (Avenue Fund V),
(xii) Avenue Capital Partners V, LLC (Avenue
Capital V), the general partner of Avenue Fund V,
(xiii) GL Partners V, LLC (GL V), the
managing member of Avenue Capital V, (xiv) Avenue
Capital Management II, L.P. (Avenue Capital II), the
investment advisor to Avenue Investments, Avenue International
Master, CDP Global, Avenue Fund IV and Avenue Fund V
(collectively, the Avenue Funds), (xv) Avenue
Capital Management II GenPar, LLC (GenPar), the
general partner of Avenue Capital II, and (xvi) Marc Lasry,
the managing member of GenPar, GL V, GL IV, CDP Global
GenPar and Avenue Partners and a director of Avenue
International GenPar.
The Avenue Capital Group beneficially owns 218,927,386 common
units, including the 4,447,680 common units the Avenue Capital
Group may receive through the exercise of outstanding warrants.
The Avenue Funds have the sole power to vote and dispose of the
common units held by them. Avenue International, Avenue
International GenPar, Avenue Partners, CDP Global GenPar, Avenue
Capital IV, GL IV, Avenue Capital V, GL V, Avenue
Capital II, GenPar and Marc Lasry have the shared power to vote
and dispose of the common units held by the Avenue Funds, all of
whom disclaim any beneficial ownership except to the extent of
their respective pecuniary interest. The address for all of the
Avenue Funds is 535 Madison Avenue, New York, NY 10022.
Avenue Fund V beneficially owns 88,938,119 common units, or
28.8%, which represents 86,756,399 common units and 2,181,720
common units issuable upon the exercise of warrants held by
Avenue Fund V. The securities owned by Avenue Fund V
may also be deemed to be beneficially owned by Avenue
Capital V, its general partner; GL V, the managing
member of Avenue Capital V; Avenue Capital II, its investment
adviser; GenPar, the general partner of Avenue Capital II; and
Mr. Lasry, the managing member of GenPar and GL V; all of
whom disclaim any beneficial ownership except to the extent of
their respective pecuniary interest. For further information
regarding Avenue Fund V, please see above.
Avenue Fund IV beneficially owns 70,458,255 common units, or
22.8%, which represents 69,186,975 common units and 1,271,280
common units issuable upon the exercise of warrants held by
Avenue Fund IV. The securities owned by Avenue Fund IV
may also be deemed to be beneficially owned by Avenue Capital
IV, its general partner; GL IV, the managing member of Avenue
Capital IV; Avenue Capital II, its investment adviser; GenPar,
the general partner of Avenue Capital II; and Mr. Lasry,
the managing member of GenPar and GL IV; all of whom disclaim
any beneficial ownership except to the extent of their
respective pecuniary interest. For further information regarding
Avenue Fund IV, please see above.
Avenue International Master beneficially owns 35,568,286 common
units, or 11.6%, which represents 35,004,706 common units and
563,580 common units issuable upon the exercise of warrants held
by Avenue International Master. The securities owned by Avenue
International Master may also be deemed to be beneficially owned
by Avenue International, its sole limited partner; Avenue
International GenPar, its general partner; Avenue Partners, the
sole shareholder of Avenue International GenPar; Avenue Capital
II, its investment adviser; GenPar, the general partner of
Avenue Capital II; and Mr. Lasry, the managing member of
GenPar and Avenue Partners and a director of Avenue
International GenPar; all of whom disclaim any beneficial
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ownership except to the extent of their respective pecuniary
interest. For further information regarding Avenue International
Master, please see above.
CDP Global beneficially owns 12,104,679 common units, or 3.9%,
which represents 11,862,159 common units and 242,520 common
units issuable upon the exercise of warrants held by CDP Global.
The securities owned by CDP Global may also be deemed to be
beneficially owned by CDP Global GenPar, its general partner;
Avenue Capital II, its investment adviser; GenPar, the general
partner of Avenue Capital II; and Mr. Lasry, the managing
member of GenPar and CDP Global GenPar; all of whom disclaim any
beneficial ownership except to the extent of their respective
pecuniary interest. For further information regarding CDP
Global, please see above.
Avenue Investments beneficially owns 11,858,047 common units, or
3.9%, which represents 11,669,467 common units and 188,580
common units issuable upon the exercise of warrants held by
Avenue Investments. The securities owned by Avenue Investments
may also be deemed to be beneficially owned by Avenue Partners,
its general partner; Avenue Capital II, its investment adviser;
GenPar, the general partner of Avenue Capital II; and
Mr. Lasry, the managing member of GenPar and Avenue
Partners; all of whom disclaim any beneficial ownership except
to the extent of their respective pecuniary interest. For
further information regarding Avenue Investments, please see
above.
(3)
Represents 23,555,229 common units that may be deemed to be
beneficially owned by Southpaw Asset Management LP
(Southpaw Management) as it serves as the
discretionary investment manager for several funds and accounts
(the Managed Accounts). The common units deemed
beneficially owned by Southpaw Management may be deemed
beneficially owned by Southpaw Holdings LLC (Southpaw
Holdings), which is the general partner of Southpaw
Management, and by each of Kevin Wyman and Howard Golden, who
are principals of Southpaw Holdings.
Southpaw Credit Opportunity Master Fund, L.P (Southpaw
Master Fund) beneficially owns 22,885,269 common units.
The securities owned by Southpaw Master Fund may also be deemed
beneficially owned by Southpaw Management, in its capacity as
the investment manager of Southpaw Master Fund, and Southpaw GP
LLC (Southpaw GP), in its capacity as general
partner of Southpaw Master Fund. The shares deemed beneficially
owned by Southpaw Management may also be deemed beneficially
owned by Southpaw Holdings, which is the general partner of
Southpaw Management, and by each of Kevin Wyman and Howard
Golden, who are principals of Southpaw Holdings and Southpaw GP.
The business address of each of Southpaw Master Fund, Southpaw
Management, Southpaw GP, Southpaw Holdings, and Messrs. Wyman
and Golden is 2 Greenwich Office Park, 1st floor, Greenwich, CT
06831. For the avoidance of doubt, none of Southpaw Management,
Southpaw GP, Southpaw Holdings, or Messrs. Wyman and Golden hold
common units for their personal accounts, and each reports
beneficial ownership of common units held by Southpaw Master
Fund and the Managed Accounts due solely to the fact that such
persons have the ability to vote and/or dispose of the common
units held by Southpaw Master Fund and the Managed Accounts.
(4)
Represents 20,710,045 common units held by Tennenbaum
Multi-Strategy Fund SPV (Cayman) Ltd. (Tennenbaum
Cayman SPV). Tennenbaum Capital Partners, LLC is the
investment manager of Tennenbaum Cayman SPV, and may be deemed
to be the beneficial owner of the common units held by such
principal unitholders. Tennenbaum Capital Partners, LLC,
however, disclaims beneficial ownership of these common units,
except to the extent of its pecuniary interest therein. The
address for Tennenbaum Cayman SPV is 2951 28th Street,
Suite 1000, Santa Monica, CA 90405.
(5)
Represents 2,240,000 common units, of which 1,478,400 are
subject to a right of repurchase by MagnaChip.
(6)
Represents 840,000 common units, of which 554,400 are subject to
a right of repurchase by MagnaChip.
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(7)
Represents 560,000 common units, of which 369,600 are subject to
a right of repurchase by MagnaChip.
(8)
Represents 336,000 common units, of which 221,760 are subject to
a right of repurchase by MagnaChip.
(9)
Represents 336,000 common units, of which 221,760 are subject to
a right of repurchase by MagnaChip.
(10)
The address for Messrs. Elkins, Klein and Tan is 535
Madison Avenue, New York, NY 10022.
(11)
Mr. Krakauer resigned as our President, Chief Financial
Officer and director on April 10, 2009.
(12)
Represents 4,760,000 common units, of which 3,141,600 are
subject to a right of repurchase by MagnaChip.
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all of the outstanding common units of MagnaChip Semiconductor
LLC will be automatically converted into shares of our common
stock at a ratio of ;
each outstanding option to purchase common units of MagnaChip
Semiconductor LLC will be automatically converted into an option
to
purchase shares
of our common stock at an exercise price of
$ per share; and
each outstanding warrant to purchase common units of MagnaChip
Semiconductor LLC will be automatically converted into a warrant
to
purchase shares
of our common stock at an exercise price of
$ per share.
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the transaction is approved by the board of directors before the
date the interested stockholder attained that status;
upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction
commenced; or
on or after the date the business combination is approved by the
board of directors and authorized at a meeting of stockholders,
and not by written consent, by at least two-thirds of the
outstanding voting stock that is not owned by the interested
stockholder.
any merger or consolidation involving the corporation and the
interested stockholder;
any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder; or
the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
Authorized but Unissued Preferred
Stock.
Our board of directors is authorized
to issue, without stockholder approval, preferred stock with
such terms as the board of directors may determine. For more
information, see Description of Capital Stock
Preferred Stock.
Calling Special Stockholder
Meetings.
Our bylaws provide that special
meetings of our stockholders may be called only pursuant to the
request of our board of directors, by the chairman of our board
of directors, by our chief executive officer or by the holders
of at least 25% of the voting power of all then outstanding
shares of common stock of the company. In addition, stockholders
may not fill vacancies on the board of directors and may not act
by written consent.
Advanced Notice
Procedures.
Stockholders must timely provide
advance notice, with specific requirements as to form and
content, of nominations of directors or the proposal of business
to be voted on at an annual meeting.
Classified Board of Directors.
Our
bylaws provide that our board of directors will be divided into
three classes of directors, with the classes to be as nearly
equal in number as possible. Prior to consummation of this
offering, our board will assign each of the current members to
their respective class as the board shall determine in its sole
discretion, subject to the foregoing requirement that the
classes be nearly equal in size. We anticipate we will have a
classified board, with two directors in Class I, two
directors in Class II and three directors in
Class III. The members of each class will serve for a term
expiring at the third succeeding annual meeting of stockholders.
As a result, approximately one-third of our board will be
elected each year. A replacement director shall serve in the
same class as the former director he or she is replacing. The
classification of our board will have the effect of making it
more difficult for stockholders to change the composition of our
board.
Other Board of Director
Requirements.
Our authorized number of
directors may be changed only by resolution of the board of
directors and all vacancies, including newly created
directorships, may, except as otherwise required by law, be
filled by the affirmative vote of a majority of directors then
in office, even if less than a quorum. In addition, directors
may only be removed for cause and then only by a vote of holders
of a majority of the shares entitled to vote at an election of
directors.
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Conflicts of Interest.
Delaware law
permits corporations to adopt provisions renouncing any interest
or expectancy in certain opportunities that are presented to the
corporation or its officers, directors or stockholders. Our
certificate of incorporation renounces any interest or
expectancy that we have in, or right to be offered an
opportunity to participate in, specified business opportunities.
Our certificate of incorporation provides that none of our
non-employee directors, non-employee 5% or greater stockholders
or their affiliates will have any duty to refrain from engaging
in a corporate opportunity in the same or similar lines of
business in which we or our affiliates now engage or propose to
engage. In addition, in the event that any such director,
stockholder or affiliate acquires knowledge of a potential
transaction or other business opportunity which may be a
corporate opportunity for us or our affiliates, such person will
have no duty to communicate or offer such transaction or
business opportunity to us and may take any such opportunity for
themselves or offer it to another person or entity. Our
certificate of incorporation does not renounce our interest in
any business opportunity that is expressly offered to a director
solely in his or her capacity as a director of the company.
Director and Officer Indemnification
. We will
indemnify officers and directors against losses that they may
incur in investigations and legal proceedings resulting from
their services to us, which may include services in connection
with takeover defense measures.
Supermajority Voting Requirements.
The
affirmative vote of the holders of at least
66
2
/
3
%
in voting power of all shares of our stock entitled to vote
generally in the election of directors, voting together as a
single class, is required in order for our stockholders to
alter, amend or repeal the provisions of our bylaws or amend or
repeal of certain provisions of our certificate of incorporation
including the following:
classified board (the election and term of our directors);
the resignation and removal of directors;
the provisions regarding competition and corporate opportunities;
the provisions regarding stockholder action by written consent;
the provisions regarding calling special meetings of
stockholders;
filling vacancies on our board and newly created directorships;
the advance notice requirements for stockholder proposals and
director nominations; and
indemnification provisions.
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temporary delays caused by closing of our or the
depositarys transfer books;
the payment of fees, charges, taxes and other governmental
charges; or
where deemed necessary or advisable by the depositary or us in
good faith due to any requirement of any U.S. or foreign
laws, government, governmental body or commission, any
securities exchange on which the depositary shares are listed or
governmental regulations relating to the depositary shares or
the withdrawal of the underlying shares of common stock.
have agreed to perform our respective obligations specifically
set forth in the deposit agreement without gross negligence or
bad faith;
are not liable if either of us by law or circumstances beyond
our control is prevented from, or delayed in, performing any
obligation under the deposit agreement, including, without
limitation, requirements of any present or future law,
regulation, governmental or regulatory authority or stock
exchange of any applicable jurisdiction, any present or future
provision of our certificate of incorporation and bylaws, on
account of possible civil or criminal penalties or restraint,
any provisions of or governing the deposited securities, any act
of God, war or other circumstances beyond each of our control as
set forth in the deposit agreement;
are not liable if either of us exercises or fails to exercise
the discretion permitted under the deposit agreement, the
provisions of or governing the deposited shares of common stock
or our certificate of incorporation and bylaws;
are not liable for any action or inaction on the advice or
information of legal counsel, accountants, any person presenting
common shares for deposit, holders and beneficial owners (or
authorized representatives) of depositary shares, or any person
believed in good faith to be competent to give such advice or
information;
are not liable for the inability of any holder to benefit from
any distribution, offering, right or other benefit if made in
accordance with the provisions of the deposit agreement;
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have no obligation to become involved in a lawsuit or other
proceeding related to any deposited shares of common stock or
the depositary shares or the deposit agreement on behalf of
holders of depositary shares or on behalf of any other party;
may rely upon any documents we believe in good faith to be
genuine and to have been signed or presented by the proper
party; and
shall not incur any liability for any indirect, special,
punitive or consequential damages for any breach of the terms of
the deposit agreement.
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one percent of the number of shares of common stock then
outstanding, which will equal
approximately shares
immediately after this offering; or
the average weekly trading volume of the common stock on all
national securities exchanges
and/or
reported through the automated quotation system of a registered
securities association during the four calendar weeks preceding
the sale.
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TO
NON-U.S.
HOLDERS
an individual citizen or resident of the United States;
a corporation or other entity taxable as a corporation created
or organized in the United States or under the laws of the
United States or any state thereof or the District of Columbia;
an estate whose income is subject to U.S. federal income
tax regardless of its source; or
a trust (x) whose administration is subject to the primary
supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all
substantial decisions of the trust or (y) which has made a
valid election to be treated as a U.S. person.
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the gain is effectively connected with a U.S. trade or
business of the
non-U.S. holder
(and attributable to a permanent establishment in the United
States if a tax treaty applies);
the
non-U.S. holder
is an individual who is present in the United States for a
period or periods aggregating 183 days or more during the
taxable year in which the sale or disposition occurs and certain
other conditions are met; or
our common stock constitutes a U.S. real property interest
by reason of our status as a United States real property
holding corporation for U.S. federal income tax
purposes at any time within the shorter of the five-year period
preceding the date of disposition or the holders holding
period for shares of our common stock. We believe that we will
not be, immediately after our conversion to a corporation, and
we believe that we will not become, a United States real
property holding corporation for U.S. federal income
tax purposes. If we become a United States real property
holding corporation, so long as our common stock is
regularly traded on an established securities
market, only a
non-U.S. holder
who, actually or constructively, holds or held (at any time
during the shorter of the five year period preceding the date of
disposition or the holders holding period) more than 5% of
shares of our common stock will be subject to U.S. federal
income tax on the disposition of shares of our common stock.
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Number of
No
Full
$
$
$
$
No
Full
$
$
$
$
140
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F-2
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MagnaChip Semiconductor LLC
F-3
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CONSOLIDATED BALANCE SHEETS
Successor
Predecessor
December 31,
December 31,
2009
2008
(In thousands of US dollars, except unit data)
$
64,925
$
4,037
11,768
74,233
76,295
63,407
47,110
3,433
4,701
12,625
9,268
3,433
4,799
222,056
157,978
156,337
183,955
50,158
34,892
10,542
7,714
14,238
14,631
$
453,331
$
399,170
$
59,705
$
70,158
7,190
15,040
22,114
38,554
95,000
618
750,000
3,937
3,735
93,564
972,487
61,132
72,409
61,939
10,536
9,874
237,641
1,044,300
142,669
142,669
55,135
52,923
168,700
3,150
(1,963
)
(995,007
)
(6,182
)
151,135
215,690
(787,799
)
$
453,331
$
399,170
F-4
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
Successor
Predecessor
Ten-Month
Two-Month
Period
Period Ended
Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
(In thousands of US dollars, except unit data)
$
111,082
$
448,984
$
601,664
$
709,508
90,408
311,139
445,254
578,857
20,674
137,845
156,410
130,651
14,540
56,288
81,314
82,710
14,741
56,148
89,455
90,805
439
13,370
12,084
(8,607
)
24,970
(27,729
)
(54,948
)
(1,258
)
(31,165
)
(76,119
)
(60,311
)
9,338
43,437
(210,406
)
(4,732
)
804,573
8,080
816,845
(286,525
)
(65,043
)
(527
)
841,815
(314,254
)
(119,991
)
1,946
7,295
11,585
8,835
(2,473
)
834,520
(325,839
)
(128,826
)
510
6,586
(91,455
)
(51,724
)
$
(1,963
)
$
841,106
$
(417,294
)
$
(180,550
)
6,317
13,264
12,031
$
(2,473
)
$
828,203
$
(339,103
)
$
(140,857
)
$
(1,963
)
$
834,789
$
(430,558
)
$
(192,581
)
$
(0.01
)
$
15.65
$
(6.43
)
$
(2.69
)
$
0.00
$
0.12
$
(1.73
)
$
(0.99
)
$
(0.01
)
$
15.77
$
(8.16
)
$
(3.68
)
300,862,764
52,923,483
52,768,614
52,297,192
F-5
Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN UNITHOLDERS
EQUITY
Accumulated
Additional
Other
Common Units
Paid-In
Accumulated
Comprehensive
Units
Amount
Capital
deficit
Income (loss)
Total
(In thousands of US dollars, except unit data)
52,720,784
$
52,721
$
2,451
$
(370,314
)
$
30,601
$
(284,541
)
124,938
125
26
151
(1,500
)
(2
)
(4
)
(6
)
604
604
(12,031
)
(12,031
)
(1,554
)
(1,554
)
(180,550
)
(180,550
)
(3,477
)
(3,477
)
3,925
3,925
(180,102
)
52,844,222
$
52,844
$
3,077
$
(564,449
)
$
31,049
$
(477,479
)
161,460
161
22
183
(82,199
)
(82
)
(414
)
(496
)
465
465
(13,264
)
(13,264
)
(417,294
)
(417,294
)
(864
)
(864
)
120,950
120,950
(297,208
)
52,923,483
$
52,923
$
3,150
$
(995,007
)
$
151,135
$
(787,799
)
233
233
166
166
(6,317
)
(6,317
)
841,106
841,106
(30,395
)
(30,395
)
340
340
811,051
52,923,483
$
52,923
$
3,549
$
(160,218
)
$
121,080
$
17,334
F-6
Table of Contents
F-7
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
Successor
Predecessor
Two-Month
Period
Ten-Month
Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
(In thousands of US dollars)
$
(1,963
)
$
841,106
$
(417,294
)
$
(180,550
)
11,218
38,255
71,960
163,434
1,851
8,835
14,026
18,834
836
16,290
3,919
(10,077
)
(44,224
)
215,571
5,398
17
95
(3,094
)
(68
)
5
(9,230
)
(3,630
)
(1,120
)
42,539
10,106
2,199
233
465
604
4,263
1,076
(805,649
)
(667
)
2,722
(400
)
51
16,443
(12,930
)
31,025
(46,504
)
6,739
(1,163
)
11,174
(18,398
)
1,755
31
1,016
971
678
1,054
1,490
952
(14,144
)
6,316
(5,063
)
26,442
(12,511
)
(11,452
)
(19,887
)
(6,021
)
(5,687
)
28,295
23,953
(5,504
)
(877
)
507
121
114
3,192
5,896
7,401
9,840
1,188
39
1,295
5,007
(1,389
)
(4,320
)
(6,505
)
(7,151
)
(125
)
(516
)
(4,471
)
(1,557
)
2,108
44,692
(18,388
)
(23,711
)
(4,263
)
(1,076
)
(2,155
)
43,616
(18,388
)
(23,711
)
F-8
Table of Contents
Successor
Predecessor
Two-Month
Period
Ten-Month
Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
(In thousands of US dollars)
37
329
3,122
364
9,375
4,204
(1,258
)
(7,513
)
(28,608
)
(85,294
)
(70
)
(366
)
(1,052
)
(1,256
)
11,409
(13,517
)
(329
)
23
(96
)
484
176
(1,597
)
13,138
(39,571
)
(81,806
)
180,000
130,100
35,280
183
151
(33,250
)
(165,000
)
(50,100
)
(496
)
(6
)
2,030
14,687
80,145
1,098
4,758
(17,036
)
544
(2,654
)
63,542
(60,308
)
(24,828
)
67,579
4,037
64,345
89,173
$
64,925
$
67,579
$
4,037
$
64,345
$
955
$
7,962
$
39,276
$
57,468
$
669
$
8,074
$
13,207
$
5,680
F-9
Table of Contents
1.
General
2.
Voluntary
Reorganization under Chapter 11
F-10
Table of Contents
3.
Fresh-Start
Reporting
F-11
Table of Contents
F-12
Table of Contents
Predecessor
Successor (*)
October 25,
Effects of
Fresh-Start
October 25,
2009
Plan
Valuation
2009
$
14,610
$
52,969
(a,b,f,j)
$
$
67,579
52,015
(52,015
)(b)
89,314
89,314
51,389
17,903
(n)
69,292
5,189
5,189
17,477
(179
)(c)
(1,233
)(o)
16,065
229,994
775
16,670
247,439
172,358
(13,940
)(p)
158,418
26,886
28,314
(q)
55,200
23,947
235
(d)
355
(r)
24,537
$
453,185
$
1,010
$
31,399
$
485,594
$
77,395
$
$
$
77,395
13,515
506
(e)
14,021
22,621
6,383
(f)
29,004
95,000
(95,000
)(a)
463
(a)
463
3,533
3,533
798,043
(798,043
)(g)
1,010,107
(885,691
)
124,416
61,287
(a)
61,287
71,029
71,029
10,468
10,468
1,091,604
(824,404
)
267,200
F-13
Table of Contents
Predecessor
Successor (*)
October 25,
Effects of
Fresh-Start
October 25,
2009
Plan
Valuation
2009
148,986
(148,986
)(h)
148,986
(148,986
)
52,923
(52,923
)(i)
49,539
(g,j)
49,539
3,383
166
(s)
(3,549
)(i)
2,533
(g)
166,322
(m)
168,855
(964,791
)
160,218
(k)
773,174
(l)
31,399
(l)
121,080
(121,080
)(k)
(787,405
)
974,400
31,399
218,394
$
453,185
$
1,010
$
31,399
$
485,594
(a)
To record the issuance of a new term loan in the amount of
$61,750 thousand and 35% cash payment of $33,250 thousand in
complete satisfaction of the first lien lender claims arising
from the senior secured credit facility (short-term borrowings)
of $95,000 thousand. The new term loan was accounted for as
current portion of long-term debt of $463 thousand and long-term
debt of $61,287 thousand.
(b)
Cash in Korea Exchange Bank account of $52,015 thousand,
restricted under forbearance agreement, was released from
restriction according to the debt restructuring by the Plan of
Reorganization.
(c)
To record impairment of remaining capitalized costs of $166
thousand in connection with entering into the senior secured
credit facility, impairment of prepaid agency fee of $14
thousand of the senior secured credit facility and
capitalization of costs of $1 thousand in connection with the
issuance of the new term loan.
(d)
To record capitalization of costs of $235 thousand in connection
with the issuance of the new term loan.
(e)
To record capitalization of costs incurred in connection with
the issuance of the new term loan of $236 thousand and 10% of
the general unsecured claims of $270 thousand to be settled in
cash.
(f)
To record professional fees of $7,459 thousand incurred in
relation to the Reorganization Proceeding of which $1,076
thousand was paid in cash with the remainder of $6,383 thousand
recorded as accrued expenses.
Table of Contents
(g)
To record the discharge of liabilities subject to compromise of
$798,043 thousand and the issuances of new common units of
$14,259 thousand and new warrants of $2,533 thousand. Current
portion of long-term debt of $750,000 thousand and its accrued
interest of $45,341 thousand as of October 25, 2009 were
discharged in exchange for new common units representing 6% of
the Successor Companys outstanding common units of $14,259
thousand to two classes of creditors of the Company and new
warrants representing 5% of the Successor Companys
outstanding common units of $2,533 thousand to two classes of
creditors of the Company. General unsecured claims of $2,702
thousand were also discharged in exchange for a cash payment
equal to 10% of the allowed claims of $270 thousand.
(h)
To record the retirement of Series B redeemable convertible
preferred units of $148,986 thousand without consideration in
accordance with the Plan of Reorganization.
(i)
To record the retirement of old equity interests without
consideration in accordance with the Plan of Reorganization.
(j)
To record the issuances of new common units of $35,280 thousand.
(k)
To record the elimination of the Predecessor Companys
accumulated deficit of $160,218 thousand and accumulated other
comprehensive income of $121,080 thousand.
(l)
To record reorganization items, net of $804,573 thousand.
(m)
To record $166,322 thousand of additional paid-in capital.
Reconciliation of total enterprise value to the reorganization
value of the Company, determination of goodwill and additional
paid-in capital and allocation of the total enterprise value to
common unitholders are as below:
$
212,564
67,579
205,451
485,594
485,594
$
$
485,594
(205,450
)
(61,750
)
2,533
49,539
$
166,322
$
215,861
(1)
The Plan of Reorganization, which was confirmed by the
bankruptcy court, includes an estimated total value attributable
to debt and equity of $225.0 million. This amount does not
include cash balances and non-financial liabilities as of the
Reorganization Effective Date.
(n)
To record the fair value of inventories, net, as estimated by
the Predecessor Company, fair value of finished goods was
estimated by subtracting from average selling prices the sum of
costs of disposal and a reasonable profit allowance for the
selling effort. Fair value of
work-in-process
was estimated by subtracting from average selling prices the sum
of costs to complete, costs of disposal and a reasonable profit
allowance for the completing and selling effort based on profit
for similar finished goods. Fair value of raw materials was
estimated by current replacement costs.
F-15
Table of Contents
(o)
To record the fair value of advance payments as estimated by the
Predecessor Company in conjunction with an independent third
party valuation specialist. For the value of advance payments,
the Orderly Liquidation Value (OLV) was estimated
using the cost and market approaches.
(p)
To record the fair value of property, plant and equipment, net
as estimated by the Predecessor Company in conjunction with an
independent third party valuation specialist. For the value of
certain fixed assets, the OLV was estimated using the cost and
market approaches. This premise of value was chosen given the
fact that the Company was just emerging from bankruptcy
proceedings.
(q)
To record the fair value of intangible assets, net as estimated
by the Predecessor Company. Discrete valuations of each of the
reporting units identified intangible assets related to
technology, contracts, trade names, customer-based intangible
assets and acquired in-process research and development
(IPR&D) were performed using the excess
earnings method or the royalty savings method.
(r)
To record the Predecessor Companys other non-current
assets at their estimated fair value using observable market
data.
(s)
To record the immediately recognized unit-based compensation of
$166 thousand, which is attributable to old unit options which
were cancelled without consideration in accordance with the Plan
of Reorganization.
(*)
The following table summarizes the allocation of fair value of
the assets and liabilities at emergence as shown in the
reorganized consolidated balance sheet as of October 25,
2009:
$
67,579
89,314
69,292
5,189
16,065
158,418
55,200
24,537
485,594
(124,416
)
(61,287
)
(81,497
)
(267,200
)
$
218,394
4.
Summary of
Significant Accounting Policies
F-16
Table of Contents
F-17
Table of Contents
30 - 40 years
10 - 20 years
5 - 10 years
5 years
F-18
Table of Contents
F-19
Table of Contents
F-20
Table of Contents
F-21
Table of Contents
F-22
Table of Contents
F-23
Table of Contents
F-24
Table of Contents
F-25
Table of Contents
F-26
Table of Contents
5.
Reorganization
Related Items
Predecessor
Ten-Month Period
Ended October 25,
2009
$
(7,459
)
31,399
780,981
(166
)
(182
)
$
804,573
Predecessor
Ten-Month Period
Ended October 25,
2009
$
798,043
(14,259
)
(2,533
)
(270
)
$
780,981
Predecessor
October 25,
2009
$
2,702
750,000
45,341
$
798,043
F-27
Table of Contents
6.
Fair Value
Measurements
F-28
Table of Contents
Successor
Quoted Prices
in Active
Significant
Markets for
Other
Significant
As of
Identical
Observable
Unobservable
Total
October 25,
Assets
Inputs
Inputs
Gains
Valuation
2009
(Level 1)
(Level 3)
$
439
$
439
$
(1,233
)
(B), (C)-I
10,078
$
10,078
2,557
(A), (C)-I
52,309
52,309
15,346
(A), (B), (C)-I
14,902
14,902
5,091
(A), (C)-I
71,007
71,007
(25,113
)
(A), (C)-I
1,435
1,435
(4,771
)
(B), (C)-I
69,664
69,664
14,867
(B), (C)-I
119
119
(1,814
)
(B), (C)-I
1,291
1,291
(2,200
)
((B), (C)-I
5,200
5,200
1,295
(C)-I, III
11,800
11,800
11,800
(C)-I, II
9,700
9,700
9,700
(C)-I, II
6,400
6,400
6,400
(C)-I, II
19,700
19,700
(3,268
)
(C)-I, II
2,400
2,400
2,387
(C)-I, III
2,270
2,270
355
(A)
$
31,399
F-29
Table of Contents
7.
Accounts
Receivable
Successor
Predecessor
December 31,
December 31,
2009
2008
$
74,516
$
67,186
3,260
12,450
(377
)
(1,569
)
(1,729
)
(671
)
(1,437
)
(1,101
)
$
74,233
$
76,295
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
$
(1,569
)
$
(1,367
)
$
(1,418
)
(379
)
(723
)
(503
)
(161
)
104
208
2
(40
)
197
4
$
(377
)
$
(2,332
)
$
(1,569
)
$
(1,367
)
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
(1,545
)
$
(671
)
$
(914
)
$
(1,450
)
(648
)
(4,476
)
(3,385
)
(2,509
)
484
3,722
3,393
3,040
(20
)
(120
)
235
5
$
(1,729
)
$
(1,545
)
$
(671
)
$
(914
)
F-30
Table of Contents
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
(1,213
)
$
(1,101
)
$
(1,260
)
$
(2,482
)
(715
)
(1,759
)
(1,854
)
(1,307
)
507
1,724
1,663
2,523
(16
)
(77
)
350
6
$
(1,437
)
$
(1,213
)
$
(1,101
)
$
(1,260
)
8.
Inventories
Successor
Predecessor
December 31,
December 31,
2009
2008
$
19,474
$
22,694
42,604
49,814
5,844
7,471
64
206
(4,579
)
(33,075
)
$
63,407
$
47,110
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
$
(33,075
)
$
(8,620
)
$
(11,652
)
(4,952
)
8,081
(34,869
)
1,101
391
11,297
4,992
1,888
(18
)
17
5,422
43
$
(4,579
)
$
(13,680
)
$
(33,075
)
$
(8,620
)
F-31
Table of Contents
9.
Property, Plant
and Equipment
Successor
Predecessor
December 31,
December 31,
2009
2008
$
72,076
$
111,933
71,505
318,440
3,043
40,422
146,624
470,795
(5,388
)
(296,038
)
15,101
9,198
$
156,337
$
183,955
10.
Intangible
assets
Successor
Predecessor
December 31,
December 31,
2009
2008
$
14,942
$
14,156
26,448
112,167
4,779
6,011
9,829
(5,840
)
(97,442
)
$
50,158
$
34,892
F-32
Table of Contents
F-33
Table of Contents
11.
Product
Warranties
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
929
$
474
$
211
$
112
(16
)
1,928
2,608
586
(4
)
(1,544
)
(2,243
)
(486
)
12
71
(102
)
(1
)
$
921
$
929
$
474
$
211
12.
Short-term
Borrowings
Annual Interest
Amount of
Maturity
Rate (%)
Principal
January 15, 2009
3 month LIBOR + 6.75
$
10,000
March 31, 2009
ABR + 5.75
85,000
$
95,000
13.
Current Portion
of Long-term Debt
F-34
Table of Contents
Annual Interest
Amount of
Rate (%)
Principal
2011
3 month LIBOR + 3.250
$
300,000
2011
6.875
200,000
2014
8.000
250,000
$
750,000
F-35
Table of Contents
14.
Long-term
Debt
F-36
Table of Contents
F-37
Table of Contents
15.
Accrued Severance
Benefits
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
72,243
$
63,147
$
75,869
$
64,642
1,851
8,835
14,026
18,834
(1,389
)
(4,320
)
(6,505
)
(7,151
)
941
4,581
(20,243
)
(456
)
73,646
72,243
63,147
75,869
(530
)
(533
)
(539
)
(784
)
(707
)
(681
)
(669
)
(909
)
$
72,409
$
71,029
$
61,939
$
74,176
F-38
Table of Contents
Severance
$
33
69
135
279
8,332
16.
Redeemable
Convertible Preferred Units
Predecessor
Ten-Month
Year Ended
Year Ended
Period Ended
December 31,
December 31,
October 25, 2009
2008
2007
Units
Amount
93,997
$
142,669
93,997
$
129,405
93,997
$
117,374
6,317
13,264
12,031
93,997
$
148,986
93,997
$
142,669
93,997
$
129,405
F-39
Table of Contents
F-40
Table of Contents
17.
Warrants
18.
Common
Units
As of December 31,
2009
Units
Amount
299,999,996
$
49,539
7,084,000
5,596
307,083,996
$
55,135
19.
Equity Incentive
Plans
F-41
Table of Contents
F-42
Table of Contents
Successor Company
Weighted
Weighted
Aggregate
Average
Average
Intrinsic
Remaining
Number of
Exercise
Value of
Contractual
Restricted Unit
Number of
Price of Unit
Unit
Life of
Bonuses
Options
Options
Unit Options
7,084,000
15,365,000
$
1.16
2,408,560
4,675,440
15,365,000
1.16
9.9 years
13,553,302
9.9 years
Two-Month Period Ended
December 31,
2009
$
0.22
2.9 Years
0.6
%
59.1
%
F-43
Table of Contents
Two-Month Period
Ended December 31, 2009
Weighted Average
Number
Grant-Date Fair Value
$
15,365,000
0.22
15,365,000
0.22
F-44
Table of Contents
Predecessor Company
Aggregate
Weighted
Weighted
Intrinsic
Average
Number of
Average Exercise
Value of
Remaining
Restricted
Number of
Price of Unit
Unit
Contractual Life
Units
Options
Options
of Unit Options
268,343
4,916,840
$
1.9
315,000
5.8
161,460
1.1
$
787
853,780
3.1
268,343
4,216,600
1.9
15,118
6.9 years
3,973,510
1.9
14,412
6.9 years
3,085,038
1.7
11,827
6.6 years
4,216,600
1.9
391,500
2.5
3,825,100
1.9
6.1 years
(3,825,100
)
F-45
Table of Contents
Predecessor
Year Ended
December 31,
December 31,
Year Ended
2008
2007
$
0.87
$
0.67
2.2 Years
2.1 Years
2.5
%
4.4
%
42.0
%
46.6
%
Ten-Month Period
Year Ended
Year Ended
Ended October 25, 2009
December 31, 2008
Weighted Average
Weighted Average
Weighted Average
Grant-Date
Grant-Date
Grant-Date
Fair Value
Fair Value
1,131,563
$
0.65
2,374,896
$
0.43
3,481,528
$
0.29
315,000
0.87
710,000
0.67
520,969
0.51
1,108,772
0.31
1,339,570
0.23
391,500
0.17
853,780
0.51
737,750
0.23
547,438
0.88
1,131,563
0.65
2,374,896
0.43
20.
Discontinued
Operations
F-46
Table of Contents
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
947
$
2,728
$
65,862
$
82,848
369
3,617
81,789
75,930
68
(6,355
)
3,491
10,280
37,506
48,058
(1,120
)
34,158
373
304
$
510
$
6,586
$
(91,455
)
$
(51,724
)
21.
Restructuring and
Impairment Charges
F-47
Table of Contents
22.
Income
Taxes
F-48
Table of Contents
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
(4
)
$
774,188
$
18,442
$
16,031
(523
)
67,627
(332,696
)
(136,022
)
$
(527
)
$
841,815
$
(314,254
)
$
(119,991
)
$
16
$
(143
)
$
1,335
$
230
1,244
6,033
8,530
8,103
9
256
92
23
95
138
163
1,292
6,241
10,095
8,496
654
1,054
1,490
339
654
1,054
1,490
339
$
1,946
$
7,295
$
11,585
$
8,835
F-49
Table of Contents
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
$
$
$
(693
)
(19,500
)
(1,076
)
4,831
(265
)
118
8,173
(18,242
)
3,139
8,192
(52,569
)
(27,028
)
(267
)
18,134
56,827
49,111
32
351
230
163
$
1,946
$
7,295
$
11,585
$
8,835
Successor
Predecessor
December 31,
December 31,
2009
2008
$
$
9,086
2,056
1,419
322
152
530
356
12,042
9,908
15,503
13,981
146,833
98,745
31,558
23,947
5,985
10,629
30,198
40,916
284
397
3,081
1,402
248,392
210,938
(225,704
)
(196,093
)
22,688
14,845
1,721
12,247
243
4,450
14,211
4,450
$
8,477
$
10,395
F-50
Table of Contents
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
December 31,
October 25,
December 31,
2009
2008
$
223,367
$
196,093
$
165,977
(409
)
17,090
79,438
2,746
10,184
(49,322
)
$
225,704
$
223,367
$
196,093
F-51
Table of Contents
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
December 31,
October 25,
December 31,
2009
2009
2008
$
2,874
$
2,293
$
1,593
33
123
635
748
(18
)
(88
)
(64
)
1
16
$
2,979
$
2,874
$
2,293
23.
Geographic and
Segment Information
F-52
Table of Contents
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
51,044
$
231,894
$
304,095
$
331,684
54,759
206,662
287,111
321,034
4,746
7,627
5,437
533
2,801
5,021
56,790
$
111,082
$
448,984
$
601,664
$
709,508
$
8,747
$
61,788
$
57,386
$
41,524
10,657
71,825
98,411
67,127
736
1,431
(4,272
)
534
2,801
4,885
22,000
$
20,674
$
137,845
$
156,410
$
130,651
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
62,241
$
244,309
$
301,006
$
404,276
25,573
116,920
144,482
155,488
6,477
31,641
79,892
71,211
14,910
48,458
61,346
58,506
1,881
7,656
14,938
20,027
$
111,082
$
448,984
$
601,664
$
709,508
F-53
Table of Contents
24.
Commitments and
Contingencies
6,840
1,883
1,883
1,883
1,883
37,244
$
51,616
F-54
Table of Contents
25.
Related Party
Transactions
Successor
Predecessor
December 31,
December 31,
2009
2008
$
40
$
94
45
46
$
85
$
140
F-55
Table of Contents
26.
Earnings (loss)
per Unit
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
$
(2,473
)
$
834,520
$
(325,839
)
$
(128,826
)
510
6,586
(91,455
)
(51,724
)
(1,963
)
841,116
(417,294
)
(180,550
)
(6,317
)
(13,264
)
(12,031
)
$
(2,473
)
$
828,203
$
(339,103
)
$
(140,857
)
$
(1,963
)
$
834,789
$
(430,558
)
$
(192,581
)
300,862,764
52,923,483
52,768,614
52,297,192
$
(0.01
)
$
15.65
$
(6.43
)
$
(2.69
)
0.00
0.12
(1.73
)
(0.99
)
$
(0.01
)
$
15.77
$
(8.16
)
$
(3.68
)
Successor
Predecessor
Two-Month
Ten-Month
Period Ended
Period Ended
Year Ended
Year Ended
December 31,
October 25,
December 31,
December 31,
2009
2009
2008
2007
NA
93,997
93,997
93,997
15,365,000
3,825,100
4,216,600
4,916,840
4,675,440
268,343
15,000,000
F-56
Table of Contents
27.
Subsequent
Events
F-57
Table of Contents
Goldman,
Sachs & Co.
Barclays Capital
Deutsche Bank Securities
UBS Investment Bank
Table of Contents
ITEM 13.
Other Expenses
of Issuance and Distribution.
$
17,825
$
25,500
$
*
$
*
$
*
$
*
$
*
$
*
$
*
$
*
*
To be provided by amendment
ITEM 14.
Indemnification
of Officers and Directors.
II-1
Table of Contents
Item 15.
Recent Sales
of Unregistered Securities.
II-2
Table of Contents
II-3
Table of Contents
ITEM 16.
Exhibits.
1
.1
Form of Underwriting Agreement*
3
.1
Certificate of Formation of MagnaChip Semiconductor LLC
(formerly System Semiconductor Holding LLC)
3
.2
Certificate of Amendment to Certificate of Formation of
MagnaChip Semiconductor LLC
3
.3
Fifth Amended and Restated Limited Liability Company Operating
Agreement of MagnaChip Semiconductor LLC
3
.4
Form of Certificate of Incorporation of MagnaChip Semiconductor
Corporation
3
.5
Form of Bylaws of MagnaChip Semiconductor Corporation
3
.6
Agreement and Plan of Conversion by and among the Members of
MagnaChip Semiconductor LLC*
4
.1
Registration Rights Agreement, dated as of November 9,
2009, by and among MagnaChip Semiconductor LLC and each of the
securityholders named therein
4
.2
Form of Deposit Agreement, among MagnaChip Semiconductor LLC,
American Stock Transfer & Trust Company, LLC, as the
depositary, and the holders from time to time of the depositary
receipts evidencing the depositary shares*
4
.3
Specimen Depositary Share (included in Exhibit 4.2)*
5
.1
Form of Opinion of DLA Piper LLP (US)*
10
.1
Amended and Restated Credit Agreement, dated as of
November 6, 2009, among MagnaChip Semiconductor S.A.,
MagnaChip Semiconductor Finance Company, the guarantors named
therein, the lenders named therein, and Wilmington
Trust FSB, as Administrative Agent
10
.2
Intellectual Property License Agreement, dated as of
October 6, 2004, by and between Hynix Semiconductor Inc.
and MagnaChip Semiconductor, Ltd. (Korea)
10
.3
Land Lease and Easement Agreement, dated as of October 6,
2004, by and between Hynix Semiconductor Inc. and MagnaChip
Semiconductor, Ltd. (Korea)(1)
10
.4
First Amendment to Land Lease and Easement Agreement, dated as
of December 30, 2005, by and between Hynix Semiconductor
Inc. and MagnaChip Semiconductor, Ltd. (Korea)
10
.5
General Service Supply Agreement, dated as of October 6,
2004, by and between Hynix Semiconductor Inc. and MagnaChip
Semiconductor, Ltd. (Korea)
10
.6
First Amendment to the General Service Supply Agreement, dated
as of December 30, 2005, by and between Hynix Semiconductor
Inc. and MagnaChip Semiconductor, Ltd. (Korea)
10
.7
License Agreement (ModularBCD), dated as of March 18, 2005,
by and between Advanced Analogic Technologies, Inc. and
MagnaChip Semiconductor, Ltd. (Korea)(2)
10
.8
Amended & Restated License Agreement (TrenchDMOS),
dated as of September 19, 2007, by and between Advanced
Analogic Technologies, Inc. and MagnaChip Semiconductor, Ltd.
(Korea)(2)
10
.9
Technology License Agreement, dated as of December 16,
1996, by and between Advanced RISC Machines Limited and
MagnaChip Semiconductor, Ltd. (Korea) (successor in interest to
LG Semicon Company Limited)(1)
10
.10
Amendment to the Technology License Agreement, dated as of
October 16, 2006, by and between ARM Limited and MagnaChip
Semiconductor, Ltd. (Korea)(2)
10
.11
ARM7201TDSP Device License Agreement, dated as of
August 26, 1997, by and between Advanced RISC Machines
Limited and MagnaChip Semiconductor, Ltd. (Korea) (successor in
interest to LG Semicon Company Limited)(1)
10
.12
Technology License Agreement, dated as of October 5, 1995,
by and between Advanced RISC Machines Limited and MagnaChip
Semiconductor, Ltd. (Korea) (successor in interest to LG Semicon
Company Limited)(2)
10
.13
Technology License Agreement, dated as of July 2001, by and
between ARM Limited and MagnaChip Semiconductor, Ltd. (Korea)
(successor in interest to Hynix Semiconductor Inc.)(1)
II-4
Table of Contents
10
.14
Technology License Agreement, dated as of August 22, 2001,
by and between ARM Limited and MagnaChip Semiconductor, Ltd.
(Korea) (successor in interest to Hynix Semiconductor Inc.)(1)
10
.15
Technology License Agreement, dated as of May 20, 2004, by
and between ARM Limited and MagnaChip Semiconductor, Ltd.
(Korea) (successor in interest to Hynix Semiconductor Inc.)
10
.16
Design Migration Agreement, dated as of May 1, 2007, by and
between ARM Limited and MagnaChip Semiconductor, Ltd. (Korea)(2)
10
.17
Basic Agreement on Joint Development and Grant of License, dated
as of November 10, 2006, by and between MagnaChip
Semiconductor, Ltd. and Silicon Works (English translation)
10
.18
Master Service Agreement, dated as of December 27, 2000 by
and between Sharp Corporation and MagnaChip Semiconductor, Ltd.
(Korea) (successor in interest to Hyundai Electronics Japan Co.,
Ltd) (English translation)
10
.19
Warrant Agreement, dated as of November 9, 2009, between
MagnaChip Semiconductor LLC and American Stock
Transfer & Trust Company, LLC
10
.20
MagnaChip Semiconductor LLC 2009 Common Unit Plan
10
.21
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of Option
Agreement
(Non-U.S.
Participants)
10
.22
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of Option
Agreement (U.S. Participants)
10
.23
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of
Restricted Unit Agreement
(Non-U.S.
Participants)
10
.24
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of
Restricted Unit Agreement (U.S. Participants)
10
.25
MagnaChip Semiconductor Corporation 2010 Equity Incentive Plan
10
.26
MagnaChip Semiconductor Corporation 2010 Employee Stock Purchase
Plan
10
.27
Amended and Restated Service Agreement, dated as of May 8,
2008, by and between MagnaChip Semiconductor, Ltd. (Korea) and
Sang Park
10
.28
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Sang Park
10
.29
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Sang Park
10
.30
Entrustment Agreement, dated as of October 6, 2004, by and
between MagnaChip Semiconductor, Ltd. (Korea) and Tae Young Hwang
10
.31
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Tae Young
Hwang
10
.32
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Tae Young Hwang
10
.33
Offer Letter dated March 7, 2006, from MagnaChip
Semiconductor LLC and MagnaChip Semiconductor, Inc. to Brent
Rowe, as supplemented on December 20, 2006
10
.34
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Brent Rowe
10
.35
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Brent Rowe
10
.36
Offer Letter dated September 5, 2006, from MagnaChip
Semiconductor LLC and MagnaChip Semiconductor, Ltd. to Margaret
Sakai
10
.37
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Margaret
Sakai
10
.38
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Margaret Sakai
Table of Contents
10
.39
Offer Letter, dated as of July 1, 2007, by and between
MagnaChip Semiconductor, Ltd. (Korea) and Heung Kyu Kim
10
.40
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Heung Kyu
Kim
10
.41
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Heung Kyu Kim
10
.42
Offer Letter, dated as of June 20, 2007, by and between
MagnaChip Semiconductor, Ltd. (Korea) and Tae Jong Lee
10
.43
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Tae Jong Lee
10
.44
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Tae Jong Lee
10
.45
Service Agreement, dated as of April 1, 2006, by and
between MagnaChip Semiconductor, Ltd. (Korea) and John McFarland
10
.46
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and John
McFarland
10
.47
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and John McFarland
10
.48
Senior Advisor Agreement, dated as of April 10, 2009, by
and between MagnaChip Semiconductor, Ltd.(Korea) and Robert J.
Krakauer
10
.49
MagnaChip Semiconductor Corporation Form of Indemnification
Agreement with Directors and Officers
21
.1
Subsidiaries of the Registrant
23
.1
Consent of Samil PricewaterhouseCoopers
23
.2
Consent of DLA Piper LLP (US) (contained in Exhibit 5.1)*
24
.1
Power of Attorney of officers and directors of MagnaChip
Semiconductor LLC (contained on signature page)
*
To be filed by amendment.
(1)
Certain portions of this document have been omitted pursuant to
a grant of confidential treatment by the SEC.
(2)
Certain portions of this document have been omitted pursuant to
a request for confidential treatment by the SEC.
Item 17.
Undertakings.
Table of Contents
II-7
Table of Contents
By:
Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
March 15, 2010
Chief Financial Officer (Principal Financial and Accounting
Officer)
March 15, 2010
Director
March 15, 2010
Director
March 15, 2010
Director
March 15, 2010
II-8
Table of Contents
Director
March 15, 2010
Director
March 15, 2010
Director
March 15, 2010
II-9
Table of Contents
1
.1
Form of Underwriting Agreement*
3
.1
Certificate of Formation of MagnaChip Semiconductor LLC
(formerly System Semiconductor Holding LLC)
3
.2
Certificate of Amendment to Certificate of Formation of
MagnaChip Semiconductor LLC
3
.3
Fifth Amended and Restated Limited Liability Company Operating
Agreement of MagnaChip Semiconductor LLC
3
.4
Form of Certificate of Incorporation of MagnaChip Semiconductor
Corporation
3
.5
Form of Bylaws of MagnaChip Semiconductor Corporation
3
.6
Agreement and Plan of Conversion by and among the Members of
MagnaChip Semiconductor LLC*
4
.1
Registration Rights Agreement, dated as of November 9,
2009, by and among MagnaChip Semiconductor LLC and each of the
securityholders named therein
4
.2
Form of Deposit Agreement, among MagnaChip Semiconductor LLC,
American Stock Transfer & Trust Company, LLC, as the
depositary, and the holders from time to time of the depositary
receipts evidencing the depositary shares*
4
.3
Specimen Depositary Share (included in Exhibit 4.2)*
5
.1
Form of Opinion of DLA Piper LLP (US)*
10
.1
Amended and Restated Credit Agreement, dated as of
November 6, 2009, among MagnaChip Semiconductor S.A.,
MagnaChip Semiconductor Finance Company, the guarantors named
therein, the lenders named therein, and Wilmington
Trust FSB, as Administrative Agent
10
.2
Intellectual Property License Agreement, dated as of
October 6, 2004, by and between Hynix Semiconductor Inc.
and MagnaChip Semiconductor, Ltd. (Korea)
10
.3
Land Lease and Easement Agreement, dated as of October 6,
2004, by and between Hynix Semiconductor Inc. and MagnaChip
Semiconductor, Ltd. (Korea)(1)
10
.4
First Amendment to Land Lease and Easement Agreement, dated as
of December 30, 2005, by and between Hynix Semiconductor
Inc. and MagnaChip Semiconductor, Ltd. (Korea)
10
.5
General Service Supply Agreement, dated as of October 6,
2004, by and between Hynix Semiconductor Inc. and MagnaChip
Semiconductor, Ltd. (Korea)
10
.6
First Amendment to the General Service Supply Agreement, dated
as of December 30, 2005, by and between Hynix Semiconductor
Inc. and MagnaChip Semiconductor, Ltd. (Korea)
10
.7
License Agreement (ModularBCD), dated as of March 18, 2005,
by and between Advanced Analogic Technologies, Inc. and
MagnaChip Semiconductor, Ltd. (Korea)(2)
10
.8
Amended & Restated License Agreement (TrenchDMOS),
dated as of September 19, 2007, by and between Advanced
Analogic Technologies, Inc. and MagnaChip Semiconductor, Ltd.
(Korea)(2)
10
.9
Technology License Agreement, dated as of December 16,
1996, by and between Advanced RISC Machines Limited and
MagnaChip Semiconductor, Ltd. (Korea) (successor in interest to
LG Semicon Company Limited)(1)
10
.10
Amendment to the Technology License Agreement, dated as of
October 16, 2006, by and between ARM Limited and MagnaChip
Semiconductor, Ltd. (Korea)(2)
10
.11
ARM7201TDSP Device License Agreement, dated as of
August 26, 1997, by and between Advanced RISC Machines
Limited and MagnaChip Semiconductor, Ltd. (Korea) (successor in
interest to LG Semicon Company Limited)(1)
10
.12
Technology License Agreement, dated as of October 5, 1995,
by and between Advanced RISC Machines Limited and MagnaChip
Semiconductor, Ltd. (Korea) (successor in interest to LG Semicon
Company Limited)(2)
10
.13
Technology License Agreement, dated as of July 2001, by and
between ARM Limited and MagnaChip Semiconductor, Ltd. (Korea)
(successor in interest to Hynix Semiconductor Inc.)(1)
10
.14
Technology License Agreement, dated as of August 22, 2001,
by and between ARM Limited and MagnaChip Semiconductor, Ltd.
(Korea) (successor in interest to Hynix Semiconductor Inc.)(1)
Table of Contents
10
.15
Technology License Agreement, dated as of May 20, 2004, by
and between ARM Limited and MagnaChip Semiconductor, Ltd.
(Korea) (successor in interest to Hynix Semiconductor Inc.)
10
.16
Design Migration Agreement, dated as of May 1, 2007, by and
between ARM Limited and MagnaChip Semiconductor, Ltd. (Korea)(2)
10
.17
Basic Agreement on Joint Development and Grant of License, dated
as of November 10, 2006, by and between MagnaChip
Semiconductor, Ltd. and Silicon Works (English translation)
10
.18
Master Service Agreement, dated as of December 27, 2000 by
and between Sharp Corporation and MagnaChip Semiconductor, Ltd.
(Korea) (successor in interest to Hyundai Electronics Japan Co.,
Ltd) (English translation)
10
.19
Warrant Agreement, dated as of November 9, 2009, between
MagnaChip Semiconductor LLC and American Stock
Transfer & Trust Company, LLC
10
.20
MagnaChip Semiconductor LLC 2009 Common Unit Plan
10
.21
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of Option
Agreement
(Non-U.S.
Participants)
10
.22
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of Option
Agreement (U.S. Participants)
10
.23
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of
Restricted Unit Agreement
(Non-U.S.
Participants)
10
.24
MagnaChip Semiconductor LLC 2009 Common Unit Plan form of
Restricted Unit Agreement (U.S. Participants)
10
.25
MagnaChip Semiconductor Corporation 2010 Equity Incentive Plan
10
.26
MagnaChip Semiconductor Corporation 2010 Employee Stock Purchase
Plan
10
.27
Amended and Restated Service Agreement, dated as of May 8,
2008, by and between MagnaChip Semiconductor, Ltd. (Korea) and
Sang Park
10
.28
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Sang Park
10
.29
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Sang Park
10
.30
Entrustment Agreement, dated as of October 6, 2004, by and
between MagnaChip Semiconductor, Ltd. (Korea) and Tae Young Hwang
10
.31
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Tae Young
Hwang
10
.32
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Tae Young Hwang
10
.33
Offer Letter dated March 7, 2006, from MagnaChip
Semiconductor LLC and MagnaChip Semiconductor, Inc. to Brent
Rowe, as supplemented on December 20, 2006
10
.34
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Brent Rowe
10
.35
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Brent Rowe
10
.36
Offer Letter dated September 5, 2006, from MagnaChip
Semiconductor LLC and MagnaChip Semiconductor, Ltd. to Margaret
Sakai
10
.37
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Margaret
Sakai
10
.38
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Margaret Sakai
10
.39
Offer Letter, dated as of July 1, 2007, by and between
MagnaChip Semiconductor, Ltd. (Korea) and Heung Kyu Kim
10
.40
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Heung Kyu
Kim
10
.41
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Heung Kyu Kim
Table of Contents
10
.42
Offer Letter, dated as of June 20, 2007, by and between
MagnaChip Semiconductor, Ltd. (Korea) and Tae Jong Lee
10
.43
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and Tae Jong Lee
10
.44
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and Tae Jong Lee
10
.45
Service Agreement, dated as of April 1, 2006, by and
between MagnaChip Semiconductor, Ltd. (Korea) and John McFarland
10
.46
Notice of Grant of Unit Option, dated as of December 8,
2009, by and between MagnaChip Semiconductor LLC and John
McFarland
10
.47
Notice of Grant of Restricted Units, dated as of
December 8, 2009, by and between MagnaChip Semiconductor
LLC and John McFarland
10
.48
Senior Advisor Agreement, dated as of April 10, 2009, by
and between MagnaChip Semiconductor, Ltd.(Korea) and Robert J.
Krakauer
10
.49
MagnaChip Semiconductor Corporation Form of Indemnification
Agreement with Directors and Officers
21
.1
Subsidiaries of the Registrant
23
.1
Consent of Samil PricewaterhouseCoopers
23
.2
Consent of DLA Piper LLP (US) (contained in Exhibit 5.1)*
24
.1
Power of Attorney of officers and directors of MagnaChip
Semiconductor LLC (contained on signature page)
*
To be filed by amendment.
(1)
Certain portions of this document have been omitted pursuant to
a grant of confidential treatment by the SEC.
(2)
Certain portions of this document have been omitted pursuant to
a request for confidential treatment by the SEC.
/s/ Catherine Sicari | ||||
Catherine Sicari | ||||
Authorized Person | ||||
State of Delaware | ||
Secretary of State | ||
Division of Corporations | ||
Delivered 07:20 PM 11/26/2003 | ||
FILED 06:56 PM 11/26/2003 | ||
SRV 030764552 - 3733022 FILE |
SYSTEM SEMICONDUCTOR HOLDING LLC | ||||||
|
||||||
|
By: | Paul C. Schorr IV | ||||
|
||||||
|
Name: | Paul C. Schorr IV | ||||
|
Title: | President |
Page | ||||||
ARTICLE I. ORGANIZATION
|
1 | |||||
1.1 Formation; Effective Date
|
1 | |||||
1.2 Name
|
2 | |||||
1.3 Registered Agent; Offices
|
2 | |||||
1.4 Purpose
|
2 | |||||
1.5 Foreign Qualification
|
2 | |||||
ARTICLE II. Membership Interests
|
3 | |||||
2.1 Existing Members; New Members
|
3 | |||||
2.2 Representations and Warranties
|
4 | |||||
2.3 Units; Certification
|
6 | |||||
2.4 Common Units
|
6 | |||||
2.5 Information
|
6 | |||||
2.6 Liability to Third Parties
|
7 | |||||
2.7 Lack of Authority
|
7 | |||||
2.8 Withdrawal
|
7 | |||||
ARTICLE III. CAPITAL CONTRIBUTIONS
|
7 | |||||
3.1 Contributions
|
7 | |||||
3.2 Additional Capital Contributions and Return of Contributions
|
7 | |||||
3.3 Advances by Members
|
8 | |||||
3.4 Capital Accoun
|
8 | |||||
3.5 Safe Harbor Election
|
9 | |||||
ARTICLE IV. ALLOCATIONS AND DISTRIBUTIONS
|
9 | |||||
4.1 Allocations
|
9 | |||||
4.2 Distributions.
|
12 | |||||
ARTICLE V. DIRECTORS
|
13 | |||||
5.1 Delegation of Rights and Powers.
|
13 | |||||
5.2 Number; Term
|
14 | |||||
5.3 Vacancies; Removals
|
14 | |||||
5.4 Subsidiaries
|
15 | |||||
5.5 Meetings of the Board of Directors
|
15 | |||||
5.6 Payments to Directors; Reimbursements
|
16 | |||||
5.7 Competitive Opportunity
|
16 | |||||
5.8 Committees
|
17 | |||||
ARTICLE VI. OFFICERS
|
17 | |||||
6.1 Designation and Appointment
|
17 | |||||
6.2 Resignation and Removal
|
17 | |||||
6.3 Duties of Officers Generally
|
18 | |||||
6.4 Chairman of the Board
|
18 |
-i-
Page | |||||
6.5 Chief Executive Officer
|
18 | ||||
6.6 President
|
18 | ||||
6.7 Vice President(s)
|
18 | ||||
6.8 Secretary
|
18 | ||||
6.9 Treasurer
|
19 | ||||
ARTICLE VII. MEETINGS OF MEMBERS
|
19 | ||||
7.1 Meetings of Members
|
19 | ||||
7.2 Notice
|
19 | ||||
7.3 Quorum; Voting
|
20 | ||||
7.4 Action by Written Consent
|
20 | ||||
7.5 Record Date
|
20 | ||||
7.6 Adjournment
|
20 | ||||
7.7 Conversion
|
20 | ||||
7.8 Merger and Consolidation
|
21 | ||||
7.9 Sale of Assets
|
21 | ||||
ARTICLE VIII. INDEMNIFICATION
|
21 | ||||
8.1 Right to Indemnification
|
21 | ||||
8.2 Insurance and Other Indemnification
|
22 | ||||
ARTICLE IX. TAXES
|
23 | ||||
9.1 Tax Returns
|
23 | ||||
9.2 Tax Elections
|
23 | ||||
9.3 Tax Allocations and Reports
|
23 | ||||
9.4 Partnership for U.S. Federal Tax Purposes
|
24 | ||||
9.5 Unrelated Business Taxable Income
|
24 | ||||
ARTICLE X. BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
|
24 | ||||
10.1 Book
|
24 | ||||
10.2 Company Funds
|
24 | ||||
ARTICLE XI. DISSOLUTION, LIQUIDATION, AND TERMINATION
|
25 | ||||
11.1 Dissolution
|
25 | ||||
11.2 Liquidation and Termination
|
25 | ||||
11.3 Deficit Capital Accounts
|
26 | ||||
11.4 Certificate of Cancellation
|
26 | ||||
ARTICLE XII. Transfer Restrictions
|
26 | ||||
12.1 Limitations on Transfers
|
26 | ||||
12.2 Drag-Along Rights
|
27 | ||||
12.3 Holdback Agreement
|
29 | ||||
ARTICLE XIII. GENERAL PROVISIONS
|
29 | ||||
13.1 Offset
|
29 | ||||
13.2 Notices
|
29 | ||||
13.3 Entire Agreement
|
30 |
-ii-
Page | |||||
13.4 Effect of Waiver or Consent
|
30 | ||||
13.5 Amendment
|
30 | ||||
13.6 Binding Act
|
30 | ||||
13.7 Governing Law
|
30 | ||||
13.8 Consent to Exclusive Jurisdiction
|
30 | ||||
13.9 Severability
|
31 | ||||
13.10 Further Assurances
|
31 | ||||
13.11 No Third Party Benefit
|
31 | ||||
13.12 Counterparts
|
31 | ||||
13.13 Construction
|
31 |
-iii-
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AVENUE INTERNATIONAL MASTER, L.P
.
By: Avenue International Master GenPar, Ltd., its General Partner |
||||
Name: | ||||
Title: | ||||
AVENUE INVESTMENTS, L.P.
By: Avenue Partners, LLC, its General Partner |
||||
Name: | ||||
Title: | ||||
AVENUE SPECIAL SITUATIONS FUND V, L.P.
By: Avenue Capital Partners V, LLC, its General Partner By: GL Partners V, LLC, its Managing Member |
||||
Name: | ||||
Title: | ||||
AVENUE SPECIAL SITUATIONS FUND IV, L.P.
By: Avenue Capital Partners IV, LLC, General Partner By: GL Partners IV, LLC, its Managing Member |
||||
Name: | ||||
Title: | ||||
AVENUE-CDP GLOBAL OPPORTUNITIES FUND, L.P.
By: Avenue Global Opportunities Fund GenPar, LLC, its General Partner |
||||
Name: | ||||
Title: | ||||
2
3
4
John McFarland, Sole Incorporator | ||||
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If to a Securityholder: |
If to the Company: |
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COMPANY:
|
MAGNACHIP SEMICONDUCTOR LLC | |||
|
||||
|
||||
|
By: | |||
|
||||
|
Name: | |||
|
Title: |
Section | Page | |||||
ARTICLE I
|
||||||
|
||||||
DEFINITIONS
|
||||||
|
||||||
SECTION 1.01
|
Defined Terms | 2 | ||||
SECTION 1.02
|
Classification of Loans and Borrowings | 32 | ||||
SECTION 1.03
|
Terms Generally | 32 | ||||
SECTION 1.04
|
Accounting Terms; GAAP | 32 | ||||
SECTION 1.05
|
Resolution of Drafting Ambiguities | 32 | ||||
|
||||||
ARTICLE II
|
||||||
|
||||||
THE CREDITS
|
||||||
|
||||||
SECTION 2.01
|
Commitments | 33 | ||||
SECTION 2.02
|
Loans | 33 | ||||
SECTION 2.03
|
Borrowing Procedure | 34 | ||||
SECTION 2.04
|
Evidence of Debt; Repayment of Loans | 34 | ||||
SECTION 2.05
|
Fees | 36 | ||||
SECTION 2.06
|
Interest on Loans | 36 | ||||
SECTION 2.07
|
[Intentionally Omitted] | 36 | ||||
SECTION 2.08
|
Interest Elections | 36 | ||||
SECTION 2.09
|
Optional and Mandatory Prepayments of Loans | 38 | ||||
SECTION 2.10
|
Alternate Rate of Interest | 40 | ||||
SECTION 2.11
|
Yield Protection | 40 | ||||
SECTION 2.12
|
Breakage Payments | 41 | ||||
SECTION 2.13
|
Payments Generally; Pro Rata Treatment; Sharing of Setoffs | 42 | ||||
SECTION 2.14
|
Taxes | 43 | ||||
SECTION 2.15
|
Mitigation Obligations; Replacement of Lenders | 45 | ||||
SECTION 2.16
|
[Intentionally Omitted] | 46 | ||||
SECTION 2.17
|
[Intentionally Omitted] | 46 | ||||
SECTION 2.18
|
Increase in Commitments | 46 | ||||
|
||||||
|
ARTICLE III | |||||
|
||||||
|
REPRESENTATIONS AND WARRANTIES | |||||
|
||||||
SECTION 3.01
|
Organization; Powers | 47 | ||||
SECTION 3.02
|
Authorization; Enforceability | 48 | ||||
SECTION 3.03
|
No Conflicts | 48 | ||||
SECTION 3.04
|
Financial Statements; Projections | 48 | ||||
SECTION 3.05
|
Properties | 49 | ||||
SECTION 3.06
|
Intellectual Property | 49 | ||||
SECTION 3.07
|
Equity Interests and Subsidiaries | 50 | ||||
SECTION 3.08
|
Litigation; Compliance with Laws | 50 | ||||
SECTION 3.09
|
Agreements | 51 |
i
Section | Page | |||||
SECTION 3.10
|
Federal Reserve Regulations | 51 | ||||
SECTION 3.11
|
Investment Company Act; Public Utility Holding Company Act | 51 | ||||
SECTION 3.12
|
Use of Proceeds | 51 | ||||
SECTION 3.13
|
Taxes | 51 | ||||
SECTION 3.14
|
No Material Misstatements | 52 | ||||
SECTION 3.15
|
Labor Matters | 52 | ||||
SECTION 3.16
|
Solvency | 52 | ||||
SECTION 3.17
|
Employee Benefit Plans | 52 | ||||
SECTION 3.18
|
Environmental Matters | 53 | ||||
SECTION 3.19
|
Insurance | 54 | ||||
SECTION 3.20
|
Security Documents | 55 | ||||
SECTION 3.21
|
Anti-Terrorism Law | 55 | ||||
SECTION 3.22
|
[Intentionally Omitted] | 56 | ||||
SECTION 3.23
|
UK Financial Assistance | 56 | ||||
|
||||||
|
ARTICLE IV | |||||
|
||||||
|
CONDITIONS PRECEDENT | |||||
|
||||||
SECTION 4.01
|
Conditions to Effective Date | 56 | ||||
SECTION 4.02
|
Conditions to All Credit Extensions | 61 | ||||
|
||||||
|
ARTICLE V | |||||
|
||||||
|
AFFIRMATIVE COVENANTS | |||||
|
||||||
SECTION 5.01
|
Financial Statements, Reports, etc | 62 | ||||
SECTION 5.02
|
Litigation and Other Notices | 65 | ||||
SECTION 5.03
|
Existence; Businesses and Properties | 65 | ||||
SECTION 5.04
|
Insurance | 66 | ||||
SECTION 5.05
|
Obligations and Taxes | 67 | ||||
SECTION 5.06
|
Employee Benefits | 67 | ||||
SECTION 5.07
|
Maintaining Records; Access to Properties and Inspections; Annual Meetings | 68 | ||||
SECTION 5.08
|
Use of Proceeds | 68 | ||||
SECTION 5.09
|
Compliance with Environmental Laws; Environmental Reports | 68 | ||||
SECTION 5.10
|
Additional Collateral; Additional Guarantors | 69 | ||||
SECTION 5.11
|
Security Interests; Further Assurances | 70 | ||||
SECTION 5.12
|
Information Regarding Collateral | 71 | ||||
SECTION 5.13
|
Post-Closing Collateral Matters | 72 | ||||
SECTION 5.14
|
Affirmative Covenants with Respect to Leases | 72 | ||||
|
||||||
|
ARTICLE VI | |||||
|
||||||
|
NEGATIVE COVENANTS | |||||
|
||||||
SECTION 6.01
|
Indebtedness | 72 | ||||
SECTION 6.02
|
Liens | 73 | ||||
SECTION 6.03
|
Sale and Leaseback Transactions | 76 | ||||
SECTION 6.04
|
Investment, Loan and Advances | 76 | ||||
SECTION 6.05
|
Mergers and Consolidations | 77 |
ii
Section | Page | |||||
SECTION 6.06
|
Asset Sales | 78 | ||||
SECTION 6.07
|
Acquisitions | 78 | ||||
SECTION 6.08
|
Dividends | 79 | ||||
SECTION 6.09
|
Transactions with Affiliates | 79 | ||||
SECTION 6.10
|
Minimum Liquidity | 80 | ||||
SECTION 6.11
|
Prepayments of Other Indebtedness; Modifications of Organizational Documents and Other Documents, etc | 80 | ||||
SECTION 6.12
|
Limitation on Certain Restrictions on Subsidiaries | 81 | ||||
SECTION 6.13
|
Limitation on Issuance of Capital Stock | 82 | ||||
SECTION 6.14
|
Limitation on Creation of Subsidiaries | 82 | ||||
SECTION 6.15
|
Business | 82 | ||||
SECTION 6.16
|
Limitation on Accounting Changes | 82 | ||||
SECTION 6.17
|
Fiscal Year | 82 | ||||
SECTION 6.18
|
[Intentionally Omitted] | 82 | ||||
SECTION 6.19
|
No Further Negative Pledge | 82 | ||||
SECTION 6.20
|
Anti-Terrorism Law; Anti-Money Laundering | 83 | ||||
SECTION 6.21
|
Embargoed Person | 83 | ||||
SECTION 6.22
|
Limitation on Finance Subsidiary | 84 | ||||
SECTION 6.23
|
Preservation of Claims Under the Korean Opco Bank Guarantees | 84 | ||||
|
||||||
|
ARTICLE VII | |||||
|
||||||
|
GUARANTEE | |||||
|
||||||
SECTION 7.01
|
The Guarantee | 84 | ||||
SECTION 7.02
|
Obligations Unconditional | 84 | ||||
SECTION 7.03
|
Reinstatement | 85 | ||||
SECTION 7.04
|
Subrogation | 86 | ||||
SECTION 7.05
|
Remedies | 86 | ||||
SECTION 7.06
|
Instrument for the Payment of Money | 86 | ||||
SECTION 7.07
|
Continuing Guarantee | 86 | ||||
SECTION 7.08
|
General Limitation on Guarantee Obligations | 86 | ||||
SECTION 7.09
|
Release of Guarantors | 86 | ||||
SECTION 7.10
|
Provisions Applicable to Certain Guarantees | 87 | ||||
|
||||||
|
ARTICLE VIII | |||||
|
||||||
|
EVENTS OF DEFAULT | |||||
|
||||||
SECTION 8.01
|
Events of Default | 87 | ||||
SECTION 8.02
|
Application of Proceeds | 90 | ||||
SECTION 8.03
|
Right to Cure | 90 | ||||
|
||||||
|
ARTICLE IX | |||||
|
||||||
|
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT | |||||
|
||||||
SECTION 9.01
|
Appointment and Authority | 91 | ||||
SECTION 9.02
|
Rights as a Lender | 91 | ||||
SECTION 9.03
|
Exculpatory Provisions | 91 | ||||
SECTION 9.04
|
Reliance by Agent | 93 |
iii
Section | Page | |||||
SECTION 9.05
|
Delegation of Duties | 93 | ||||
SECTION 9.06
|
Resignation of Agent | 93 | ||||
SECTION 9.07
|
Non-Reliance on Agent and Other Lenders | 94 | ||||
SECTION 9.08
|
Agents Not Required to Advance Funds | 94 | ||||
|
||||||
|
ARTICLE X | |||||
|
||||||
|
MISCELLANEOUS | |||||
|
||||||
SECTION 10.01
|
Notices. | 94 | ||||
SECTION 10.02
|
Waivers; Amendment. | 96 | ||||
SECTION 10.03
|
Expenses; Indemnity; Damage Waiver. | 99 | ||||
SECTION 10.04
|
Successors and Assigns. | 101 | ||||
SECTION 10.05
|
Survival of Agreement | 103 | ||||
SECTION 10.06
|
Counterparts; Integration; Effectiveness; Electronic Execution. | 104 | ||||
SECTION 10.07
|
Severability | 104 | ||||
SECTION 10.08
|
Right of Setoff | 104 | ||||
SECTION 10.09
|
Governing Law; Jurisdiction; Consent to Service of Process. | 105 | ||||
SECTION 10.10
|
Waiver of Jury Trial | 105 | ||||
SECTION 10.11
|
Obligations Joint and Several | 106 | ||||
SECTION 10.12
|
Headings | 106 | ||||
SECTION 10.13
|
Treatment of Certain Information; Confidentiality | 106 | ||||
SECTION 10.14
|
USA PATRIOT Act Notice | 106 | ||||
SECTION 10.15
|
Interest Rate Limitation | 107 | ||||
SECTION 10.16
|
[Intentionally Omitted] | 107 | ||||
SECTION 10.17
|
Obligations Absolute | 107 | ||||
SECTION 10.18
|
Judgment Currency. | 107 | ||||
SECTION 10.19
|
Restatement of Pre-Petition Credit Agreement. | 108 |
ANNEX | ||
Annex I
|
Outstanding Term Loans |
SCHEDULES | ||
Schedule 1.01(a)
|
Korean Opco Security Documents | |
Schedule 1.01(d)
|
Subsidiary Guarantors | |
Schedule 3.03
|
Governmental Approvals; Compliance with Laws | |
Schedule 3.05(b)
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Real Property | |
Schedule 3.06(c)
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Violations or Proceedings | |
Schedule 3.07(a)
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Equity Interests | |
Schedule 3.07(c)
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Corporate Organizational Chart | |
Schedule 3.20
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Financing Statements | |
Schedule 4.01(d)
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Extinguished Indebtedness | |
Schedule 4.01(g)
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Local and Foreign Counsel | |
Schedule 5.13
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Post-Closing Matters |
EXHIBITS | ||
Exhibit A
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Form of Administrative Questionnaire |
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EXHIBITS | ||
Exhibit B
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Form of Assignment and Assumption | |
Exhibit C
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Form of Borrowing Request | |
Exhibit D
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Form of Compliance Certificate | |
Exhibit E
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Form of Interest Election Request | |
Exhibit F
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Form of Joinder Agreement | |
Exhibit G
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Form of Note | |
Exhibit H
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Form of Security Agreement | |
Exhibit I
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Form of Solvency Certificate |
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Date | Amount of Term Loans to Be Repaid | |||
March 31, 2010
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$ | 154,375 | ||
June 30, 2010
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$ | 154,375 | ||
September 30, 2010
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$ | 154,375 | ||
December 31, 2010
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$ | 154,375 | ||
March 31, 2011
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$ | 154,375 | ||
June 30, 2011
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$ | 154,375 | ||
September 30, 2011
|
$ | 154,375 | ||
December 31, 2011
|
$ | 154,375 | ||
March 31, 2012
|
$ | 154,375 | ||
June 30, 2012
|
$ | 154,375 | ||
September 30, 2012
|
$ | 154,375 | ||
December 31, 2012
|
$ | 154,375 | ||
March 31, 2013
|
$ | 154,375 | ||
June 30, 2013
|
$ | 154,375 | ||
September 30, 2013
|
$ | 154,375 |
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(i) |
if to any Loan Party, to Borrowers at:
|
||
c/o MagnaChip Semiconductor, Ltd. | |||
891 | Daechi-dong, Gangnam-gu | ||
Seoul 135-738 Korea | |||
Attention: General Counsel | |||
Telecopier No.: +82-2-6903-3898 |
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(ii) |
if to the Administrative Agent or the Collateral Agent, to it at:
|
||
Wilmington Trust FSB | |||
50 South Sixth Street, Suite 1290 | |||
Minneapolis, MN 55402 | |||
Attention: Renee Kuhl | |||
Telecopier No.: 612-217-5651 |
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MAGNACHIP SEMICONDUCTOR S.A., a Luxembourg company
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By: | ||||
Name: | ||||
Title: | ||||
MAGNACHIP SEMICONDUCTOR FINANCE COMPANY, a Delaware limited liability company
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By: | ||||
Name: | ||||
Title: | ||||
MAGNACHIP SEMICONDUCTOR LLC, a Delaware limited liability company
|
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By: | ||||
Name: | ||||
Title: | ||||
SUBSIDIARY GUARANTORS
MAGNACHIP SEMICONDUCTOR, INC., a California company |
||||
By: | ||||
Name: | ||||
Title: | ||||
MAGNACHIP SEMICONDUCTOR SA HOLDINGS LLC, a Delaware limited liability company
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By: | ||||
Name: | ||||
Title: | ||||
MAGNACHIP SEMICONDUCTOR LIMITED, a company
incorporated in England and Wales with registered number 05232381
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By: | ||||
Name: | ||||
Title: | ||||
MAGNACHIP SEMICONDUCTOR HOLDING COMPANY LIMITED, a
company incorporated in the British Virgin Islands |
||||
By: | ||||
Name: | ||||
Title: | ||||
MAGNACHIP SEMICONDUCTOR, INC., a Japanese company
|
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By: | ||||
Name: | ||||
Title: | ||||
For execution as a deed
:
|
||||||||
SEALED WITH THE COMMON SEAL
|
) | |||||||
OF MAGNACHIP SEMICONDUCTOR
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) | |||||||
LIMITED AND SIGNED
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) | |||||||
BY
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) | |||||||
in the presence of:
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) | |||||||
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Witness:
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Witness:
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|||||||
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||||||||
Name:
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Name: | |||||||
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||||||||
Address:
|
Address: |
MAGNACHIP SEMICONDUCTOR LIMITED, a
Taiwan company |
||||
By: | ||||
Name: | ||||
Title: | ||||
MAGNACHIP SEMICONDUCTOR B.V.
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||||
By: | ||||
Name: | ||||
Title: | ||||
WILMINGTON TRUST FSB, as Administrative Agent
and Collateral Agent |
||||
By: | ||||
Name: | ||||
Title: | ||||
By: | ||||
Name: | ||||
Title: | ||||
AVENUE INVESTMENTS, L.P.
|
||||
By: | Avenue Partners, LLC, its General Partner | |||
By: | ||||
Name: | ||||
Title: | ||||
GOLDMAN SACHS LENDING PARTNERS LLC
|
||||
By: | ||||
Name: | ||||
Title: | ||||
CITICORP NORTH AMERICA INC.
|
||||
By: | ||||
Name: | ||||
Title: | ||||
1. | DEFINITIONS |
1.1. | Confidential Information means (i) all information and proprietary materials of Hynix which is not publicly known and is in the possession of, or disclosed by Hynix to, Purchaser or a representative of Purchaser and relating to Hynixs business (after giving effect to the transactions contemplated by the Business Transfer Agreement), including but not limited to Hynixs Intellectual Property and proprietary business information and (ii) all information and proprietary materials of Purchaser (after giving effect to the transactions contemplated by the Business Transfer Agreement) which is not publicly known and is in the possession of, or disclosed by Purchaser to, Hynix or a representative of Hynix and relating to Purchasers business, including but not limited to Purchasers Intellectual Property and proprietary business information. | ||
1.2. | Hynix Licensed Intellectual Property means any Intellectual Property (other than Purchaser Licensed Intellectual Property (as defined below)) of Hynix and/or |
any Subsidiaries of Hynix, as such Intellectual Property existed as of the Closing Date; provided however that Hynix shall have the right to delete, from time to time, from the definition of Hynix Licensed Intellectual Property, any Patents (as defined below) which Hynix chooses in its sole discretion to abandon. In the case that Hynix abandons any Patent(s) as permitted pursuant to the foregoing sentence, notwithstanding any other provision to the contrary, the license granted under this Agreement for such Patent shall immediately terminate. |
1.3. | Intellectual Property means patents, patent applications, utility models, utility model applications and industrial design registrations and applications, together with any continuations, continuations-in-part or divisional applications thereof, and all patents issued or issuing thereon and unfiled invention disclosures (the Patents), as well as other technology, know-how, trade secrets, processes, formulae, technical information, designs, data, documentation, drawings, plans, specifications, formulations, methods, procedures and reports, and other general and specific knowledge, experience, techniques and information, in written or machine-readable form and otherwise (collectively, the Know-How), the mask work rights/chip layout (regardless of registration) (Mask Works), and software and copyrights (including without limitation computer programs and computer program registrations and applications) (Copyrights), but expressly excluding for purposes of this definition, trademarks, service marks, trade names, logotypes, slogans, and trade dress associated therewith and/or product or part identification codes (Trademarks) and applications for Trademarks. | ||
1.4. | Purchaser 022 Patents means U.S. Patent No. 5,438,022 and its foreign counterparts that are part of the Acquired Assets which have been transferred to Purchaser under the Business Transfer Agreement. | ||
1.5. | Purchaser Licensed Intellectual Property means those of the Acquired Assets which are Intellectual Property, as such Intellectual Property existed as of the Closing Date; provided however that Purchaser shall have the right to delete, from time to time, from the definition of Purchaser Licensed Intellectual Property, any Patents which Purchaser chooses in its sole discretion to abandon. In the case that Purchaser abandons any Patent(s) as permitted pursuant to the foregoing sentence, notwithstanding any other provisions to the contrary, the license granted under this Agreement for such Patent shall immediately terminate. |
2. | LICENSE GRANT TO PURCHASER |
2.1. | LICENSED INTELLECTUAL PROPERTY |
(a) | As of the Closing Date and subject to the terms and conditions of this Agreement, Hynix hereby grants to Purchaser and its Subsidiaries a perpetual, worldwide, paid-up, royalty-free, non-exclusive, non-transferable (except as permitted under Section 7.13 of this Agreement) right and personal license under and to the Hynix Licensed Intellectual Property to (i) with respect to the Hynix Licensed Intellectual Property which are Patents related or directed to semiconductor products or their method of manufacture (Product Patents), design, develop, manufacture, have |
2
manufactured, make, have made, use, lease, offer for sale, sell, export and import, package, modify or otherwise dispose of (A) any semiconductor product(s) other than Memory Products, and/or (B) Memory Products which Purchaser manufactures for Hynix and/or any Subsidiary(ies) of Hynix, (ii) copy, have copied, use or have used any other manufacturing technology included in the Hynix Licensed Intellectual Property to design, develop, manufacture, have manufactured, make or have made, package or modify (A) any semiconductor product(s) other than Memory Products, and/or (B) Memory Products which Purchaser manufactures for Hynix and/or any Subsidiary(ies) of Hynix; and (iii) with respect to Hynix Licensed Intellectual Property which are not Products Patents or other manufacturing technology, to copy and use such Hynix Licensed Intellectual Property, and to create derivative works thereof and copy and use such derivative works, in the conduct of its business; provided, however, that with respect to softwares which are Hynix Licensed Intellectual Property, the license granted hereunder shall be limited to such softwares existing as of the Closing Date and which are used or have been used in the Business on or prior to the Closing Date. For the avoidance of doubt and without limiting the foregoing sentence, the Parties agree that the license granted hereunder shall include the following softwares: ADMS, IP Web, Legal System and EGGS (Employee/Officer General Supporting System). In addition, for the avoidance of doubt, and notwithstanding the foregoing or any other provision to the contrary, Purchaser shall have the right to create any improvements, developments, enhancements, modifications, and/or derivative works to the Hynix Licensed Intellectual Property. | |||
(b) | Notwithstanding the foregoing or any other provision of this Agreement to the contrary, nothing in this Section 2.1 shall be interpreted to allow Purchaser or any Subsidiary of Purchaser to, directly or indirectly, take any action that would violate the covenant not to compete in Section 6.4 of the Business Transfer Agreement. |
2.2. | SOFTWARE | ||
As of the Closing Date and subject to the terms and conditions of this Agreement, Hynix hereby agrees to transfer to Purchaser, with respect to each commercial and custom software application, (a) with respect to the software applications on Schedule 2.2, that number of software licenses (that is, individual installations or usage rights) as is listed on Schedule 2.2 and (b) with respect to all other software applications, a number of software licenses equal to the number used by the Business as of the Closing Date; provided, however, that the on-going costs and expenses related to such software applications accrued after the Closing Date will be borne solely by Purchaser. |
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2.3. | HYNIX REGISTERED USER REQUIREMENTS | ||
Hynix may, on behalf of both Parties and at its expense, take such action, in its sole discretion, that it deems necessary or desirable with respect to compliance with registered user or similar filing requirements of, or to otherwise cause the license granted by Hynix under this Agreement to be registered with, the appropriate authorities of the government of any jurisdiction. In addition, Hynix shall, on behalf of both Parties, take such other requested action with respect to compliance with registered user or similar filing requirements of, or to otherwise cause the license granted by Hynix under this Agreement to be registered with, the appropriate authorities of the government of any jurisdiction upon, the reasonable request of Purchaser and at Purchasers expense. | |||
2.4. | HYNIX OBLIGATIONS REGARDING PROSECUTION AND MAINTENANCE OF PATENTS AND ABANDONMENT | ||
Hynix shall have no obligation to Purchaser with respect to the prosecution or injunction of any infringement, violation, misappropriation and/or interference by third parties with respect to the Hynix Licensed Intellectual Property or any associated intellectual property rights. For Patents that are abandoned as permitted in Section 1.2, Hynix shall have no further obligation to Purchaser with respect to such Patents after the abandonment of such Patents. |
3. | LICENSE GRANT TO HYNIX |
3.1. | LICENSE GRANT |
(a) | As of the Closing Date and subject to the terms and conditions of this Agreement, Purchaser hereby grants to Hynix and its Subsidiaries a perpetual, worldwide, paid-up, royalty-free, non-exclusive, non-transferable (except as permitted under Section 7.13 of this Agreement) right and personal license under and to the Purchaser Licensed Intellectual Property to (i) with respect to the Purchaser Licensed Intellectual Property which are Product Patents, design, develop, manufacture, have manufactured, make, have made, use, lease, offer for sale, sell, export and import, package, modify or otherwise dispose of any semiconductor product(s), (ii) copy, have copied, use or have used any other manufacturing technology included in the Purchaser Licensed Intellectual Property to design, develop, manufacture, have manufactured, make or have made, package or modify any semiconductor product(s), and (iii) with respect to Purchaser Licensed Intellectual Property which are not Product Patents or other manufacturing technology; to copy and use such Purchaser Licensed Intellectual Property, and to create derivative works thereof and copy and use such derivative works, in the conduct of its business. For the avoidance of doubt, and notwithstanding the foregoing or any other provision to the contrary, Hynix shall have the right to create any improvements, developments, enhancements, modifications, and/or derivative works to the Purchaser Licensed Intellectual Property. | ||
(b) | Notwithstanding the foregoing, nothing in this Agreement shall be interpreted to allow Hynix and/or any Hynix Subsidiary(ies) to directly or indirectly, take any action that would violate the covenant not to compete in Section 6.4 of the Business Transfer Agreement. |
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(c) | Purchaser agrees that its and its Subsidiaries rights to the Purchaser 022 Patents will be subject to all licenses Hynix has granted to third parties which were in effect as of June 12, 2004. In addition, in connection with claims against Hynix with respect to the infringement, violation or misappropriation of and/or interference with the intellectual property rights of a third party, Hynix shall have the right to sub-license to such third party its rights with respect to the Purchaser 022 Patents under this Agreement. |
3.2. | PURCHASER REGISTERED USER REQUIREMENTS | ||
Purchaser may, on behalf of both Parties and at its expense, take such action, in its sole discretion, that it deems necessary or desirable with respect to compliance with registered user or similar filing requirements of, or to otherwise cause the license granted by Purchaser under this Agreement to be registered with, the appropriate authorities of the government of any jurisdiction. In addition, Purchaser shall, on behalf of both Parties, take such other requested action with respect to compliance with registered user or similar filing requirements of, or to otherwise cause the license granted by Purchaser under this Agreement to be registered with, the appropriate authorities of the government of any jurisdiction, upon the reasonable request of Hynix and at Hynixs expense. | |||
3.3. | PURCHASER OBLIGATIONS REGARDING PROSECUTION AND MAINTENANCE OF PATENTS | ||
Purchaser shall have no obligation to Seller with respect to the prosecution or injunction of any infringement, violation, misappropriation and/or interference by third parties with respect to the Purchaser Licensed Intellectual Property or any associated intellectual property rights. For Patents that are abandoned as permitted in Section 1.5, Purchaser shall have no further obligation to Hynix with respect to such Patents after the abandonment of such Patents. |
4. | RIGHT TO SUBLICENSE; NO IMPLIED LICENSES; INTELLECTUAL PROPERTY RIGHTS NOTICES |
4.1. | Notwithstanding any provision to the contrary, subject to Section 6.4 of the Business Transfer Agreement, each Party shall have the right to sublicense the license rights granted to it under this Agreement, for the sole purpose of having, in the case of Hynix, its Subsidiaries, or its agents and contractors, exercise its rights hereunder solely on its behalf to make, manufacture, design, develop or package any semiconductor products for Hynix; or in the case of Purchaser, Warrant Issuers Subsidiaries, or its agents and contractors exercise its rights hereunder solely on its behalf to make, manufacture, design, develop or package any semiconductor products (other than Memory Products) for Purchaser or any |
5
Memory Products for Hynix and/or any Subsidiary(ies) of Hynix. Notwithstanding the forgoing, neither Party shall sublicense the license rights granted to it under this Agreement to any direct or indirect Subsidiary of Warrant Issuer or Hynix, as the case may be, which at the time such Subsidiary became a direct or indirect Subsidiary of Warrant Issuer or Hynix, as the case may be, was actively operating a technology business (including a semiconductor business). In no event shall Hynixs Subsidiaries, or its agents and/or contractors, or the Warrant Issuers Subsidiaries, or Purchasers agents and/or contractors, make, manufacture, design, develop or package any products under this sublicense for, and/or sell any products made under this sublicense to, any party other than Hynix and/or any Subsidiary of Hynix or Purchaser and/or any Subsidiary(ies) of the Warrant Issuer, as the case may be. | |||
4.2. | NO IMPLIED LICENSE | ||
Except for the licenses expressly granted in this Agreement, neither Party grants to the other Party by implication, estoppel or otherwise any license or other right to any of its Intellectual Property. In addition, neither Party grants any license, release or other right expressly, by implication, by estoppel or otherwise to any third party. | |||
4.3. | INTELLECTUAL PROPERTY RIGHTS NOTICES | ||
Each Party agrees that, unless otherwise agreed by the Parties in writing, it will not obfuscate, remove or alter any of the trademarks, trade names, logos, patent, mask work or copyright notices, confidential or other proprietary legends or notices on or in the materials to which it is granted a license, and all such markings shall be included in all copies made by such Party of any portion of the materials to which it is granted a license hereunder. |
5. | CONFIDENTIALITY | |
Each Party shall protect the others Confidential Information from unauthorized dissemination and use with the same degree of care that such Party uses to protect its own like information, but not less than reasonable care. Neither Party will use the others Confidential Information except as permitted by the licenses hereunder or for purposes other than those necessary to directly further the purposes of this Agreement. Notwithstanding the foregoing or any other provision of this Agreement to the contrary, each Party shall only have the right to sublicense the Intellectual Property to which it is granted a license hereunder, subject to Section 4.1 and pursuant to the following: (i) with respect to a sublicense to a Subsidiary, to a Subsidiary which, prior to accessing any of the licensed Intellectual Property, is legally bound to the terms of an appropriate confidentiality agreement containing limitations no less restrictive than those set forth in Sections 2.1 and/or 3.1, as applicable, 4.3 and 5 of this Agreement and otherwise adequately protects the intellectual property rights of licensor in the Intellectual Property and who uses the Intellectual Property solely in accordance with the terms and conditions of this Agreement; and/or (ii) with respect to any third party agent and/or contractor, to a |
6
third party agent and/or contractor with a need to know who is hired by the party to whom a license to the applicable Intellectual Property has been granted hereunder, who uses the applicable Intellectual Property solely for the benefit of the applicable licensee hereunder, and who, prior to accessing any of the licensed Intellectual Property, has signed an appropriate confidentiality agreement, which agreement contains provisions no less restrictive than those set forth in Sections 2.1 and/or 3.1, as applicable, 4.3 and 5 of this Agreement and otherwise adequately protects the intellectual property rights of licensor in the Intellectual Property and who uses the Intellectual Property solely in accordance with the terms and conditions of this Agreement. Except as permitted by the licenses hereunder or as required by law or order of any governmental authority (provided that such disclosure will be done under reasonable steps to protect confidentiality, such as a protective order), neither Party will disclose to any third parties the others Confidential Information without the prior written consent of the other Party. Except as expressly provided in this Agreement, no ownership or license right is granted in any Confidential Information. The Parties obligations of confidentiality under this Agreement shall not be construed to limit either Partys right to independently develop or acquire products without use of, or reference to, the other Partys Confidential Information. The confidentiality obligations of the Parties under this Agreement shall terminate with respect to any specific Confidential Information five (5) years from the date of receipt thereof. | ||
Each Party agrees not to disclose the content or nature of this Agreement to any third party without the prior written consent of the other Party; provided, however, that this obligation shall not apply to a Party (i) to the extent such Party is required by law or order of any governmental authority (provided that such Party takes reasonable steps to protect the confidentiality of such information, such as a protective order) to disclose this Agreement, but only to the extent necessary to comply with such law or order; (ii) to the extent necessary for such Party to enforce or exercise its rights under this Agreement, (iii) to the extent reasonably necessary and on a confidential basis, to its accountants, attorneys, financial advisers and potential investors in or acquirers of such Party or (iv) with respect to such Partys disclosure and public filing of this Agreement (and its terms and conditions) in connection with a public offering of securities by such Party or its Affiliates. | ||
6. | DISCLAIMERS | |
EXCEPT AS EXPRESSLY PROVIDED IN THE BUSINESS TRANSFER AGREEMENT, THE HYNIX LICENSED INTELLECTUAL PROPERTY IS PROVIDED AS IS WITHOUT ANY REPRESENTATION OR WARRANTY AND HYNIX MAKES NO, AND EXPRESSLY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THE BUSINESS TRANSFER AGREEMENT, THE PURCHASER LICENSED INTELLECTUAL PROPERTY IS PROVIDED AS IS WITHOUT ANY REPRESENTATION OR |
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WARRANTY AND PURCHASER MAKES NO, AND EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT. | ||
7. | GENERAL |
7.1. | TERM AND TERMINATION | ||
The term of this Agreement shall become effective as of the Closing Date and shall continue to be effective until terminated by mutual agreement of the Parties, provided that this Agreement and all licenses hereunder may be earlier terminated by either Party if the other Party materially breaches any of the terms and conditions of this Agreement and fails to remedy such breach within 60 days after written notice thereof. | |||
7.2. | RELATIONSHIP OF THE PARTIES | ||
This Agreement does not create a fiduciary or agency relationship between Hynix and Purchaser, each of which shall be and at all times remain independent companies for all purposes hereunder. Nothing in this Agreement is intended to make either Party a general or special agent, joint venturer, partner or employee of the other for any purpose. | |||
7.3. | COUNTERPARTS | ||
This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party. | |||
7.4. | GOVERNING LAW; CONSENT TO JURISDICTION | ||
This Agreement shall be governed by and construed in accordance with the Laws of the Korea without giving effect to the rules of conflict of laws of the Korea that would require application of any other Law. Purchaser and Hynix each consent to and hereby submit to the non-exclusive jurisdiction of the Seoul Central District Court located in the Korea in connection with any action, suit or proceeding arising out of or relating to this Agreement, and each of the Parties irrevocably waives, to the fullest extent permitted by Law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. |
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7.5. | ENTIRE AGREEMENT | ||
This Agreement and the Business Transfer Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede any prior agreements, understandings or other communications, written or oral, between the Parties with respect to the subject matter hereof, and there are no agreements, understandings, representations or warranties between the Parties with respect to the subject matter hereof other than those set forth herein or the Business Transfer Agreement. | |||
7.6. | NO THIRD-PARTY BENEFICIARIES | ||
Nothing in this Agreement, express or implied, is intended to or shall confer on any Person other than the Parties and their respective successors or permitted assigns any rights (including third party beneficiary rights), remedies, obligations or liabilities under or by reason of this Agreement. This Agreement shall not provide third parties with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to the terms of this Agreement. | |||
7.7. | INTERPRETATION; ABSENCE OF PRESUMPTION |
(a) | For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms hereof, herein, and herewith and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs to this Agreement unless otherwise specified, (iii) the word including and words of similar import when used in this Agreement means including, without limitation, unless the context otherwise requires or unless otherwise specified, (iv) the word or shall not be exclusive, (v) provisions shall apply, when appropriate, to successive events and transactions, and (vi) all references to any period of days shall be deemed to be to the relevant number of calendar days. | ||
(b) | This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted. |
7.8. | FORCE MAJEURE | ||
A Party shall not be liable for a failure or delay in the performance of any of its obligations under this Agreement where such failure or delay is the result of conditions beyond the control of said Party, such as fire, flood, or other natural disaster, act of God, war, embargo, riot, labor dispute, or the intervention of any government authority, providing that the Party failing in or delaying its performance immediately notifies the other Party of its inability to perform and states the reason for such inability. |
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7.9. | PUBLICITY | ||
Neither Party shall, without the approval of the other Party, make any press release or other public announcement concerning the terms of the transactions contemplated by this Agreement, except as allowed under Section 5. | |||
7.10. | FURTHER ASSURANCES | ||
Each Party shall cooperate and take such action as may be reasonably requested by the other Party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby. | |||
7.11. | EXPORT CONTROL | ||
The Parties shall comply with any and all export regulations and rules now in effect or as may be issued from time to time by the Office of Export Administration of the United States Department of Commerce, Korean governmental authority, or any other governmental authority which has jurisdiction relating to the export of technology. | |||
7.12. | NOTICES | ||
Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any Party hereunder shall be in writing and shall be deemed duly given only upon delivery to the Party personally (including by reputable overnight courier service), when telecopied (with confirmation of transmission having been received) during normal business hours or three days after being mailed by registered or certified mail (return receipt requested), with postage and registration or certification fees thereon prepaid, addressed to the Party at its address set forth below (or at such other address for a Party as shall be specified by such Party by like notice): |
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7.13. | ASSIGNMENT | ||
This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that no Party may assign its rights or delegate its obligations under this Agreement (including by operation of law and provided that a change in control with respect to Hynix or Purchaser shall be deemed an assignment for purposes of this Agreement) without the express prior written consent of each other Party, except that (i) Purchaser may assign its rights hereunder as collateral security to any entity providing financing of indebtedness for borrowed money to Purchaser and/or any of its Subsidiaries and any such financial institutions may assign such rights in connection with a sale of Purchaser, (ii) Hynix and Purchaser each may, upon written notice to the other party (but without the obligation to obtain the consent of such other party), assign this Agreement or any of its rights and obligations under this Agreement to any person, entity or organization that acquires all or substantially all of its assets and liabilities or all or substantially all of the assets and liabilities of the portion of the Partys business to which the subject of this Agreement relates or of a division of such Party as a result of a change in control (provided that upon any such assignment or change in control the applicable license granted hereunder shall not extend to the business or products of the assignee or acquiring entity as conducted as of the date of such assignment or acquisition), if such person or entity agrees in writing to assume and be bound by all of the relevant obligations of such party under this Agreement; and (iii) Purchaser may, upon written notice to Hynix (but without the obligation to obtain the consent of Hynix), assign this Agreement or any of its rights and obligations under this Agreement to one or more direct or indirect Subsidiaries of Warrant Issuer, provided that at the time such Subsidiary became a direct or indirect Subsidiary of Warrant Issuer it was not actively operating a technology business (including a semiconductor business). | |||
7.14. | HEADINGS; DEFINITIONS | ||
The section and article headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. | |||
7.15. | AMENDMENT | ||
This Agreement may not be amended, modified, superseded, canceled, renewed or extended except by a written instrument signed by the Party to be charged therewith. | |||
7.16. | WAIVER; EFFECT OF WAIVER | ||
No provision of this Agreement may be waived except by a written instrument signed by the Party waiving compliance. No waiver by any Party of any of the requirements hereof or of any of such Partys rights hereunder shall release the other Parties from full performance of their remaining obligations stated herein. No failure to exercise or delay in exercising on the part of any Party hereto any |
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right, power or privilege of such Party shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege by such Party. | |||
7.17. | SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF | ||
The Parties each acknowledge that, in view of the uniqueness of the subject matter hereof, the Parties would not have an adequate remedy at law for money damages in the event that this Agreement were not performed in accordance with its terms, and therefore agree that the Parties shall have the right to a claim for injunctive relief and be entitled to specific enforcement of the terms hereof in addition to any other remedy to which the Parties may be entitled at law or in equity. | |||
7.18. | SURVIVAL | ||
The respective rights and obligations of the Parties under Sections 5, 6, 7, and other Sections which by their nature are intended to extend beyond termination, shall survive the termination of this Agreement. |
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HYNIX SEMICONDUCTOR INC. | ||||||
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Article 1. Definitions
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Article 2. Grant of Lease and Easement
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Article 3. Term
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Article 4. Rent
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Article 5. Representations, Warranties and Covenants
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Article 6. Maintenance and Other Expenses
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Article 7. Registration of the Lease Right and Easement Right
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Article 8. [Intentionally Deleted]
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Article 9. Use and Maintenance
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Article 10. Termination
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Article 11. Sublease and Assignment
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Article 12. Quiet Enjoyment; Indemnification
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Article 13. Surrender
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Article 14. Disputes and Governing Law
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Article 15. Change of Applicable Laws of Korea
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Article 16. Alterations
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Article 17. Right of First Refusal
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Article 18. Additional Warehouse
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Article 19. Insurance
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Article 20. Signage
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Article 21. Force Majeure
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Article 22. Confidentiality
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Article 23. Miscellaneous
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EXHIBIT A CHEONG-JU COMPLEX
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EXHIBIT B DESCRIPTION OF THE SITE, ACCESS AREAS AND EASEMENT AREAS
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EXHIBIT C CONSENTS
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EXHIBIT D DESCRIPTION OF THE PORTIONS TO BE SUB-LEASED TO VEOLIA
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EXHIBIT E SIGNAGE
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SCHEDULE 5.1(d) VEOLIA LEASE RIGHTS
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SCHEDULE 5.1(e) VEOLIA CONSENTS
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(1) | Hynix Semiconductor Inc., a company organized and existing under the laws of the Republic of Korea (Korea) with its registered office at San-136-1, Ami-Ri, Bubal-Eub, Ichon-Si, Kyoungki-Do, Korea (Lessor); and |
(2) | MagnaChip Semiconductor, Ltd., a company organized and existing under the laws of Korea with its registered office at 1 Hyanjeong-dong, Heungduk-gu, Cheongju City, Chung Cheong Bok-do, Korea (Lessee) (each a Party, and collectively, the Parties). |
1.1. | Unless otherwise defined herein or in the BTA, all capitalized terms shall have the meanings set forth below: |
Access Areas shall mean the access roads and areas located on the Lease Rights Site I, as more specifically shown on Exhibit B. |
Additional Warehouses shall have the meaning ascribed to such term in Section 18.1. |
Affiliate shall have the meaning ascribed to such term in the BTA. |
Amended Section 6.5 of the BTA shall mean Section 6.5 of the BTA as amended by an First Amendment to Business Transfer Agreement made and entered into on October 6, 2004 by and between Lessor and Lessee. |
Applicable Laws shall mean all laws, constitutions, statutes, codes, ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards, consent orders and decrees, policies, guidelines or any interpretations of any of the foregoing, including general principles of civil law and equity, issued by any Governmental Entity having or exercising jurisdiction over or otherwise affecting any Party, the Business or the Land. |
BTA shall have the meaning ascribed to such term in the Recitals. |
Buildings shall mean the R Building, C1 Building and C2 Building, as well as the to be built Gas Warehouse Building and Waste Water Facility Building and such other buildings, if any, and improvements affixed to such buildings now or hereafter owned by Lessee located in the Cheong-Ju Complex, each of which Building is owned by Lessee, as the same may be altered or replaced. |
Business shall have the meaning ascribed to such term in the BTA including all Permitted Uses. |
Cheong-Ju Complex shall mean Lessors manufacturing, testing, packaging and research and development facilities and appurtenant areas located in Cheong-Ju, Korea, as more specifically identified in Exhibit A attached hereto. |
Closing Date shall have the meaning ascribed to such term in the BTA. |
Confidential Information shall mean any and all information including technical data, trade secrets or know-how, disclosed by either Party to the other Party in connection with this Agreement, which is marked as Proprietary or Confidential or is declared by the other Party, whether in writing or orally, to be confidential, or which by its nature would reasonably be considered confidential. |
Consents shall mean any consents, approvals, waivers or authorizations to be obtained from, or notices to be given to, any persons or entities, and includes Governmental Authorizations. |
Damages shall mean any and all losses, settlements, expenses, liabilities, obligations, claims, damages (including any governmental penalty or costs of investigation, clean-up and remediation), deficiencies, royalties, interest, costs and expenses (including reasonable attorneys fees and all other expenses reasonably incurred in investigating, preparing or defending any litigation or proceeding, commenced or threatened incident to the successful enforcement of this Agreement), the extent of which are recoverable under Korean law. Damages also shall include, if applicable, any and all increases in insurance premiums that are reasonably demonstrably attributable to the breach by Lessee or Lessor, as the case may be, of its representations, warranties, agreements and covenants expressly |
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contained in this Agreement, or negligence, gross negligence, intentional breach or willful misconduct of Lessee or Lessor, as the case may be, for the two following annual policy periods. |
Due Date shall have the meaning ascribed to such term in Section 4.3. |
Easement Right shall mean the right to use all necessary and appropriate roads for ingress to, egress from and access to and from all locations at the Cheong Ju Complex and the right to use certain land to own, use or perform maintenance, repair and replacement of utility, pipeline, conduit and wiring systems at the Cheong Ju Complex serving the locations leased by Lessee or owned by Lessor, as the case may be, each of which is on an equal and shared basis with the owner or lessee, as the case may be, of relevant land. |
Easement Site shall mean Easement Site I and Easement Site II. |
Easement Site I shall mean the main access roads from public roads to the Lease Right Site I, as more specifically shown on Exhibit B. |
Easement Site II shall mean the access roads, areas and the parking lots at the Cheong Ju Complex, as more specifically shown on Exhibit B. |
Event of Force Majeure shall have the meaning ascribed to such term in Section 21.1. |
Excluded Damages shall mean any punitive damages. |
Execution Date shall mean the date of this Agreement. |
Expansion Area shall have the meaning ascribed to such term in Section 17.1. |
Governmental Authorization shall mean any approval, consent, license, permit, waiver or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Entity or otherwise pursuant to any Applicable Law, and any registration with, or report or notice to, any Governmental entity pursuant to any Applicable Law, including those listed on Exhibit C. |
Governmental Entity shall mean a court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency. |
Grace Period shall have the meaning ascribed to such term in Section 13.1. |
Hynix Building shall mean any building in the Cheong-Ju Complex other than any of the Buildings. |
Hynix Easement Right shall mean the Easement Right over the Access Areas on an equally shared basis with Lessee. |
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Hynix Land shall mean the portions of the Cheong-Ju Complex land, excluding the Land. |
Indemnified Person of a Party shall mean the Party and its Subsidiary and any shareholder, director, officer, employee or agent of the Party or such Subsidiary. |
Invoice shall have the meaning ascribed to such term in Section 4.2. |
Land shall mean (a) the Lease Rights Site I, (b) Lease Rights Site II, (c) Easement Site I and (d) Easement Site II located in the Cheong-Ju Complex, as more specifically identified in Exhibit B, all of which are subject to the lease or easement rights under this Agreement. |
Lease Right shall have the meaning ascribed to such term in Section 2.5. |
Lease Rights Site shall mean the Lease Rights Site I and the Lease Rights Site II. |
Lease Rights Site I shall mean the Site and the Access Areas. |
Lease Rights Site II shall mean certain lots on which the Gas Warehouse Building and the Waste Water Facility Building will be built by Lessee, as more specifically identified in Exhibit B attached hereto. |
Lease Term shall have the meaning ascribed to such term in Section 3.1. |
Lessee Easement Rights Consents shall have the meaning ascribed to such term in Section 5.2(e). |
Lessor Easement Rights Consents shall have the meaning ascribed to such term in Section 5.1(e). |
Lessor Lease Rights Consents shall have the meaning ascribed to such term in Section 5.1(e). |
Lien shall mean any lien, charge, claim, agreement to sell, pledge, judgment, security interest, conditional sale agreement or other title retention agreement, lease, mortgage, deed of trust, security agreement, right of first refusal or offer (or other similar right), option, restriction, tenancy, license, covenant, encroachment (whether upon any real property or by any improvement situated on any real property onto any adjoining real property or onto any easement area), right of way, easement, title defect or other encumbrance or title matter or interest in real estate, existing as of the Closing Date. |
Other Costs shall have the meaning ascribed to such term in Section 4.5. |
Partition Date shall mean the date on which the Lease Rights Site I is partitioned as a separate parcel and the Lessor acquires the sole legal and beneficial ownership thereto from the Lessee. |
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Permitted Uses shall mean the Business or any other semiconductor, information technology or other technology related business. |
Proceeding shall mean any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Entity. |
Rent shall have the meaning ascribed to such term in Section 4.1. |
Rules and Regulations shall have the meaning ascribed to such term in Section 2.2. |
Site shall mean certain lots which are occupied by Building R, Building C1, Building C2, as more specifically identified in Exhibit B, all of which are subject to the lease under this Agreement. |
Subsidiary shall have the meaning ascribed to such term in the BTA. |
Successor shall have the meaning ascribed to such term in Section 11.2. |
Turnover Condition shall have meaning set forth in Section 17.1(d) of this Lease. |
VAT shall mean the value added tax required to be paid to the relevant Governmental Entity in respect of the lease or grant of easement rights of the Land to Lessee. |
Warrant Issuer shall have the meaning ascribed to such term in the BTA. |
1.2. | Rules of Interpretation. |
(a) | When a reference is made in this Agreement to a section or article, such reference shall be to a section or article of this Agreement unless otherwise clearly indicated to the contrary. | ||
(b) | Whenever the words include, includes or including are used in this Agreement they shall be deemed to be followed by the words without limitation. | ||
(c) | The words hereof, hereto, herein and herewith and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph and exhibit references are to the articles, sections, paragraphs and exhibits of this Agreement unless otherwise specified. | ||
(d) | The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning. |
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(e) | A reference to any party to this Agreement or any other agreement or document shall include such partys successors and permitted assigns. | ||
(f) | A reference to any legislation or to any provision of any legislation shall include any amendment to, and any modification or re-enactment thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto. | ||
(g) | The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement. | ||
(h) | Headings are for convenience only and do not affect the interpretation of the provisions of this Agreement. | ||
(i) | Any Exhibits attached hereto are incorporated herein by reference and shall be considered as part of this Agreement. |
2.1. | Subject to Article 3, in consideration of the Rent hereby agreed to be paid to Lessor by Lessee and the agreements and covenants herein made by Lessee and subject to other terms and conditions herein, Lessor hereby (a) leases to Lessee the Lease Rights Site and the one-half of the Easement Site (until the date of registration of the Easement Right on the Easement Site) and (b) grants Lessee the Easement Right to use the Easement Site from the date of the registration of the Easement Right; provided that the Easement Right and the Lease Right on the one-half of the Easement Site granted to Lessee shall be exercisable by Lessee in a manner and to the extent that it is in common with equivalent rights exercisable by Lessor, as owner. | |
2.2. | In consideration of the lease rights and easement rights hereby granted to Lessee by Lessor and the agreements and covenants herein made by Lessor and subject to other terms and conditions herein, for the Lease Term Lessee shall grant to Lessor the Hynix Easement Right over the Access Areas for free; provided that the Hynix Easement Right granted to Lessor shall be exercised by Lessor in a manner and to the extent that allows Lessee to exercise equal right to use the Access Areas based upon Lessees Lease Rights over the Access Areas. | |
2.3. | In consideration of the Rent hereby agreed to be paid to Lessor by Lessee and the agreements and covenants herein made by Lessee and subject to other terms and conditions herein, Lessor hereby grants to Lessee a right (i) to access to the Cheong-Ju Complex for the purpose of using the Land in accordance with this Agreement, and to pass and repass to and from the Land or any part thereof over and along certain roads, accessways, paths, highways and other thoroughfares within the Cheong-Ju Complex, provided that Lessee shall fully comply in all material respects with all Applicable Laws and the rules and regulations as currently adopted and enforced in the ordinary operation |
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of the Cheong-Ju Complex and such additional rules and regulations adopted by Lessor and enforced uniformly as to all occupants of the Cheong-Ju Complex which do not materially change the economic structure or effect of the Business (together Rules and Regulations) and (ii) to use, operate, maintain, repair and replace all of Lessees utility, pipeline, conduit and wiring systems on the Cheong Ju Complex or any part thereof that serve the Site. In case where it is necessary, (i) Lessee may install utility, pipeline, conduit or wiring systems for the purpose of using the Buildings on Easement Site and Access Areas with Lessors prior written consent which may not be unreasonably withheld and (ii) Lessor may install such facilities for the purpose of using Hynix Buildings on Access Areas with Lessees prior written consent which may not be unreasonably withheld. | ||
2.4 | In consideration of the Lease Right and the Easement Right hereby granted to Lessee by Lessor and the agreements and covenants herein made by Lessor and subject to other terms and conditions herein, Lessee hereby grants to Lessor a right (i) to access to the Cheong-Ju Complex for the purpose of using the Hynix Land as the owner thereof, and to pass and repass to and from the Land or other part of the Cheong Ju Complex on which Lessee has a lease right or any part thereof over and along certain roads, accessways, paths, highways and other thoroughfares within the Cheong-Ju Complex, provided that Lessor shall fully comply in all material respects with all Applicable Laws and reasonable rules and regulations adopted by Lessee and enforced uniformly as to all occupants of the Cheong-Ju Complex which do not materially change the economic structure of, or have an effect on, Lessors business and (ii) to use, operate, maintain, repair and replace all of Lessors utility, pipeline, conduit and wiring systems on the Cheong Ju Complex or any part thereof that serve the Hynix Land. | |
2.5 | Subject to Article 7, Lessor hereby grants to Lessee a right to register the lease under this Agreement (Lease Right, deunggi imchakwon ) over the Lease Rights Site and the one-half of the Easement Site and the Easement Right ( jiyokkown ) over the Easement Site with the relevant real property registry offices. The Lease Right and the Easement Right shall be effective during the Lease Term, as long as the Buildings remain on the Lease Rights Site and the Lease Rights Site is used for the Permitted Uses in accordance with the terms of this Agreement. | |
2.6 | Subject to Article 7, Lessee hereby grants to Lessor a right to register the Hynix Easement Right over the Access Areas with the relevant real property registry offices. | |
2.7 | Lessee acknowledges and agrees that Lessee has the right to occupy and use the Land only for the Permitted Uses, and upon the terms and conditions set forth in this Agreement. |
3.1. | This Agreement shall be effective from the Closing Date. | |
3.2. | Subject to Section 3.4, the lease term for the Lease Right (Lease Term) shall be indefinite (i) unless otherwise agreed between the Parties, and (ii) as long as the Buildings remain on the Lease Rights Site and are owned by Lessee and Lessee uses the Lease Rights Site for the purpose of the Permitted Uses. |
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3.3 | The Lease Term for the Lease Right on the one-half of the Easement Site shall continue until the Easement Right is registered on the Easement Site. | |
3.4 | Term for the Easement Right on the Easement Site shall continue from the Partition Date to the expiration date of the Lease Term. |
3.5 | Hynix Easement Right on Access Areas shall be effective from the Partition Date to the expiration date of the Lease Term. |
4.1. | The monthly rent for the Land, exclusive of VAT, (the Rent) shall be [*****] per year for ten (10) years, which is [*****] payable monthly in accordance with Article 4. Commencing on the tenth (10 th ) anniversary of the Closing Date, or the first day of the immediately succeeding calendar month if the Closing Date is not the first day of a calendar month, and every second (2 nd ) anniversary of such date (each, a Calculation Date), Rent shall be recalculated for the next succeeding two years to increase or decrease by the same percentage as the change in the consumer price index published by the Korean National Statistical Office of the Ministry of Finance and Economy (each, an Index) or any of its equivalent if an Index is not available, between the Index published most recently prior to the Calculation Date compared to the Index published most recently prior to two years before such Calculation Date. In any event prior to the commencement date on which such recalculated Rent shall be applicable, the Parties, upon the request of either Party, agree to submit a joint application to modify the amount of the Rent registered as of such time into such recalculated amount of the Rent. |
4.2. | Lessor shall provide an invoice (the Invoice) to Lessee by the 10 th day of each calendar month which shall include the amount of Rent, Other Costs and the corresponding VAT amount payable by Lessee for such month. |
4.3. | Lessee shall pay in aggregate the Rent, Other Costs and the corresponding VAT amount stated on each Invoice to the Lessors designated account, or as otherwise designated by Lessor, by means of wire transfer in immediately available funds by 25 th day of each calendar month (the Due Date). |
4.4. | For any month of the Lease Term which is less than a full calendar month, the amount of Rent (and the corresponding VAT amount) payable by Lessee shall be equal to a pro rata portion of the Rent, based on a ratio of the number of days during such month that the Lease Term is in effect to the total number of days in such month. |
4.5. | If (a) the Rent is not paid on or before the Due Date or (b) any other amounts payable herein including payments due by either Party with respect to Damages (collectively, the Other Costs) are not paid when due, after the passage of any applicable grace and/or cure period, Lessee or Lessor, as applicable, shall be liable for and pay interest on the outstanding amounts of the Rent and/or Other Costs at a rate of eight percent (8%) per annum calculated from and including the sixth day after the Due Date until the date Rent and/or Other Costs are received in full by the Party to whom they are due. |
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4.6. | Lessee shall be responsible for payment of any VAT levied on the Rent under this Agreement. |
4.7 | Notwithstanding anything herein to the contrary, in the event of a bankruptcy filing with respect to Lessee, Lessee shall deposit with Lessee an amount equal to the fees paid by Lessee during the immediately preceding full calendar month under the terms of this Agreement, against which will be credited fees payable by Lessee over the thirty day period following such deposit. Lessee shall renew such deposit each thirty days in each case by reference to the fees paid by Lessee during the full calendar month immediately preceding any such renewal until such bankruptcy protection filing has been accepted by the bankruptcy court. For the avoidance of doubt, Lessee shall not be relieved of responsibility for, and shall pay when due, any fees for services hereunder during any such thirty day period to the extent in excess of the then actual deposit. |
5.1. | Lessor hereby covenants, represents and warrants to Lessee that all of the representations and warranties contained in this Section 5.1 are true and correct in all material respects as of the Closing Date, and the Partition Date, as the case may be. |
(a) | Organization . Lessor is a corporation duly organized and validly existing under the laws of Korea and has full power and authority to own and lease the Land. | ||
(b) | Authorization . Lessor has full corporate power and authority to execute and deliver this Agreement. The execution, delivery and performance by Lessor of this Agreement have been duly authorized by all corporate actions on the part of Lessor that are necessary to authorize the execution, delivery and performance by Lessor of this Agreement. | ||
(c) | Binding Agreement . This Agreement has been duly executed and delivered by Lessor and, assuming due and valid authorization, execution and delivery hereof by Lessee, is a valid and binding obligation of Lessor, enforceable against Lessor in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors rights generally and (ii) the availability of the remedy of injunctive relief may be subject to the discretion of the court before which any proceeding therefor may be brought or the general principle of good faith and fairness provided for in the Korean Civil Code. | ||
(d) | Title and Consents . Except as disclosed in Schedule 5.1(d), Lessor is the only legal and beneficial owner of the Land and has requisite power to grant the Lease Rights or the Easement Right hereunder to Lessee and has the requisite power to grant the registration of the Lease Right and the Easement Right on the relevant portions of the Land to Lessee. |
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(e) | Use of Land . Except as disclosed in Schedule 5.1(e), Lessor has obtained all Consent required in connection with the ownership or use of the Land and the granting to Lessee of the rights under this Agreement, and shall obtain such additional Consents necessary or appropriate for the grant of the Lease Rights or the Easement Right, as applicable, and the registration thereof in accordance with Section 7 (Lessor Lease Rights Consents or Lessor Easement Rights Consent, as the case may be). Lessor has provided Lessee with copies of all such Consents and shall provide Lessee with the Lessor Lease Rights Consents related to the registration of Lease Rights on or before the Closing Date and the Lessor Easement Rights Consents related to the registration of the Easement Right on or before the Partition Date, including those listed on Exhibit C. The present condition and use of the Land by Lessor complies with all Applicable Laws in all material respects. | ||
(f) | Veolia Lease Right . Lessor shall de-register the registered lease rights in favor of Veolia Water Korea Co., Ltd. (formerly known as Vivendi Water Industrial Development Co., Ltd.) (Veolia) on the land described in Schedule 5.1(d) (Veolia Leased Land) and consent to the registration of Lease Right I for the benefit of Lessee on the Veolia Leased Land as soon as possible after the Closing but in no event later than 4 weeks thereafter. | ||
(g) | Brokerage . Lessor and its Subsidiaries (as defined in the BTA) have not made any agreement or taken any other action which might cause any Person to become entitled to a brokers or finders fee or commission as a result of this Agreement. | ||
(h) | NO OTHER REPRESENTATIONS . EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT OR THE BTA, NEITHER LESSOR NOR ANY OTHER PERSON OR ENTITY ACTING ON BEHALF OF LESSOR, MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED. TO THE EXTENT ANY REPRESENTATIONS OR WARRANTIES HEREIN ARE INCONSISTENT WITH ANY REPRESENTATIONS OR WARRANTIES IN THE BTA, THE APPLICABLE REPRESENTATIONS OR WARRANTIES IN THE BTA SHALL CONTROL. |
5.2. | Lessee hereby covenants, represents and warrants to Lessor that all of the representations and warranties contained in this Section 5.2 are true and correct in all material respects as of the Closing Date, and the Partition Date, as the case may be. |
(a) | Organization . Lessee is a corporation duly organized and validly existing under the laws of Korea and has full power and authority to carry on its business as heretofore conducted. |
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(b) | Authorization . Lessee has full corporate power and authority to execute and deliver this Agreement. The execution, delivery and performance by Lessee of this Agreement have been duly authorized by all corporate actions on the part of Lessee that are necessary to authorize the execution, delivery and performance by Lessee of this Agreement. | ||
(c) | Binding Agreement . This Agreement has been duly executed and delivered by Lessee and, assuming due and valid authorization, execution and delivery hereof by Lessor, is a valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors rights generally and (ii) the availability of the remedy of injunctive relief may be subject to the discretion of the court before which any proceeding therefor may be brought or the general principle of good faith and fairness provided for in the Korean Civil Code. | ||
(d) | Title and Consents . As of the Partition Date, Lessee has requisite power to grant the easement rights hereunder to Lessor and has the requisite power to grant the registration of the Hynix Easement Right on the relevant portions of the Land to Lessor. | ||
(e) | Use of Land . Lessee has obtained all Consents required in connection with the use of the Land and the granting to Lessor of the rights under this Agreement, and shall obtain such additional Consents necessary or appropriate for the grant of the Hynix Easement Right and the registration thereof in accordance with Section 7 (Lessee Easement Rights Consents). As of Partition Date, Lessee has provided Lessor with copies of all such Consents and shall provide Lessor with the Lessee Easement Rights Consents on or before the Partition Date, including those listed on Exhibit C. The condition and use of the Access Areas as of the Partition Date by Lessee complies with all Applicable Laws in all material respects. | ||
(f) | Construction of Warehouses. Lessee shall construct a Gas Warehouse Building on the Lease Right Site II within two (2) years from the Closing Date and a Waste Water Facility Building on the Lease Rights Site II within one(1) year from the Closing Date. | ||
(g) | Brokerage. Lessee has not made any agreement or taken any other action which might cause any Person to become entitled to a brokers or finders fee or commission as a result of this Agreement. | ||
(h) | NO OTHER REPRESENTATIONS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT OR THE BTA, NEITHER LESSEE NOR ANY OTHER PERSON OR ENTITY ACTING ON BEHALF OF LESSEE, MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED. TO THE EXTENT ANY REPRESENTATIONS OR WARRANTIES HEREIN ARE |
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INCONSISTENT WITH ANY REPRESENTATIONS OR WARRANTIES IN THE BTA, THE APPLICABLE REPRESENTATIONS OR WARRANTIES IN THE BTA SHALL CONTROL. |
5.3. | Each Party covenants and agrees to endeavor to cooperate with the other Party so as to minimize any interference with the other Partys operation of its business. |
5.4. | With respect to Lessees use of the Land, from and after the Closing Date, Lessee shall comply in all material respects with all Applicable Laws applicable to the ordinary operation of Lessees Business, including the environmental laws, and with the terms of all Government Authorizations relating to Lessees operation of its Business at the Land or in the Buildings arising after the Closing Date. |
5.5. | Lessee covenants and agrees to reimburse Lessor, in full and promptly upon demand, if Lessor sustains any material Damages or is reasonably required to expend any money as a result of a default by Lessee hereunder; provided, however, Lessee shall not reimburse Lessor for any damages resulting from (a) reasonable wear and tear to the Land, (b) Lessors maintenance of the Land as provided for herein, or (c) to the extent such Damages arises from Lessors gross negligence or intentional misconduct. |
5.6. | Based on the Lease Right over the Site, Lessee shall grant to Veolia a registered sublease ( deunggi cheonchawkwon ) on certain portions of the Site, as more specifically depicted in Exhibit D attached hereto, under the terms and conditions substantially the same as those of the Land Use Rights Agreement dated March 27, 2001 entered into by and between Lessor and Veolia. |
5.7. | Except as disclosed in Schedule 5.1(d), Lessor will deliver actual possession of the Site free and clear of occupancy. |
5.8. | By the Closing Date, Lessor shall have obtained all necessary and relevant Lessor Lease Rights Consents related to the registration of the Lease Rights. By the Partition Date, Lessee shall have obtained all necessary and relevant Lessee Easement Rights Consents. Lessor shall not permit or suffer future Liens on the Lease Rights Site I. |
5.9. | Lessor covenants and agrees to reimburse Lessee, in full and promptly upon demand, if Lessee sustains any material Damages or is reasonably required to expend any money as a result of a default by Lessor hereunder; provided, however, Lessor shall not reimburse Lessee for any damages resulting from (a) reasonable wear and tear to the Land, or (b) Lessees maintenance of the Land as provided for herein, or (c) to the extent such Damage arises from Lessees gross negligence or intentional misconduct. |
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7.1. | On the Closing Date, Lessor shall consent to the registration of (a) the Lease Right over the Lease Rights Site for the benefit of Lessee, in accordance with Section 2.3 and (b) the lease rights over the one-half of the Easement Site for the benefit of Lessee, subject to Lessors rights to use the Easement Site as the owner thereof, and shall provide to Lessee all the necessary and appropriate documents normally required of a lessor for the registration of such Lease Right on the Closing Date, including Lessor Lease Rights Consents. Lessee shall be entitled to register, on or after the Closing Date, the rights granted under this Section 7.1 with the pertinent real property registry offices. Such registration shall have, (i) with respect to the Lease Rights Site I and the Easement Site I, first priority during the Lease Term over any Lien on the Lease Rights Site I and the Easement Site I, subject to the subsequent de-registration of such lease rights over the one-half of the Easement Site on the Partition Date and (ii) with respect to the Lease Rights Site II, subordinate to the Liens held by Lessors creditors. The registration shall include such material matters provided in this Agreement as Lessor and Lessee may agree to register and as permitted to be registered in the real property registry under the Applicable Laws, provided that the terms of such Lease Right shall be the same as the terms and conditions of this Agreement. The expenses and costs of such registration of the Lease Right shall be borne wholly by Lessee. |
7.2 | On the Partition Date, Lessor shall consent to the registration of the Easement Right over the Easement Site for the benefit of Lessee, in accordance with Section 2.3 and shall provide to Lessee all necessary and appropriate documents normally required of a lessor for the registration of such Easement Right on the Partition Date. Lessee shall be entitled to register, on or after the Partition Date, the Easement Right over the Easement Site granted under this Section 7.2 with the pertinent real property registry offices. Such registration shall have, (a) with respect to the Easement Site I, first priority during the Lease Term over any Lien on the Easement Site I and (b) with respect to Easement Site II, priority subordinated to the Liens held by Lessors creditors. The registration shall |
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include such material matters provided in this Agreement as Lessor and Lessee may agree to register and as permitted to be registered in the real property registry under the Applicable Laws, including the matter of the exercise by Lessee of the Easement Right in a manner and to the extent that allows Lessor to exercise a equal rights to use the Easement Site based on its ownership rights to the Easement Site set forth in Section 2.1, provided that the terms of such Easement Right shall be the same as the terms and conditions of this Agreement. The expenses and cost of deregistration and re-registration of rights other than Lease Right over Lease Rights Site and Easement Right over Easement Site shall be borne by the Party incurring such costs and expenses. The expenses and costs of such registration of such Easement Right shall be borne solely by Lessee. |
7.3 | On the Partition Date, Lessee shall consent to the registration of the Hynix Easement Right over the Access Areas in accordance with Section 2.1 for the benefit of Lessor and shall provide to Lessor all necessary and appropriate documents normally required of a lessor for the registration of such easement rights on the Partition Date. Lessor shall be entitled to register, on or after the Partition Date, such Easement Right over the Access Areas granted under this Section 7.3 with the pertinent real property registry offices. Such registration shall have, with respect to the Access Areas, first priority during the Lease Term over any Lien on the Access Areas. The registration shall include such material matters provided in this Agreement as Lessor and Lessee may agree to register and as permitted to be registered in the real property registry under the Applicable Laws, including the matter of the exercise by Lessee of the Easement Right in a manner and to the extent that allows Lessee to exercise a equal rights to use the Access Areas based on its Lease Rights over the Access Areas set forth in Section 2.2, provided that the terms of such easement rights shall be the same as the terms and conditions of this Agreement. The expenses and costs of such registration of Hynix Easement Right shall be borne solely by Lessor. |
9.1. | Subject to Section 2.7, Lessee shall not occupy or use the Lease Rights Site and the Easement Site for any purpose whatsoever, other than in connection with the operation of the Business, including all Permitted Uses and in compliance with all Applicable Laws and Rules and Regulations. |
9.2. | Lessee shall, at its sole cost and expense, maintain, or cause to be maintained, during the Lease Term, the Site in equivalent condition to the condition as of the Closing Date, wear and tear, insured casualty and condemnation excepted. |
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10.1. | Termination. This Agreement may be terminated at any time during the Lease Term of this Agreement upon the occurrence of any of the following events: |
(a) | by a Party serving a written notice of termination to the other Party in the event of a material breach or default by such other Party of its obligations hereunder, which default shall not have been cured within sixty (60) days after written notice is provided by the non-breaching Party to the breaching Party; or | ||
(b) | by Lessee with ninety (90) days prior written notice to Lessor for any reason whatsoever. |
10.2. | Upon termination of this Agreement, each Party shall discontinue the use of all Confidential Information provided by the other Party in connection with this Agreement, and shall promptly return to the other Party any and all Confidential Information, including documents originally conveyed to it by the other Party and any copies thereof made thereafter. |
10.3. | Termination of this Agreement shall be without prejudice to the accrued rights and liabilities of the Parties prior to the termination of this Agreement. |
10.4. | The respective rights and obligations of the Parties under any Sections which by their nature are intended to extend beyond termination, shall survive the termination or expiry of this Agreement. |
10.5. | In the event of the termination of this Agreement pursuant to Section 10.1 hereof, a written notice thereof shall forthwith be given to the other Party specifying the provision hereof pursuant to which such termination is made, and Lessee or Lessor (as the case may be) shall only be liable thereafter for (i) Damages suffered as a result of its fraud or willful breach of this Agreement that occurred prior to the termination of this Agreement, or (ii) the obligations and liabilities of the Parties pursuant to this Agreement that accrued prior to the termination of this Agreement. |
11.1. | This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided, however, that no Party hereto will assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto, except that (i) Lessee may assign its rights hereunder (other than the lease right over the one-half of the Easement Site allowed from the Closing Date until the Partition Date) as collateral security to any bona fide financial institution engaged in financing in the ordinary course providing financing to the Warrant Issuer or its Subsidiaries and any of the foregoing financial institutions may assign such rights in connection with the sale of Lessees business in the form then being conducted by Lessee substantially as an entirety; (ii) Lessor and Lessee each may, upon written notice to the other Party (but without the obligation to obtain the consent of such other Party), assign this Agreement or any of its rights and obligations under this Agreement to |
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any person, entity or organization that succeeds (by purchase, merger, operation of law or otherwise) to all or substantially all of the capital stock, assets or business of such party, all or substantially all of its assets and liabilities or to all or substantially all of the assets and liabilities of the portion of the Partys business to which the subject of this Agreement relates or of a division of Lessee, if such person or entity agrees in writing to assume and be bound by all of the relevant obligations of such Party under this Agreement; and (iii) Lessee may, upon written notice to Lessor (but without the obligation to obtain the consent of Lessor), assign this Agreement or any of its rights and obligations under this Agreement to one or more direct or indirect Subsidiaries of the Warrant Issuer if such Subsidiaries agree in writing to assume and be bound by all of the relevant obligations of Lessee under this Agreement. |
11.2. | Intentionally Deleted. |
11.3. | Notwithstanding anything to the contrary, Lessee shall not sublease the Lease Rights Site, in whole or in part, to a third party, except Veolia in accordance with Section 5.6 and the Hynix Easement Right. |
12.1. | Without prejudice to Lessors rights under this Agreement or under the Applicable Laws, so long as Lessee pays the Rent and materially observes all other terms, conditions and covenants hereof, Lessor shall ensure that Lessee has the right to quietly enjoy the Land without hindrance, molestation or interruption during the Lease Term, subject to the terms and conditions of this Agreement. |
12.2. | Lessor shall indemnify Lessee and its Indemnified Persons (the Lessee Indemnified Parties), and hold the Lessee Indemnified Parties harmless from and against, any and all Damages arising out of, resulting from or relating to claims by third parties arising from the negligent acts of Lessor, except to the extent such Damage is caused by the negligence or willful misconduct of any such Lessee Indemnified Party. |
12.3. | Lessee shall indemnify Lessor and its Indemnified Persons (the Lessor Indemnified Parties) and hold the Lessor Indemnified Parties harmless from and against, any and all Damages arising out of, resulting from or relating to claims by third parties arising from the negligent acts of Lessee, except to the extent such Damage is caused by the negligence or willful misconduct of any such Lessor Indemnified Party. |
12.4. | In no event shall a Party be liable for Excluded Damages. |
13.1. | Upon the expiration or termination of this Agreement, Lessor and Lessee shall consult in good faith to determine a reasonable grace period (which shall not be more than 6 months) (the Grace Period) for Lessee to peaceably and quietly vacate and surrender the Land to Lessor. For the avoidance of doubt, Lessee shall be obligated to pay the Rent for the period until the date of surrender of the Land to Lessor. |
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13.2. | During the Grace Period, Lessee shall, among other things, restore the Land to its condition and shape equivalent to that of the Closing Date, wear and tear, insured casualty and condemnation excepted, and as otherwise reasonably acceptable to Lessor by removing at its own expense any additional fixtures, partitions and structural alterations made by Lessee not consented to by Lessor. In the event Lessee fails to vacate, surrender and restore the Land to its condition equivalent to that of the Closing Date, including the presence of any buildings and improvements, reasonable wear and tear and insured casualty excepted, by the end of the Grace Period, Lessor may move, remove or dispose of any fixtures, partitions, structural alterations or other property or belongings remaining on the Land, and all reasonable expenses incurred therefrom shall be borne by Lessee. |
14.1. | This Agreement shall be governed by and construed in accordance with the laws of Korea without reference to the choice of law principles thereof. |
14.2. | The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction to prevent any breach of this Agreement and to enforce specifically the terms and provisions of this Agreement by bringing a relevant action in the Seoul Central District Court in Seoul, Korea, in addition to any other remedy to which any Party may be entitled at law or in equity. In addition, the Parties agree that any disputes, claims or controversies between the Parties arising out of or relating to this Agreement, whether in contract, tort, equity or otherwise and whether relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement shall be submitted to the exclusive jurisdiction of the Seoul Central District Court in Seoul, Korea. Each of the Parties irrevocably waives, to the fullest extent permitted by law, any objection which it may now, or hereafter, have with respect to the jurisdiction of, or the venue in, the Seoul Central District Court. |
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17.1. | Lessor is the current occupant of portions of the Hynix Land (Expansion Area), Lessee shall have both a Right of First Refusal on the Expansion Area as set forth below: |
(a) | Right of First Refusal . If Lessor shall receive an offer to lease any portion of the Expansion Area, from time to time, which offer Lessor shall desire to accept, Lessor shall transmit a memorandum of said offer to Lessee. The memorandum shall set forth in detail the terms of the offer, including a description of the area, the rent (including any abatement and escalations), and any other material terms of the offer, to the extent available. Within fifteen (15) days of receiving Lessors memorandum, Lessee shall, by written notice to Lessor exercise the right (each, a Right of First Refusal), (i) to accept such Expansion Area upon the terms and conditions stated in the offer or (ii) to accept such Expansion Area on the terms and conditions set forth in Section 17.1(c) and 17.1(d). Lessees failure to make the election shall be deemed a rejection of the Expansion Area. Upon Lessees acceptance of the Expansion Area, the parties shall execute an amendment incorporating the Expansion Area into the Site subject to all of the terms, covenants, and conditions of the Lease, except as modified by the terms of the offer (if Lessee has elected option (i) above). Notwithstanding anything to the contrary in the offer, the terms of the Lease for the Expansion Area shall be as provided in Section 17.1(c) immediately below. Notwithstanding that Lessee should fail or refuse to exercise its Right of First Refusal in the manner herein provided, if the Expansion Area, or any part thereof, is not leased to the prospective tenant contemplated by Lessors memorandum within the time-period and on terms no more favorable to such tenant than originally offered to Lessee, the Expansion Area shall thereafter continue to be subject to the terms and conditions imposed by this Section 17.1(a) upon third party offers to lease and the first refusal procedure established by this Section 17.1(a) shall be reinstated. | ||
(b) | Should Lessee elect to exercise its Right of First Refusal, the terms and conditions of this Lease shall apply to the Expansion Area except as modified by the terms of the offer if Lessee has accepted in Section 17.1(a) option (i) above. Rent for the Expansion Area shall be at the then current square meter rental rate except as modified by the terms of the offer if Lessee has accepted in Section 17.1(a) option (i) above. |
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(c) | Should Lessee exercise its Right of First Refusal, Lessor shall deliver such Expansion Area to Lessee, in Turnover Condition (defined below) whereupon said Expansion Area shall be added to and become a part of the Site and shall be governed in all respects by the terms of this Lease except that (i) as to the Right of First Refusal, the terms of the offer upon which Lessee exercised such right shall govern to the extent inconsistent with the terms of this Agreement and (ii) notwithstanding anything herein to the contrary, the term applicable to such space shall end at the same time, and under the same conditions, as applicable to the Lease Term. As used herein, Turnover Condition shall mean broom clean, free of occupants, debris, and movable property. |
18.1 | In accordance with Applicable Laws and if any land in the Cheong Ju Complex is available for the construction of one additional warehouse (First Additional Warehouse), Lessee may elect to construct a First Additional Warehouse by hiring its own contractors and performing such construction. In such event, Lessor shall provide or engage in the following: |
(a) | the use or lease of the additional land necessary for the construction of the First Additional Warehouse, which would become part of the Lease Rights Site II; and | ||
(b) | the use of access to such additional land and to the completed First Additional Warehouse, which would become part of the Easement Site II. | ||
(c) | to undertake the performance for Lessee to obtain second priority Lease Rights for the site of the First Additional Warehouse and second priority Easement Rights for access from a public road along the main road to the site of the First Additional Warehouse consistent with Article 7 of this Agreement. |
18.2 | In accordance with Applicable Laws and if any land in the Cheong Ju Complex is available for the construction of one other additional warehouse (Second Additional Warehouse, together with the First Additional Warehouse, the Additional Warehouses), upon Lessees request, the Parties shall discuss in good faith (i) to accommodate such request and (ii) the selection of the site for the Second Additional Warehouse and other required acts. If both Parties agree, Lessor shall provide the undertakings as set forth in Sections 18.1(a), (b) and (c) above. |
18.3 | This Section shall be deemed as advance consent by Lessor to the site of the Additional Warehouses becoming part of the Lease Rights Site II and having the right of Easement Right II for access from a public road along the main road to the site of the Additional Warehouses. |
19.1. | Lessor and Lessee shall each obtain from, keep in force during the Lease Term with, and pay all premiums due to, an insurer(s) holding a Best Rating of B+ or higher, Standard |
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Commercial General Liability Insurance. The limits of liability of such insurances shall be in an amount not less than One Million Dollars ($1,000,000.00) per occurrence, Personal Injury including death and One Million Dollars ($1,000,000.00) per occurrence, Property Damage Liability or One Million Dollars ($1,000,000.00) combined single limit for Personal Injury and property Damage Liability. |
19.2. | Lessee shall pay to Lessor the incremental amount of insurance premiums which will be additionally charged to Lessor due to Lessors grant to Lessee of lease of the Lease Rights Site I and easement right to the Easement Site in accordance with this Agreement. |
21.1. | Neither Party shall be liable to the other Party for failure of or delay in the performance of any obligations under this Agreement due to causes reasonably beyond its control including (i) war, insurrections, riots, explosions, inability to obtain raw materials due to then current market situation; (ii) natural disasters and acts of God, such as violent storms, earthquakes, floods, and destruction by lightning; (iii) the intervention of any Governmental Entity or changes in relevant laws or regulations which restrict or prohibit either Partys performance of its obligations under this Agreement or implementation of this Agreement; or (iv) strikes, lock-outs and work-stoppages, which are beyond the reasonable control of the Party claiming the benefit (each, an Event of Force Majeure). Upon the occurrence of an Event of Force Majeure, the affected Party shall notify the other Party as soon as possible of such occurrence, describing the nature of the Event of Force Majeure and the expected duration thereof. Notwithstanding the foregoing, Lessee shall be under continuing obligation to make the payments required hereunder for any Rent, Other Costs and the corresponding VAT payable by Lessee, which was payable by Lessee prior to the occurrence of an Event of Force Majeure. |
21.2. | If a Party is unable, by reason of an Event of Force Majeure, to perform any of its obligations under this Agreement, then such obligation shall be suspended to the extent and for the period that the affected Party is unable to perform. If this Agreement requires an obligation to be performed by a specified date, such date shall be extended for the period during which the relevant obligation is suspended due to such an Event of Force Majeure under this Agreement. |
22.1. | Confidentiality. Neither Party shall, except as expressly permitted by the terms of this Agreement, disclose to any third party the terms and conditions of this Agreement, the |
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existence of this Agreement and any Confidential Information which either Party obtains from the other Party in connection with this Agreement and/or use such Confidential Information for any purposes whatsoever other than those contemplated hereunder provided , however , that this Agreement (and its terms and conditions) may be disclosed and filed publicly in connection with a public offering of securities by Lessee or its Affiliates. Confidential Information shall mean any and all information including technical data, trade secrets or know-how, disclosed by either Party to the other Party in connection with this Agreement, which is marked as Proprietary or Confidential or is declared by the other Party, whether in writing or orally, to be confidential, or which by its nature would reasonably be considered confidential. |
22.2. | The obligation of confidentiality in Section 22.1 shall not apply to any information that: (a) was known to the other Party without an obligation of confidentiality prior to its receipt thereof from the disclosing Party; (b) is or becomes generally available to the public without breach of this Agreement, other than as a result of a disclosure by the recipient Party, its representatives, its Affiliates or the representatives of its Affiliates in violation of this Agreement; (c) is rightfully received from a third party with the authority to disclose without obligation of confidentiality and without breach of this Agreement; or (d) is required by law or regulation to be disclosed by a recipient Party or its representatives (including by oral question, interrogatory, subpoena, civil investigative demand or similar process), provided that written notice of any such disclosure shall be provided to the disclosing Party in advance. If a Party determines that it is required to disclose any information pursuant to applicable law (including the requirements of any law, rule or regulation in connection with a public offering of securities by Lessor or its Affiliates) or receives any demand under lawful process to disclose or provide information of the other Party that is subject to the confidentiality provisions hereof, such Party shall notify the other Party prior to disclosing and providing such information and shall cooperate at the expense of the requesting Party in seeking any reasonable protective arrangements requested by such other Party. Subject to the foregoing, the Party that receives such request may thereafter disclose or provide information to the extent required by such law or by lawful process. |
23.1. | Exercise of Right . A Party may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by a Party does not prevent a further exercise of that or of any other right, power or remedy. A failure to exercise a right, power or remedy or a delay in exercising a right, power or remedy by a Party does not prevent such Party from exercising the same right thereafter. |
23.2. | Extension; Waiver . At any time during the Lease Term, each of Lessor and Lessee may (a) extend the time for the performance of any of the obligations or other acts of the other or (b) waive any inaccuracies in the representations and warranties of the other contained in this Agreement or in any document delivered pursuant to this Agreement. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set |
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forth in an instrument in writing signed on behalf of such Party. The failure of any Party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. Any rights under this Agreement may not be waived except in writing signed by the Party granting the waiver or varied except in writing signed by the Parties. |
23.3. | Notices . Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any Party shall be in writing and shall be deemed duly given only upon delivery to the Party personally (including by reputable overnight courier service), when telecopied (with confirmation of transmission having been received) during normal business hours or three days after being mailed by registered or certified mail (return receipt requested), with postage and registration or certification fees thereon prepaid, addressed to the Party at its address set forth below (or at such other address for a party as shall be specified by such Party by like notice): |
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23.4. | Fees and Expenses . All costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such expenses, except as specifically provided to the contrary in this Agreement. |
23.5. | Entire Lease; No Third Party Beneficiaries . This Agreement (a) constitutes the entire agreement between the Parties and supersedes all prior agreements and understandings, both written or oral, between the Parties with respect to the subject matter hereof and (b) is not intended to confer upon any person other than the Parties hereto any rights or remedies hereunder. |
23.6. | Severability of Provisions . Any term or provision of this Agreement that is held by a court of competent jurisdiction or other authority to be unlawful, invalid, void or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares that any term or provision hereof is unlawful, invalid, void or unenforceable, the Parties agree that the court making such determination shall have the power to reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any unlawful, invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the unlawful, invalid or unenforceable term or provision. |
23.7. | Amendment and Modification . This Agreement (for the avoidance of doubt, including Exhibits attached hereto) may be amended, modified and supplemented in any and all respects, but only by a written instrument signed by the Parties expressly stating that such instrument is intended to amend, modify or supplement this Agreement. |
23.8. | Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. |
23.9. | Election of Remedies . Neither the exercise of nor the failure to exercise a right or to give notice of a claim under this Agreement shall constitute an election of remedies or limit any Party in any manner in the enforcement of any other remedies that may be available to such Party, whether at law or in equity. |
23.10. | Language . This Agreement is being originally executed in the English language only. In the event that the Parties agree to have a Korean version of this Agreement following signing, this Agreement may be translated into Korean. The Parties acknowledge that the Korean version of this Agreement shall be for reference purposes only, and in the event of any inconsistency between the two texts, the English version shall control. |
23.11. | No Merger . It is the intention of the Lessor to lease the Land to the Lessee free of any merger of the fee estate and leasehold estate or any other interests that may be held contemporaneously by Lessor, or any of them, and Lessee. No such merger will occur until such time as the Lessee executes a written instrument specifically effecting such merger and duly records the same. |
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Hynix Semiconductor Inc. | ||||
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MagnaChip
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Semiconductor, Ltd. | |||
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1. |
Section 4.2 is hereby amended and restated in its entirety as follows:
Lessor shall provide an invoice (the Invoice) to Lessee by the last day of each calendar month which shall include the amount of Rent, Other Costs and the corresponding VAT amount payable by Lessee for such month. |
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Section 4.3 is hereby amended and restated in its entirety as follows:
Lessee shall pay in aggregate the Rent, Other Costs and the corresponding VAT amount stated on each Invoice to the Lessors designated account, or as otherwise designated by Lessor, by means of wire transfer in immediately available funds by the 25 th day of the next calendar month following the date of the Invoice (the Due Date). |
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3. | Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. | |
4. | Wherever necessary, all terms of the Agreement are hereby amended to be consistent with the terms of this Amendment. Except as set forth herein, the Agreement remains in full force and effect according to its terms. | |
5. | This Amendment shall become effective from the 6th of October, 2004. |
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6. | This Amendment shall be governed by, and shall be construed in accordance with, the laws of Korea. |
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MagnaChip Semiconductor, Ltd. | ||||
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President & Chief Executive Officer | |||
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ARTICLE 1. DEFINITIONS
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ARTICLE 2. TERM OF AGREEMENT; DURATION OF SERVICES
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ARTICLE 3. SERVICES AND FEES
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ARTICLE 4. SUPPLY OF THE SERVICES; RIGHT OF FIRST REFUSAL
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ARTICLE 5. MAINTENANCE OF THE SERVICES
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ARTICLE 6. COORDINATING COMMITTEE
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ARTICLE 7. PAYMENTS FOR THE SERVICES
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ARTICLE 8. REPRESENTATIONS, WARRANTIES AND COVENANTS
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ARTICLE 9. FORCE MAJEURE
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ARTICLE 10. TERMINATION; EFFECT OF TERMINATION
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ARTICLE 11. INDEMNIFICATION
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ARTICLE 12. LIMITATION ON LIABILITY
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ARTICLE 13. ASSIGNMENT
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ARTICLE 14. GOVERNING LAW; DISPUTE RESOLUTION
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ARTICLE 15. CONFIDENTIALITY
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ARTICLE 16. MISCELLANEOUS
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EXHIBIT A SHORT TERM SERVICES
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EXHIBIT B ENVIRONMENTAL SAFETY & FACILITY MONITORING SERVICES FEES
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EXHIBIT C UTILITIES AND INFRASTRUCTURE SUPPORT SERVICES FEES
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EXHIBIT D VIVENDI SERVICES FEES & CERTAIN VIVENDI ASSETS
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EXHIBIT E WELFARE FACILITY SERVICES FEES
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EXHIBIT F CHEMICAL PROCUREMENT SERVICES FEES
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EXHIBIT G PARKING LOT, SPORTS FIELDS AND TENNIS COURT NEAR THE
WOMENS DORMITORIES
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APPENDIX I SAMPLE CALCULATION OF FEES
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(1) | Hynix Semiconductor Inc., a company organized and existing under the laws of the Republic of Korea (Korea) with its registered office at San-136-1, Ami-Ri, Bubal-Eub, Ichon-Si, Kyoungki-Do, Korea (Hynix); and |
(2) | MagnaChip Semiconductor, Ltd., a company organized and existing under the laws of Korea with its registered office at 1, Hyangjeong-Dong, Heungduk-Gu, Cheongju-Si, Chungcheongbuk-Do, Korea (NewCo) (each a Party and collectively the Parties). |
1.1. | Unless otherwise defined herein, all capitalized terms shall have the meanings set forth below: |
Affiliate shall have the meaning ascribed to such term in the BTA. |
AUP shall mean the agreed-upon-procedures which Samil PricewaterhouseCoopers (formerly Samil Accounting Corporation) has performed in connection with the financial statements attached in Schedule 2.4 of the BTA. |
BTA shall have the meaning ascribed to such term in the Recitals. |
Business shall have the meaning ascribed to such term in the BTA. Any reference to the conduct of the Business or the operation of the Business shall refer to the conduct or operation of the Business as conducted as of the execution date of the BTA. |
Business Day shall mean any day other than a Saturday, Sunday or a day on which banks in Seoul are authorized or obligated by relevant law to close. |
CAO Operation Support Services shall mean on-the-job training of personnel so that such personnel can provide services related to accounting, finance, administration and control of human resources (but excluding planning and decision functions of human resources), which have been historically provided to the Business. |
Chemical Procurement Services shall mean the sale by Hynix to NewCo of such quantities of CPD-18 in a state of Developer 2.38% CPD2000 (Developer 20%) and produced by mixing with de-ionized water (the Chemical) as are requested by NewCo from time to time to meet the requirements of NewCos business, and the services related to such sale in which every morning Hynix will pick up from such locations within the Hynix Complex in Cheongju, Korea as may be designated by NewCo from time to time such drums which NewCo has deposited there for these Services and the following morning Hynix will deliver to the same locations each such drum refilled with the Chemical. |
Closing shall have the meaning ascribed to such term in the BTA. |
Closing Date shall have the meaning ascribed to such term in the BTA. |
Confidential Information shall have the meaning ascribed to such term in Section 15.1. |
Coordinating Committee shall have the meaning ascribed to such term in Section 6.1. |
Daesung shall mean Daesung Industrial Gas Co., Ltd., a company organized and existing under the laws of Korea and a party to the Daesung Agreements. |
Daesung Agreements shall mean all agreements entered into between Hynix and Daesung under which Daesung supplies gas to Hynix by constructing and operating, at Daesungs own cost and responsibility, on-site gas plants within the Hynix Complex in Cheongju, Korea. |
Damages shall mean any and all losses, settlements, expenses, liabilities, obligations, claims, damages (including any governmental penalty or costs of investigation, clean-up and remediation), deficiencies, royalties, interest, costs and expenses (including reasonable attorneys fees and all other expenses reasonably incurred in investigating, preparing or defending any litigation or proceeding, commenced or threatened incident to the successful enforcement of this Agreement), the extent of which are recoverable under Korean law. For the purposes of Articles 11 and 12, Damages also shall include any and all increases in insurance premiums that are reasonably demonstrably attributable to the breach by NewCo or Hynix, as the case may be, of its representations, warranties, agreements and covenants expressly contained in this Agreement, or negligence, gross negligence, intentional breach or willful misconduct of NewCo or Hynix, as the case may be, for the two following annual policy periods. |
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Environmental Safety & Facility Monitoring Services shall mean the services related to wastewater treatment, sewage management (to the extent it is not supplied as a part of the Vivendi Services), fire emergency service and drills/training, facility monitoring service, radiation and in-house clinic, which have been historically provided to the Business. |
Event of Force Majeure shall have the meaning ascribed to such term in Section 9.1. |
Governmental Authorization shall mean any approval, consent, license, permit, waiver or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Entity or otherwise pursuant to any applicable laws, or any registration with, or report or notice to, any Governmental Entity pursuant to any applicable laws. |
Governmental Entity shall mean a court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency. |
Hynix Complex shall mean the Hynix and/or NewCo manufacturing, testing, packaging, research and development and other facilities located at Ichon, Cheongju, Gumi, and Seoul, Korea. |
Hynix Utilities and Infrastructure Support Services shall mean the services related to electricity (154kV substation and substation of the Korea Electric Power Corporation), water, fuel (city gas and light oil), bulk gasses (of the type historically provided under the Daesung Agreements) and de-ionized water (to the extent it is not supplied by Vivendi as a part of the Vivendi Services), which have been historically provided to the Business in Cheongju, Korea. |
Indemnified Party shall have the meaning ascribed to such term in Section 11.1. |
Indemnifying Party shall have the meaning ascribed to such term in Section 11.1. |
Joint Purchasing Services shall mean, to the extent permitted by applicable law, such cooperation and coordination between the Parties, including by means of information sharing and joint purchasing from the same vendors, as is necessary or advisable to achieve such benefits including volume discounts, cost reductions and efficiency in gathering market information in the purchase of equipment, silicon wafers, photo chemicals and other raw materials and spare parts, which have been historically provided to the Business. |
Leased Premises shall have the meaning ascribed to such term in Section 3.14(a). |
Long-Term Service shall mean each of the Vivendi Services and each of the services related to (a) electricity (154kV substation), electricity (substation of the Korea Electric Power Corporation), bulk gasses and de-ionized water (to the extent it is not supplied as a part of the Vivendi Services), which are part of the Hynix Utilities and Infrastructure Support Services; (b) use of and services related to dormitory (including sewage and waste management and disposal services), Hynix culture center, security cameras, |
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security guard house, commuting bus, cafeteria, communication systems including leased lines, company broadcasting system (other than content), company house (Poolen Apartments, Sawon Apartments and sa-rang-bang ) and leased apartments (Woojung apartments), sports field, tennis courts and parking lot (near womens dormitories) and reserve troops in Cheongju, Korea, and use of and services relating to Highla Condominiums, Korea Condominiums and, subject to then applicable union contracts and restrictions, other condominiums existing as of the date hereof, which are part of the Welfare Facility Services; and (c) wastewater treatment and sewage management (to the extent they are not supplied as a part of the Vivendi Services), fire emergency service and drills/training and in-house clinic, which are part of the Environmental Safety & Facility Monitoring Services. |
Maintenance Activities shall have the meaning ascribed to such term in Section 5.1. |
Mask Services shall mean certain services relating to the Products as defined in the Mask Production and Supply Agreement between the Parties, dated the date hereof, including defect inspection, repair and cleaning of such Products. |
NewCo Utilities and Infrastructure Support Services shall mean the services related to management of water tank, supply of assembly utility and waste management, which have been historically used or received by Hynix (other than in connection with the Business) in connection with Hynixs use of the R, C1, C2, C3 and Assembly buildings in Cheongju, Korea. |
Notice of Sale shall have the meaning ascribed to such term in Section 4.5. |
Notice Period shall have the meaning ascribed to such term in Section 4.5. |
Offered Assets shall have the meaning ascribed to such term in Section 4.5. |
Permitted Business shall mean the Business or any other semiconductor, information technology or other technology related business. |
Service Facilities shall mean those facilities at the Hynix Complex and those assets that are used for or relate to the provision of the Services. |
Services shall mean such services related to goods, facilities and utilities which are required or desirable for transition, setting-up or continuing operation of the applicable Partys business and consisting of each of the services constituting the Vivendi Services, Hynix Utilities and Infrastructure Support Services, NewCo Utilities and Infrastructure Support Services, Welfare Facility Services, Environmental Safety & Facility Monitoring Services, Mask Services, CAO Operation Support Services, Chemical Procurement Services, Joint Purchasing Services and the other services described herein. |
Subsidiaries shall have the meaning ascribed to such term in the BTA. |
Term shall have the meaning ascribed to such term in Article 2. |
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Third Party Supplier(s) shall mean Daesung and/or Vivendi, as applicable, which provide certain services to Hynix for Hynixs provision of such Services hereunder. |
Third Party Supplier Agreement(s) shall mean the Daesung Agreement and/or the Vivendi Water and Wastewater Services Agreement, as applicable, and any replacements or modifications thereof from time to time. |
Unprotected Long-Term Services shall mean each of the services related to (a) security cameras, security guard house, commuting bus, cafeteria, communication systems including leased lines, company broadcasting system, company house (Poolen Apartments, Sawon Apartments and sa-rang-bang ) and leased apartments (Woojung apartments), sports field, tennis courts and parking lot (near the womens dormitories) and reserve troops in Cheongju, Korea, and Highla Condominiums, Korea Condominiums and, subject to then applicable union contracts and restrictions, other condominiums existing as of the date hereof, which are part of the Welfare Facility Services; and (b) fire emergency service and drills/training and in-house clinic, which are part of the Environmental Safety & Facility Monitoring Services. |
Vivendi shall mean Veolia Water Industrial Development Co., Ltd. (formerly known as Vivendi Water Industrial Development Co., Ltd.), organized and existing under the laws of Korea and a party to the Vivendi Water and Wastewater Services Agreement. |
Vivendi Services shall mean the services related to de-ionized water supply and wastewater disposal in the Hynix Complex located in Cheongju, Korea and in Gumi, Korea, and all such other services provided by Vivendi to Hynix under the Vivendi Water and Wastewater Service Agreement. |
Vivendi Water and Wastewater Services Agreement shall mean the Water and Wastewater Services Agreement dated March 29, 2001 entered into by and between Hynix (then named Hyundai Electronics Industries Co., Ltd.) and Vivendi, as the same may be amended from time to time. |
Warrant Issuer shall have the meaning ascribed to such term in the BTA. |
Welfare Facility Services shall mean such welfare and facility services, including the use of and services related to (a) dormitories (including sewage and waste management and disposal services), Hynix culture center, security cameras, security guard house, commuting bus, cafeteria, communication systems, company broadcasting system (other than content), company house (Poolen Apartments, Sawon Apartments and sa-rang-bang ) and leased apartments (Woojong apartments), sports fields, tennis courts and parking lot (near womens dormitories), and reserve troops in the Hynix Complex located in Cheongju, Korea; (b) leased apartments, dormitory (including sewage and waste management and disposal services), cafeteria, gymnasium, parking lot, communication systems, pavilion/PR center/audience room, kindergarten, reserve troops, security and sports field in the Hynix Complex located in Ichon, Korea; (c) reserve troops, postal and package delivery (among Cheongju, Ichon and Youngdong), security card key system and communication systems in the Hynix Complex located in Youngdong Building, |
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Seoul, Korea, which have been historically provided to the Business; and (d) Highla Condominiums, Korea Condominiums and, subject to then applicable union contracts and restrictions, other condominiums existing as of the date hereof owned by Hynix. |
1.2. | Rules of Interpretation . |
(a) | When a reference is made in this Agreement to a section or article, such reference shall be to a section or article of this Agreement unless otherwise clearly indicated to the contrary. | ||
(b) | Whenever the words include, includes or including are used in this Agreement they shall be deemed to be followed by the words without limitation. | ||
(c) | The words hereof, hereto, herein and herewith and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified. | ||
(d) | The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning. | ||
(e) | A reference to any party to this Agreement or any other agreement or document shall include such partys successors and permitted assigns. | ||
(f) | A reference to any legislation or to any provision of any legislation shall include any amendment to, and any modification or re-enactment thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto. | ||
(g) | The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement. | ||
(h) | Headings are for convenience only and do not affect the interpretation of the provisions of this Agreement. | ||
(i) | Any Exhibits attached hereto are incorporated herein by reference and shall be considered as a part of this Agreement. |
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2.1. | This Agreement shall become effective on the Effective Date and continue in full force and effect for so long as any Service is being provided hereunder, unless earlier terminated in accordance with Article 10 (the Term). |
2.2. | Unless specified otherwise in this Article 2, each of the Services shall be provided from the Effective Date until the date that is one (1) year after the Effective Date (the Initial Service Period), unless otherwise earlier terminated pursuant to this Agreement. Unless specified otherwise in this Article 2, after the Initial Service Period for a Service, such Service shall be provided for one additional one (1) year period NewCo notifies Hynix in writing of its desire not to renew the provision of such Service at least sixty (60) days prior to the expiration of the Initial Service Period or the Service is earlier terminated pursuant to this Agreement. |
2.3. | The provision of Services in the Hynix Complex located in Youngdong Building, Seoul, and Ichon, Korea, respectively, will terminate after the applicable lease for the Hynix Complex located in Youngdong Building, Seoul, and Ichon, Korea, respectively, terminates, provided, however, that with respect to the leased apartments in Ichon, Korea, NewCo or the NewCo employee (as applicable) shall have the right to early termination of such leased apartment without penalty and shall, subject to the regulations of Hynix concerning the leased apartments, have the option to renew a leased apartment for one additional term. |
2.4. | Each Long-Term Service shall be provided for the Initial Service Period and for successive additional one (1) year periods, unless NewCo notifies Hynix in writing of its desire not to renew the provision of such Long-Term Service at least sixty (60) days prior to the expiration of the Initial Service Period or any annual anniversary thereof or the Long-Term Service is earlier terminated pursuant to this Agreement. |
2.5. | NewCo and Hynix shall, for a period of one year from the date hereof, cooperate with each other and negotiate in good faith with Vivendi regarding, and use commercially reasonable efforts to enter into, separate water and wastewater services agreements with Vivendi under which Vivendi shall directly provide NewCo and Hynix with services that are identical to the services provided by Vivendi to Hynix under the Vivendi Water and Wastewater Services Agreement, with terms at least as favorable as those on which the services are currently provided to Hynix. To the extent that NewCo is able to enter into such an agreement, Hynix will no longer be obligated to provide such services as are provided directly from Vivendi to NewCo under such agreement. To the extent that NewCo is unable to receive the applicable services directly from Vivendi, Hynix shall remain obligated to provide Vivendi Services to NewCo in accordance with the terms and conditions of this Agreement. NewCo and Hynix shall, for a period of one year from the date hereof, cooperate with each other and negotiate in good faith with Daesung regarding, and use commercially reasonable efforts to enter into, separate gas agreements with Daesung under which Daesung shall directly provide NewCo and Hynix with services that are identical to the services provided by Daesung to Hynix under the Daesung Agreements, with terms at least as favorable as those on which the services currently are |
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provided to Hynix. To the extent that NewCo is able to enter into such an agreement, Hynix will no longer be obligated to provide such services as are provided directly from Daesung to NewCo under such agreement. To the extent that NewCo is unable to receive the applicable services directly from Daesung, Hynix shall remain obligated to provide such services to NewCo in accordance with the terms and conditions of this Agreement. |
2.6. | NewCo Utilities and Infrastructure Support Services shall be provided for the Initial Service Period and for successive one (1)-year periods, unless Hynix notifies NewCo in writing of its desire not to renew the provision of the NewCo Utilities and Infrastructure Support Services at least sixty (60) days prior to the expiration of the Initial Service Period or any annual anniversary thereof or the NewCo Utilities and Infrastructure Support Services are earlier terminated pursuant to this Agreement. |
2.7. | Notwithstanding any other provision of this Agreement to the contrary, each Party may terminate the provision of any Service, in whole or in part, by providing the other Party with sixty (60) days prior notice of such termination (or such shorter time period of notice as is specified for such Service in Exhibit A). The terminating Party shall not be obligated to pay the other Party the service fees attributable to such cancelled Service(s), or part thereof, to the extent such fees are for services provided for any period beginning on or after the effective date of such termination. |
2.8. | Chemical Procurement Services shall be provided from the Effective Date until the date that is five (5) years after the Effective Date, and thereafter for so long as Hynix has the capacity to provide such Service, unless otherwise earlier terminated pursuant to this Agreement. |
2.9. | With respect to the Services related to the company broadcasting system under the Welfare Facility Services relating to production and development of content, such services shall be provided from the Effective Date until the date that is five (5) years after the Effective Date, unless otherwise earlier terminated pursuant to this Agreement. |
2.10. | The Mask Services shall be provided from the Effective Date until the date that is five (5) years after the Effective Date, unless otherwise earlier terminated pursuant to this Agreement. |
3.1. | Hynix shall provide, or cause the applicable Third Party Supplier to provide, NewCo with the Vivendi Services, Hynix Utilities and Infrastructure Support Services, Welfare Facility Services, Environmental Safety & Facility Monitoring Services, Mask Services, CAO Operation Support Services and Chemical Procurement Services, and NewCo shall receive such Services from Hynix, for the periods determined in accordance with Article 2. NewCo shall provide Hynix with the NewCo Utilities and Infrastructure Support Services, and Hynix shall receive such Services from NewCo, for the periods determined in accordance with Article 2. |
3.2. | The Parties shall each provide the Joint Purchasing Services to the other at no cost to the other and, to the extent permitted by applicable law, shall jointly purchase equipment, |
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silicon wafers, photo chemicals and other materials or spare parts if such joint purchasing would reduce the cost of any such item. For such purpose, Hynix and NewCo shall form a joint purchasing steering committee composed of an equal number of representatives designated by each Party to, to the extent permitted by applicable laws, coordinate information sharing and the joint purchasing of equipment, silicon wafers, photo chemicals and other raw materials and spare parts. |
3.3. | The fees for the Environmental Safety & Facility Monitoring Services, Hynix Utilities and Infrastructure Support Services, NewCo Utilities and Infrastructure Support Services, Welfare Facility Services and Chemical Procurement Services shall be determined in accordance with Exhibits B, C.1, C.2, E and F, respectively. Until the expiration and/or termination of the Vivendi Water and Wastewater Service Agreement, the fees for the Vivendi Services shall be determined in accordance with Exhibit D. |
3.4. | Hynix shall provide NewCo with the CAO Operation Support Services, at no additional cost, for the period set forth in Article 2. Hynix shall provide NewCo with the Mask Services at actual cost incurred for the period set forth in Article 2. |
3.5. | Upon the expiration of the Vivendi Water and Wastewater Service Agreement, Hynix will be entitled to receive certain assets (the Vivendi Assets) from Vivendi used in connection with the provision of services under such agreement. In such case, upon NewCos request, Hynix shall promptly transfer, assign and convey to NewCo, at no additional cost, those Vivendi Assets which are listed on Exhibit D hereto. Upon the early termination of the Vivendi Water and Wastewater Service Agreement, Hynix also will be entitled to receive the Vivendi Assets from Vivendi used in connection with the provision of services under such agreement. In such case, upon NewCos request, Hynix shall promptly transfer, assign and convey to NewCo those Vivendi Assets which are listed on Exhibit D hereto at the same price paid by Hynix to Vivendi for such Vivendi Assets under the Vivendi Water and Wastewater Services Agreement. To the extent that there are any benefits provided to either Party under the Vivendi Water and Wastewater Service Agreement, both Parties shall work in good faith to divide such benefits between them in an equitable manner. |
3.6. | With respect to the Welfare Facility Services related to the dormitories, NewCo shall provide Hynix with the names and identities of NewCos employees who intend to use such Welfare Facility Services as soon as reasonably practical in advance of the first day of such use. |
3.7. | NewCo agrees that it shall, and shall cause NewCos directors, officers, employees, agents, representatives or any other permitted users of the Welfare Facility Services to, abide by all reasonable safety and administrative rules and regulations of Hynix related to the Welfare Facility Services, if any. |
3.8. | Subject to Section 3.14, Hynix and NewCo shall have equal rights for the use of all relevant facilities for the Welfare Facility Services. NewCo and its directors, officers and employees shall, at all times, receive the benefits of the Welfare Facility Services on terms and conditions that are as favorable as those enjoyed by Hynix, and its directors, officers and employees at such time without any additional incremental cost to NewCo or its directors, officers or employees. |
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3.9. | Hynix shall provide, at no additional cost, NewCo and NewCos representatives with access at all reasonable times to any historical data relating to the Business that NewCo may request. In furtherance of the forgoing, at the reasonable request of NewCo, Hynix shall provide NewCo and NewCos representatives with access to, or shall otherwise provide to NewCo and NewCos representatives, electronic data in electronic form relating to the Business. NewCo shall provide, at no additional cost, Hynix and Hynixs representatives with access at all reasonable times to any historical data relating to Hynixs business, except for information relating to the Business, that Hynix may request. Neither Party shall, for a period of six years after the date hereof, destroy any such data without giving the other Party at least 30 days prior written notice, during which time the other Party shall have the right (subject to Article 15) to examine, remove, to the extent not prohibited by operation of applicable law, or make and retain a copy of, any such data prior to destruction. Nothing herein shall limit or modify or be deemed to limit or modify the Parties rights and obligations under Section 6.2 of the BTA. |
3.10. | If either Party receives any payment after the Closing Date to which the other Party is entitled pursuant to the BTA, such Party shall promptly (and in no event later than ten (10) Business Days after receipt of such payment) remit such payment to the other Party. |
3.11. | In addition to the Services set forth herein, Hynix and NewCo acknowledge and agree that there may be additional services which have not been identified but which historically have been provided by Hynix to the Business and which shall continue to be required or desired by NewCo. If, within one year of the Closing Date, any such additional services are identified and requested reasonably in advance by NewCo, Hynix shall provide such additional services to NewCo in a manner consistent with the other Services, at a price no greater than actual cost, and, to the extent applicable, calculated by taking into account the AUP. Any such additional services which are consistent with the type and subject matter of other Long-Term Services under this Agreement shall be deemed to be Long-Term Services for the purposes of Article 2 and any other such additional services shall be provided until the second anniversary of the date hereof, subject to Section 2.7. With respect to additional services which historically have not been provided by Hynix with respect to the Business (New Service), at the request of NewCo, the Parties will discuss in good faith the provision of any such New Service by Hynix to NewCo. |
3.12. | Any fees for the Services to be provided hereunder are set forth on the applicable Exhibit and there are no other fees for the Services except as set forth thereon. To the extent applicable, calculations hereunder shall be made by taking into account the AUP. |
3.13. | Notwithstanding anything herein to the contrary, but subject to the last sentence of Section 3.11, the Parties acknowledge and agree that it is their mutual intent that the fees for the Services provided hereunder shall be no greater than the actual cost reasonably incurred to provide such Services. The Parties agree to cooperate in good faith in furtherance of the foregoing, including by adjusting the fees from time to time if |
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necessary in order to effectuate this intent and by conducting, at the request of either Party, an audit of the fees in each calendar year during which services are provided (at a time within the first six months of the succeeding calendar year mutually agreed to in good faith) to compare the costs actually incurred to provide the Services hereunder during such period with the fees paid for such Services. The audited Party may dispute the results of any such audit, provided that the audited Party shall notify the requesting Party in writing of such disputed results within 30 days of the audited Partys receipt of the results of the audit. In the event of any such dispute, Hynix and NewCo shall attempt to reconcile their differences and any resolution by them as to any disputed amounts shall be final, binding and conclusive on Hynix and NewCo. If Hynix and NewCo are unable to reach a resolution to such effect of all disputed amounts within 30 days of receipt of the audited Partys written notice of dispute to the requesting Party, NewCo and Hynix shall submit the amounts remaining in dispute for resolution to the Independent Accounting Firm, which shall, within 30 days after such submission, determine and report to Hynix and NewCo with respect to the amounts disputed. The findings of the Independent Accounting Firm shall be final, binding and conclusive on Hynix and NewCo. If the results of any such audit as finally determined indicate that the requesting Party has, in the aggregate with respect to all costs audited, paid more than the amount otherwise required to have been paid pursuant to this Agreement, the audited Party shall promptly (and in no event later than 30 days from the date of such determination) refund the amount of such overpayment to the requesting Party. If the results of any such audit as finally determined indicate that the requesting Party has, in the aggregate with respect to all costs audited, paid less than the amount otherwise required to have been paid pursuant to this Agreement, the requesting Party shall promptly (and in no event later than 30 days from the date of such determination) pay the amount of such underpayment to the audited Party. For any individual deficiency or overpayment indicated by the results of any such audit as finally determined, the Party owing the payment shall pay to the other Party, in addition to such payment due, interest thereon at a rate of eight (8%) percent per annum of such deficiency or overpayment for the period from the date of such deficiency or overpayment until the date finally paid or reimbursed, as the case may be. The total costs involved in any such audit shall be paid by: (i) the requesting Party, in the case that the audit demonstrates a deviation in the aggregate with respect to all audited costs of less than 5% from the amount otherwise required to have been paid pursuant to this Agreement, (ii) both Parties equally, in the case that the audit demonstrates a deviation from 5% to 10% and (iii) the audited Party, in the event that the audit demonstrates a deviation greater than 10%. Each Party shall use its commercially reasonable efforts to minimize the costs incurred to provide the Services. The Parties agree that the audit contemplated hereunder shall be conducted only once in each calendar year for all of the following agreements entered into by and between the Parties and/or their Affiliates as of the date hereof: General Service Supply Agreement, R&D Equipment Utilization Agreement, IT & FA Service Agreement, Taiwan Overseas Sales Services Agreement, U.S. Overseas Sales Services Agreement, Japan Overseas Sales Services Agreement, U.K. Overseas Sales Services Agreement and Hong Kong Overseas Sales Services Agreement. |
3.14. | (a) Hynix and NewCo shall have the right to use up to 54.7% and 45.3%, respectively, of the units in each dormitory and apartment in Cheongju, Korea |
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which is a part of the Welfare Facility Services. Each Party shall have the right to use such additional amount of the units in each such dormitory or apartment as the Parties may agree from time to time. In order to secure NewCos right described in the first sentence of this Section 3.14 (a), on or after the Effective Date, NewCo shall have the right to register lease rights (the Lease Rights) over 45.3% of the total floor area of each dormitory in the Hynix Complex in Cheongju, Korea (the Leased Premises) with the relevant real property registry offices for the Term, such Lease Right registration having priority over any lien or encumbrance established on such dormitories other than statutory liens and liens established thereon as of one (1) day prior to the Closing Date by Hynixs financing creditors; provided, however, that with respect to the womens dormitory, Hynix shall conduct the registration to preserve ownership with respect to the womens dormitory within one (1) year from the Effective Date and shall thereafter register the Lease Rights over 45.3% of the total floor area of the womens dormitory having priority over any lien or encumbrance established on the womens dormitory other than statutory liens and liens to be established thereon by Hynixs financing creditors. Hynix shall take any action necessary to maintain or cause to be maintained the priority of the Lease Right, subordinate only to such Hynixs senior financing and statutory liens, with respect to the Leased Premises during the Term. Hynix shall provide to NewCo all necessary documents normally required of a lessor for the registration of the Lease Right on the Leased Premises on the Effective Date. For the avoidance of doubt, the Parties agree and acknowledge that notwithstanding the registration of the Lease Rights pursuant to this Section 3.14(a), NewCo shall not have the right to exclusively use the Leased Premises and the Parties shall have the right to use all dormitories in existence as of the date hereof on a pro rata shared basis as indicated in the first sentence of this Section 3.14(a). | |||
(b) | With respect to the leased apartments in Ichon, Korea which are a part of the Welfare Facility Services, only the employees of NewCo who reside in such apartments on the date hereof or who apply to Hynix for occupancy within one day prior to the Closing Date shall be eligible to occupy such apartments. |
3.15. | Hynix shall provide e-mail forwarding services for NewCo employees for up to six (6) months from the Closing Date at no additional cost so that any e-mail addressed to the former Hynix e-mail account of a NewCo employee shall automatically forward to the NewCo e-mail account of such NewCo employee. Each NewCo employee shall be entitled to use the same telephone numbers and fax numbers as it used prior to the Closing Date and NewCo shall also be entitled to use the same telephone numbers and fax numbers as were used by the Business prior to the Closing Date. |
3.16. | With respect to the sports field and the parking lot near the womens dormitories as set forth on Exhibit G, Hynix may cease to provide these facilities to NewCo on three months prior written notice in the event Hynix determines to put such space to a different use or sells such facilities, but if such facilities are replaced with a substitute recreational facility or parking lot, respectively, such facilities shall be made available to NewCo and its employees as part of the Welfare Facilities Services to the extent such substitute |
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facilities are available to Hynix or its employees. If Hynix makes any other sports field or parking lot available to Hynix employees in lieu of the removed facilities, such other sports field and parking lot shall be made available to NewCo and its employees as part of the Welfare Facilities Services. |
3.17. | Hynix may, on three months prior written notice to NewCo, remove the tennis courts set forth in Exhibit G in Cheongju, Korea, but only in the event that such tennis courts are replaced with a substitute recreational facility, such facility to be made available to NewCo and its employees as part of the Welfare Facilities Services. |
3.18. | With respect to the Highla Condominiums, Korea Condominiums and, subject to then applicable union contracts and restrictions, other condominiums existing as of the date hereof under the Welfare Facilities Services, Hynix shall make such condominiums available to NewCo employees on the same terms applicable to Hynix employees. There shall be no additional fees paid by NewCos employees with regard to such condominiums except the usage fees paid by the employee using such condominiums, which shall be consistent with fees paid by Hynix employees. |
3.19. | With respect to fire emergency drills/training under the Environmental Safety & Facility Monitoring Services, the Parties shall cooperate in good faith in determining the scheduling of such drills and training at mutually agreeable times. |
3.20. | Beginning upon the expiration and/or early termination of the Vivendi Water and Wastewater Service Agreement, each Party will cooperate and coordinate with each other as is reasonably necessary or advisable for the joint operation of the Vivendi Assets, including entering into an agreement with a third party service provider, in order that both Parties receive services that are identical to the services provided by Vivendi as of the expiration and/or early termination of the Vivendi Water and Wastewater Service Agreement. Beginning upon the the expiration and/or early termination of the Vivendi Water and Wastewater Service Agreement, each Party shall provide back up services to the other Party with respect to the Vivendi Services, including use of de-ionized water systems, waste water treatment facilities and other applicable facilities. |
4.1. | The obligations of Hynix to provide each of the Vivendi Services, and the part of the Hynix Utilities and Infrastructure Support Services provided by Daesung, set forth in this Agreement shall be subject, to the extent applicable, to the terms and conditions of the applicable Third Party Supplier Agreements; provided that NewCo shall be entitled to participate in any negotiations that Hynix may have with any third party supplier regarding the provision of services by such third party supplier, including any renewal, replacement, modification or termination of any third party supplier agreement and Hynix shall not agree to any renewal, replacement, modification or termination of the Vivendi Water and Wastewater Service Agreement or Daesung Agreements without NewCos prior written consent (which consent shall not be unreasonably withheld). |
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4.2. | Unless Hynix otherwise agrees and subject to Article 13, NewCo shall use the Services for the sole purpose of operating and maintaining NewCos business and may not sell, transfer, supply or grant access to any of the Services to any third party without Hynixs prior written consent (which shall not be unreasonably withheld). |
4.3. | All Services under this Agreement shall be performed in compliance with all applicable laws and regulations in all material respects, in a manner, to the extent and at a time, substantially consistent with past practice and in the manner, extent and time in which the applicable Party performs similar services for its own benefit (including with respect to using employees with similar levels and experience). The Parties agree to take timely and adequate action to correct any deficiency in the performance of any Service. |
4.4. | The Parties shall cooperate in good faith to increase overall site safety and reduce insurance costs. |
4.5. | In the event that Hynix wishes to sell or otherwise dispose of all or any part of its assets (Offered Assets) that are used for or relate to the provision of the Services at any time during the Term, Hynix shall first make an offer for the sale of such Offered Assets to NewCo by giving NewCo a written notice setting forth the price and other terms and conditions thereof (Notice of Sale). NewCo shall notify Hynix in writing whether NewCo accepts or rejects such offer made in the Notice of Sale within thirty (30) days after the receipt thereof (such thirty-day period, the Notice Period). Unless NewCo accepts in writing such offer made in the Notice of Sale prior to the expiration of the Notice Period, Hynix shall be free to sell or otherwise dispose of such Offered Assets offered through the Notice of Sale to a third party within thirty (30) days from the date of expiration of the Notice Period; provided , however , that such sale or disposal to a third party shall not be made under terms and conditions more favorable than the offer made to NewCo in the Notice of Sale. If Hynix sells or otherwise disposes of any of such Offered Assets, it shall nonetheless continue to provide NewCo with the Services in accordance with this Agreement without any other change in the terms and conditions thereof; provided , however , that Hynix shall not be obligated to provide an Unprotected Long-Term Service following the fifth anniversary of the date hereof if NewCo has rejected the offer made in a Notice of Sale with respect to the assets used to provide such Unprotected Long-Term Service. |
5.1. | During the Term of this Agreement if Hynix or any third party supplier (including Third Party Suppliers) has scheduled, or otherwise has planned to undertake inspection, testing, preventative maintenance, corrective maintenance, repairs, replacement, improvement or other similar activities to all or any portion of the Service Facilities (collectively, the Maintenance Activities), Hynix or the relevant third party supplier, as applicable, may, for the duration of such Maintenance Activities, interrupt, suspend or curtail the provision of relevant Services to the extent that the Maintenance Activities for the affected parts of the Service Facilities are necessary or advisable. In the event that Hynix is required to perform corrective maintenance, repairs due to malfunction or non-routine inspection due to a suspected malfunction, Hynix shall give NewCo prior written notice of such |
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activities to the extent reasonably possible. In the event that Hynix proposes to conduct any other Maintenance Activities, Hynix shall give NewCo as much prior written notice as reasonably possible of such activities, which in any event shall not be less than 30 days prior written notice, and Hynix shall consult with NewCo prior to undertaking or permitting to occur any such Maintenance Activity. Upon Hynixs receipt of any notice of any Maintenance Activities by any third party suppliers, Hynix promptly shall provide NewCo written notice thereof and shall consult with NewCo to the extent reasonably possible prior to permitting any such Maintenance Activities to occur. |
5.2. | If NewCo receives such notice as set forth in Section 5.1, then to the extent that the affected Services are insufficient to meet NewCos requirements for NewCos use thereof in accordance with the terms and conditions hereof, Hynix shall (i) to the extent Hynix has alternative sources available internally, provide alternate sources for the affected Services for the duration of the Maintenance Activities, (ii) to the extent that Hynix obtains any alternate sources for such Services, Hynix shall make available a pro-rata share of these alternate sources to NewCo, and (iii) if the foregoing are not available or are insufficient to meet NewCos requirements, Hynix shall cooperate with NewCo to locate alternate sources for such Services. To the extent the foregoing alternate sources are provided by Hynix, there shall be no incremental cost or expense to NewCo. To the extent the foregoing alternate sources are provided by third-parties, NewCo shall bear the actual costs of the services it uses. |
6.1. | Within thirty (30) days after the Effective Date, the Parties shall establish a coordinating committee (the Coordinating Committee) which shall consist of four (4) members, two (2) of which shall be appointed by Hynix and two (2) of which shall be appointed by NewCo. Each Party, upon prior written notice to the other Party, may from time to time remove or replace any member appointed by such Party. |
6.2. | Except as the Parties may otherwise agree in writing, the Coordinating Committee shall have the power and the responsibility under this Agreement to: |
(a) | act as a forum for the liaison between the Parties with respect to the day-to-day implementation of this Agreement; | ||
(b) | subject to Article 14, seek to resolve disputes; and | ||
(c) | undertake such other functions as the Parties may agree in writing. |
7.1. | Hynix shall invoice NewCo on the tenth (10th) day (except that for the Vivendi Services this shall be the fourteenth (14) day, until the expiration and/or termination of the Vivendi Water and Wastewater Service Agreement) of each calendar month for the fees for the Environmental Safety & Facility Monitoring Services, Hynix Utilities and Infrastructure Support Services (except for the fees for electricity (substation of the Korea Electric Power Corporation), water and fuel, which will be invoiced as set forth in the |
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third sentence of this Section 7.1), Vivendi Services, Welfare Facility Services and Chemical Procurement Services, provided during the immediately preceding calendar month specifying the Services provided during that month and the amount of fees for such Services calculated in accordance with Exhibits B, C, D, E and F, respectively, and Article 3. By the twenty-fifth (25th) day of each calendar month so invoiced (except with respect to the Vivendi Services for which the due date will be the twenty-fourth (24th) day of each calendar month so invoiced, until the expiration and/or termination of the Vivendi Water and Wastewater Service Agreement), NewCo shall pay the invoiced amount and value added tax thereto to Hynixs designated account by means of a wire transfer in cash. In addition, by the fifth (5th) day prior to the due date for the fees for electricity (substation of the Korea Electric Power Corporation), water and fuel supplied by Hynix to NewCo as part of the Hynix Utilities and Infrastructure Support Services as such due date is set forth on the relevant invoice therefor, Hynix shall invoice NewCo for the fees for such Services in the amounts for which such fees are set forth on the relevant invoice issued by relevant agencies and NewCo shall pay such invoiced amount and value added tax thereto to Hynixs designated account by means of a wire transfer in cash by one (1) Business Day prior to such due date. |
7.2. | NewCo shall invoice Hynix on the tenth (10th) day of each calendar month for the fees for the NewCo Utilities and Infrastructure Support Services provided during the immediately preceding calendar month specifying the Services provided during that month and the amount of fees for such Services calculated in accordance with Exhibit C. By the twenty-fifth (25th) day of each calendar month so invoiced, Hynix shall pay the invoiced amount and value added tax thereto to NewCos designated account by means of a wire transfer in cash. |
7.3. | All payments hereunder shall be made in Korean Won. |
7.4. | If a Party fails to make any payment due hereunder by the date it is due, such non-paying Party shall pay the other party, in addition to the amount of such payment due, a late charge of eight (8%) percent per annum of the outstanding amount, prorated to reflect a pro rata portion of such late charge for the period from the due date of the payment until finally paid. |
7.5. | Notwithstanding any dispute on the amount of payment under this Agreement, each Party shall continue to perform its obligations hereunder (including obligations to make payments of the amounts included on the invoices for the Services which are not disputed in good faith) and be entitled to exercise its rights under this Agreement; provided, however, that if a Party fails to pay in full the portion of sums invoiced by the other which are not disputed by the invoiced Party in good faith for three (3) calendar months after such sums become due, the invoicing Party may suspend or curtail the applicable Services for which payment was not made until such payment is made in full. Any invoice amount which remains disputed after thirty (30) days shall be referred to the Coordinating Committee in accordance with Section 14.2. |
7.6. | Each Party shall, at the request of the other Party, provide the other Party with relevant data and records for the determination of such Partys compliance with its obligations |
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under this Agreement (other than with respect to calculation of fees hereunder which is governed by Section 3.13); provided that a Party may make no more than one such request per calendar quarter and any such request must be reasonably specific. In this regard, each Party shall prepare and maintain proper books and records of all matters pertaining to the Services under this Agreement. Subject to Article 15 and the first sentence of this Section 7.6, upon seven (7) days prior written notice, either Party, or its authorized representatives, may examine during normal business hours, the books, records and documents of the other Party to the extent reasonably necessary for verification of compliance under this Agreement; provided , however , that if a Party is to provide such books and records to the other Party for such Partys examination and photocopying purposes, the other Party may blackout any information contained in such books and records that relates to the other Party other than information that is required for the determination of the other Partys compliance with its obligations under this Agreement. |
7.7. | Notwithstanding anything herein to the contrary, in the event of a bankruptcy filing with respect to NewCo, NewCo shall deposit with Hynix an amount equal to the fees paid by NewCo during the immediately preceding full calendar month under the terms of this Agreement, against which will be credited fees payable by NewCo over the thirty day period following such deposit. NewCo shall renew such deposit each thirty days in each case by reference to the fees paid by NewCo during the full calendar month immediately preceding any such renewal until such bankruptcy protection filing has been accepted by the bankruptcy court. For the avoidance of doubt, NewCo shall not be relieved of responsibility for, and shall pay when due, any fees for services hereunder during any such thirty day period to the extent in excess of the then actual deposit. |
8.1. | Each Party hereby represents and warrants to the other Party that all of the statements contained in this Section 8.1 are true and correct with respect to such Party as of the Effective Date and at all times thereafter during the Term. |
(a) | Organization . Such Party is duly incorporated and validly existing under the laws of Korea and has full power and authority to perform its respective obligations herein. | ||
(b) | Authorization . Such Party has full corporate power and authority to execute and deliver this Agreement. The execution, delivery and performance by such Party of this Agreement have been duly authorized by all corporate actions on the part of such Party that are necessary to authorize the execution, delivery and performance by such Party of this Agreement. | ||
(c) | Binding Agreement . This Agreement has been duly executed and delivered by such Party and, assuming due and valid authorization, execution and delivery hereof by the other Party, is a valid and binding obligation of such Party, enforceable against such Party in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent |
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conveyance and other similar laws of general application affecting enforcement of creditors rights generally and (ii) the availability of the remedy of injunctive relief may be subject to the discretion of the court before which any proceeding therefor may be brought or the general principle of good faith and fairness provided for in the Korean Civil Code. | |||
(d) | No Violation of Laws or Agreements . The execution, delivery and performance of this Agreement does not, (i) contravene any provision of the articles of incorporation or bylaws, or other similar organizational documents, of such Party; or (ii) violate, conflict with, result in a breach of, or constitute a default (or an event which might, with the passage of time or the giving of notice, or both, constitute a default) under any agreement to which such Party is a party or by which it is bound. | ||
(e) | Governmental Authorizations . Such Party has obtained all required Governmental Authorizations in connection with the supply of the Services. |
8.2. | EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT OR IN THE BTA, NEITHER PARTY NOR ANY OTHER PERSON OR ENTITY ACTING ON BEHALF OF SUCH PARTY, MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED (INCLUDING ANY REPRESENTATION OR WARRANTY FOR SUFFICIENCY, SATISFACTORY RESULT OR FITNESS FOR PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER). |
8.3. | Each Party covenants and agrees to endeavor to cooperate with the other Party so as to minimize any interference with the other Partys operation of its business. |
9.1. | Neither Party shall be liable to the other Party for failure of or delay in the performance of any obligations under this Agreement due to causes reasonably beyond its control including (i) war, insurrections, riots, explosions and inability to obtain raw materials due to then current market situations; (ii) natural disasters and acts of God, such as violent storms, earthquakes, floods and destruction by lightning; (iii) the intervention of any governmental authority or changes in relevant laws or regulations which restrict or prohibit either Partys performance of its obligations under this Agreement or implementation of this Agreement; or (iv) strikes, lock-outs and work-stoppages (each, an Event of Force Majeure). Upon the occurrence of an Event of Force Majeure, the affected Party shall notify the other Party as soon as reasonably possible of such occurrence, describing the nature of the Event of Force Majeure and the expected duration thereof. Notwithstanding the foregoing, the Party receiving Services hereunder shall be under a continuing obligation to make payments for such Services which have already been supplied to the Party prior to the occurrence of an Event of Force Majeure. |
9.2. | If a Party is unable, by reason of an Event of Force Majeure, to perform any of its obligations under this Agreement, then such obligations shall be suspended to the extent |
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and for the period that the affected Party is unable to perform. If this Agreement requires an obligation to be performed by a specified date, such date shall be extended for the period during which the relevant obligation is suspended due to such an Event of Force Majeure under this Agreement. |
9.3. | Notwithstanding anything to the contrary contained herein, a third party suppliers (including Third Party Suppliers) failure to meet its obligations in accordance with the applicable third party supplier agreement (including Third Party Supplier Agreements) shall not constitute an Event of Force Majeure and Hynix shall be liable to NewCo for any breach of this Agreement resulting from such failure; provided that any such liability to NewCo shall be limited to the extent that such third party suppliers liability to Hynix is limited under the applicable third party supplier agreement; provided , further , that any such liability to NewCo shall be limited to the amount that Hynix actually recovers from such third party supplier. In the case of a material breach by a third party supplier, and in the event that NewCo incurs Damages resulting from such breach of the applicable third party supplier agreement material to NewCo, Hynix shall use commercially reasonable efforts to vigorously pursue all available actions for Damage compensation from any such third party supplier. In the event Hynix receives any compensation for Damages from the third party supplier for any breach, Hynix shall pay to NewCo a pro rata portion of such Damages received from the third party supplier based on the amount of Damages suffered by NewCo relative to the aggregate amount of Damages suffered by both Parties. Each Party shall be responsible for a portion of the reasonable and documented expenses of any such actions for Damage compensation in proportion to the allocation of any recovery of Damages pursuant to the preceding sentence; provided that the Parties shall cooperate in good faith to minimize such expenses and consult with each other in advance with respect to the conduct of any such action. |
9.4. | To the extent that the Services affected due to a third partys failure to meet its obligations under the applicable third party supplier agreement are insufficient to meet NewCos requirements for NewCos use thereof in accordance with the terms and conditions hereof, Hynix shall (i) to the extent Hynix has alternative sources available internally, provide such alternate sources for the affected Services for the duration the Services are affected, (ii) to the extent that Hynix obtains any alternate sources for such Services, Hynix shall make available a pro-rata share of such alternate sources to NewCo, and (iii) if the foregoing are not available or are insufficient to meet NewCos requirements, Hynix shall cooperate with NewCo to locate alternate sources for such Services. To the extent the foregoing alternate sources are provided by Hynix, there shall be no incremental cost or expense to NewCo. To the extent the foregoing alternate sources are provided by third parties, NewCo shall bear the actual costs of the services it uses. To the extent that any service which both Parties utilize for their respective businesses remains partially available during an Event of Force Majeure (e.g., Hynix makes some quantity of service available but not the usual amount or Hynix otherwise accesses an alternative source of some quantity of service), each Party shall receive, to the extent practically possible, equal provision of such service up to the amount it would otherwise receive if there were no Event of Force Majeure. |
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10.1. | Termination . This Agreement may be terminated at any time during the Term upon occurrence of any of the following: |
(a) | by the non-breaching Party serving a written notice thereof to the other Party and the Coordinating Committee in the event of a material breach or default by the other Party of its obligations hereunder, which default shall not have been cured by other Party, or otherwise resolved by the Coordinating Committee, within sixty (60) days after written notice is provided by the non-breaching Party to the other Party and the Coordinating Committee; or | ||
(b) | by Hynixs serving sixty (60) days prior written notice thereof to NewCo if NewCo ceases to conduct any Permitted Business (provided that an assignment pursuant to Article 13 shall not trigger the application of this provision in so far as such assignee does not cease to conduct any Permitted Business). |
10.2. | Upon termination of this Agreement, each Party shall discontinue the use of all Confidential Information provided by the other Party in connection with this Agreement, and shall promptly return to the other Party any and all Confidential Information, including documents originally conveyed to it by the other Party and any copies thereof made thereafter. |
10.3. | Except as provided in this Section 10.3 and Section 10.4, following the termination or expiration of this Agreement all obligations and liabilities of the Parties under or arising from this Agreement shall cease and be of no effect, and neither Party shall have any liability under or arising from this Agreement as a consequence of the termination or expiration of this Agreement in accordance with Section 10.1 except for fraud or willful breach of this Agreement. Notwithstanding the foregoing, termination of this Agreement shall be without prejudice to the accrued rights and liabilities of the Parties prior to the termination of this Agreement. |
10.4. | The respective rights and obligations of the Parties under Sections 3.9, 3.10 and 3.11 and Articles 11, 14 and 15 and other Sections which by their nature are intended to extend beyond termination, shall survive the termination or expiry of this Agreement. |
11.1. | Subject to Article 12 hereof, each Party (the Indemnifying Party) shall defend, indemnify and hold harmless the other Party (and its shareholders, partners, members, directors, officers, employees, agents and representatives) (collectively, the Indemnified Party) from and against, and shall pay to the Indemnified Party the amount of any Damages arising from any breach of any representation, warranty, agreement or covenant made by the Indemnifying Party under this Agreement or the negligence, gross negligence or willful misconduct of the Indemnifying Party. |
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12.1. | Notwithstanding anything to the contrary herein, neither Party shall have any liability whatsoever to the other Party, and the other Party shall have no rights or remedies whatsoever (in each case whether in contract, tort, including negligence, or otherwise), for or in connection with any failure to provide (a) any Services in accordance with this Agreement to the extent such failure is attributable to the occurrence of an Event of Force Majeure or (b) electricity, except to the extent such failure is attributable to the Partys gross negligence, willful misconduct or intentional breach. |
12.2. | Notwithstanding anything to the contrary, no Party shall be liable to the other Party, whether by way of indemnity or otherwise, for any punitive damages, whether any such damages arise out of contract, equity, tort (including negligence), strict liability or otherwise arising out of, or related to, this Agreement and each Party hereby waives, to the fullest extent permitted by law, all rights with respect to punitive damages. |
12.3. | Notwithstanding anything to the contrary contained herein, the liability of each Party (the Breaching Party) hereunder for Damages resulting from the Breaching Partys breach of this Agreement or its negligence, gross negligence or willful misconduct shall be limited to (a) in the event that the Breaching Party proves that such breach was the result of the negligence of the Breaching Party and no other reason or, in the case of a tort claim, the Indemnifying Party proves that such Damages resulted from the negligence of the Indemnifying Party and no other reason, the aggregate amount received by the Breaching Party in fees hereunder for the calendar year prior to the year of determination for the Service affected by such breach and (b) in all other events, including if the breach was the result of gross negligence, willful misconduct or intentional breach, the maximum amount permitted by Korean law. |
12.4. | If any Indemnified Party is at any time entitled to recover under any third-party policy of insurance (excluding any self-insurance that is not reinsured with a third party), in respect of any Damages for which indemnification is sought under Article 11, the Indemnified Party shall, at the request of the Indemnifying Party, use its commercially reasonable efforts to enforce such recovery for the benefit of the Indemnifying Party and, upon recovery under such policy, reduce the amount of Damages for which it is seeking indemnification under Article 11 by the amount actually recovered under the policy (net of all costs, charges and expenses of the Indemnified Party in connection with such recovery). |
12.5. | Each Party shall subscribe for and maintain in effect, at its own expense, such insurance covering the Damages incurred from any electricity failure, with such amounts and other terms as a reasonably prudent business would maintain under like circumstances. |
13.1. | This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that no Party will assign its rights or delegate its obligations under this Agreement without the express prior |
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written consent of the other Party, except that (i) NewCo may assign its rights hereunder as collateral security to any bona fide financial institution engaged in financing in the ordinary course providing financing to the Warrant Issuer or its Subsidiaries and any of the foregoing financial institutions may assign such rights in connection with a sale of NewCo in the form then being conducted by NewCo substantially as an entirety; (ii) Hynix and NewCo each may, upon written notice to the other Party (but without the obligation to obtain the consent of such other Party), assign this Agreement or any of its rights and obligations under this Agreement to any person, entity or organization that succeeds (by purchase, merger, operation of law or otherwise) to all or substantially all of the capital stock, assets or business of such party, to all or substantially all of its assets and liabilities or to all or substantially all of the assets and liabilities of the portion of the Partys business to which the subject of this Agreement relates or of a division of the Party, if such person or entity agrees in writing to assume and be bound by all of the relevant obligations of such Party under this Agreement; and (iii) NewCo may, upon written notice to Hynix (but without the obligation to obtain the consent of Hynix), assign this Agreement or any of its rights and obligations under this Agreement to one or more direct or indirect Subsidiaries of Warrant Issuer. |
13.2. | Notwithstanding anything to the contrary contained herein, Hynix may be entitled to utilize any subcontractor or supplementary provider in performing all or any parts of its obligations under this Agreement without any prior written consent of NewCo; provided that Hynix remains liable under this Agreement for the performance of all of its obligations. |
14.1. | This Agreement shall be governed by and construed in accordance with the laws of Korea without reference to the choice of law principles thereof. |
14.2. | Each Party seeking the resolution of a dispute arising under this Agreement must provide written notice of such dispute to the other Party, which notice shall describe the nature of such dispute. All such disputes shall be referred initially to the Coordinating Committee for resolution. Decisions of the Coordinating Committee under this Section 14.2 shall be made by unanimous vote of all members and shall be final and legally binding on the Parties. If a dispute is resolved by the Coordinating Committee, then the terms of the resolution and settlement of such dispute shall be set forth in writing and signed by both Parties. In the event that the Coordinating Committee does not resolve a dispute within thirty (30) days of the submission thereof, such dispute shall be resolved in accordance with Section 14.3. Notwithstanding the foregoing, Hynix and NewCo shall each continue to perform its obligations under this Agreement during the pendency of such dispute in accordance with this Agreement. |
14.3. | The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction to prevent any breach of this Agreement and to enforce specifically the terms and provisions of this Agreement by bringing a relevant action in the Seoul Central |
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District Court in Seoul, Korea, in addition to any other remedy to which any Party may be entitled at law or in equity. In addition, the Parties agree that any dispute, claims or controversy between the Parties arising out of or relating to this Agreement, whether in contract, tort, equity or otherwise and whether relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, which is not resolved by the Coordinating Committee pursuant to Section 14.2 may be submitted to the exclusive jurisdiction of the Seoul Central District Court, in Seoul, Korea. Each of the Parties irrevocably waives, to the fullest extent permitted by law, any objection which it may now, or hereafter, have with respect to the jurisdiction of, or the venue in, the Seoul Central District Court. |
15.1. | Neither Party shall, except as expressly permitted by the terms of this Agreement, disclose to any third party the terms and conditions of this Agreement, the existence of this Agreement and any Confidential Information which either Party obtains from the other Party in connection with this Agreement and/or use such Confidential Information for any purposes whatsoever other than those contemplated hereunder; provided , however , that this Agreement (and its terms and conditions) may be disclosed and filed publicly in connection with a public offering of securities by NewCo or its Affiliates. Confidential Information shall mean any and all information including technical data, trade secrets or know-how, disclosed by either Party to the other Party in connection with this Agreement, which is marked as Proprietary or Confidential or is declared by the other Party, whether in writing or orally, to be confidential, or which by its nature would reasonably be considered confidential. |
15.2. | The obligation of confidentiality in Section 15.1 shall not apply to any information that: (a) was known to the other Party without an obligation of confidentiality prior to its receipt thereof from the disclosing Party; (b) is or becomes generally available to the public without breach of this Agreement, other than as a result of a disclosure by the recipient Party, its representatives, its Affiliates or the representatives of its Affiliates in violation of this Agreement; (c) is rightfully received from a third party with the authority to disclose without obligation of confidentiality and without breach of this Agreement; or (d) is required by law or regulation to be disclosed by a recipient Party or its representatives (including by oral question, interrogatory, subpoena, civil investigative demand or similar process), provided that written notice of any such disclosure shall be provided to the disclosing Party in advance. If a Party determines that it is required to disclose any information pursuant to applicable law (including the requirements of any law, rule or regulation in connection with a public offering of securities by NewCo or its Affiliates) or receives any demand under lawful process to disclose or provide information of the other Party that is subject to the confidentiality provisions hereof, such Party shall notify the other Party prior to disclosing and providing such information and shall cooperate at the expense of the requesting Party in seeking any reasonable protective arrangements requested by such other Party. Subject to the foregoing, the Party that receives such request may thereafter disclose or provide information to the extent required by such law or by lawful process. |
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16.1. | Exercise of Right . A Party may exercise a right, power or remedy at its discretion, and separately or concurrently with another right, power or remedy. A single or partial exercise of a right, power or remedy by a Party does not prevent a further exercise of that or of any other right, power or remedy. A failure to exercise a right, power or remedy or a delay in exercising a right, power or remedy by a Party does not prevent such Party from exercising the same right thereafter. |
16.2. | Extension; Waiver . At any time during the Term, each of Hynix and NewCo may (a) extend the time for the performance of any of the obligations or other acts of the other or (b) waive any inaccuracies in the representations and warranties of the other contained in this Agreement or in any document delivered pursuant to this Agreement. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party. The failure of any Party to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. Any rights under this Agreement may not be waived except in writing signed by the Party granting the waiver or varied except in writing signed by the Parties. |
16.3. | Notices . Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted to be given to any Party shall be in writing and shall be deemed duly given only upon delivery to the Party personally (including by reputable overnight courier service), when telecopied (with confirmation of transmission having been received) during normal business hours or three days after being mailed by registered or certified mail (return receipt requested), with postage and registration or certification fees thereon prepaid, addressed to the Party at its address set forth below (or at such other address for a party as shall be specified by such Party by like notice): |
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16.4. | Fees and Expenses . All costs and expenses incurred in connection with this Agreement shall be paid by the Party incurring such expenses, except as specifically provided to the contrary in this Agreement. |
16.5. | Entirety; No Third Party Beneficiaries . This Agreement (a) constitutes the entire agreement between the Parties and supersedes all prior agreements and understandings, both written or oral, between the Parties with respect to the subject matter hereof and (b) is not intended to confer upon any person other than the Parties hereto any rights or remedies hereunder. |
16.6. | Severability of Provisions . Any term or provision of this Agreement that is held by a court of competent jurisdiction or other authority to be unlawful, invalid, void or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares that any term or provision hereof is unlawful, invalid, void or unenforceable, the Parties agree that the court making such determination shall have the power to reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any unlawful, invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the unlawful, invalid or unenforceable term or provision. |
16.7. | Amendment and Modification . This Agreement (for the avoidance of doubt, including Exhibits attached hereto) may be amended, modified and supplemented in any and all respects, but only by a written instrument signed by the Parties expressly stating that such instrument is intended to amend, modify or supplement this Agreement. |
16.8. | Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. |
16.9. | Election of Remedies . Neither the exercise of nor the failure to exercise a right or to give notice of a claim under this Agreement shall constitute an election of remedies or limit any Party in any manner in the enforcement of any other remedies that may be available to such Party, whether at law or in equity. |
16.10. | Language . This Agreement is being originally executed in the English language only. In the event that the Parties agree to have a Korean version of this Agreement following |
25
signing, this Agreement may be translated into Korean. The Parties acknowledge that the Korean version of this Agreement shall be for reference purposes only, and in the event of any inconsistency between the two texts, the English version shall control. |
16.11. | Relationship of the Parties . Each Party shall perform its obligations hereunder as an independent contractor. This Agreement does not create a fiduciary or agency relationship between Hynix and NewCo, each of which shall be and at all times remain independent companies for all purposes hereunder. Nothing in this Agreement is intended to make either Party a general or special agent, joint venturer, partner or employee of the other for any purpose. |
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Hynix Semiconductor Inc. | ||||
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By:
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Name:
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Title:
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MagnaChip Semiconductor, Ltd. | ||||
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By:
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Name:
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Title:
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1. | Section 1.1 is hereby amended by adding the following thereto in the appropriate alphabetical order : | ||
Mask Shop Chemicals and Gases Procurement Services shall mean the provision by NewCo to Hynix with such quantities of the chemicals (including TMAH2.38, Thinner, HMDS, H2SO4, H2O2, NH4OH and IPA) and gases (including CI2, CF4, CHF3, SF6, HCI, F2/Kr/Ne, Kr/Ne) (collectively, the Chemicals and Gases) required for Hynixs mask production lines installed in C1 and C2 buildings as are requested by Hynix from time to time. | |||
2. | Section 1.1 is hereby amended by deleting the defined term Services and replacing such defined term with the following: | ||
Services shall mean such services related to goods, facilities and utilities which are required or desirable for transition, setting-up or continuing operation of the applicable Partys business and consisting of each of the services constituting the Vivendi Services, Hynix Utilities and Infrastructure Support Services, NewCo Utilities and Infrastructure Support Services, Welfare Facility Services, Environmental Safety & Facility Monitoring Services, Mask Services, CAO Operation Support Services, Chemical Procurement Services, Mask Shop Chemicals and Gases Procurement Services , Joint Purchasing Services and the other services described herein. |
1
3. | Section 2.6 is hereby amended and restated in its entirety as follows: | ||
Each of the NewCo Utilities and Infrastructure Support Services and Mask Shop Chemicals and Gases Procurement Services shall be provided for the Initial Service Period and for successive additional one (1)-year periods, unless Hynix notifies NewCo in writing of its desire not to renew the provision of such Services at least sixty (60) days prior to the expiration of the Initial Service Period or any annual anniversary thereof or such Services are earlier terminated pursuant to this Agreement. | |||
4. | Section 3.1 is hereby amended by deleting the second sentence thereof in its entirety and by adding the following sentence to the end of such section: | ||
NewCo shall provide Hynix with the NewCo Utilities and Infrastructure Support Services and Mask Shop Chemicals and Gases Procurement Services, and Hynix shall receive such Services from NewCo, for the periods determined in accordance with Article 2. | |||
5. | Appendix A hereto shall be added as Exhibit H of the Agreement and Section 3.3 is hereby amended by deleting the first sentence thereof in its entirety and by adding the following sentence to the beginning of such section: | ||
The fees for the Environmental Safety & Facility Monitoring Services, Hynix Utilities and Infrastructure Support Services, NewCo Utilities and Infrastructure Support Services, Welfare Facility Services, Chemical Procurement Services and Mask Shop Chemicals and Gases Procurement Services shall be determined in accordance with Exhibits B, C.1, C.2, E, F and H, respectively. | |||
6. | Section 7.1 is hereby amended and restated in its entirety as follows: | ||
Hynix shall invoice NewCo on the last day (except that for the Vivendi Services this shall be the fourteenth (14 th ) day, until the expiration and/or termination of the Vivendi Water and Wastewater Service Agreement) of each calendar month for the fees for the Environmental Safety & Facility Monitoring Services, Hynix Utilities and Infrastructure Support Services (except for the fees for electricity (substation of the Korea Electric Power Corporation), water and fuel, which will be invoiced as set forth in the third sentence of this Section 7.1), |
2
Vivendi Services, Welfare Facility Services and Chemical Procurement Services, provided during such calendar month specifying the Services provided during that month and the amount of fees for such Services calculated in accordance with Exhibits B, C.1, D, E and F, respectively, and Article 3. By the twenty-fifth (25 th ) day of the next calendar month following the invoice (except with respect to the Vivendi Services for which the due date will be the twenty-fourth (24 th ) day of the invoiced calendar month, until the expiration and/or termination of the Vivendi Water and Wastewater Service Agreement), NewCo shall pay the invoiced amount and value added tax thereto to Hynixs designated account by means of a wire transfer in cash. In addition, by the fifth (5 th ) day prior to the due date for the fees for electricity (substation of the Korea Electric Power Corporation), water and fuel supplied by Hynix to NewCo as part of the Hynix Utilities and Infrastructure Support Services as such due date is set forth on the relevant invoice therefore, Hynix shall invoice NewCo for the fees for such Services in the amounts for which such fees are set forth on the relevant invoice issued by relevant agencies and NewCo shall pay such invoiced amount and value added tax thereto to Hynixs designated account by means of a wire transfer in cash by one (1) Business Day prior to such due date. |
7. | Section 7.2 is hereby amended and restated in its entirety as follows: | ||
NewCo shall invoice Hynix on the last day of each calendar month for the fees for the NewCo Utilities and Infrastructure Support Services and Mask Shop Chemicals and Gases Procurement Services provided during such calendar month specifying the Services provided during that month and the amount of fees for such Services calculated in accordance with Exhibits C.2 and H, respectively. By the twenty-fifth (25 th ) day of the next calendar month following the invoice, Hynix shall pay the invoiced amount and value added tax thereto to NewCos designated account by means of a wire transfer in cash. |
3
8. | The Variable Overhead Cost definition in Exhibit E.1 is hereby amended and restated as follows: |
Variable Overhead Cost
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means, for any applicable Service item (reserve troops; company broadcasting station; Hynix Culture Center; mens dormitory; womens dormitory; Bongmyung dormitory; and sports field), the amount of those relatively variable overhead costs (costs which fluctuate heavily from month to month) which have been historically allocated in connection with the provision of such Service item and which were actually incurred by Hynix in providing such Service item for the month of calculation |
9. | Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. | ||
10. | Wherever necessary, all terms of the Agreement are hereby amended to be consistent with the terms of this Amendment. Except as set forth herein, the Agreement remains in full force and effect according to its terms. | ||
11. | Articles 1 through 7 of this Amendment shall become effective from the 6th of October, 2004 and Article 8 of this Amendment shall become effective from the 1st of April, 2005. | ||
12. | This Amendment shall be governed by, and shall be construed in accordance with, the laws of Korea. |
4
MagnaChip Semiconductor, Ltd. | ||||
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By:
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Name:
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Title:
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President & Chief Executive Officer | |||
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Hynix Semiconductor, Inc. | ||||
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By:
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Name:
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Title:
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5
means the sum of the
products of (i) the Labor
Cost for each NewCo employee
providing the applicable
Service to Hynix multiplied
by (ii) the Labor
Contribution Rate for such
employee
means, for any NewCo
employee, average monthly (i)
salary plus (ii) amount of
reserve for retirement
allowances plus (iii) amount
of Fringe Benefits for such
employee, over the Standard
Calculation Period.
means, for any NewCo
employee, the percentage of
the Labor Cost for such
employee allocated to Hynix
(other than the Business) for
the Standard Calculation
Period, which such percentage
is based upon the AUP and
takes into account (in a
manner consistent with
historical practice) such
factors as ratio of time
spent on activities for the
benefit of Hynix (other than
the Business), the relative
importance of such activities
and the other factors
historically taken into
account
means, for any NewCo
employee, the fringe benefits
provided to such employee in
accordance with past practice
means the second
calendar year prior to the
year of calculation, with
respect to calculations made
for the first three months of
any calendar year, and the
calendar year immediately
prior to the year of
calculation, with respect to
calculations made for the
last nine months of any
calendar year e.g., the
calculations for January
through March of 2005 will be
based on calendar year 2003,
while the calculations for
April through December 2005
will be based on calendar
year 2004
means the sum of the products of (i) the Asset Cost for each NewCo
asset used to provide the applicable Service to Hynix multiplied by (ii)
the Asset Contribution Rate for such asset
means, for any asset, one twelfth of the sum of (i) depreciation
expense plus (ii) the product of Book Value multiplied by 8%, allocated to
such asset in accordance with the AUP for the Standard Calculation Period
means, for any asset, a fraction the numerator of which equals the
quantity of the Chemical produced by NewCo for Hynix (other than the
Business) for the Standard Calculation Period and the denominator of which
equals the total quantity of the Chemical produced by NewCo for the
Standard Calculation Period
means, for any asset, the value of such asset on the books of NewCo
as of the last day of the Standard Calculation Period, as may be adjusted
from time to time (a) as a result of the installation of capital
improvements or the incurrence of capital expenditures, as determined in
accordance with Korea generally accepted accounting principles, or (b) as
a result of a revaluation as may be permitted by law
means the sum of the products of (i) the Fixed Overhead Cost for each
NewCo employee providing the Service to Hynix multiplied by (ii) the Fixed
Overhead Contribution Rate for such employee
means, for any employee, the amount equal to one-twelfth of the
product of (i) those relatively fixed overhead costs (those that do not
fluctuate much from month to month) which have been historically allocated
in connection with the provision of the Service and which were actually
incurred by NewCo (or the Business) in providing the Service in the
Standard Calculation Period multiplied by (ii) the percentage of such
costs historically allocated to such employee in connection with providing
the Service
means, for any employee, the Labor Contribution Rate for such employee
means the sum of the
product of (i) the Variable
Overhead Cost multiplied by
(ii) the Variable Overhead
Contribution Rate
means the amount of
those relatively variable
overhead costs (costs which
fluctuate heavily from month
to month) which have been
historically allocated in
connection with the provision
of the Service and which were
actually incurred by NewCo in
providing the Service for the
month of calculation
means, for Variable
Overhead Cost arising from
(i) the raw chemicals and
gases used to produce the
Chemicals and Gases, a
fraction, the numerator of
which equals the quantity of
the raw chemicals and gases
purchased by NewCo to provide
the Service to Hynix for the
month of calculation and the
denominator of which equals
the total quantity of the raw
chemicals and gases purchased
by NewCo for the month of
calculation, (ii) costs to
repair the assets used to
produce the Chemicals and
Gases, a fraction, the
numerator of which equals the
quantity of the Chemicals and
Gases delivered to Hynix
hereunder for the month of
calculation and the
denominator of which equals
the total quantity of the
Chemicals and Gases produced
by NewCo for the month of
calculation and (iii)
temporary workers used to
produce the Chemicals and
Gases, a fraction, the
numerator of which equals the
number of hours such workers
worked to provide the Service
to Hynix for the month of
calculation and the
denominator of which equals
the total number of hours
worked by such temporary
workers to provide the
Chemicals and Gases to NewCo
and Hynix for the month of
calculation
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
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-8-
-9-
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[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
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-13-
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Attn: EVP, GM of SMS Division
|
SVP, General Counsel and Secretary | ||
Tel: 82-2-3459-3160
|
82-2-3459-3073 | ||
Fax: 82-2-3459-4698
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82-23459-3898 | ||
Email:
channy. Iee@magnachip.com
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jmcfarland@magnachip.com |
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[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
MagnaChip Semiconductor, Ltd.:
|
||||
By : | /s/ Channy Lee | |||
Name: | Channy Lee | |||
Title:
Address: Facsimile: |
Executive Vice President and General Manager of SMS Division
891 Daechi-dong Kangnam-gu, Seoul, South Korea, 135-738 82-2-3459-4698 |
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Advanced Analogic Technologies,
Inc.:
|
||||
By: | /s/ Richard K. Williams | |||
Name: | Richard K. Williams | |||
Title:
Address: Facsimile: |
President, Chief Executive Officer (CEO) and Chief Technical Officer (CTO)
830 E. Arques Ave. Sunnyvale, California 94085 (408) 737-4611 |
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-20-
This Technology Licence Agreement (the Agreement) is made the 16th day of December 1996 | ||
BETWEEN | ||
ADVANCED RISC MACHINES LIMITED whose registered office is situated at 90, Fulbourn Road, Cherry Hinton, Cambridge CBI 4JN, England (ARM) | ||
and | ||
LG SEMICON COMPANY LIMITED whose principal place of business is situated at 16 Woomyeon-dong. Seocho-gu. Seoul 137-140, Korea (LGS). | ||
WHEREAS | ||
LGS has requested ARM and ARM has agreed, to license LGS to manufacture and distribute certain ARM products and thereby to make use of certain portions of the Intellectual Property (as defined below) upon the terms set out in this Agreement. | ||
In consideration of the mutual representations, warranties, covenants, and other terms and conditions contained herein, the parties agree as follows: | ||
1. | Definitions | |
1.1 | ARM Compliant Product shall mean any single silicon chip developed by LGS which contains, at a minimum: (i) an ARM7TDMI Core; or (ii) a Modified ARM7TDMI Core, which has been verified in accordance with the provisions of Clause 3. | |
1.2 | ARM7TDMI Core shall mean the device as described and identified in the ARM7TDMI datasheet identified in Schedule 2 Part A Item A1. | |
1.3 | ARM Instruction Set shall mean both the ARM Instruction Set and THUMB Instruction Set as each are defined in the ARM Architecture and Reference Manual identified in Schedule 2 Part A Item A2. | |
1.4 | Authorised Distributor shall mean those distributors appointed, in writing, by LGS. | |
1.5 | AVS shall mean the ARM Architectural Validation Suite in binary code format Schedule 2 Part B Section 2 Item T3. | |
1.6 | Confidential Information shall mean: (i) any trade secrets relating to the ARM7TDMI Core and Transfer Materials and the source code for any Software; (ii) any information designated in writing by either party as confidential which if disclosed verbally is reduced to writing within thirty (30) days after its oral disclosure; and (iii) the terms and conditions of this Agreement. | |
1.7 | Core Functional Test Vectors shall mean the test vectors identified in Schedule 2 Part A Items B10, B11, B12 and B13. | |
1.8 | Design Win Event shall mean for each different Design Win Product, the point in time of the sale, supply or other distribution of five hundred (500) units of such product. | |
1.9 | Design Win Product shall mean an application specific product made by LGS, an LG Affiliate or LG Group Company, which incorporates an ARM Compliant Product. |
Page 1
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
1.10 | Effective Date shall mean the date of this Agreement or the date upon which the Korean Government gives approval to this Agreement, whichever is the later, subject always to the provisions of Clause 18.4. | |
1.11 | Embedded ICE shall mean the Embedded ICE Protocol Converter identified in Schedule 14. | |
1.12 | End User Licence shall mean a licence agreement substantially conforming to that agreement set forth in Schedule 7. | |
1.13 | Half Year shall mean each calendar half year ending the 30th June and 31st December of any year. | |
1.14 | HP shall mean any Hewlett Packard compatible computer running HP-UX v9.0.5 (and later versions as may be mutually agreed). | |
1.15 | IBM PC shall mean any computer. 486 (or above) processor based IBM AT architecture, having, at a minimum. 16Mb RAM. 50Mb hard disc space and running Microsoft DOS v6.2 (and later versions as may be mutually agreed) and, where appropriate, Microsoft Windows 95 or Windows NT. ARM will use reasonable endeavours, in collaboration with LGS, to ensure the Software operates on reputable IBM PC compatible computers provided that such operation is not constrained by significant hardware or software deficiencies. | |
1.16 | Intellectual Property shall mean any patents, patent rights, trade marks, service marks, registered designs, topography or semiconductor maskwork rights, applications for any of the foregoing, copyright, know-how, unregistered design right, confidential information, any Intellectual Property Derivatives, and any other similar protected rights in any country, which are taken into use in the design, use or production of the ARM7TDMI Core. Software or Transfer Materials. | |
1.17 | Intellectual Property Derivatives shall include: (i) for copyrightable or copyrighted material, any translation, abridgement, revision or other form in which an existing work may be recast, transformed or adapted; (ii) for work protected by topography or mask right, any translation, abridgement, revision or other form in which an existing work may be recast, transformed or adapted; (iii) for patentable or patented material, any improvement created by ARM; and (iv) for material protected by trade secret any new material derived from or employing such existing trade secret. | |
1.18 | LG Affiliate shall mean each of the companies set forth in Schedule 10. An LG Affiliate shall cease to be an LG Affiliate when; (i) it is merged into a corporation other than an LG Group Company; or (ii) the majority of its voting shares becomes owned or controlled by a person, company or other legal entity other than an LG Group Company; or (iii) the Chief Executive Officer (referred to in Korean as Hoejang) ceases to control directly or indirectly such LG Affiliate. | |
1.19 | LG Group Company shall mean each of the companies identified in Schedule 8. | |
1.20 | LGS Users shall mean LGS (or any LG Group Company) when incorporating an ARM Compliant Product, distributed pursuant to this Agreement, for use in LGSs (or such LG Group Companys) end user products. | |
1.21 | LGS Materials shall mean such of the Transfer Materials (or any additional materials) as are necessary to enable ARM, in respect of any Modified ARM7TDMI Core, to exercise the rights set out in Clause 2.3. | |
1.22 | Models shall mean: (i) the object code and source code of the programs identified in Schedule 3 Part A; (ii) the object code and such source code of the programs identified in Schedule 3 Part B as may be necessary (at ARMs absolute discretion) to allow the support of |
Page 2
subsequent releases of the specified simulator: and (iii) subject to the payment by LGS of the fee(s) set out in Clause 9.2, the object code and such source code of the programs identified in Schedule 3 Part C as may be necessary (at ARMs absolute discretion) to allow the support of subsequent releases of the specified simulator; together with such Updates thereof, if any, as are developed by or for ARM. |
1.23 | Modified ARM7TDMI Core shall mean any ARM7TDMI Core modified in accordance with the provisions of Clause 2.2. | |
1.24 | NSP shall mean the net sales price of any ARM Compliant Product calculated by taking the aggregate invoice price charged on arms length terms by LGS and its Subsidiaries in the sale or distribution of any ARM Compliant Product, less any (i) value added, turnover, import, or other tax, duty or tariff payable thereon (ii) freight and insurance costs incurred and (iii) amounts actually repaid or credited with respect to any ARM Compliant Products returned. | |
In the event that ARM, in its discretion, considers that the NSP for any ARM Compliant Product charged to LGS Users is materially below the open market value for such ARM Compliant Product, the NSP shall be deemed to be: in the case of the sale or distribution of any ARM Compliant Product to LGS Users, the net sales price for such ARM Compliant Product sold by LGS to third parties; and in the case of the sale or distribution of ARM Compliant Products manufactured for, and supplied solely to, LGS Users, at a minimum, the sum of: |
(i) | the cost of materials and the cost of fabrication or such other processing of such ARM Compliant Product; and | ||
(ii) | an amount for general expenses and profit equal to that usually reflected in the sales to third parties of products of the same general class or kind as the ARM Compliant Product; and | ||
(iii) | the cost of all packaging. |
1.25 | PIV Card shall mean the hardware identified in Schedule 2 Section 1 Part A as Item E1. | |
1.26 | Software shall mean together the Models, Tools, Test Programs, Embedded ICE and Vectors. | |
1.27 | Subsidiary shall mean any company the majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by a party hereto or any company a majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by any of the aforementioned entities. A company shall be considered a Subsidiary only so long as such control exists. | |
1.28 | Sun/SunOS shall mean any Sun/SPARC compatible computer running SunOS v4.1.3_u1 (and later versions as may be mutually agreed). | |
1.29 | Test Programs shall mean the source code and object code of the programs identified in Schedule 2 Part B Section 1 Items T1 and T2 together with such Updates, if any, as are developed by or for ARM. | |
1.30 | Test Chip shall mean a device which complies with the test chip specification set forth in Schedule 2 Part A Item D1. | |
1.31 | Test Chip Characterisation Vectors shall mean those test vectors identified in Schedule 2 Part A Items D6, D7, D8 and D9. |
Page 3
1.32 | Test Chip Functional Vectors shall mean those test vectors identified in Schedule 2 Part A Items D4 and D5. | |
1.33 | Tools shall mean the source and object code of the programs identified in Schedule 4 Parts A and B; and (ii) the documentation identified in Schedule 4 Part C, together with such Updates, if any, as are developed by or for ARM. | |
1.34 | Trademarks shall mean the trademarks, service marks and logos set forth in Schedule 5. | |
1.35 | Transfer Materials shall mean that technical information with respect to the ARM7TDMI Core identified in Schedule 2 Part A. | |
1.36 | Updates shall mean; (i) for the Software, any bug fixes or enhancements to the Software the incorporation of which ARM, in its absolute discretion, decides does not cause to be created a new product; and (ii) for the Transfer Materials, all modifications, enhancements and updates to the Transfer Materials, created by ARM, including such modifications to the Transfer Materials as are made by ARMs other licencees and adopted by ARM for general release as an update provided that ARM may exclude any modification, enhancement or update which ARM, in its absolute discretion decides, results in the creation of a new product; | |
1.37 | Use shall mean copying the programs identified in Schedule 3 Parts B and C and Schedule 4 Parts A and C onto a computer for the purposes of processing the instructions or statements contained therein, but excluding disassembly, reverse assembly, or reverse compiling except as permitted by local legislation implementing Article 6 of the EC Software Directive and only to the extent necessary to achieve interoperability of an independently created program with other programs. Disassembly, reverse assembly, or reverse compiling for die purpose of error correction is specifically prohibited. | |
1.38 | Vectors shall mean together the Test Chip Functional Vectors and Test Chip Characterisation Vectors. | |
1.39 | 1995 Agreement shall mean the Technology Licence Agreement between ARM and LGS dated the 5th October 1995. | |
2. | Licence | |
2.1 | In consideration of the fee (Core Fee) set out in Schedule 12 Part A, ARM hereby grants to LGS, under the Intellectual Property, a perpetual (subject to Clause 18), non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence to: |
(i) | use, modify (subject to the provisions of Clauses 2.2 and 2.3) and copy the Transfer Materials solely for the purposes of creating, developing, manufacturing, having manufactured (subject to the provisions of Clauses 2.4 and 2.5), and selling, supplying and distributing to any third party, ARM Compliant Products; | ||
(ii) | modify, translate, reproduce and distribute, subject to the confidentiality obligations set forth in Clause 14, the documentation identified in Schedule 2 (except Item A2). |
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2.2 | LGS may modify: |
(i) | the internal logic of any ARM7TDMI Core: | ||
(ii) | the layout of any ARM7TDMI Core where necessary for the purposes of manufacturing such ARM7TDMI Core on another CMOS process, |
PROVIDED ALWAYS THAT the Modified ARM7TDMI Core retains compatibility with the ARM Instruction Set. A Modified ARM7TDMI Core will be deemed compatible if the Test Chip for the Modified ARM7TDMI Core: (i) executes each and every instruction contained in the ARM Instruction Set; (ii) executes the instructions at an identical rate of clocks per instruction as the ARM7TDMI Core from which it was derived; and (iii) runs the Vectors and the AVS. | ||
2.3 | LGS hereby grants to ARM, in respect of all modifications made to the ARM7TDMI Core (Modifications), a perpetual and irrevocable, royalty-free, non-transferable, non-exclusive, world-wide right and licence to manufacture, have manufactured, modify, create derivative works of, use, sell, supply and distribute all Modifications and sub-license others to exercise similar rights with respect to such Modifications. In pursuance of the licence to all Modifications hereby granted, LGS shall; |
2.3.1 | prior to any prototype production of the first ARM Compliant Product including any Modification, deliver to ARM, in writing, a full technical description of such proposed Modification; and | ||
2.3.2 | within thirty (30) days of the first shipment of the first ARM Compliant Product including any Modification, deliver to ARM the LGS Materials for such ARM Compliant Product including the Modification. |
For the avoidance of doubt, nothing in this Clause 2.3 shall be construed as granting to ARM any right or licence to any peripheral devices owned by LGS which are integrated around the ARM7TDMI Core. | ||
ARM shall notify LGS in the event that ARM incorporates any Modification in any general update to or general release of the ARM7TDMI Core. |
2.4 | LGS may exercise its right to have manufactured ARM Compliant Products provided that: |
(i) | LGS notifies ARM of the identity of LGSs subcontracted manufacturer (Manufacturer) not less than thirty (30) days prior to first prototype production by the Manufacturer; and | ||
(ii) | LGS ensures that any Manufacturer agrees (i) to be bound by the same obligations of confidentiality as are contained in this Agreement and (ii) to supply The ARM Compliant Products solely to LGS. |
In the event that any Manufacturer breaches the provisions referred to in this Clause 2.4, LGS agrees that such breach shall be treated as a material breach of this Agreement by LGS which is incapable of remedy. Further LGS hereby undertakes to keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. | ||
For the avoidance of doubt, in the event that LGS subcontracts only the packaging of ARM Compliant Products to a third party, LGS shall be released from the obligations of this Clause 2.4. |
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2.5 | In the event that LGS subcontracts the packaging of ARM Compliant Products, LGS shall |
(i) | ensure that the packaging company agrees to supply the ARM Compliant Products solely to LGS; and | ||
(ii) | undertake to keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to the breach of the provisions of Clause 2.5(i). |
2.6 | For the avoidance of doubt, no right is granted to LGS to: |
(i) | sublicense the rights licensed to LGS pursuant to Clause 2.1; | ||
(ii) | distribute any ARM Compliant Product prior to verification in accordance with Clause 3 except that in the event that it is the intention of LGS, and LGS do proceed, to verify a device in accordance with Clause 3, LGS may distribute a maximum of one hundred (100) prototype units of such device without having verified such device. |
2.7 | Save as licensed in Clause 2.1, LGS acquires no right, title or interest in the ARM7TDMI Core or Transfer Materials and Intellectual Property. In no event shall the licence grant set forth in Clause 2.1 be construed as granting LGS, expressly or by implication, estoppel or otherwise, a licence to use any ARM technology or intellectual property other than that pertaining to the ARM7TDMI Core. | |
2.8 | During the term of this Agreement, LGS may exercise the right to include any Subsidiary as a licence of ARM provided that: |
(i) | such Subsidiary agrees in writing, as set forth in Schedule 1, to be bound by the obligations of LGS and to comply with all the terms and conditions of this Agreement LGS shall deliver to ARM a copy of the Subsidiarys undertaking within thirty (30) days of the execution of such undertaking: | ||
(ii) | any breach of the terms and conditions of this Agreement by a Subsidiary shall constitute a breach of this Agreement by LGS; | ||
(iii) | any termination of this Agreement as provided by Clause 18 shall be effective in respect of all Subsidiaries; | ||
(iv) | any licence, granted in accordance with the provisions of this Clause 2.8, shall automatically terminate upon any Subsidiary ceasing to be a Subsidiary. |
2.9 | During the term of this Agreement LGS may exercise the right to include any LG Affiliate as a Licence of ARM provided that: |
(i) | such LG Affiliate agrees in writing, as set forth in Schedule 11, to be bound by the obligations of LGS and to comply with all the terms and conditions of this Agreement LGS shall deliver to ARM a copy of the LG Affiliates undertaking within thirty (30) days of the execution of such undertaking; | ||
(ii) | any breach of the terms and conditions of this Agreement by a LG Affiliate shall constitute a breach of this Agreement by LGS; | ||
(iii) | any termination of this Agreement as provided by Clause 18 shall be effective in respect of all LG Affiliates; |
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(iv) | any licence, granted in accordance with the provisions of this Clause 2.9, shall automatically terminate upon any LG Affiliate ceasing to be a member of the LG Group. |
3. | Verification of ARM Compliant Products | |
3.1 | LGS shall manufacture and characterise a Test Chip for the ARM7TDMI Core and any Modified ARM7TDMI Core. | |
3.2 | LGS shall: |
(i) | run the Vectors, in the appropriate format, on the Test Chip and deliver to ARM, a copy of the log (the Log Results) generated by running the Vectors together with five (5) samples of the Test Chip: and | ||
(ii) | run the AVS on the Test Chip (by means of a PIV Card) and deliver to ARM a copy of the log (the AVS Results) generated by running the AVS. |
ARM may, at ARMS discretion, exercise the right to run the Vectors and/or AVS on the Test Chip. | ||
3.3 | The ARM7TDMI Core shall be verified upon: |
(i) | ARMS acceptance, of the Log Results either; (a) delivered by LGS; or (b) generated by ARM. The Log Results shall be accepted when they indicate that no errors have been detected or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties: and | ||
(ii) | ARMs acceptance of the AVS Results either; (a) delivered by LGS; or (b) generated by ARM. The AVS Results shall be accepted when they indicate that no differences have been detected between the AVS Results and the AVS reference file supplied by ARM or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties. |
ARM shall notify LGS, in writing, within thirty (30) days of delivery by LGS of the Log Results and Test Chip samples to ARM (the Verification Period), whether the Test Chip has been verified or has failed the verification process. In the event that the Test Chip fails the verification process, ARM shall provide details of the errors which cause the failure to LGS and LGS shall endeavour to correct the errors. The parties shall repeat the above process until either: (i) the Test Chip is verified; or (ii) LGS withdraws the Test Chip from the verification process. In the event that ARM fails to notify LGS of the result of the verification process within the Verification Period, the Test Chip subject to the verification process shall be deemed verified. | ||
3.4 | Provided that: (a) the Test Chip has been verified in accordance with the provisions of Clause 3.2; and (b) the ARM Compliant Product containing the ARM Core contained in such Test Chip runs the Core Functional Test Vectors and they indicate that no errors have been detected (or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties), LGS may distribute such ARM Compliant Product without further verification. | |
3.5 | LGS shall provide to ARM. free of charge, within thirty (30) days of verification in accordance with Clause 3.2, fifty (50) samples of each Test Chip manufactured by LGS on each process utilised for such manufacture, so that ARM, at its option, may test the compatibility of each Test Chip. For the avoidance of doubt, there shall be no restriction on ARMs use of such samples provided that ARM shall not reverse engineer any Test Chips provided by LGS under this Clause 3. |
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4. | Models Licence | |
4.1 | In consideration of the fee (Models Fee) set out in Schedule 12 Part K, ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence under the Intellectual Property, to; |
(i) | reproduce and use, internally and for third party support purposes, the Models and relevant documentation; | ||
(ii) | reproduce and distribute, and sub-license (provided that the end user agrees to be bound by the End User Licence) the Use of the object code of the Models (excluding the Model identified in Schedule 3 Part A); | ||
(iii) | modify, reproduce, use and distribute, in connection with the Models (excluding the Model identified in Schedule 3 Part A), the documentation (including any modified documentation) relevant thereto. | ||
(iv) | sub-license the distribution rights granted to LGS under Clauses 4.1(ii) and (iii) to Authorised Distributors only. |
4.2 | For the avoidance of doubt, except as provided by Clause 4.1(iv), no right is granted to LGS to sub-license the right to sell, supply or otherwise distribute the Models. |
5. | Tools Licence | |
5.1 | In consideration of the Fees set out in Schedule 12 Part L. ARM hereby grants, to LGS, a non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence under the Intellectual Property, to; |
(i) | modify the Tools and related documentation identified in Schedule 4 solely for the purpose of providing Hangul language support and incorporating any LGS logo; | ||
(ii) | copy and use the Tools and related documentation identified in Schedule 4 (and any modified versions thereof created under the provisions of Clause 5.1(i)), internally only. |
5.2 | If, within the period of two (2) years from the Effective Date LGS exercises any of the following options; |
Option 1: payment of the fees (Tools Distribution Option Fee 1) set out in Schedule 12 Part H; or | |||
Option 2: payment of the fees (Tools Distribution Option Fee 2) set out in Schedule 12 Part I; or | |||
Option 3: payment of the fees (Tools Distribution Option Fee 3) set out in Schedule 12 Part J. |
The licence to the Tools provided in Clause 5.1 shall be extended to include the following rights: |
(i) | copy and distribute and sub-license (provided that the end user agrees to be bound by the End User Licence) the Use of the object code of the Tools identified in Schedule 4 Part A and Schedule 4 Part C; |
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(ii) | copy and distribute, and sub-license (provided that the end user agrees to be bound by the End User Licence) the use of the Tools identified in Schedule 4 Part B (including the Tools modified in accordance with Clause 5.1(ii)); | ||
(iii) | modify, copy, use and distribute the Tools documentation identified in Schedule 4 Part D (including any modified Tools documentation); | ||
(iv) | sub-license the distribution rights granted to LGS under Clauses 5.2 (i)-(iii) to Authorised Distributors only. |
5.3 | For the avoidance of doubt, except as provided by Clause 5.2(iv), no right is granted to LGS to sub-license the right to sell, supply or otherwise distribute the Tools. |
5A. | Embedded ICE Licence | |
5A.1 | In consideration of the fees paid by LGS to ARM as set out in Schedule 12 Part C. ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), non-exclusive, world-wide licence under the Intellectual Property to; |
(i) | use copy and modify the Embedded ICE, internally and for third party support purposes; | ||
(ii) | copy and distribute and sub-license (provided that the end user agrees to be bound by the End User Licence) the Use of the binary code derived from the source code for the Embedded ICE (together with any modified versions thereof created under the provisions of Clause 5A.1(i)) of the Embedded ICE. |
5B. PID7T Configurable Device Programs Licence | ||
5B.1 ARM hereby grants to LGS a non-transferable (subject to Clause
20.3), non-exclusive, world-wide licence under the Intellectual
Property to;
|
(i) | use copy and modify the PID7T Configurable Device Programs identified in Schedule 15 Part B, internally and for third party support purposes. |
6. | Verification and Test Licence | |
6.1 | In consideration of the fees (Core Fees) paid by LGS to ARM as set out in Schedule 12 Part A. ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), nonexclusive, world-wide right and licence under the Intellectual Property, to copy, modify (subject to the provisions of Clause 6.2) and use internally only, the Test Programs and associated documentation. | |
6.2 | LGS may modify the Test Programs provided that; |
(i) | the Test Programs exhibit the same functionality after modification as they did prior to modification; and | ||
(ii) | LGS shall, upon request, from ARM, deliver, to ARM, the source code for such modified Test Programs and a file of the test patterns generated using such modified Test Programs. |
6.3 | ARM hereby grants, to LGS, a non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence under the ARMs Intellectual Property rights, to copy and use internally only, the AVS. |
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6.4 | ARM hereby grants, to LGS a non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence under the ARMs Intellectual Property rights, to copy, translate into different formats and use, and distribute (subject to the conditions attaching to limited confidential information described in Clause 14.2) solely for the purpose of testing ARM Compliant Products, the Vectors and Core Functional Vectors. | |
7. | Ownership of the Software | |
7.1 | In no event shall the licence grants set forth in Clauses 4.1. 5.1, 5A.1 and 6.l be construed as granting LGS, expressly or by implication, estoppel or otherwise, a licence under any ARM technology other than the Software and related documentation. | |
7.2 | Except as licensed to LGS in Clauses 4.1. 5.1. 5A.1 and 6.1 all right, title and interest in and to the Software and related documentation shall remain vested in ARM. | |
7.3 | LGS shall reproduce and not remove or obscure any notice incorporated in the Software or related documentation by ARM to protect ARMs Intellectual Property Rights or to acknowledge the copyright and/or contribution of any third party developer. LGS shall incorporate corresponding notices and/or such other markings and notifications as ARM may reasonably require on all copies of Software and related documentation used or distributed by LGS. | |
8. | Trademark Licence | |
8.1 | ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), non-exclusive, royalty-free, world-wide right and licence under ARMs Intellectual Property rights, to use the Trademarks in the promotion and sale of ARM Compliant Products. | |
8.2 | LGS shall use the Trademarks, in accordance with ARMs guidelines set forth in Schedule 5 (the Guidelines), on (i) all ARM Compliant Products sold or distributed by LGS and (ii) all documentation, promotional materials and software associated with such ARM Compliant Products. ARM shall have the right to revise Schedule 5 and the Guidelines (including the right to add further trademarks or modify the Trademarks) provided that such revisions are made in respect of the Guidelines issued to all licencees of the Trademarks. Any such revisions shall be effective, upon ninety (90) days written notice to LGS. | |
8.3 | LGS shall be released from the provisions of Clause 8.2 in the case of any ARM Compliant Product, created or developed by LGS, solely for a specific customer of LGS provided that; (a) the customer has notified LGS, in writing, that the customer wishes the ARM Compliant Product packaging not to bear any Trademark; and (b) the ARM Compliant Product does not bear the LGS name or trademark. | |
8.4 | LGS shall submit samples of documentation, packaging, and promotional or advertising materials bearing the Trademarks to ARM from time to time in order that ARM may verity compliance with the Guidelines. In the event that any documentation, packaging, promotional or advertising material fails to comply with the Guidelines, ARM shall notify LGS and LGS shall rectify such documentation, packaging, and promotional or advertising materials so as to comply with the Guidelines and cease using any such non-compliant materials within thirty (30) days of the date of ARMs notice. Any documentation, packaging, and promotional or advertising materials not rejected for failing to comply with the Guidelines by ARM within thirty (30) days after delivery to ARM shall be deemed approved. |
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8.5 | LGS agrees to assist ARM in maintaining the validity of the Trademarks by retaining a record of its use of the Trademarks. Such records shall include samples of the use of each of the Trademarks as well as information regarding the first use of the Trademarks in each country. Upon request, LGS shall make available all such records. | |
8.6 | Except as provided by the terms of this Agreement, LGS shall not use or register any trademark, service mark, device or logo, any of the Trademarks or any word or mark confusingly similar to any of the Trademarks in any jurisdiction. | |
9. | Licence Fees and Royalties | |
9.1 | In consideration of the licences granted to the Transfer Materials and the delivery of the Transfer Materials to LGS under this Agreement, LGS shall pay the fees (Core Fees) set out in Schedule 12 Part A. | |
9.1A | In consideration of the delivery of the PID7T cards and Embedded ICE protocol converters (identified in Schedule 15) to LGS under this Agreement, LGS shall pay the fee (PID Fee) set out in Schedule 12 Part M. | |
9.2 | For each ARM Compliant Product sold, supplied or distributed by LGS. LGS shall pay a royalty (Running Royalty) calculated in accordance with the provisions of Schedule 13. | |
9.3 | For the period of five years from the Effective Date (Design Win Period). LGS shall pay a non-refundable fee (Design Win Fee), as set out in Schedule 12 Part G, upon each Design Win Event up to a maximum of eight (8) Design Win Fees (except no Design Win Fee shall be payable on the first Design Win Event). No Design Win Fees shall be payable after the Design Win Period and LGS shall not manipulate the sale, supply or other distribution of any Design Win Product to avoid the payment of a Design Win Fee. | |
9.3A | After a period of ten (10) years from the first commercial shipment of the first manufactured ARM Compliant Product under this Agreement (the Initial Period), LGS shall be entitled to either; (i) require ARM to enter into good faith negotiations to revise the Running Royalty rates for the remainder of the term of this Agreement; or (ii) require ARM to enter into good faith negotiations to agree a sum payable by LGS to ARM in lieu of the Running Royalties which would otherwise fall due in accordance with the provisions of Clause 9.2. LGS shall exercise its rights under this Clause 9.3A upon written notice to ARM referring to this Clause 9.3A, served not less that six (6) months prior to the expiry of the Initial Period. For the avoidance of doubt, in the event that; |
(i) | LGS fails to serve any notice in accordance with the provisions of Clause 9.3, the rights set forth in Clause 9.3A shall lapse; or | ||
(ii) | the parties fail to reach agreement prior to the expiry of the Initial Period and LGS does not terminate this Agreement, LGS shall continue to pay the Running Royalties in accordance with the provisions of Clause 9.2. |
9.4 | In no event shall any Fee or Design Win Fee be construed as being an advance payment of Running Royalties and no right of set off of Running Royalties against any Fee or Royalty Fee paid to ARM, by LGS, shall exist. LGS shall not manipulate distribution of ARM Compliant Products between LGS Subsidiaries for the purpose of avoiding payment of Running Royalties at a higher rate than would have been the case if such manipulation had not taken place. |
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9.5 | In consideration of the Embedded ICE licence under Clause 5A, LGS shall pay to ARM a fee (Embedded ICE Fee), as set out in Schedule 12 Part C, and for each microprocessor development system created by LGS which incorporates the Embedded ICE (or a modified version thereof created under the provisions of Clause 5A.1(i) a further fee (Embedded ICE Royalty) as set out in Schedule 12 Part C. | |
9.6 | Upon giving written notice to ARM referring to this Clause 9.6, together with payment, to ARM of the option fee set out in Schedule 12 Part B, for a limited period of three (3) years from the Effective Date, LGS may extend the licence contained in Clause 4 hereof, so as to include any of the simulator specific models specified in Schedule 3 Part C. | |
9.7 | In consideration of the Core maintenance services provided under Clause 12 and the training provided under Clause 13A, LGS shall pay, to ARM the fee (Core Maintenance Fee) set out in Schedule 12 Part D. | |
9.8 | In consideration of the Software maintenance services provided under Clause 13, LGS shall pay, to ARM the fee (Software Maintenance Fee) set out in Schedule 12 Part E. | |
9.9 | LGS shall keep all records of account as are necessary to demonstrate compliance with its obligations under this Clause 9. | |
9.10 | ARM shall have the right for representatives of a firm of independent Chartered Accountants to which LGS shall not unreasonably object (Auditors), to make an examination and audit by prior appointment during normal business hours, not more frequently than once annually, of all records and accounts as may under recognised accounting practices contain information bearing upon (i) the number of chips and the NSP of ARM Compliant Products sold or distributed by LGS under this Agreement and (ii) the amounts of Running Royalties payable to ARM under this Clause 9. The Auditors will report to ARM only upon whether the Running Royalties paid to ARM by LGS were or were not correct, and if incorrect, what are the correct amounts for the Running Royalties. LGS shall be supplied with a copy of or sufficient extracts from any report prepared by the Auditors. The Auditors report shall (in the absence of clerical or manifest error) be final and binding on the parties. Such audit shall be at ARMs expense unless it reveals an underpayment of Running Royalties of five per cent (5%) or more, in which case LGS shall reimburse ARM for the costs of such audit. LGS shall make good any underpayment of royalties forthwith. If the audit identifies that LGS has made an overpayment, such overpayment will be credited to the next such payment or payments to be made by LGS. | |
9.11 | Any income or other tax which LGS is required by law to pay or withhold on behalf of ARM with respect to any licence fees and/or royalties payable to ARM under this Agreement shall be deducted from the amount of such licence fees and/or royalties otherwise due provided, however, that in regard to any such deduction, LGS shall give to ARM such assistance as may be necessary to enable or assist ARM to claim exemption therefrom, or credit therefor, and shall upon request furnish to ARM such certificates and other evidence of deduction and payment thereof as ARM may properly require. | |
9.12 | Any Running Royalties due to ARM under this Agreement shall be paid in accordance with the terms set forth in Schedule 6 Part B. All other sums shall be due, to ARM, in accordance with the provisions of Schedule 12 and shall be paid within thirty (30) days of the date of ARMs invoice therefor except that in the case of the Core Fee [*****] shall be paid within thirty (30) days of the date of ARMs invoice therefor and [*****] shall be paid within ninety (90) days of the date of ARMs invoice therefor. |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
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9.13 | If any sum due under this Agreement is not paid within thirty (30) days of receipt of the invoice therefor, then (without prejudice to ARMs other rights and remedies) ARM reserves the right to charge interest on such sum on a day to day basis (as well after as before any judgement) from the date from which payment was due to the date of payment at the rate of five (5) per cent per annum above the base rate of Barclays Bank PLC from time to time in force. | |
10. | Delivery, Acceptance and Production Costs | |
10.1 | In consideration of the payment to ARM by LGS of the fee (Design Transfer Fee) set out in Schedule 12 Part F. ARM shall port and deliver to LGS database CD in respect of the ARM7TDMI Core which conform to the LGS 0.35 micron ASIC Design Rules Version 2 (Aug 19th 1996). In the event that LGS delivers a later set of rules ARM shall review and if the amount of work involved is substantially different then ARM and LGS shall mutually agree an alternative course of action. | |
10.2 | ARM shall deliver any deliverables due to LGS under the provisions of this Agreement in accordance with the delivery schedule set forth in Schedule 9. | |
10.3 | Unless otherwise agreed in writing, delivery: |
(i) | by LGS, shall take place at Advanced RISC Machines Limited 90 Fulbourn Road, Cherry Hinton, Cambridge CB1 4JN. England marked for the attention of the Engineering Director; | ||
(ii) | by ARM, shall take place at 16 Woomyeon-dong, Seocho-gu, Seoul 137-140. Korea marked for the attention of Mr Jay H. Kim. |
10.4 | ARM shall not be responsible under the terms of this Agreement for any recoverable or non-recoverable costs incurred directly or indirectly, by LGS in the design translation, processing, or manufacture of masks and prototypes characterisation or manufacture of production quality silicon in whatever quantity. | |
11. | Contract Administrators | |
11.1 | The parties hereby appoint the following individuals as their respective contract administrators between ARM and LGS with respect to this Agreement: |
ARM: | LGS: | |
|
||
For legal notices
:
|
||
David N MacKay
VP of Strategic Alliances Advanced RISC Machines Limited 90, Fulbourn Road Cherry Hinton Cambridge CBl 4JN England |
Jong-Taek Hong
General Manager Legal Affairs Department LG Semicon Co Limited 891 Daechi-dong Kangnam-ku Seoul Korea |
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For corporate issues
:
|
||
|
||
James S Urquhart
|
||
VP of Sales and Marketing
|
Mr. Young-Pyo Bae | |
Advanced RISC Machines Limited
|
Managing Director | |
90, Fulbourn Road
|
LG Semicon Co Limited | |
Cherry Hinton
|
891 Daechi-dong | |
Cambridge
|
Kangnam-ku | |
CB1 4JN
|
Seoul | |
England
|
Korea | |
|
||
For Confidential Information
:
|
||
|
||
Bryn Parry
|
Mr. Jay H. Kim | |
Business Unit Manager
|
Group Leader MD 8 | |
At the address set forth above
|
At the address set forth above | |
|
||
For financial issues
:
|
||
|
||
Angela Au
|
Mr. K K. Kang | |
Financial Controller
|
General Manager | |
At the address set forth above
|
At the address set forth above | |
|
||
For applications support
:
|
||
|
||
Bryn Parry
|
Mr. Jay H. Kim | |
Business Unit Manager
|
Group Leader MD 8 | |
At the address set forth above
|
At the address set forth above | |
|
||
For software support
:
|
||
|
||
Bryn Parry
|
Mr. Jay H. Kim | |
Business Unit Manager
|
Group Leader MD 8 | |
At the address set forth above
|
At the address set forth above |
11.2 | The contract administrators identified herein are appointed by the parties for the receipt and dispatch on their behalf of all communications relating to the administrators above designated areas of responsibility. The contract administrators shall also be responsible for the good progress of the parties performance under this Agreement and the timely resolution of all technical, administrative and commercial issues which may arise from time to time during the execution of this Agreement. | |
11.3 | Each party reserves the right to change its appointment as above upon seven (7) days written notice to the other partys then current corresponding liaison. | |
12. | Core Maintenance Services | |
12.1 | In consideration of the payment of the Core Maintenance Fee to ARM, by LGS, ARM shall provide, to LGS, in respect of the ARM7TDMI Core through the parties applicable contract administrator, the following maintenance services; |
(i) | the correction, to the extent reasonably possible, of any defects in any ARM7TDMI Core which cause such ARM7TDMI Core not to operate in accordance with the functionality described in the applicable documentation. If ARM determines that such defects are due to errors in such description, ARM shall promptly issue corrections to the applicable documentation and shall not be required to correct the |
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(ii) | reasonable telephone and written consultation pertaining to the operation and application of the ARM7TDMI Core; | ||
(iii) | any bug-fixes or corrections to the ARM7TDMI Core made available by ARM to any third party; | ||
(iv) | all Updates to the ARM7TDMI Core; | ||
(v) | the provision of ARM-related training; |
The services provided under Clauses 12.1(ii), 12.1(v) and 13.1(ii) shall together be limited to a total of thirty (30) man days per annum. | ||
12.2 | Upon LGS requesting ARMS assistance pursuant to the provisions of Clause 12.1, LGS shall promptly provide to ARM such samples and technical information as ARM may reasonably require to enable ARM to provide such assistance. | |
12.3 | In notifying ARM of any defects or problems LGS shall use a format and medium reasonably requested by ARM. Notwithstanding the foregoing, LGS shall provide ARM promptly with any information or assistance reasonably requested by ARM to enable ARM to provide the maintenance service hereunder. | |
12.4 | The maintenance services shall be provided at ARMs UK premises. Nevertheless, ARM will use reasonable efforts to provide maintenance services to LGS, at LGSs premises, subject to LGS meeting all reasonable travelling, accommodation and sustenance expenses. | |
12.5 | For the avoidance of doubt, ARMs obligation under this Clause 12 is limited expressly to the provision of the maintenance services to LGS and ARM shall be under no obligation to provide the maintenance services to LGSs customers. | |
13. | Software Maintenance Services | |
13.1 | In consideration of the payment of the Software Maintenance Fee to ARM, by LGS, ARM shall provide to LGS, in respect of the Software, through the parties applicable contract administrator, the following maintenance services: |
(i) | to correct, to the extent reasonably possible, any defects in the Software which cause the Software not to operate in accordance with the description of the Softwares function in the applicable documentation. If ARM determines that such defects are due to errors in such description, ARM shall promptly issue corrections to the documentation and shall not be required to alter the Software provided that LGS is not thereby prevented from commercially exploiting the Software. | ||
(ii) | to provide reasonable telephone and written consultation pertaining to the operation and application of the Software. | ||
(iii) | to provide as available Updates to the Software. |
13.2 | In notifying ARM of any defects or problems LGS shall use a format reasonably requested by ARM. LGS shall provide ARM promptly with any information or assistance reasonably requested by ARM to enable ARM to provide the maintenance service hereunder. | |
13.3 | For the avoidance of doubt, ARMs obligation under this Clause 13 is limited expressly to the provision of the Software maintenance services to LGS and ARM shall be under no obligation to provide the maintenance services to LGSs sub-licensees of the Software. |
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13A. | Training | |
I3A.1 | In consideration of the Fees see out in Schedule 12 Part D. ARM shall provide, on reasonable notice, at ARMs premises in Cambridge, up to four (4) weeks of support for up to two (2) LGS personnel in relation to building the Test Chip and use of the Embedded ICE. | |
14. | Confidentiality | |
14.1 | Save as provided by Clause 14.2, each party shall maintain in confidence the Confidential Information disclosed by the other party and apply security measures no less stringent than the measures that such party applies to protect its own like information, but not less than a reasonable degree of care, to prevent unauthorised disclosure and use of the Confidential Information. The period of confidentiality shall be (i) indefinite with respect to the terms of this Agreement, pattern generation tapes and photomasks and (ii) twenty (20) years with respect to all other information. | |
14.2 | In the event that either party qualifies the confidentiality of any Confidential Information in writing by marking such Confidential Information with the words Limited Confidentiality, such Confidential Information may be disclosed to a third party who has entered into a non disclosure agreement (NDA) with the recipient containing substantially similar terms to this Clause 14. A NDA in respect of the disclosure of business Confidential Information may be limited in duration to a period of not less than three (3) years from the date of disclosure. A NDA in respect of the disclosure of technical Confidential Information may be limited in duration to a period of not less than five (5) years from the date of disclosure. | |
14.3 | The provisions of this clause shall not apply to information which:- |
(i) | is known and has been reduced to tangible form by the receiving party prior to disclosure by the other party; or | ||
(ii) | is, or becomes through no fault of the receiving party, generally known; or | ||
(iii) | is disclosed to the receiving party by a third party having the lawful right to make such disclosure; or | ||
(iv) | is independently conceived by the receiving party provided that the receiving party is able to provide evidence of such independent conception in the form of written records; or | ||
(v) | is released to the receiving party for disclosure to any third party, other than on a confidential basis, by the disclosing party in writing; or | ||
(vi) | as required by any court or other governmental body. |
14.4 | For the avoidance of doubt, LGS Royalty Reports may be disclosed to, in confidence, ARMs financial and/or legal advisors. In addition, ARM may disclose the total unit sales of ARM Compliant Products. | |
14.5 | The parties agree that the disclosure of Confidential Information to a party hereunder shall be co-ordinated through the appointed contract administrators identified for such purpose in Clause 11.1. |
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15. | Warranties | |
15.1 | ARM warrants that the materials delivered to LGS will be sufficient for a competent semiconductor manufacturer to produce an ARM7TDMI Core which meets the functionality specified in the ARM Datasheet Doc. No. ARM DDI 0029E. LGSs sole and exclusive remedy for any breach of such warranty shall be for ARM to correct any errors in the materials and deliver such corrected materials to LGS or replace the materials at ARMs discretion. | |
15.2 | LGS acknowledges that the Software cannot be tested in every possible operation, and accordingly ARM does not warrant that the Software will be free from all defects or that there will be no interruption in its use. However, ARM warrants that the Software will be complete and comply with the description of its functionality specified in the documentation. LGSs sole and exclusive remedy for any breach of such warranty shall be for ARM, as soon as is reasonably practicable, to correct any errors in the Software and deliver such corrected Software to LGS. | |
15.3 | ARM further warrants that to ARMs knowledge and belief, but expressly without having undertaken any searches for prior art, that: |
(i) | the ARM7TDMI Core, and Software do not infringe any third party copyright, maskwork right or trade secret; and | ||
(ii) | there are no pending claims that have been made, or actions commenced, against ARM for breach of any third party copyright, maskwork right, patent or trade secret; and | ||
(iii) | ARM, or its applicable licensor, is the owner of the properties to be delivered to LGS; and | ||
(iv) | ARM has the right to enter into the Agreement. |
15.4 | Except as expressly provided in this Agreement, the ARM7TDMI Core. Software, Intellectual Property, and Transfer Materials are licensed as is and ARM makes no warranties express, implied or statutory, including, without limitation, the implied warranties of merchantability or fitness for a particular purpose with respect to the ARM7TDMI Core, Software, Intellectual Property and Transfer Materials. | |
15.5 | LGS warrants that LGS shall: |
(i) | submit this Agreement for approval by the Korean Government forthwith upon signature by the parties; and | ||
(ii) | use all reasonable endeavours to obtain all or any tax exemption or tax credits applicable to the technology licensed and monies payable under this Agreement. |
16. | Infringement | |
16.1 | Each party (the Delivering Party) will support the other party (the Receiving Party) in any action based on a claim that the materials delivered by the Delivering Party to the Receiving Party under this Agreement (the Delivered Materials), when used in accordance with this Agreement, infringe any patent, copyright or trade secret provided that the Receiving Party shall notify the Delivering Party promptly in writing of each such suit. However, a party shall not be obliged to support the other party in any action based upon an infringement or alleged infringement of any patent, copyright, trade secret, mask work, trademark or other property right by; (a) the Receiving Partys manufacturing process; (b) any modification of the Delivered Materials not made by the Delivering Party; or (c) the use of |
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the Delivered Materials in combination with other equipment, technology or software not purchased or licensed from the Delivering Party, provided that such claim would not have occurred but for such combination, modification or enhancement. |
16.2 | The Receiving Party will support the Delivering Party in any action based on a claim that (a) the process used by or on behalf of the Receiving Party in manufacturing products incorporating, embodying or based upon the Delivered Materials, (b) any modification of the Delivered Materials made by or on behalf of the Receiving Party, or (c) the use of the Delivered Materials in combination with other equipment, software or technology not purchased or licensed from the Delivering Party, provided that such claim would not have occurred but for such combination, modification or enhancement, has infringed any patent, copyright or trade secret provided that the Delivering Party shall notify the Receiving Party promptly in writing of such suits. | |
16.3 | If any Delivered Materials provided to LGS by ARM, or any portion thereof, is finally adjudged to infringe a patent or copyright, ARM shall, at ARMs election, use its reasonable efforts to; (a) procure the right to continue using the unmodified Delivered Materials; (b) modify the Delivered Materials so that they become non-infringing; (c) replace the unmodified Delivered Materials, or infringing portions thereof, with reasonably equivalent non-infringing products; or (d) pay compensatory damages to LGS, subject to the limitations of Clause 16.6. The provisions of this Clause 16.3 do not extend to any suit based upon an infringement or alleged infringement of any patent, copyright, trade secret, mask work, trademark or other property right by; (a) the LGS manufacturing process; (b) any modification of the Delivered Materials not made by ARM; or (c) the use of the Delivered Materials in combination with other equipment, technology or software not purchased or licensed from ARM, provided that such claim would not have occurred but for such combination, modification or enhancement. | |
16.4 | If any Delivered Materials provided to ARM by LGS, or any portion thereof, is finally adjudged to infringe a patent or copyright. LGS shall, at LGSs election, use its reasonable efforts to; (a) procure the right to continue using the unmodified Delivered Materials; (b) modify the Delivered Materials so that they become non-infringing; (c) replace the unmodified Delivered Materials, or infringing portions thereof, with reasonably equivalent non-infringing products; or (d) pay compensatory damages to ARM subject to the limitations of Clause 16.6. The provisions of this Clause 16.4 do not extend to any suit based upon an infringement or alleged infringement of any patent, copyright, trade secret, mask work, trademark or other property right by any modification of the Delivered Materials not made by LGS. | |
16.5 | In the event that there is a final adjudication of infringement, the liability of the Delivering Party for such infringement shall terminate with respect to all damages regarding the infringing intellectual property arising after the date of such final adjudication. | |
16.6 | THE FOREGOING STATES THE ENTIRE LIABILITY OF THE PARTIES, AND THE EXCLUSIVE REMEDY FOR THE PARTIES, FOR ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, TRADE SECRET, MASK WORK OR OTHER PROPRIETARY RIGHT OF A THIRD PARTY. ARM AND LGS DISCLAIM ALL OTHER LIABILITY FOR ANY SUCH INFRINGEMENT. INCLUDING ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT. NEITHER PARTY SHALL BE LIABLE FOR ANY AMOUNTS IN EXCESS OF THE SUM OF TWO HUNDRED AND EIGHTY FIVE THOUSAND US DOLLARS (US$285,000) IN THE AGGREGATE FOR ALL PAYMENTS MADE PURSUANT TO ANY CLAIMS IN ANY WAY ARISING OUT OF OR IN CONNECTION WITH THE PROVISIONS OF THIS CLAUSE 16. |
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17. | Disclaimer of Consequential Damages | |
17.1 | IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHETHER SUCH DAMAGES ARE ALLEGED AS A RESULT OF TORTIOUS CONDUCT OR BREACH OF CONTRACT OR OTHERWISE EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SUCH DAMAGES SHALL INCLUDE BUT SHALL NOT BE LIMITED TO THE COST OF REMOVAL AND REINSTALLATION OF GOODS, LOSS OF GOODWILL, LOSS OF PROFITS, LOSS OF USE OF DATA, INTERRUPTION OF BUSINESS OR OTHER ECONOMIC LOSS BUT NOTHING IN THIS CLAUSE SHALL OPERATE TO EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM EITHER PARTYS NEGLIGENCE. | |
18. | Term and Termination | |
18.1 | This Agreement shall commence on the Effective Date and continue in force, except as provided by Clause 18.3, unless and until terminated in accordance with the provisions of Clause 18.2. | |
18.2 | Without prejudice to any other right or remedy which may be available to it, either party shall be entitled summarily to terminate this Agreement by giving written notice to the other. |
(i) | if the other party has committed a material breach of any of its obligations hereunder which is not capable of remedy; or | ||
(ii) | if the other party has committed a material breach of any of its obligations hereunder which is capable of remedy but which has not been remedied within a period of sixty (60) days following receipt of written notice to do so; or | ||
(iii) | makes any voluntary arrangement with its creditors for the settlement of its debts or becomes subject to an administration order; or | ||
(iv) | has an order made against it. or passes a resolution, for its winding-up (except for the purposes of amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over all or substantially all of its property or assets. |
18.3 | After a period of seven and one half (7.5) years from the Effective Date of the 1995 Agreement (the Initial Period), the licence set forth in Clause 5 shall expire automatically whereupon LGS shall have no further right or licence in respect of the Tools. However, LGS may renew the licence granted under the provisions of Clause 5, subject to the provisions of Clauses 18.3(i) and (ii), for a further term of seven (7) years upon payment of a fee (Renewal Fee). |
(i) | LGS may exercise its rights to renew, as provided by this Clause 18.3, provided that LGS gives to ARM not less than six (6) months notice in writing of its intention to so renew, expiring on the seventh anniversary of the Effective Date. | ||
(ii) | Upon receipt of LGSs notice served in accordance with Clause 18.3(i), the parties shall enter into good faith negotiations to agree a reasonable Renewal Fee. For the avoidance of doubt, LGS shall not be entitled to exercise any of the rights contained in Clause 5 unless and until agreement has been reached and the Renewal Fee has been paid to ARM. |
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18.4 | LGS and ARM acknowledge that each and every term and condition of this Agreement has been fully and completely negotiated and such terms and conditions closely relate to each other. In the event that the Korean governmental authorities, including the Korean Fair Trade Commission, during the review of this Agreement require a modification to one or more of the clauses or this Agreement. ARM shall have the option to renegotiate the entire Agreement or accept the applicable modification of the Agreement as required by such governmental authorities. | |
19. | Effect of Termination | |
19.1 | Upon termination of this Agreement by either party pursuant to Clause 18.2, LGS will immediately discontinue any use and distribution of all ARM Compliant Products, Software, Intellectual Property, Transfer Materials and ARM Confidential Information. LGS shall, at ARMs option, either destroy or return to ARM any Confidential Information, including any copies thereof in its possession, together with the Transfer Materials and all copies of the Software in its possession. Within one month after termination of this Agreement LGS will furnish to ARM a certificate signed by a duly authorised officer of LGS that to the best of his or her knowledge, information and belief, after due enquiry, LGS has complied with provisions of this Clause. For the avoidance of doubt, any sub-licences of the Software granted by LGS prior to the termination of this Agreement shall survive such termination. | |
19.2 | Upon termination of this Agreement the termination date shall be treated as the end of a Half Year for the purposes of accounting for all Running Royalties due to ARM. Thereafter LGS shall submit a royalty report to ARM in accordance with the provisions of Schedule 6. | |
19.3 | The provisions of Clauses 1, 2.3, 2.4 (in respect of LGSs obligation to indemnify ARM thereunder), 7, 9 (to the extent that any amounts remain due and unpaid at the date of termination), 14, 16, 17, 19, and 20 shall survive termination or expiration of this Agreement. | |
20. | General | |
20.1 | All communications between the parties including, but not limited to, notices, royalty reports, error or bug reports, the exercise of options, and support requests shall be in the English language. | |
20.2 | All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out in this Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of this Clause. Any such notice may be delivered personally, by commercial overnight courier or facsimile transmission which shall be followed by a hard copy and shall be deemed to have been served if by hand when delivered, if by commercial overnight courier 48 hours after deposit with such courier, and if by facsimile transmission when dispatched. | |
20.3 | Neither party shall assign or otherwise transfer this Agreement or any of its rights and obligations hereunder whether in whole or in part without the prior written consent of the other. | |
20.4 | Neither party shall be liable for any failure or delay in its performance under this Agreement due to causes, including, but not limited to, acts of God, acts of civil or military authority, fires, epidemics, floods, earthquakes, riots, wars, sabotage, third party industrial disputes and governments actions, which are beyond its reasonable control: provided that the delayed party: (i) gives the other party written notice of such cause promptly, and in any event within fourteen (14) days of discovery thereof; and (ii) uses its reasonable efforts to correct such failure or delay in its performance. The delayed partys time for performance or cure under this Clause 20.4 shall be extended for a period equal to the duration of the cause. |
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20.5 | ARM and LGS are independent parties. Neither company nor their employees, consultants, contractors or agents, are agents, employees or joint venturers of the other party, nor do they have the authority to bind the other party by contract or otherwise to any obligation. Neither party will represent to the contrary, either expressly, implicitly, by appearance or otherwise. | |
20.6 | The parties agree that the terms and conditions of this Agreement shall be treated as Confidential Information hereunder and shall not be disclosed without the consent of both parties. | |
20.7 | Failure by either party to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that or any other provision. | |
20.8 | If any provision of this Agreement, or portion thereof, is determined to be invalid or unenforceable the same will be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of this Agreement will continue in full force and effect. | |
20.9 | The headings to the Clauses of this Agreement are for ease of reference only and shall not affect the interpretation or construction of this Agreement. | |
20.10 | This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument. | |
20.11 | This Agreement, including all Schedules and documents referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior or contemporaneous understandings or agreements, written or oral, regarding the subject matter. No amendment to, or modification of, this Agreement shall be binding unless in writing and signed by a duly authorised representative of both parties. | |
20.12 | This Agreement shall be governed by and construed in accordance with the laws of England. In the event that ARM commences proceedings against LGS under this Agreement, the parties agree to submit to the jurisdiction of the Seoul District Court, Korea, for the purpose of hearing and determining any disputes arising out of this Agreement. In the event that LGS commences proceedings against ARM under this Agreement, the parties agree to submit to the jurisdiction of the High Court of Justice, London, England, for the purpose of hearing and determining any disputes arising out of this Agreement. |
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by their duly authorised representative: |
ADVANCED RISC MACHINES LIMITED: | LG SEMICON COMPANY LIMITED: | |||||||
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||||||||
SIGNED:
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/s/ R. K. Saxby
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SIGNED: |
/s/ B. D. Sun
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|||||
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||||||||
NAME:
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R. K. Saxby | NAME: | Byung-Don Sun | |||||
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||||||||
TITLE:
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President & CEO | TITLE: | Executive Vice President |
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12 October, 2006 | Confidential | LEC-LTM-01434-V5.0 |
A. | This Amendment (defined above) refers to and amends the terms and conditions of the technology licence agreement, ARM document number LEC-TLA-00142, between ARM and MAGNACHIP dated 16th December 1996 (the Agreement ). | |
B. | The Agreement was assigned by LG Semicon Company Limited to Hyundai Electronics Ltd (Hyundai) in the month of March 2000. | |
C. | Hyundai changed its name to Hynix Semiconductor Inc ( Hynix ) on 29th March 2001. | |
D. | MAGNACHIP purchased the system IC business of Hynix on 6 th October 2004 and the Agreement was assigned to MAGNACHIP. | |
E. | MAGNACHIP has requested and ARM has agreed to license an additional model to MAGNACHIP under the terms and conditions of the Agreement. |
1. | That all definitions contained in the Agreement shall have the same meanings and apply to this Amendment. | |
2. | Delete the following from Clause 1.22(iii) of the Agreement | |
subject to the payment by MAGNACHIP of the fee(s) set out in Clause 9.2 | ||
and replace with the following: | ||
subject to the payment by MAGNACHIP of the fee(s) set out in Clauses 9.6a, 9.6b and 9.6c as applicable | ||
3. | After Clause 9 .6, add Clauses 9 .6a and 9 .6b to the Agreement as follows: |
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9.6a | In consideration of ARM agreeing to licence the Model identified in Schedule 3 Part C Item C7 to MAGNACHIP, MAGNACHIP shall pay, to ARM, the sum of [*****] due on the Effective Date of the Amendment. | ||
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9.6b | In consideration of ARM agreeing to provide support and maintenance services to MAGNACHIP in respect of the Model identified in Schedule 3 Part C Item C7, MAGNACHIP shall pay, to ARM, the [******] due on the Effective Date of the Amendment. | ||
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9.6c | In the event that MAGNACHIP exercises its option in Clause 13.1b, MAGNACHIP shall pay, to ARM, the sum of [*****] ( Model Optional Support and Maintenance Fee) due on the first anniversary of the Effective Date of the Amendment. |
NM/JL | Page 1 of 2 | ARM/Magnachip Semiconductor Limited |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
12 October, 2006 | Confidential | LEC-LTM-O1434-V5.0 |
4. | After Clause 13.1 of the Agreement, add Clause 13.1a to the Agreement as follows: |
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13.1a | Notwithstanding anything to the contrary contained in Clause 13.1, for the period commencing on the Effective Date of the Amendment and ending one (1) year thereafter, ARM shall provide support and maintenance to MAGNACHIP pursuant to this Clause 13 in respect of the Model identified in Schedule 3 Part C Item C7. | ||
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13.1b | Subject to receipt of notice from MAGNACHIP requesting support and maintenance and payment of the Model Optional Support and Maintenance Fee (defined in Clause 9.6c), for the period commencing on the first anniversary of the Effective Date of the Amendment and ending one (1) year thereafter, ARM shall provide support and maintenance to MAGNACHIP pursuant to this Clause 13 in respect of the Model identified in Schedule 3 Part C Item C7. |
5. | Add the following to the end of Schedule 3 Part C of the Agreement: |
C7
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AT010-MS-28607 | ARM7TDMI Model |
NC-Verilog simulator on Linux
platform |
N |
ARM LIMITED
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MAGNACHIP | SEMICONDUCTOR LTD | ||||||||
BY
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/s/
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BY |
/s/ David J Gampell
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|||||||
NAME
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NAME | DAVID J GAMPELL | ||||||||
TITLE
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EVP | TITLE | VP ENGINEERING, ISO | |||||||
DATE
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7/11/06 | DATE | 16 OCT 2006 |
NM/JL | Page 2 of 2 | ARM/Magnachip Semiconductor Limited |
1. | Definitions | |
The following terms shall have the following meanings where used in this Agreement; | ||
1.1 | 1996 Agreement shall mean the Technology Licence Agreement between ARM and LGS dated the 16th December 1996. | |
1.2 | ARM Services shall mean the services described in Schedule 1 which ARM shall provide to LGS pursuant to this Agreement. | |
1.3 | ARM Compliant Product shall mean any single silicon chip developed by LGS which contains, at a minimum; (i) an ARM7TDMI Core or a Modified ARM7TDMI Core as defined in the 1996 Agreement; or (ii) an ARM720T Core or a Modified ARM720T Core, which has been verified in accordance with the provisions of Clause 3 of the 1996 Agreement mutatis mutandis. | |
1.4 | ARM720T Core shall mean the ARM720T Core specified in the ARM720T Datasheet identified in Schedule 3 Part A. | |
1.5 | ARM720T Model shall mean the ARM720T Model identified in Schedule 3 Part B. | |
1.6 | ARM720T Core Transfer Materials shall mean the items in respect of the ARM720T Core identified in Schedule 3. | |
1.7 | ARM7201TDSP Device shall mean the device specified in the device specification approved by LGS in accordance with Clause 3.3 together with any changes thereto mutually agreed between the parties in writing from time to time. A preliminary specification is set out in Schedule 11. |
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[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
1.8 | ARM7201TDSP Transfer Materials shall mean the items identified in Schedule 2 Parts A. | |
1.9 | ARM720TDSP shall mean the combined core of the ARM720T Core and the Piccolo Core | |
1.10 | ARM720TDSP Transfer Materials shall mean the items identified in Schedule 2 Part B. | |
1.11 | ARM Deliverables shall mean the ARM720T Core Transfer Materials, ARM720TDSP Core Transfer Materials, the ARM7201TDSP Transfer Materials and the Piccolo Core Transfer Materials. | |
1.12 | Beta Release shall mean a version of the Software which, subject to Known exceptions (which will be documented and provided to LGS); |
(i) | substantially conforms with the Specification; and | ||
(ii) | is free from significant bugs. |
1.13 | Delivery Schedule shall mean the dates set out in the various schedules of this Agreement for performance of the ARM Services for and delivery of the ARM720T Core Transfer Materials, the ARM720TDSP Core Transfer Materials, the ARM7201TDSP Transfer Materials, the Piccolo Core Transfer Materials, and the Software to LGS. | |
1.14 | Design Win Event shall mean for each different ARM Compliant Product or semiconductor product incorporating the Piccolo Core, the point in time of sale, supply or other distribution by LGS of ten thousand (10,000) units of such product. | |
1.15 | Device Driver Software shall mean the source and object code versions of the computer programs and documentation identified in Schedule 5 Part A. | |
1.16 | Effective Date shall mean the date of this Agreement or date upon which the Korean Government gives approval to this Agreement, whichever is the later, subject always to the provision of Clause 13.3. | |
1.17 | Final Release shall mean a version of the Software which; |
(i) | conforms with the Specification; | ||
(ii) | is free from significant bugs; and | ||
(iii) | is supported by such documentation as is necessary for its, installation, operation and interpretation. |
1.18 | FPGA Board shall mean the hardware identified in Schedule 5 Part B. | |
1.19 | OAL Software shall mean the source and object code versions of the computer programs and documentation identified in Schedule 5 Part A. | |
1.20 | Intellectual Property shall mean patents and patent rights, trade marks, service marks, registered designs, applications for any of the foregoing, design rights, |
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1.21 | Intellectual Property Derivatives shall mean; (i) for copyrightable or copyrighted material, any translation, abridgement, revision or other form in which an existing work may be recast, transformed or adapted; (ii) for work protected by topography or maskwork right, any translation, abridgement, revision or other form in which an existing work may be recast, transformed or adapted; (iii) for patented or patentable material, any improvement; and (iv) for material protected by trade secret any new material derived from or employing such trade secret. | |
1.22 | LGS Deliverables shall mean the items in respect of the ARM7201TDSP Device identified in Schedule 8 Part A. | |
1.23 | LGS Services shall mean the services as set out in Schedule 9 which LGS shall provide to ARM. | |
1.24 | LG Affiliates shall mean each of the companies set out in Schedule 10. | |
1.25 | Microsoft shall mean Microsoft Corporation, One Microsoft Way, Redmond, WA 9052-6399 USA. | |
1.26 | Modified ARM720T Core shall mean any ARM720T Core modified in accordance with the provisions of Clause 2.2 of the 1996 Agreement mutatis mutandis. | |
1.27 | Modified ARM720TDSP Core shall mean any ARM720TDSP Core modified in accordance with the provisions of Clause 2.2 of the 1996 Agreement mutatis mutandis. | |
1.28 | Model shall mean: (i) the object code and source code of the Design Transfer Model identified in Schedule 2, Schedule 3 and Schedule 4; (ii) the object code and such source code of the Design Simulation Models and Design Simulation Model Options identified in Schedule 2, Schedule 3 and Schedule 4 as may be necessary (at ARMs absolute discretion) to allow the support of subsequent releases of the specified simulator; together with such Updates thereof, if any, as are developed by or for ARM. | |
1.29 | NSP shall mean the net sales price of any ARM Compliant Products calculated by taking the aggregate invoice price charged on arms length terms by LGS and its Subsidiaries in the sale or distribution of any ARM Compliant Product, less any (i) value added, turnover, import, or other tax, duty or tariff payable thereon (ii) freight and insurance costs incurred and (iii) amounts actually repaid or credited with respect to any ARM Compliant Products returned. | |
1.30 | OEM Agreement shall mean a separate royalty license and distribution agreement by which MS licenses an original equipment manufacturer (OEM) the right to distribute Windows CE with a Windows CE Device designed by such OEM. | |
1.31 | Piccolo Coprocessor shall mean the ARM SP7 as described and identified in the ARM SP7 datasheet. ARM DDI 0089 | |
1.32 | Piccolo Core shall mean an implementation which |
(i) | executes each and every instruction in the Piccolo Instruction Set; |
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(ii) | executes no additional instructions to those contained in the Piccolo Instruction Set; and | ||
(iii) | has been verified using ARM720TDSP test chip in accordance with the provisions of Clause 3 of the 1996 Agreement. |
1.33 | Piccolo Instruction Set shall mean the Piccolo Instruction Set as defined in the Piccolo Architecture Specification: ARM IPU - 0025 including all amendments and architectural enhancements made thereto within a period of ten (10) years from the Effective Date. | |
1.34 | Piccolo Core Transfer Materials shall mean the items in respect of the Piccolo Core identified in Schedule 4. | |
1.35 | Software shall mean together the OAL Software and the Device Driver Software. | |
1.36 | ARM Software shall mean together the Models, Tools, Test Programs, Embedded ICE and Vectors for the ARM720T Core, the ARM720TDSP, the ARM7201TDSP Device and the Piccolo Core identified in Schedule 2, Schedule 3 and Schedule 4. | |
1.37 | Software Transfer Materials shall mean the items identified in Schedule 5. | |
1.38 | Specification shall mean the specification for the Software as set out in Schedule 5. | |
1.39 | Subsidiary shall mean any company the majority of shares is now or hereafter owned or controlled, directly or indirectly, by a party hereto or any company a majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by any of the aforementioned entities. A company shall be considered a Subsidiary only so long as such control exists. | |
1.40 | Test Programs shall mean the source code and object code of the programs identified in Schedule 2, Schedule 3 and Schedule 4 together with such Updates, if any, as are developed by or for ARM. | |
1.41 | Tools shall mean: (i) the source and object code of the programs identified in Schedule 4 Part C Section 1; and (ii) the documentation identified in Schedule 4 Part C Section 2, together with such Updates, if any, as are developed by or for ARM. | |
1.42 | Updates shall mean; (i) for the ARM Software, any bug fixes or enhancements to the Software the incorporation of which ARM, in its absolute discretion, decides does not cause to be created a new product; and (ii) for the ARM Deliverables, all modifications, enhancements and updates to the ARM Deliverables, created by ARM, including such modifications to the ARM Deliverables as are made by ARMs other licensees and adopted by ARM for general release as an update provided that ARM may exclude any modification, enhancement or update which ARM, in its absolute discretion decides, results in the creation of a new product | |
1.43 | Validation Card shall mean the hardware identified in Schedule 2 Part D. | |
1.44 | Vectors shall mean together the Test Chip functional vectors and Test Chip characterisation vectors identified in Schedule 2, Schedule 3 and Schedule 4. | |
1.45 | Windows CE or WinCE shall mean any version Microsofts hand-held operating system and applications platform software delivered by Microsoft to ARM. |
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1.46 | Windows CE OAK shall mean the Windows CE OEM adaptation kit. | |
1.47 | Windows CE Device or WinCE Device shall mean any semiconductor device designed and/or assembled by LGS which incorporates the WinCE operating system software. | |
2. | ARM Deliverables and Provision of ARM Services | |
2.1 | ARM shall deliver the ARM Deliverables and the Software Transfer Materials, to LGS, in accordance with the Delivery Schedule. | |
2.2 | ARM shall apply reasonable skill and care in the provision of the ARM Services to LGS. | |
2.3 | LGS shall provide, to ARM, all necessary accurate information, support and cooperation that may be reasonably required to enable ARM to provide the ARM Services to LGS in accordance with the Delivery Schedule. | |
2.4 | ARM shall provide the following services to LGS; |
(i) | the Core Maintenance Services for the ARM720T Core, the ARM720TDSP Core and the Piccolo Core in accordance with the provisions of the Clause 12 of the 1996 Agreement mutatis mutandis. | ||
(ii) | the Software Maintenance Services for the ARM Software in accordance with the provisions of the Clause 13 of the 1996 Agreement mutatis mutandis. | ||
(iii) | the Training for the ARM720T Core, the ARM720TDSP Core and the Piccolo Core in accordance with the provisions of the Clause 12 of the 1996 Agreement mutatis mutandis. |
2.5 | LGS acknowledges that adherence to the Delivery Schedule by ARM is dependent upon the receipt by ARM of certain deliverables from Microsoft. ARM shall not be liable for any departure from the Delivery Schedule which results directly or indirectly from any failure by Microsoft to deliver such deliverables to ARM in a timely manner provided that ARM has used reasonable efforts to secure timely delivery from Microsoft. | |
3. | ARM7201TDSP Device Development | |
3.1 | Subject to the provisions of Clauses 6.2 and 2.5, ARM shall use reasonable efforts to develop and deliver the ARM7201TDSP Transfer Materials to LGS in accordance with the Delivery Schedule. | |
3.2 | Where LGS provides a requirements specification to ARM for the ARM Deliverables, ARM shall review the requirements specification in good faith and if the requirements specification is acceptable to ARM, then ARM shall approve it in writing prior to commencement of work under this Agreement. If the requirements specification is not acceptable to ARM then ARM shall recommend the changes to the requirements |
5
(i) | perform an LVS check in respect of such layout. The LVS check shall be deemed complete when either; (i) the LVS check indicates an exact match between the layout and the schematic netlist; or (ii) where all discrepancies between the layout and the schematic netlist have been reviewed by the parties with the foundry in good faith and a waiver agreed between ARM, LGS and the foundry; | ||
(ii) | perform layout simulation and provide test vectors for layout verification; and | ||
(iii) | perform a design rule check in respect of such layout by reference to the DRC file provided by LGS (where, for the purposes of this Clause 3.5(iii), LGS shall mean LGS or LGS chosen foundry, as appropriate) to ARM. The layout delivered to LGS by ARM shall be deemed to comply with the LGS design rules if the layout passes the DRC provided by LGS. The layout shall be deemed to pass the DRC when either, (i) The DRC log generated by |
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3.6 | Following delivery of any complete layout, by ARM, to LGS, LGS shall manufacture the ARM7201TDSP Device. With support from ARM, LGS shall test the prototypes of the ARM7201TDSP Device to determine whether or not the functionality and performance of the prototypes conforms to the device specification approved by LGS in accordance with the provisions of Clause 3.3. ARM shall continue to support LGS in the testing of the ARM7201TDSP Device until such device is approved by LGS. Upon completion of the testing of the prototypes, LGS shall promptly report to ARM, in writing, whether or not the prototypes comply with the device specification and in the event that LGS believes that the prototypes do not comply with the device specification, LGS shall provide ARM with details of such non-compliance. ARM shall be responsible for identifying the cause of such non-compliance and shall use reasonable endeavours to amend the layout such that revised prototypes can be manufactured which do comply with the device specification. The parties shall repeat the above process until the prototypes are approved by LGS. | |
4. | Software Development | |
4.1 | Subject to the provisions of Clauses 6.2 and 2.5, ARM shall use reasonable efforts to develop and deliver the Software and the Software Transfer Materials to LGS in accordance with the Delivery Schedule. | |
4.2 | LGS shall review the Specification and shall report, to ARM, in writing, within thirty (30) days of receipt of the Specification whether or not it is approved (such approval not to be unreasonably withheld) and if not approved the reasons for withholding approval. If the Specification is not approved by LGS, ARM shall revise the Specification accordingly and resubmit it to LGS. This process shall be repeated until the Specification is approved by LGS. If, after LGS has approved the Specification, LGS requires that the Specification be revised for any reason, LGS shall be liable for the cost of any work required to comply with such revisions. ARM shall review any such requirement in good faith and shall deliver a reasonable quote for the performance of the additional work, to LGS, based on ARMs then standard scale of consulting charges. | |
4.3 | Within forty (40) days of receipt of each Beta Release by LGS, LGS shall test the Beta Release and report any bugs or non-compliance with the Specification to ARM. If any bugs or non-compliance are reported, ARM shall revise the Beta Release accordingly and resubmit it to LGS within twenty (20) days of receipt of the non-compliance report regarding the Beta Release. This process shall be repeated until the Beta Release is approved by LGS, provided, however, that the total period of time for such repeat shall be limited to eighty (80) days. It LGS fails to test a Beta Release and deliver a report of non-compliance to ARM within forty (40) days of receipt of the Beta Release, then such Beta Release shall be deemed to be accepted by LGS. | |
4.4 | Within forty (40) days of receipt of the Final Release by LGS, LGS shall provide written confirmation of approval of the Final Release to ARM. If any bugs or |
7
non-compliance are reported. ARM shall revise the Final Release accordingly and resubmit it to LGS within twenty (20) days of receipt of the non-compliance report regarding the Final Release. This process shall be repeated until the Final Release is approved by LGS, provided, however, that the total period of time for such repeat shall be limited to sixty (60) days. If LGS fails to-deliver confirmation of approval to ARM within forty (40) days of receipt of the Final Release by LGS, then the Final Release shall be deemed to be approved by LGS. | ||
5. | Fees and Terms of Payment | |
5.1 | In consideration of the licenses granted by ARM, to LGS, for the ARM7201TDSP Device, the ARM720T Core, the Piccolo Core, the Software and other ARM Deliverables and the Win CE Consortium rights set out in Schedule 12, LGS shall pay to ARM; (i) a tee (Technology Fee) of [*****] in accordance with the provisions of Schedule 7 allocated as follows; |
ARM7201TDSP Device, ARM720T Core,
|
||||
Win CE Consortium rights set out in Schedule 12 and Software
|
[*****] | |||
Piccolo Core with WinCE Device
|
[*****] | |||
Piccolo Core with any integrated circuit
|
[*****] |
5.2 | LGS shall pay, to ARM, all reasonable travelling accommodation and sustenance expenses necessarily incurred by ARM when visiting LGS, or LGS agents premises in performance of ARMs obligations under this Agreement. | |
5.3 | For each unit of ARM Compliant Product incorporating an ARM720T Core or a Modified ARM720T Core sold, supplied or distributed by LGS, LGS shall pay a royalty (Running Royalty) in accordance with the Running Royalty table set out in Schedule 6. | |
5.4 | For each unit of ARM Compliant Product or other integrated circuit which incorporates a Piccolo Core sold, supplied or distributed by LGS, LGS shall pay a royalty (Running Royalty) calculated in accordance with the Running Royalty Rate tables set out in Schedule 6. | |
5.5 | LGS shall pay the fees, to ARM, in accordance with the provisions of this Clause 5. | |
5.6 | Reporting and payment any Running Royalties shall be submitted to ARM, by LGS, in accordance with the terms set out in Schedule 6 of the 1996 Agreement. | |
5.7 | The Element of the Technology Fee due in respect of the Win CE Consortium rights shall be due as follows; |
On the Effective Date
|
[*****] | |||
On availability of Beta of Tools Port from Microsoft (ARMv4 version only)
|
[*****] |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
8
On Release To Manufacturing by Microsoft of OAK
for ARM (ARMv4 version only) Birch Version
|
[*****] | |||
On Release To Manufacturing by Microsoft of the
Windows CE Port for ARM (ARMv4 version only)
Birch version
|
[*****] |
5.8 | In consideration of the Support and Maintenance Services provided by ARM, to ARM Partner, under Schedule 12, for a period of two (2) years from the Effective Date, ARM Partner shall pay to ARM, in advance, an annual fee (Maintenance Fee) of [*****]. The Maintenance Fee for the first year following the Effective Date shall be deemed included within the Consortium Fee. The Maintenance Fee for the second year following the Effective Date shall be due upon the anniversary of the Effective Date. | |
5.9 | In consideration of the Development Services provided by ARM, to ARM Partner, under Schedule 12, for the period of two (2) years ending on the 30 th June 1999, ARM Partner shall pay to ARM an annual development services fee (Development Fee). The Development Fee for the first year following the Effective Date shall be [*****] and shall be deemed included within the Consortium Fee. The Development Fee for the second year following the Effective Date shall be due in accordance with the provisions of Clause 5.10 and shall be determined by reference to the number of Members on the anniversary of the Effective Date as follows: |
Number of Members | Development Fee (US$) | |||
1 - 2
|
[*****] | |||
3
|
[*****] | |||
4
|
[*****] | |||
5 and above
|
[*****] |
5.10 | Fifty percent (50%) of the Development Fee for the second year following the Effective Date shall be due on the first anniversary of the Effective Date. If provision of the Development Services is substantially procured by ARM by payments to BSquare or any third party contractor, then the balance of the Development Fee for the second year following the Effective Date shall be due only when ARM makes such payments to the third party. The amount of each installment due from ARM Partner shall be the same proportion of the balance of the Development Fee as the payment by ARM to the third party is a proportion of ARMs committed expenditure to the third party in that period. If provision of the Development Services is not substantially procured by ARM by payment to a third party, then the Development Fee shall be due only where ARM can demonstrate to ARM Partner a reasonable schedule for the availability of the next version of the Tools Port and in such event the balance of the Development Fee shall be due in four equal quarterly installments with the first installment due on the first anniversary of the Effective Date. | |
5.11 | ARM warrants to ARM Partner that, for the period from the 30 th June 1997 to 30 th June 2000 (the Initial Period), the Consortium Fee payable by any third party shall be one million US dollars (US$1,000,000). If any more favourable rate is agreed with any third party during the Initial Period, then ARM shall refund, to ARM Partner, the difference between the Consortium Fee and the more favourable rate payable by the third party. |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
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5.12 | ARM further warrants to ARM Partner that the Maintenance Fees and Development Fees due in respect of the two (2) year period expiring on the 30th June 1999 (the Initial Support Period), shall be the same rates as set out in this Win CE Agreement for all Founder Members (together with, after the expiry of the Initial Period, Ordinary Members) subject always to the effect of the discount schedule applicable in respect of the second year of this Win CE Agreement as set forth in Clause 5.9 (the Discount Schedule). If any more favourable rates are agreed with another Founder or Ordinary Member during the Initial Support Period (other than where such more favourable rate is obtained by virtue of the operation of the Discount Schedule), then ARM shall refund, to ARM Partner, the difference between the Maintenance Fee or Development Fee, as appropriate, and the more favourable rate. | |
5.13 | All sums due to ARM under this Agreement shall be paid net thirty (30) days of receipt by ARM Partner of an invoice therefor. | |
5.14 | Any income or other tax which LGS is required by law to pay or withhold on behalf of ARM with respect to any license fees and/or royalties payable to ARM under this Agreement shall be deducted from the amount of such of license fees and/or royalties otherwise due, provided, however, that in regard to any such deduction, LGS shall give to ARM such assistance as may be necessary to enable or assist ARM to claim exemption therefrom, or credit therefor, and shall upon request furnish to ARM such certificates and other evidence of deduction and payment thereof as ARM may properly require. | |
5.15 | If any sum due under this Agreement is not paid within thirty (30) days of receipt, by LGS, of an invoice therefor then, without prejudice to ARMs other rights and remedies, ARM reserves the right to charge interest on such sum on a day to day basis (as well after as before any judgement) from the date that such sum became due to the date of payment at the rate of two (2) per cent per annum above the base rate of Barclays Bank PLC from time to time in force. | |
6. | LGS Deliverables | |
6.1 | LGS shall deliver the LGS deliverables, to ARM, in accordance with the delivery schedule set out in Schedule 8 Part B. | |
6.2 | If LGS fails to deliver the LGS Deliverables in accordance with the delivery schedule set out in Schedule 8 Part B and such failure prevents ARM from meeting any of its obligations under Clause 3.1, ARM shall be permitted to extend any relevant dependent dates in the Delivery Schedule for such period as is reasonable. | |
6.3 | To the extent that it does not result in a disclosure of Confidential Information or a breach of LGSs or any third party Intellectual Property, nothing in this Agreement shall be construed to prevent ARM from using, in furtherance of ARMs normal business, ideas and know-how gained during the performance of the ARM Services and development of the ARM Deliverables and Software. | |
7. | Provision of LGS Services | |
7.1 | For the duration of this Agreement LGS shall provide the LGS Services, as required by ARM. | |
7.2 | LGS shall apply reasonable skill and care in the provision of the LGS Services to ARM. |
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7.3 | ARM shall provide, to LGS, all necessary accurate information, support and cooperation that may be reasonably required to enable LGS to provide the LGS Services to ARM. | |
8. | Intellectual Property and Licences | |
General | ||
8.1 | Except as set out in this Agreement, all right, title and interest in any Intellectual Property in any or all of the ARM Deliverables and ARM Software shall vest in and be owned by ARM. | |
ARM720T Core Licence | ||
8.2 | Except to the extent that such terms and conditions have been varied by the terms of this Agreement, ARM hereby grants to LGS a licence, in respect of the ARM720T Core, the Modified ARM720T Core and/or the ARM720T Core Transfer Materials, upon the terms and conditions set out in Clause 2 of the 1996 Agreement (mutatis mutandis) in respect of the ARM7TDMI Core, the Modified ARM7TDMI Core and the ARM7TDMI Core Transfer Materials. | |
ARM Software Licence | ||
8.3 | Except to the extent that such terms and conditions have been varied by the terms of this Agreement, ARM hereby grants to LGS a licence, in respect of the ARM Software, upon the terms and conditions set out in the 1996 Agreement (mutatis mutandis) in respect of the Models, Embedded ICE, PID7T, Configurable Device Programs, and Verification and Test as defined in the 1996 Agreement except that LGS shall also have the right to modify the ARM Software and the rights granted under the 1996 Agreement shall apply mutatis mutandis to any modified ARM Software developed by LGS by exercising such right. | |
Piccolo Core Licence | ||
8.4 | In consideration of the payment in accordance with the provisions set out in Schedule 7 in respect of the Piccolo Core, ARM hereby grants to, LGS, subject to the terms and conditions of the 1996 Agreement mutatis mutandis a non-transferable, non-exclusive, world-wide licence, with the right to sub-license to LGSs Subsidiary, to use, modify (subject to the provisions of Clauses 2.2 and 2.3 of the 1996 Agreement mutatis mutandis) and copy the Piccolo Core and/or the Piccolo Transfer Materials for the purposes of creating, developing, having developed, manufacturing, having manufactured (subject to the provisions of Clauses 2.4 and 2.5 of the 1996 Agreement mutatis mutandis), and selling, supplying and distributing to any third party, ARM Compliant Products or any other semiconductor products. | |
Software Modem Licence | ||
8.5 | In the event that ARM owns or has secured the right from a third party to sub-licence, a 56K6bps software modem, ARM shall not unreasonably withhold a licence, to LGS, in respect of such 56K6bps software modem on usual commercial terms. |
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Software Licence | ||
8.6 | LGS hereby acknowledges and represents that ARM has advised LGS that an OEM Agreement with Microsoft is necessary in order to obtain license rights to the Microsoft WinCE software and that LGSs intended customers should communicate with Microsoft concerning such a proposed license agreement prior to signature of this Agreement. | |
8.7 | ARM shall use reasonable efforts to secure the rights from Microsoft, subject to Microsofts rights and interests in the Device Driver Software to sub-license, to Recipient the non-exclusive, non-transferable, worldwide right under ARMs Intellectual Property, to copy, use, modify, sell, supply and distribute the Device Driver Software in conjunction with software licensed from Microsoft. ARM shall use reasonable efforts to assist LGS in entering into a Microsoft Windows CE Development and Testing Agreement (or its equivalent) with Microsoft. |
8.8 | ARM shall use reasonable efforts to secure the rights from Microsoft, subject to Microsofts rights and interests in the OAL Software to sub-license, to Recipient, the non-exclusive, non-transferable, worldwide right under Intellectual Property jointly owned by ARM and Microsoft, to copy, use, modify, sell, supply and distribute the OAL Software in conjunction with software licensed from Microsoft. ARM shall use reasonable efforts to assist LGS in entering into a Microsoft Windows CE Development and Testing Agreement (or its equivalent) with Microsoft. | |
ARM7201TDSP Device Licence | ||
8.9 | Except to the extent that such terms and conditions are varied by the terms and conditions of this Agreement, the ARM7201TDSP Device shall be deemed to be an ARM Compliant Product and the terms of the 1996 Agreement shall apply accordingly. | |
8.10 | ARM hereby grants, to LGS, under ARMs Intellectual Property, a worldwide, non-exclusive, perpetual (subject to termination in accordance with the provisions of Clause 13), non-transferable, licence to use, modify (subject to the provisions of Clause 2.2 of the 1996 Agreement in respect of the ARM720T Core and Piccolo Core), have modified (subject to the provisions of Clause 2.4 of the 1996 Agreement mutatis mutandis and the provisions of Clause 2.2 of the 1996 Agreement mutatis mutandis in respect of the ARM720T Core and Piccolo Core), design, have designed (subject to the provisions of Clause 2.4 of the 1996 Agreement mutatis mutandis and the provisions of Clause 2.2 of the 1996 Agreement mutatis mutandis in respect of the ARM720T Core and Piccolo Core) and copy the ARM7201TDSP Transfer Materials for the purpose of exercising the licence granted below; | |
ARM hereby grants to LGS under ARMs Intellectual Property a worldwide, exclusive, perpetual (subject to termination in accordance with the provisions of Clause 13), transferable licence to use, modify (subject to the provisions of Clause 2.2 of the 1996 Agreement mutatis mutandis in respect of the ARM720T Core and Piccolo Core), have modified (subject to the provisions of Clause 2.4 of the 1996 Agreement mutatis mutandis and the provisions of Clause 2.2 of the 1996 Agreement mutatis mutandis in respect of the ARM720T Core and Piccolo Core) copy, manufacture, have manufactured (subject to the provisions of Clause 2.4 of the 1996 Agreement) sell, supply and distribute to third parties the ARM7201TDSP Device and any derivative of the ARM7201TDSP Device created under the licences granted in this Clause. |
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Other ARM Deliverables Licence | ||
8.11 | ARM shall, under ARMs Intellectual Property, grants to LGS a worldwide, non-exclusive, non-transferable, paid-up and perpetual license, with the right to sub-license to LGSs Subsidiary, to use, modify, design, have designed and copy the peripheral circuits incorporated in the ARM7201TDSP Device for the purpose of creating, developing, having developed, manufacturing, having manufactured, and selling, supplying and distributing to any third party, ARM Compliant Products and/or any semiconductor product which incorporates the peripheral circuits incorporated in the ARM7201TDSP Device. | |
LG Affiliatess Licence | ||
8.12 | LGS may exercise the right to include any LG Affiliate as a licencee of ARM provided that: |
(i) | such LG Affiliate agrees in writing to be bound by the obligations of LGS and to comply with all the terms and conditions of this Agreement. LGS shall deliver to ARM a copy of the LG Affiliates undertaking within thirty (30) days of the execution of such undertaking; | ||
(ii) | any breach of the terms and conditions of this Agreement by a LG Affiliate shall constitute a breach of this Agreement by LGS; | ||
(iii) | any termination of this Agreement shall be effective in respect of all LG Affiliates. |
LGS Deliverables Licence | ||
8.13 | All right, title and interest in any intellectual property in the LGS Deliverables shall vest in and be owned by LGS. | |
8.14 | LGS hereby grants, to ARM, a non-exclusive licence to use, copy and modify LGS Deliverables solely for the purpose of developing the ARM7201TDSP Device. | |
9. | Confidentiality | |
9.1 | During the course of this development, ARM and LGS may exchange information which is of a secret or confidential nature and which is neither already known to the recipient nor in the public domain either at the time of disclosure or subsequently through no fault of the recipient (the Confidential Information). ARM Confidential Information shall include but shall not be limited to; (i) the source code for the Software; and (ii) all underlying ideas, principles and information derived by LGS from observing, studying and testing the functioning of the Software. The party receiving Confidential Information hereunder (the Recipient) shall use the same standard of care, but in any event no less than a reasonable standard of care, to prevent the unauthorised use, dissemination or publication of such Confidential Information, as it uses to protect its own confidential information of a similar nature. | |
9.2 | The Recipient is hereby authorised to disclose such of the Confidential Information to third party sub-contractors or consultants as is necessary for the performance by the sub-contractor or consultant of any of the work under this Agreement that is assigned to it provided always that any such subcontractor or consultant is bound by provisions of confidentiality no less stringent than those provided by Clause 9.1. | |
9.3 | Except as provided by this Agreement the Recipient shall not commercially exploit nor permit others to commercially exploit any Confidential Information. |
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9.4 | Except with the other partys express prior written consent (which shall not be unreasonably withheld), neither party shall make any press announcements or publicise the contents or existence of this Agreement in any way. | |
10. | ARM Warranties and Indemnities | |
10.1 | Except as expressly provided in this Agreement, the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software are supplied as is and ARM makes no representations and gives no warranties express, implied or statutory, including, without limitation, the implied warranties of satisfactory quality or fitness for a particular purpose in respect thereof. | |
10.2 | ARM warrants that; (i) the ARM7201TDSP Transfer Materials shall be consistent and sufficient for a competent semiconductor manufacturer to fabricate the ARM7201TDSP Device which conforms to the device specification approved by LGS in accordance with the Clause 3.2 and 3.3; (ii) the ARM720T Core Transfer Materials shall be consistent and sufficient for a competent semiconductor manufacturer to fabricate the ARM720T Core which conforms to the functionality specified in the ARM Datasheet Doc. No. ARM DDI (00XX); and (iii) the Piccolo Core Transfer Materials shall be consistent and sufficient for a competent semiconductor manufacturer to fabricate the Piccolo Core which conforms to the functionality specified in the ARM Datasheet Doc. No. ARM DDI 0089. LGS sole and exclusive remedy for any breach of this warranty shall be for ARM to correct any errors in the ARM Deliverables and deliver such corrected deliverables to LGS. | |
10.3 | ARM does not warrant the adequacy of any device specification, approved by LGS, with respect to LGS intended use and ARM shall not be responsible for the circuit performance of the ARM7201TDSP Device in LGS intended application. | |
10.4 | ARM shall not be liable for any; |
(i) | recoverable or non-recoverable costs incurred, directly or indirectly, in the processing, or manufacture of masks and prototypes, characterisation or manufacture of production quality silicon in whatever quantity; or | ||
(ii) | defect in the ARM7201TDSP Device caused by a fault in the LGS or LGS agents manufacturing process. |
10.5 | After the period of sixty (60) days following approval of the prototypes of the ARM7201 Device in accordance with the provisions of Clause 3.6, ARM shall not be liable for any changes necessary to any layout. | |
10.6 | LGS acknowledges that the Software cannot be tested in every possible operation, and accordingly ARM does not warrant that the Software will be free from all defects or that there will be no interruption in its use. ARM warrants for the period of twelve (12) months from the delivery of the Software to LGS that the Software will be complete and exhibit the functionality described in the Specification. LGSs sole and exclusive remedy for any breach of the warranty in this Clause 10.6 shall be for ARM, as soon as is reasonably practicable, to correct any errors in the Software and deliver such corrected Software to LGS. |
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10.7 | ARM warrants, to LGS, that; |
(i) | to ARMs knowledge (but expressly without having undertaken any searches for prior art) the Intellectual Property in the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software does not infringe any third party copyright, design right, registered design right, trade secret or maskwork right; and | ||
(ii) | as at the date of entering into this Agreement, ARM has not received written notice of any claim, and no actions have been commenced or threatened, against ARM for infringement of any third party Intellectual Property; and | ||
(iii) | ARM has the right to enter into this Agreement. |
10.8 | If any part of the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software becomes the subject of a claim brought against LGS on the issue of infringement of the Intellectual Property of any third party or if the use or licensing of any part of the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software is restricted in any way, then ARM at its option and expense may; |
(i) | obtain for LGS the right to continue to use the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software; | ||
(ii) | replace or modify the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software so that they become non-infringing; or | ||
(iii) | offer reasonable compensation to LGS for the direct loss suffered by LGS up to a maximum of all sums paid by LGS to ARM under this Agreement. |
(a) | compliance with the LGS requirement specification or the Specification, as the case may be, and such alleged infringement is unavoidable in providing such compliance; | ||
(b) | the combination, use or operation of the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software in connection or combination with any equipment, device or software not developed and supplied by ARM and such alleged infringement would have been avoided in the absence of such combination; or | ||
(c) | the modification of the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software by the LGS or any third party unless the modification was made or approved by ARM, | ||
(d) | infringement by any manufacturing process applied to the ARM720T Core Transfer Materials, ARM7201TDSP Transfer Materials, Piccolo Core Transfer Materials and Software. |
10.9 | The foregoing states the entire liability of ARM for infringement by the Intellectual Property in the ARM Deliverables and Software, of third party Intellectual Property. |
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11. | LGS Warranties and Indemnities | |
11.1 | LGS warrants, to ARM, that; |
(i) | to LGS knowledge (but expressly without having undertaken any searches for prior art), the Intellectual Property in the LGS Deliverables does not infringe any third party copyright, design right, registered design right, maskwork right, or trade secret; and | ||
(ii) | LGS has the right to enter into this Agreement. |
11.2 | If compliance, by ARM, with LGS designs, specifications or instructions, or use, by ARM, of Intellectual Property received from LGS or LGS agent, results in ARM being subject to a claim for infringement of any Intellectual Property of a third party, LGS, at its option and expense, may; |
(i) | obtain for ARM the right to continue to use the LGS Deliverables; | ||
(ii) | replace or modify the LGS Deliverables so that they become non-infringing; or | ||
(iii) | offer reasonable compensation to ARM for the direct loss suffered by ARM up to a maximum of all sums paid by LGS to ARM under this Agreement. |
11.3 | The foregoing states the entire liability of LGS for infringement by the Intellectual Property in the LGS Deliverables, of third party Intellectual Property. | |
12. | Limitation of Liability | |
12.1 | IN NO EVENT SHALL EITHER PARTY BE LIABLE UNDER THE AGREEMENT FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHETHER SUCH DAMAGES ARE ALLEGED AS A RESULT OF TORTIOUS CONDUCT OR BREACH OF CONTRACT OR OTHERWISE EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SUCH DAMAGES SHALL INCLUDE BUT SHALL NOT BE LIMITED TO THE COST OF REMOVAL AND REINSTALLATION OF GOODS, LOSS OF GOODWILL, LOSS OF PROFITS, LOSS OR USE OF DATA, INTERRUPTION OF BUSINESS OR OTHER ECONOMIC LOSS BUT NOTHING IN THIS CLAUSE SHALL OPERATE TO EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM EITHER PARTYS NEGLIGENCE. | |
12.2 | EACH PARTYS LIABILITY FOR THE AGGREGATE OF ALL CLAIMS IN ANY WAY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED THE SUM OF ALL FEES PAID TO ARM BY LGS UNDER THE PROVISIONS OF THIS AGREEMENT. | |
13. | Term and Termination | |
13.1 | This Agreement shall commence on the Effective Date and shall continue in force until termination in accordance with the provisions of Clause 13.2. | |
13.2 | Without prejudice to any other right or remedy which may be available to it and except as provided to the contrary elsewhere in this Agreement, either party shall be entitled summarily to terminate this Agreement by giving written notice to the other; |
(i) | If the other party has committed a material breach of any of its obligations hereunder which is not capable of remedy; or |
16
(ii) | if the other party has committed a material breach of any of its obligations hereunder which is capable of remedy but which has not been remedied within a period of thirty (30) days following receipt of written notice to do so; or | ||
(iii) | if the other party makes any voluntary arrangement with its creditors or becomes subject to an administration order; or | ||
(iv) | if the other party has an order made against it, or passes a resolution, for its winding-up (except for the purpose of bona fide solvent amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over a material part of its property or assets. |
13.3 | LGS and ARM acknowledge that each and every term and condition of this Agreement has been fully and completely negotiated and such terms and conditions closely related to each other. In the event that the Korean Governmental authorities, including the Korean Fair Trade Commission, during the review of this Agreement require a modification to one or more of the clauses of this Agreement, ARM shall have the option to renegotiate the entire Agreement or accept the applicable modification of the Agreement as required by such governmental authorities. | |
14. | Effect of Termination | |
14.1 | Upon termination of this Agreement by ARM In accordance with the provisions of Clause 13.2, the license and rights granted by ARM to LGS hereunder shall terminate. LGS shall, at ARMs option, either destroy or return to ARM any Confidential Information, including any copies thereof and any ARM Deliverables in LGSs possession. Within one month after termination of this Agreement in accordance with this Clause 14.1, LGS will furnish to ARM a certificate signed by a duly authorised officer of LGS that to the best of his or her knowledge, information and belief, LGS has complied with provisions of this Clause. | |
14.2 | Upon termination of this Agreement, by LGS under the provisions of Clause 13.2; (i) the rights granted to LGS under Clause 8 (except the licence granted under Clause 8.4) shall survive such termination; (ii) LGS shall be entitled to retain any ARM Deliverables delivered by ARM to LGS prior to such termination; and (iii) ARM shall deliver any then partially completed ARM Deliverables to LGS. The licence granted under Clause 8.4 shall survive only in respect of any semiconductor product which is already under development by LGS at the date of termination under the provisions of this Clause and the survival of such licence shall be subject to a continuing obligation for LGS to pay the appropriate fee in the event that such product is the subject of a Design Win Event. | |
14.3 | The provisions of Clauses 1, 5 (to the extent that any payment has accrued and is outstanding) 8, 9, 10, 11, 12, 13, 14 and Schedule 12 shall survive termination of this Agreement. |
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15. | General |
Notices
|
All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out in this Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of this Clause. Any such notice may be delivered personally, by commercial overnight courier, or facsimile transmission which shall be followed by a hard copy and shall be deemed to have been served if by hand when delivered, if by commercial overnight courier 48 hours after deposit with such courier, and it by facsimile transmission when transmitted. | |
|
||
Assignment
|
Neither party shall assign or otherwise transfer this Agreement or any of its rights and obligations hereunder whether in whole or in part without the prior written consent of the other, such consent not to be unreasonably withheld. | |
|
||
Non-association
|
ARM and LGS are independent parties. Neither partys company nor their employees, consultants, contractors or agents, are agents, employees or joint venturers of the other party, nor do they have the authority to bind the other party by contract or otherwise to any obligation. Neither party shall represent to the contrary, either expressly, or implicitly. | |
|
||
Waiver
|
Failure by either party to enforce any provision of this Agreement shall not be deemed a waiver of the right to enforce that or any other provision in the future. | |
|
||
Force Majeure
|
ARM shall not be liable to LGS for any delay in or failure to perform its obligations under this Agreement as a result of any cause beyond ARMs reasonable control, including but not limited to any industrial dispute or failure by a supplier to deliver a relevant deliverable to ARM on time. If such delay continues for a period of more than ninety (90) days, then either party shall be entitled to terminate this Agreement by written notice and the provisions of Clause 14.2 shall apply. | |
|
||
Entire Agreement
|
These terms and conditions apply in preference to and supersede any terms and conditions referred to, offered or relied upon by LGS whether in negotiation or at any stage in the dealings between ARM and LGS with reference to this Agreement. Without prejudice to the generality of the foregoing, ARM will not be bound by any standard or printed terms and conditions furnished by LGS in any of its documents. No amendment to, or modification of, this Agreement shall be binding unless in writing and signed by a duly authorised representative of both parties. | |
|
||
Severance
|
If any provision of this contract is held invalid, illegal or unenforceable for any reason by any court of competent jurisdiction such provision shall be severed and the remainder of the provisions shall continue in full force and effect as if this Agreement had been executed with the invalid provisions eliminated. In the event of a holding of invalidity so fundamental as to prevent the accomplishment of the purpose of this Agreement, ARM and LGS shall immediately commence good faith negotiations to remedy such invalidity. | |
|
||
English Law
|
This Agreement shall be considered as a contract made in England and according to English Law. In the event that ARM commences proceedings against LGS under this Agreement, the parties agree to submit to the jurisdiction of the Seoul District Court, Korea, for the purpose of hearing and determining |
18
|
any disputes arising out of this Agreement. In the event that LGS commence proceedings against ARM under this Agreement, the parties agree to submit to the jurisdiction of the High Court of Justice, London, England, for the purpose of hearing and determining any disputes arising out of this Agreement. |
ADVANCED RISC MACHINES LIMITED | LG SEMICON CO., LIMITED | |||||||||
|
||||||||||
BY:
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/s/ R.K.Saxby | BY: | /s/ B. D. Sun | |||||||
|
||||||||||
NAME:
|
R.K.Saxby | NAME: | Sun Byung-Don | |||||||
TITLE:
|
President & Ceo | TITLE: | Executive Vice President |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
|
This Technology Licence Agreement (the Agreement) is made the 5th day of October 1995 | |
|
||
|
BETWEEN | |
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||
|
ADVANCED RISC MACHINES LIMITED whose registered office is situated at Fulbourn Road, Cherry Hinton, Cambridge CB1 4JN, England ( ARM ) | |
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||
|
and. | |
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||
|
LG SEMICON COMPANY LIMITED whose principal place of business is situated at 16 Woomyeon-dong, Seocho-gu, Seoul 137-140, Korea (LGS) | |
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||
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WHEREAS | |
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||
|
ARM is the owner of certain Intellectual Property, Intellectual Property Derivatives and the know-how to manufacture the ARM Cores, AMBA and the Peripherals as such terms are defined below. | |
|
||
|
LGS has requested ARM, and ARM has agreed, to license LGS to manufacture and distribute certain ARM products and thereby to make use of certain portions of the Intellectual Property and Intellectual Property Derivatives as set forth in this Agreement. | |
|
||
|
Therefore, in consideration of the mutual representations, warranties, covenants, and other terms and conditions contained herein, the parties agree as follows: | |
|
||
1.
|
Definitions | |
|
||
1.1
|
ARM Compliant Product shall mean any single silicon chip developed by LGS which: | |
|
||
|
(i) contains, at a minimum, an ARM Core or Modified ARM Core; and | |
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||
|
(ii) implements an ARM Core or Modified ARM Core which has been verified in accordance with the provisions of Clause 3. | |
|
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1.2
|
ARM7 Core shall mean the device as described and identified in the ARM7 datasheet: | |
|
ARM DDI-0020C. | |
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1.3
|
ARM7l0a Core shall mean the device as described and identified in the ARM710a Macrocell datasheet: ARM DDI 0033C. | |
|
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1.4
|
ARM Core(s) shall mean, jointly and severally where the context admits, the ARM7 and ARM710a Cores. | |
|
||
1.5
|
ARM Instruction Set shall mean the instruction set as defined in the ARM7 datasheet | |
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||
1.6
|
Authorized Distributor shall mean those distributors appointed, in writing, by LGS. | |
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1.7
|
Confidential Information shall mean: (i) any trade secrets relating to the ARM Cores and Transfer Materials (ii) any information designated in writing by either party as confidential which if disclosed verbally is reduced to writing within thirty (30) days after its oral disclosure; and (iii) the terms and conditions of this Agreement | |
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Page 1
1.8
|
Effective Date shall mean the date of this Agreement or the date upon which the Korean Government gives approval to this Agreement, whichever is the later, subject always to the provisions of Clause 18.4. | |
|
||
1.9
|
End User Licence shall mean a licence agreement substantially conforming to that agreement set forth in Schedule 9. | |
|
||
1.10
|
Half Year shall mean each calendar half year ending the 30th June and 31st December of any year. | |
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1.11
|
HP shall mean any Hewlett Packard compatible computer running HP-UX v9.0.3 (and later versions as may be mutually agreed). | |
|
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1.12
|
IBM PC shall mean any computer, 486 (or above) processor based IBM AT architecture, having, at a minimum, 16Mb RAM, 10Mb hard disc space and running Microsoft DOS v6.2 (and later versions as may be mutually agreed) and, where appropriate, Microsoft Windows v3.11, Windows 95 or Windows NT. ARM will use reasonable endeavours, in collaboration with LGS, to ensure the Software operates on reputable IBM PC compatible computers provided that such operation is not constrained by significant hardware or software deficiencies. | |
|
||
1.13
|
Intellectual Property shall mean any patents, patent rights, trade marks, service marks, registered designs, topography or semiconductor maskwork rights, applications for any of the foregoing, copyright, know-how, unregistered design right, confidential information, any Intellectual Property Derivatives, and any other similar protected rights in any country, which are taken into use in the design, use or production of ARM Cores, AMBA, Peripherals, Software or Transfer Materials. | |
|
||
1.14
|
Intellectual Property Derivatives shall include: (i) for copyrightable or copyrighted material, any translation, abridgement, revision or other form in which an existing work may be recast, transformed or adapted; (ii) for work protected by topography or mask right, any translation, abridgement, revision or other form in which an existing work may be recast, transformed or adapted; (iii) for patentable or patented material, any improvement created by ARM; and (iv) for material protected by trade secret any new material derived from or employing such existing trade secret. | |
|
||
1.15
|
LG Affiliate shall mean each of the companies set forth in Schedule 13. | |
|
||
1.16
|
LG Group Company shall mean each of the companies identified in Schedule 10. | |
|
||
1.17
|
LGS Users shall mean LGS (or any LG Group Company) when incorporating an ARM Compliant Product, distributed pursuant to this Agreement, for use in LGSs (or such LG Group Companys) end user products. | |
|
||
1.18
|
LGS Materials shall mean such of the Transfer Materials (or any additional materials) as are necessary to enable ARM, in respect of any Modified ARM Core and modified Peripheral, to exercise the rights set forth in Clause 2.3. | |
|
||
1.19
|
Models shall mean the source code and object code of the programs described in Schedule 4 together with such Updates, if any, as are developed by or for ARM. | |
|
||
1.20
|
Modified ARM Core shall mean any ARM Core modified in accordance with the provisions of Clause 2.2. | |
|
||
1.21
|
NSP shall mean the net sales price of any ARM Compliant Product calculated by taking the aggregate invoice price charged on arms length terms by LGS and its Subsidiaries in the sale or distribution of any ARM Compliant Product, less any (i) value added, turnover, import, or other tax, duty or tariff payable thereon (ii) freight and insurance costs incurred |
Page 2
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and (iii) amounts actually repaid or credited with respect to any ARM Compliant Products returned. | |
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||
|
In the event that ARM, in its discretion, considers that the NSP for any ARM Compliant Product charged to LGS Users is materially below the open market value for such ARM Compliant Product, the NSP shall be deemed to be: in the case of the sale or distribution of any ARM Compliant Product to LGS Users, the net sales price for such ARM Compliant Product sold by LGS to third parties; and in the case of the sale or distribution of ARM Compliant Products manufactured for, and supplied solely to, LGS Users, at a minimum, the sum of: | |
|
||
|
(i) the cost of materials and the cost of fabrication or such other processing of such ARM Compliant Product; and | |
|
||
|
(ii) an amount for general expenses and profit equal to that usually reflected in the sales to third parties of products of the same general class or kind as the ARM Compliant Product; and | |
|
||
|
(iii) the cost of all packaging. | |
|
||
1.22
|
Peripherals shall mean the macrocells designs as each are described and identified in Schedule 2. | |
|
||
1.23
|
PIE Card shall mean the device identified in the ARM7 PIE Card User Guide: ARM DUI - 0011B together with the Release Notes for the ARM710a PIE Card Kit. | |
|
||
1.24
|
Software shall mean together the Models, Tools and Test. | |
|
||
1.25
|
Subsidiary shall mean any company the majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by a party hereto or any company a majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by any of the aforementioned entities. A company shall be considered a Subsidiary only so long as such control exists. | |
|
||
1.26
|
Sun/SPARC shall mean any Sun/SPARC compatible computer running SunOS v4.1.3_ul (and later versions as may be mutually agreed). | |
|
||
1.27
|
Test shall mean the source code and object code of the programs described in Schedule 6 together with such Updates, if any, as are developed by or for ARM. | |
|
||
1.28
|
Tools shall mean the Sun/SPARC, IBM PC and HP versions of source code and object code of the programs described in Schedule 5 together with such Updates, if any, as are developed by or for ARM. | |
|
||
1.29
|
Trademarks shall mean the trademarks, service marks and logos set forth in Schedule 7. | |
|
||
1.30
|
Transfer Materials shall mean that technical information with respect to the ARM Cores, AMBA and Peripherals as set forth in Schedule 3. | |
|
||
1.31
|
Updates shall mean any bug fixes or enhancements to the Software the incorporation of which ARM, in its absolute discretion, decides does not cause to be created a new product. | |
|
||
1.32
|
Use shall mean copying the programs identified in Schedule 4 and Schedule 5 Part A onto a computer for the purposes of processing the instructions or statements contained therein, but excluding disassembly, reverse assembly, or reverse compiling except as permitted by local legislation implementing Article 6 of the EC Software Directive and only to the extent necessary to achieve interoperability of an independently created program with other |
Page 3
|
programs. Disassembly, reverse assembly, or reverse compiling for the purpose of error correction is specifically prohibited. | |
|
||
1.33
|
Validation Vectors and Functional Test Vectors shall mean those test patterns identified in Schedule 3 as items B7a, B7b, B9, D7a and D7b respectively. | |
|
||
1.34
|
AMBA shall mean ARMs Advanced Module Bus Architecture as identified in the AMBA Draft Specification, document reference ARM IHI-0001C, and any future version thereof released by ARM. | |
|
||
2.
|
Licence |
2.1
|
ARM hereby grants to LGS, under ARMs Intellectual Property rights, a perpetual (subject to Clause 18), non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence to: | |
|
||
|
(i) use, modify (subject to the provisions of Clauses 2.2 and 2.3) and copy the Transfer
Materials and/or any Intellectual Property solely for the purposes of creating,
developing, manufacturing, having manufactured (subject to the provisions of
Clauses 2.4 and 2.5), and selling, supplying and distributing to any third party
(subject to the provisions of Clause 2.6), ARM Compliant Products;
|
|
|
||
|
(ii) use and copy the Transfer Materials and/or any Intellectual Property specific to
AMBA for the purposes of creating, developing, manufacturing, having manufactured
(subject to the provisions of Clauses 2.4 and 2.5), and selling, supplying and
distributing to any third party any product developed by LGS;
|
|
|
||
|
(iii) modify, translate, reproduce and distribute, subject to the confidentiality obligations
set forth in Clause 14, the documentation identified in Schedule 3.
|
|
|
||
2.2
|
LGS may modify: | |
|
||
|
(i) the internal logic of any ARM Core and/or Peripheral;
|
|
|
||
|
(ii) the layout of any ARM Core and/or Peripheral where necessary for the purposes of
manufacturing such ARM Core or Peripheral on another CMOS process;
|
|
|
||
|
(iii) the ARM710a Core (provided that ARM7 Core contained therein shall not be modified except as provided by (i) and (ii) above).
|
|
|
||
|
PROVIDED ALWAYS THAT the ARM7 Core retains compatibility with the ARM Instruction Set. A modified ARM Core will be deemed compatible provided that ARM7 Core contained therein (i) executes each and every instruction contained in the ARM7 Cores Instruction Set; (ii) executes the instructions at an identical rate of clocks per instruction as the ARM7 Core from which it was derived; and (iii) runs the Validation Vectors and Functional Test Vectors. | |
|
||
2.3
|
LGS hereby grants to ARM, in respect of all modifications made to the ARM Cores and Peripherals (Modifications), a perpetual and irrevocable, royalty-free, non-transferable, non-exclusive, world-wide right and licence to manufacture, have manufactured, modify, create derivative works of, use, sell, supply and distribute all Modifications and sub-license others to exercise similar rights with respect to such Modifications. In pursuance of the licence to all Modifications hereby granted, LGS shall: | |
|
||
|
2.3.1
prior to any prototype production of the first ARM Compliant Product including any
Modification, deliver to ARM, in writing, a full technical description of such
proposed Modification; and
|
Page 4
|
2.3.2 within thirty (30) days of the first shipment of the first ARM Compliant Product
including any Modification, deliver to ARM the LGS Materials for such ARM
Compliant Product including the Modification.
|
|
|
||
|
For the avoidance of doubt, nothing in this Clause 2.3 shall be construed as granting to ARM any right or licence to any peripheral devices owned by LGS which are integrated around the ARM Core. | |
|
||
2.4
|
LGS may exercise its right to have manufactured ARM Compliant Products provided that: | |
|
||
|
(i) LGS notifies ARM of the identity of LGSs subcontracted manufacturer
(Manufacturer) not less than thirty (30) days prior to first prototype production by
the Manufacturer, and
|
|
|
||
|
(ii) LGS ensures that any Manufacturer agrees (i) to be bound by the same obligations of
confidentiality as are contained in this Agreement and (ii) to supply the ARM
Compliant Products solely to LGS.
|
|
|
||
|
In the event that any Manufacturer breaches the provisions referred to in Clause 2.4, LGS agrees that such breach shall be treated as a material breach of this Agreement by LGS which is incapable of remedy. Further LGS hereby undertakes to keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. | |
|
||
|
For the avoidance of doubt, in the event that LGS subcontracts only the packaging of ARM Compliant Products to a third party, LGS shall be released from the obligations of this Clause 2.4. | |
|
||
2.5
|
In the event that LGS subcontracts the packaging of ARM Compliant Products, LGS shall | |
|
(i) ensure that the packaging company agrees to supply the ARM Compliant Products
solely to LGS; and
|
|
|
(ii) undertake to keep ARM indemnified against all and any loss, liability, costs,
damages, expenses (including the fees of lawyers and other professionals), suffered,
incurred or sustained as a result of or in relation to the breach of the provisions of
Clause 2.5(i).
|
|
2.6
|
Notwithstanding anything to the contrary contained in this Agreement, for a period of fifteen (15) calendar months from the Effective Date, LGS shall not sell, supply or distribute any ARM Compliant Product to any third party other than a LGS User or ARM and/or its Subsidiaries. In the event that any LG User distributes any ARM Compliant Product, other than either (i) as a constituent part of LGSs (or such LG Group Companys) end user products or (ii) to ARM and/or its Subsidiaries, within the period specified in this Clause 2.6, LGS agrees that such use or distribution shall be treated as a material breach of this Agreement by LGS which is incapable of remedy thus entitling ARM to summarily terminate this Agreement in accordance with the provisions of Clause 18.2. | |
2.7
|
For the avoidance of doubt, no right is granted to LGS to: | |
|
(i) sublicense the rights licensed to LGS pursuant to Clause 2.1;
|
|
|
(ii) distribute any ARM Compliant Product prior to verification in accordance with
Clause 3 except that in the event that it is the intention of LGS, and LGS do proceed,
to verify a device in accordance with Clause 3, LGS may distribute (subject always to
the provisions of Clause 2.6) a maximum of one hundred (100) prototype units of
such device without having verified such device.
|
Page 5
Page 6
|
(iv) | reproduce and distribute, and sub-license (provided that the end user agrees to be bound by the End User Licence) the use of the object code of the PIE Card software; |
|
||
|
(v) | reproduce and distribute, in connection with the PIE Card, the documentation relevant thereto. |
|
For the avoidance of doubt, no right or licence is granted to LGS to distribute the PIE Card to third parties for revenue or other consideration. | |
|
||
3.
|
Verification of ARM Compliant Products | |
|
||
3.1
|
LGS shall develop, manufacture and characterize an ARM710a Core test chip (the Test Chip) which complies with the test chip specification set forth in Schedule 3 (Item D16). | |
|
||
3.2
|
LGS shall run the Validation Vectors and Functional Test Vectors (together the Vectors), on the Test Chip and deliver to ARM a copy of the log (the Log Results) generated by running the Vectors together with five (5) samples of the applicable Test Chip. ARM may, at ARMs discretion, exercise the right to run the Vectors on the Test Chip. The ARM Core shall be verified for a that process upon ARMs acceptance of either the Log Results (i) delivered by LGS or (ii) generated by ARM. The Log Results shall be accepted when they indicate that no errors have been detected or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties. ARM shall notify LGS, in writing, within thirty (30) days of delivery by LGS of the Log Results and Test Chip samples to ARM (the Verification Period), whether the Test Chip has been verified or has failed the verification process. In the event that the Test Chip fails the verification process, ARM shall provide details of the errors which cause the failure to LGS and LGS shall endeavour to correct the errors with ARMs assistance as provided under the terms of Clause 12. The parties shall repeat the above process until either: (i) the Test Chip is verified; or (ii) LGS withdraws the Test Chip from the verification process. In the event that ARM fails to confirm the result of the verification process within the Verification Period, the Test Chip subject to the verification process shall be deemed verified. | |
|
||
3.3
|
Provided that: (a) the Test Chip has been verified in accordance with the provisions of Clause 3.2; and (b) the ARM Compliant Product containing the ARM Core contained in the Test Chip runs the Functional Test Vectors and they indicate that no errors have been detected (or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties); except as hereafter provided, LGS may distribute such ARM Compliant Product without further verification. However, in the event that LGS modifies the internal logic of the ARM7 Core or ports any ARM Core to a new process LGS shall not be entitled to distribute any such modified or ported ARM Compliant Product until: |
|
(i) | in respect of an ARM Compliant Product containing the ARM710a Core, a Test Chip has been verified in accordance with the provisions of Clause 3.2; or |
|
||
|
(ii) | in respect of an ARM Compliant Product containing the ARM7 Core (other than an ARM Compliant Product as specified in Clause 3.3(i)), an ARM7 test chip, which complies with the test chip specification set forth in Schedule 3 (Item B12), has been verified, mutatis mutandis, in accordance with the provisions of Clause 3.2. |
|
||
3.4
|
LGS shall provide to ARM, free of charge, fifty (50) samples of each Test Chip manufactured by LGS on each process utilized for such manufacture so that ARM, at its option, may, inter alia, test the compatibility of each Test Chip with the ARM Instruction Set. For the avoidance of doubt, there shall be no restriction on ARMs use of such samples provided that ARM shall not reverse engineer such Test Chips. |
Page 7
4.
|
Models Licence | |
|
||
4.1
|
ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence under the ARMs Intellectual Property rights, to: | |
|
||
|
(i) reproduce, modify and use, internally and for third party support purposes, the Models and relevant documentation; | |
|
||
|
(ii) reproduce and distribute, and sub-license (provided that the end user agrees to be bound by the End User Licence) the Use of the object code of the Models including any modified versions thereof; | |
|
||
|
(iii) modify, reproduce, use and distribute, in connection with the Models including any modified versions thereof, the documentation (including any modified documentation) relevant thereto; | |
|
||
|
(iv) sub-license the distribution rights granted to LGS under Clauses 4.1(ii) and (iii) to Authorized Distributors only. | |
|
||
4.2
|
For the avoidance of doubt, except as provided by Clause 4.1(iv), no right is granted to LGS to sub-license the right to sell, supply or otherwise distribute the Models. | |
|
||
5.
|
Tools Licence | |
|
||
5.1
|
ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence under the ARMs Intellectual Property rights, to: | |
|
||
-
|
(i) reproduce and use the Tools and relevant documentation, internally and for third party support purposes; | |
|
||
|
(ii) modify the Tools solely for the purpose of providing Hangul language support and incorporating any LGS logo; | |
|
||
|
(iii) reproduce and distribute, and sub-license (provided that the end user agrees to be bound by the End User Licence) the Use of the object code of the Tools identified in Schedule 5 Part A (including the Tools modified in accordance with Clause 5.l(ii)); | |
|
||
|
(iv) reproduce and distribute, and sub-license (provided that the end user agrees to be bound by the End User Licence) the use of the Tools identified in Schedule 5 Part B (including the Tools modified in accordance with Clause 5.1 (ii)); | |
|
||
|
(v) modify, reproduce, use and distribute the Tools documentation (including any modified Tools documentation); | |
|
||
|
(vi) sub-license the distribution rights granted to LGS under Clauses 5.1(iii) (v) to Authorized Distributors only. | |
|
||
5.2
|
For the avoidance of doubt, except as provided by Clause 5.1(vi), no right is granted to LGS to sub-license the right to sell, supply or otherwise distribute the Tools. | |
|
||
6.
|
Test Licence | |
|
||
6.1
|
ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), non-exclusive, world-wide right and licence under the ARMs Intellectual Property rights, to reproduce, modify, have modified, and use internally only, the Test and relevant Test documentation (including modified Test and modified Test documentation). |
Page 8
6.2
|
For the avoidance of doubt, no right is granted to LGS to sell, supply or otherwise distribute the Test. | |
|
||
7.
|
Ownership of the Software | |
|
||
7.1
|
In no event shall the licence grants set forth in Clauses 4.1, 5.1 and 6.1 be construed as granting LGS, expressly or by implication, estoppel or otherwise, a licence under any ARM technology other than the Software and related documentation. | |
|
||
7.2
|
Except as licensed to LGS in Clauses 4.1, 5.1 and 6.1 all right, title and interest in and to the Software and related documentation shall remain vested in ARM. | |
|
||
7.3
|
LGS shall reproduce and not remove or obscure any notice incorporated in the Software or related documentation by ARM to protect ARMs Intellectual Property Rights or to acknowledge the copyright and/or contribution of any third party developer. LGS shall incorporate corresponding notices and/or such other markings and notifications as ARM may reasonably require on all copies of Software and related documentation used or distributed by LGS. | |
|
||
8.
|
Trademark Licence | |
|
||
8.1
|
ARM hereby grants to LGS a non-transferable (subject to Clause 20.3), non-exclusive, royalty-free, world-wide right and licence under ARMs Intellectual Property rights, to use the Trademarks in the promotion and sale of ARM Compliant Products. | |
|
||
8.2
|
LGS shall use the Trademarks, in accordance with ARMs guidelines set forth in Schedule 7 (the Guidelines), on (i) all ARM Compliant Products sold or distributed by LGS and (ii) all documentation, promotional materials and software associated with such ARM Compliant Products. ARM shall have the right to revise Schedule 7 and the Guidelines (including the right to add further trademarks or modify the Trademarks) provided that such revisions are made in respect of the Guidelines issued to all licencees of the Trademarks. Any such revisions shall be effective, upon ninety (90) days written notice to LGS. | |
|
||
8.3
|
LGS shall be released from the provisions of Clause 8.2 in the case of any ARM Compliant Product, created or developed by LGS, solely for a specific customer of LGS PROVIDED THAT (a) the customer has notified LGS, in writing, that the customer wishes the ARM Compliant Product packaging not to bear any Trademark and (b) the ARM Compliant Product does not bear the LGS name or trademark. | |
|
||
8.4
|
LGS shall submit samples of documentation, packaging, and promotional or advertizing materials bearing the Trademarks to ARM from time to time in order that ARM may verify compliance with the Guidelines. In the event that any documentation, packaging, promotional or advertizing material fails to comply with the Guidelines, ARM shall notify LGS and LGS shall rectify such documentation, packaging, and promotional or advertizing materials so as to comply with the Guidelines and cease using any such non-compliant materials within thirty (30) days of the date of ARMs notice. Any documentation, packaging, and promotional or advertizing materials not rejected for failing to comply with the Guidelines by ARM within thirty (30) days after delivery to ARM shall be deemed approved. | |
|
||
8.5
|
LGS agrees to assist ARM in maintaining the validity of the Trademarks by retaining a record of its use of the Trademarks. Such records shall include samples of the use of each of the Trademarks as well as information regarding the first use of the Trademarks in each country. Upon request, LGS shall make available all such records. |
Page 9
8.6
|
Upon ARMs request, LGS shall provide, free of charge, samples of the use of the Trademarks for the purpose of trademark registration or renewal. LGS shall support ARM in the application and maintenance of any registration for the Trademarks in the name of ARM. Upon request, LGS shall execute any documents required by the applicable laws of any jurisdiction for the purpose of registering and/or maintaining the Trademarks. In the event that LGS fails to timely execute any such documents, LGS hereby irrevocably appoints ARM as its attorney with respect to such matters. Any and all registrations for the Trademarks shall be procured by and for ARM, at ARMs expense. | |
|
||
8.7
|
Except as provided by the terms of this Agreement, LGS shall not use or register any trademark, service mark, device or logo, any of the Trademarks or any word or mark confusingly similar to any of the Trademarks, in any jurisdiction. | |
|
||
9.
|
Licence Fees and Royalties | |
|
||
9.1
|
LGS shall pay a non-refundable licence fee (the Technology Licence Fee) of [*****] upon the terms set forth in Clause 9.1(i), together with for each ARM Compliant Product sold, supplied or distributed by LGS (including as permitted by this Agreement, any Subsidiary and/or LG Affiliate), an additional royalty (Running Royalty) upon the terms set forth in Clause 9.1(ii). | |
|
||
|
(i) The Technology Licence Fee shall be paid by instalments as follows: | |
|
||
|
On the Effective Date
[*****]
|
|
|
||
|
On delivery of the design databases for the ARM Cores
[*****]
|
|
|
||
|
On acceptance of the Test Chip (as defined in
Clause 10.4) [*****]
|
|
|
||
|
(ii) The Running Royalty for each ARM Compliant Product shall be determined by
reference to the NSP of such ARM Compliant Product and the total number of ARM
Compliant Product chips sold or distributed by LGS (including as permitted by this
Agreement, any Subsidiary and/or LG Affiliate) in accordance with the following
table:
|
|
|
Cumulative Volume | Running Royalty as %age of NSP | |
[*****]
[*****] [*****] |
[*****]
[*****] [*****] |
|
For the avoidance of doubt, in no event shall the Technology Licence Fee be construed as being an advance payment of Running Royalties and no right of set off of Running Royalties against the Technology Licence Fee shall exist. | |
|
||
9.2
|
Running Royalties due to ARM under this Agreement shall be paid in accordance with the terms set forth in Schedule 8. | |
|
||
9.3
|
After a period of ten (10) years from the first commercial shipment of the first manufactured ARM Compliant Product (the Initial Period), LGS shall be entitled to either (i) require ARM to enter into good faith negotiations to revise the Running Royalty rates for the remainder of the term of this Agreement or (ii) require ARM to enter into good faith negotiations to agree a sum payable by LGS to ARM in lieu of the Running Royalties which would otherwise fall due in accordance with the provisions of Clauses 9.1. LGS shall exercise its rights under this Clause 9.3 upon written notice to ARM, referring to this Clause |
Page 10
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
|
9.3, served not less that six (6) months prior to the expiry of the Initial Period. For the avoidance of doubt, in the event that: | |
|
||
|
(i) LGS fails to serve any notice in accordance with the provisions of Clause 9.3, the rights set forth in Clause 9.3 shall lapse; or | |
|
||
|
(ii) the parties fail to reach agreement prior to the expiry of the Initial Period and LGS does not terminate this Agreement, LGS shall continue to pay the Running Royalties at the rates specified in Clause 9.1(ii). | |
|
||
9.4
|
LGS shall keep all records of account as are necessary to demonstrate compliance with its obligations under this Clause 9. | |
|
||
9.5
|
ARM shall have the right for representatives of a firm of independent Chartered Accountants to which LGS shall not unreasonably object (Auditors), to make an examination and audit, by prior appointment during normal business hours, not more frequently than once annually, of all records and accounts as may under recognized accounting practices contain information bearing upon (i) the number of chips and the NSP of ARM Compliant Products sold or distributed by LGS under this Agreement and (ii) the amounts of Running Royalties payable to ARM under this Clause 9. The Auditors will report to ARM only upon whether the Running Royalties paid to ARM by LGS were or were not correct, and if incorrect, what are the correct amounts for the Running Royalties. LGS shall be supplied with a copy of or sufficient extracts from any report prepared by the Auditors. The Auditors report shall (in the absence of clerical or manifest error) be final and binding on the parties. Such audit shall be at ARMs expense unless it reveals an underpayment of Running Royalties of five per cent (5%) or more, in which case LGS shall reimburse ARM for the costs of such audit LGS shall make good any underpayment of royalties forthwith. If the audit identifies that LGS has made an overpayment, such overpayment will be credited to the next such payment or payments to be made by LGS. | |
|
||
9.6
|
In consideration of the payment by LGS of the Technology Licence Fee, ARM shall provide the support and maintenance services for a period of two (2) years from the Effective Date. In the event that LGS requests that ARM continue to provide the support and maintenance services after the expiration of the initial two (2) year period, the annual support and maintenance fees payable in respect of any such subsequent year shall be determined by good faith negotiations between the parties. However, ARM shall be under no obligation to provide the support and maintenance services, in respect of any subsequent year, until the annual support and maintenance fees have been agreed and paid to ARM. | |
|
||
9.7
|
Any income or other tax which LGS is required by law to pay or withhold on behalf of ARM with respect to any licence fees and/or royalties payable to ARM under this Agreement shall be deducted from the amount of such licence fees and/or royalties otherwise due, provided, however, that in regard to any such deduction, LGS shall give to ARM such assistance as may be necessary to enable or assist ARM to claim exemption therefrom, or credit therefor, and shall upon request furnish to ARM such certificates and other evidence of deduction and payment thereof as ARM may properly require. | |
|
||
9.8
|
LGS shall pay all instalments of the Technology Licence Fee due to ARM under the terms of this Agreement within thirty (30) days of receipt of ARMs invoice therefor (the Due Date). The Due Date in respect of the payment of Running Royalties shall be forty five (45) days from the end of each Half Year. | |
|
||
9.9
|
If any sum under this Agreement is not paid by the Due Date, then (without prejudice to ARMs other rights and remedies) ARM reserves the right to charge interest on such sum on a day to day basis (as well after as before any judgment) from the Due Date to the date of payment at the rate of five (5) per cent per annum above the base rate of Barclays Bank PLC from time to time in force. |
Page 11
10.
|
Delivery, Acceptance and Production Costs | |
|
||
10.1
|
The database tapes in respect of the ARM Cores delivered to LGS shall conform to the LGS 0.6um ASIC Design Rules (Rev 1.1) dated February 1995 using three layers of metal. | |
|
||
10.2
|
ARM shall deliver the Transfer Materials and Software in accordance with the delivery schedule set forth in Schedule 11. | |
|
||
10.3
|
Unless otherwise agreed in writing, delivery: |
|
(i) | by LGS, shall take place at Advanced RISC Machines Limited, Fulbourn Road, Cherry Hinton, Cambridge CB1 4JN, England marked for the attention of the Engineering Director; |
|
||
|
(ii) | by ARM, shall take place at 16 Woomyeon-dong, Seocho-gu, Seoul 137-140, Korea marked for the attention of Mr Hag-Keun Kim. |
10.4
|
For the purposes of Clause 9.1(i): |
|
(i) | LGS shall use best efforts to manufacture (or have manufactured) the Test Chip and comply with the provisions of Clause 10.4(ii). |
|
||
|
(ii) | LGS shall run the Vectors on the Test Chip and forthwith deliver to ARM a copy of the log results generated by running the Vectors, together with five (5) samples of the Test Chip. The Test Chip shall be deemed accepted when the log results indicate that no errors have been detected or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties. |
|
||
|
However, in the event that: | |
|
||
|
(a) | LGS fails to manufacture the Test Chip within nine (9) months of delivery of the ARM710a Core design database, LGS shall pay to ARM the third instalment of the Technology Licence Fee irrespective of the provisions of Clause 9. l(i); or |
|
||
|
(b) | due to a LGS manufacturing fault, the Test Chip does not pass the Vectors within nine (9) months of delivery of the ARM710a Core design database, LGS shall pay to ARM the third instalment of the Technology Licence Fee irrespective of the provisions of Clause 9.1(i). |
Page 12
ARM: | LGS: | |
For
legal notices:
|
||
|
||
David N MacKay
|
Jong-Taek Hong | |
Director of Legal Affairs
|
General Manager Legal Affairs Department | |
Advanced RISC Machines Limited
|
LG Semicon Co Limited | |
Fulbourn Road
|
891 Daechi-dong | |
Cherry Hinton
|
Kangnarm-ku | |
Cambridge
|
Seoul | |
CB14JN
|
Korea | |
England
|
||
|
||
For
corporate issues:
|
||
|
||
James S Urquhart
|
Dr Min-Sung Choi | |
Sales Director
|
Managing Director | |
Advanced RISC Machines Limited
|
LG Semicon Co Limited | |
Fulbourn Road
|
16 Woomyeon-dong | |
Cherry Hinton
|
Seocho-gu | |
Cambridge
|
Seoul | |
CB14JN
|
137-140 | |
England
|
Korea | |
|
||
For
Confidential Information:
|
||
|
||
Peter King
|
Dr Min-Sung Choi | |
Partner Support Manager
|
Managing Director | |
At the address set forth above
|
At the address set forth above | |
|
||
For
financial issues:
|
||
|
||
John Martyn
|
Dr Min-Sung Choi | |
Financial Controller
|
Managing Director | |
At the address set forth above
|
At the address set forth above | |
|
||
For
applications support:
|
||
|
||
Peter King
|
Hag-Keun Kim | |
Partner Support Manager
|
Department Manager Multimedia Device #2 | |
At the address set forth above
|
At the address set forth above | |
|
||
For software support:
|
||
|
||
Peter King
|
Hag-Keun Kim | |
Partner Support Manager
|
Department Manager Multimedia Device #2 | |
At the address set forth above
|
At the address set forth above | |
|
||
For
design transfer:
|
||
|
||
Tudor Brown
|
Hag-Keun Kim | |
Engineering Director
|
Department Manager Multimedia Device #2 |
Page13
At the address set forth above
|
At the address set forth above |
11.2
|
The contract administrators identified herein are appointed by the parties for the receipt and dispatch on their behalf of all communications relating to the administrators above designated areas of responsibility. The contract administrators shall also be responsible for the good progress of the parties performance under this Agreement and the timely resolution of all technical, administrative and commercial issues which may arise from time to time during the execution of this Agreement. | |
|
||
11.3
|
Each party reserves the right to change its appointment as above upon seven (7) days written notice to the other partys then current corresponding liaison. | |
|
||
12.
|
Macrocell Maintenance Services | |
|
||
12.1
|
ARM shall provide to LGS, in respect of the ARM Cores, AMBA and Peripherals (the Macrocells), through the parties applicable contract administrator, the following maintenance services; |
Page 14
12.5
|
For the avoidance of doubt, ARMs obligation under this Clause 12 is limited expressly to the provision of the maintenance services to LGS and ARM shall be under no obligation to provide the maintenance services to LGSs customers. | |
|
||
13.
|
Software Maintenance Services | |
|
||
13.1
|
ARM shall provide to LGS, in respect of the Software, through the parties applicable contract administrator, the following maintenance services: | |
|
||
|
(i) to correct, to the extent reasonably possible, any defects in the Software which cause
the Software not to operate in accordance with the description of the Softwares
function in the applicable documentation. If ARM determines that such defects are
due to errors in such description, ARM shall promptly issue corrections to the
documentation and shall not be required to alter the Software provided that LGS is
not thereby prevented from commercially exploiting the Software.
|
|
|
||
|
(ii) to provide reasonable telephone and written consultation pertaining to the operation
and application of the Software.
|
|
|
||
|
(iii) to provide as available Updates to the Software.
|
|
|
||
13.2
|
In notifying ARM of any defects or problems LGS shall use a format reasonably requested by ARM. LGS shall provide ARM promptly with any information or assistance reasonably requested by ARM to enable ARM to provide the maintenance service hereunder. | |
|
||
13.3
|
For the avoidance of doubt, ARMS obligation under this Clause 13 is limited expressly to the provision of the Software maintenance services to LGS and ARM shall be under no obligation to provide the maintenance services to LGSs sub-licensees of the Software. | |
|
||
14.
|
Confidentiality | |
|
||
14.1
|
Save as provided by Clause 14.2, each party shall maintain in confidence the Confidential Information disclosed by the other party and apply security measures no less stringent than the measures that such party applies to protect its own like information, but not less than a reasonable degree of care, to prevent unauthorized disclosure and use of the Confidential Information. The period of confidentiality shall be (i) indefinite with respect to the terms of this Agreement, pattern generation tapes and photomasks and (ii) twenty (20) years with respect to all other information. | |
|
||
14.2
|
In the event that either party qualifies the confidentiality of any Confidential Information in writing by marking such Confidential Information with the words Limited Confidentiality, such Confidential Information may be disclosed to a third party who has entered into a non disclosure agreement (NDA) with the recipient containing substantially similar terms to this Clause 14. A NDA in respect of the disclosure of business Confidential Information may be limited in duration to a period of not less than three (3) years from the date of disclosure. A NDA in respect of the disclosure of technical Confidential Information may be limited in duration to a period of not less than five (5) years from the date of disclosure. | |
|
||
14.3
|
The provisions of this clause shall not apply to information which:- | |
|
||
|
(i) is known and has been reduced to tangible form by the receiving party prior to
disclosure by the other party; or
|
|
|
||
|
(ii) is, or becomes through no fault of the receiving party, generally known; or
|
Page 15
|
(iii) is disclosed to the receiving party by a third party having the lawful right to make
such disclosure; or
|
|
|
||
|
(iv) is independently conceived by the receiving party provided that the receiving party is
able to provide evidence of such independent conception in the form of written
records; or
|
|
|
||
|
(v) is released to the receiving party for disclosure to any third party, other than on a
confidential basis, by the disclosing party in writing; or
|
|
|
||
|
(vi) as required by any court or other governmental body.
|
|
|
||
14.4
|
For the avoidance of doubt, LGS Royalty Reports may be disclosed to, in confidence, ARMs financial and/or legal advisors. In addition, ARM may disclose the total unit sales of ARM Compliant Products. | |
|
||
14.5
|
The parties agree that the disclosure of Confidential Information to a party hereunder shall be co-ordinated through the appointed contract administrators identified for such purpose in Clause 11.1. | |
|
||
15.
|
Warranties | |
|
||
15.1
|
ARM warrants that the materials delivered to LGS will be sufficient for a competent semiconductor manufacturer to produce the ARM Cores, AMBA and Peripherals which meet the functionality specified in the applicable documentation. LGSs sole and exclusive remedy for any breach of such warranty shall be for ARM to correct any errors in the materials and deliver such corrected materials to LGS or replace the materials at ARMs discretion. | |
|
||
15.2
|
LGS acknowledges that the Software cannot be tested in every possible operation, and accordingly ARM does not warrant that the Software will be free from all defects or that there will be no interruption in its use. However, ARM warrants that the Software will be complete and comply with the description of its functionality specified in the documentation. LGSs sole and exclusive remedy for any breach of such warranty shall be for ARM, as soon as is reasonably practicable, to correct any errors in the Software and deliver such corrected Software to LGS. | |
|
||
15.3
|
ARM further warrants that to ARMs knowledge and belief, but expressly without having undertaken any searches for prior art, that: | |
|
||
|
(i) the ARM Cores, AMBA, Peripherals and Software do not infringe any third party
copyright, maskwork right or trade secret; and
|
|
|
||
|
(ii) there are no pending claims that have been made, or actions commenced, against
ARM for breach of any third party copyright, maskwork right, patent or trade secret;
and
|
|
|
||
|
(iii) ARM, or its applicable licensor, is the owner of the properties to be delivered to LGS;
and
|
|
|
||
|
(iv) ARM has the right to enter into the Agreement.
|
|
|
||
15.4
|
Except as expressly provided in this Agreement, the ARM Cores, AMBA, Peripherals Software, Intellectual Property, and Transfer Materials are licensed as is and ARM makes no warranties express, implied or statutory, including, without limitation, the implied warranties of merchantability or fitness for a particular purpose with respect to the ARM Cores, AMBA, Peripherals Software, Intellectual Property and Transfer Materials. |
Page 16
15.5
|
LGS warrants that LGS shall: |
|
(i) | submit this Agreement for approval by the Korean Government forthwith upon signature by the parties; and |
|
||
|
(ii) | use all reasonable endeavours to obtain all or any tax exemption or tax credits applicable to the technology licensed and monies payable under this Agreement. |
16.
|
Infringement | |
|
||
16.1
|
Each party (the Delivering Party) will support the other party (the Receiving Party) in any action based on a claim that the materials delivered by the Delivering Party to the Receiving Party under this Agreement (the Delivered Materials), when used in accordance with this Agreement, infringe any patent, copyright or trade secret provided that the Receiving Party shall notify the Delivering Party promptly in writing of each such suit. However, a party shall not be obliged to support the other party in any action based upon an infringement or alleged infringement of any patent, copyright, trade secret, mask work, trademark or other property right by: (a) the Receiving Partys manufacturing process; (b) any modification of the Delivered Materials not made by the Delivering Party; or (c) the use of the Delivered Materials in combination with other equipment, technology or software not purchased or licensed from the Delivering Party, provided that such claim would not have occurred but for such combination, modification or enhancement. | |
|
||
16.2
|
The Receiving Party will support the Delivering Party in any action based on a claim that (a) the process used by or on behalf of the Receiving Party in manufacturing products incorporating, embodying or based upon the Delivered Materials, (b) any modification of the Delivered Materials made by or on behalf of the Receiving Party, or (c) the use of the Delivered Materials in combination with other equipment, software or technology not purchased or licensed from the Delivering Party, provided that such claim would not have occurred but for such combination, modification or enhancement, has infringed any patent, copyright or trade secret provided that the Delivering Party shall notify the Receiving Party promptly in writing of such suits. | |
|
||
16.3
|
If any Delivered Materials provided to LGS by ARM, or any portion thereof, is finally adjudged to infringe a patent or copyright, ARM shall, at ARMs election, use its reasonable efforts to: (a) procure the right to continue using the unmodified Delivered Materials; (b) modify the Delivered Materials so that they become non-infringing; (c) replace the unmodified Delivered Materials, or infringing portions thereof, with reasonably equivalent non-infringing products; or (d) pay compensatory damages to LGS, subject to the limitations of Clause 16.6. The provisions of this Clause 16.3 do not extend to any suit based upon an infringement or alleged infringement of any patent, copyright, trade secret, mask work, trademark or other property right by: (a) the LGS manufacturing process; (b) any modification of the Delivered Materials not made by ARM; or (c) the use of the Delivered Materials in combination with other equipment, technology or software not purchased or licensed from ARM, provided that such claim would not have occurred but for such combination, modification or enhancement | |
|
||
16.4
|
If any Delivered Materials provided to ARM by LGS, or any portion thereof, is finally adjudged to infringe a patent or copyright, LGS shall, at LGSs election, use its reasonable efforts to: (a) procure the right to continue using the unmodified Delivered Materials; (b) modify the Delivered Materials so that they become non-infringing; (c) replace the unmodified Delivered Materials, or infringing portions thereof, with reasonably equivalent non-infringing products; or (d) pay compensatory damages to ARM subject to the limitations of Clause 16.6. The provisions of this Clause 16.4 do not extend to any suit based upon an infringement or alleged infringement of any patent, copyright, trade secret, mask work, trademark or other property right by any modification of the Delivered Materials not made by LGS. |
Page 17
16.5
|
In the event that there is a final adjudication of infringement, the liability of the Delivering Party for such infringement shall terminate with respect to all damages regarding the infringing intellectual property arising after the date of such final adjudication. | |
|
||
16.6
|
THE FOREGOING STATES THE ENTIRE LIABILITY OF THE PARTIES, AND THE EXCLUSIVE REMEDY FOR THE PARTIES, FOR ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, TRADEMARK, TRADE SECRET, MASK WORK OR OTHER PROPRIETARY RIGHT OF A THIRD PARTY. ARM AND LGS DISCLAIM ALL OTHER LIABILITY FOR ANY SUCH INFRINGEMENT, INCLUDING ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE FOR ANY AMOUNTS IN EXCESS OF THE SUM OF FOUR HUNDRED AND SEVENTY FIVE THOUSAND US DOLLARS (US$475,000) IN THE AGGREGATE FOR ALL PAYMENTS, ROYALTIES OR FEES MADE PURSUANT TO ALL CLAIMS IN ANY WAY ARISING OUT OF OR IN CONNECTION WITH THE PROVISIONS OF THIS CLAUSE 16. | |
|
||
17.
|
Disclaimer of Consequential Damages | |
|
||
17.1
|
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHETHER SUCH DAMAGES ARE ALLEGED AS A RESULT OF TORTIOUS CONDUCT OR BREACH OF CONTRACT OR OTHERWISE EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SUCH DAMAGES SHALL INCLUDE BUT SHALL NOT BE LIMITED TO THE COST OF REMOVAL AND REINSTALLATION OF GOODS, LOSS OF GOODWILL, LOSS OF PROFITS, LOSS OF USE OF DATA, INTERRUPTION OF BUSINESS OR OTHER ECONOMIC LOSS BUT NOTHING IN THIS CLAUSE SHALL OPERATE TO EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM EITHER PARTYS NEGLIGENCE. | |
|
||
18.
|
Term and Termination | |
|
||
18.1
|
This Agreement shall commence on the Effective Date and continue in force, except as provided by Clause 18.3, unless and until terminated in accordance with the provisions of Clause 18.2. | |
|
||
18.2
|
Without prejudice to any other right or remedy which may be available to it, either party shall be entitled summarily to terminate this Agreement by giving written notice to the other: |
|
(i) | if the other party has committed a material breach of any of its obligations hereunder which is not capable of remedy; or |
|
||
|
(ii) | if the other party has committed a material breach of any of its obligations hereunder which is capable of remedy but which has not been remedied within a period of sixty (60) days following receipt of written notice to do so; or |
|
||
|
(iii) | makes any voluntary arrangement with its creditors for the settlement of its debts or becomes subject to an administration order; or |
|
||
|
(iv) | has an order made against it, or passes a resolution, for its winding-up (except for the purposes of amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over all or substantially all of its property or assets. |
Page 18
18.3
|
After a period of seven (7) years from the Effective Date (the Initial Period), the licence set forth in Clause 5 shall expire automatically whereupon LGS shall have no further right or licence in respect of the Tools. However, LGS may renew the licence granted under the provisions of Clause 5, subject to the provisions of Clauses 18.3(i) and (ii), for a farther term of seven (7) years upon payment of a Renewal Fee. |
|
(i) | LGS may exercise its rights to renew, as provided by this Clause 18.3, provided that LGS gives to ARM not less than six (6) months notice in writing of its intention to so renew, expiring on the seventh anniversary of the Effective Date. |
|
||
|
(ii) | Upon receipt of LGSs notice served in accordance with Clause 18.3(i), the parties shall enter into good faith negotiations to agree a reasonable Renewal Fee. For the avoidance of doubt, LGS shall not be entitled to exercise any of the rights contained in Clause 5 unless and until agreement has been reached and the Renewal Fee has been paid to ARM. |
18.4
|
LGS and ARM acknowledge that each and every term and condition of this Agreement has been fully and completely negotiated and such terms and conditions closely relate to each other. In the event that the Korean governmental authorities, including the Korean Fair Trade Commission, during the review of this Agreement require a modification to one or more of the clauses of this Agreement, ARM shall have the option to renegotiate the entire Agreement or accept the applicable modification of the Agreement as required by such governmental authorities. | |
|
||
19.
|
Effect of Termination | |
|
||
19.1
|
Upon termination of this Agreement by either party pursuant to Clause 18.2, LGS will immediately discontinue any use and distribution of all ARM Compliant Products, Software, Intellectual Property, Transfer Materials and ARM Confidential Information. LGS shall, at ARMs option, either destroy or return to ARM any Confidential Information, including any copies thereof in its possession, together with the Transfer Materials and all copies of the Software in its possession. Within one month after termination of this Agreement LGS will furnish to ARM a certificate signed by a duly authorised officer of LGS that to the best of his or her knowledge, information and belief, after due enquiry, LGS has complied with provisions of this Clause. For the avoidance of doubt, any sub-licences of the Software granted by LGS prior to the termination of this Agreement shall survive such termination. | |
|
||
19.2
|
Upon termination of this Agreement the termination date shall be treated as the end of a Half Year for the purposes of accounting for all Running Royalties due to ARM. Thereafter LGS shall submit a royalty report to ARM in accordance with the provisions of Schedule 8. | |
|
||
19.3
|
The provisions of Clauses 2.3, 9, 14, 16, 17, 19, and 20 shall survive termination or expiration of this Agreement. | |
|
||
20.
|
General | |
|
||
20.1
|
All communications between the parties including, but not limited to, notices, royalty reports, error or bug reports, the exercise of options, and support requests shall be in the English language. | |
|
||
20.2
|
All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out in this Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of this Clause. Any such notice may be delivered personally, by commercial overnight courier or facsimile transmission which shall be followed by a hard copy and shall be deemed to have been |
Page 19
|
served if by hand when delivered, if by commercial overnight courier 48 hours after deposit with such courier, and if by facsimile transmission when dispatched. | |
|
||
20.3
|
Neither party shall assign or otherwise transfer this Agreement or any of its rights and obligations hereunder whether in whole or in part without the prior written consent of the other. | |
|
||
20.4
|
Neither party shall be liable for any failure or delay in its performance under this Agreement due to causes, including, but not limited to, acts of God, acts of civil or military authority, fires, epidemics, floods, earthquakes, riots, wars, sabotage, third party industrial disputes and governments actions, which are beyond its reasonable control; provided that the delayed party: (i) gives the other party written notice of such cause promptly, and in any event within fourteen (14) days of discovery thereof; and (ii) uses its reasonable efforts to correct such failure or delay in its performance. The delayed partys time for performance or cure under this Clause 20.4 shall be extended for a period equal to the duration of the cause. | |
|
||
20.5
|
ARM and LGS are independent parties. Neither company nor their employees, consultants, contractors or agents, are agents, employees or joint venturers of the other party, nor do they have the authority to bind the other party by contract or otherwise to any obligation. Neither party will represent to the contrary, either expressly, implicitly, by appearance or otherwise. | |
|
||
20.6
|
The parties agree that the terms and conditions of this Agreement shall be treated as Confidential Information hereunder and shall not be disclosed without the consent of both parties. | |
|
||
20.7
|
Failure by either party to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that or any other provision. | |
|
||
20.8
|
If any provision of this Agreement, or portion thereof, is determined to be invalid or unenforceable the same will be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of this Agreement will continue in full force and effect. | |
|
||
20.9
|
The headings to the Clauses of this Agreement are for ease of reference only and shall not affect the interpretation or construction of this Agreement. | |
|
||
20.10
|
This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument. | |
|
||
20.11
|
This Agreement, including all Schedules and documents referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior or contemporaneous understandings or agreements, written or oral, regarding the subject matter. No amendment to, or modification of, this Agreement shall be binding unless in writing and signed by a duly authorized representative of both parties. | |
|
||
20.12
|
This Agreement shall be governed by and construed in accordance with the laws of England. In the event that ARM commences proceedings against LGS under this Agreement, the parties agree to submit to the jurisdiction of the Seoul District Court, Korea, for the purpose of hearing and determining any disputes arising out of this Agreement. In the event that LGS commences proceedings against ARM under this Agreement, the parties agree to submit to the jurisdiction of the High Court of Justice, London, England, for the purpose of hearing and determining any disputes arising out of this Agreement. |
Page 20
ADVANCED RISC MACHINES LIMITED: | LG SEMICON COMPANY LIMITED: | |||||||
SIGNED:
|
/s/ R. K Sayby | SIGNED: | /s/ Chung Hwan Mun | |||||
|
||||||||
NAME:
|
ROBIN K. SAYBY | NAME: | CHUNG HWAN MUN | |||||
TITLE:
|
PRESIDENT | TITLE: | PRESIDENT |
Page 21
1 of 18
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
1.10 | Confidential Information means; (i) any trade secrets relating to the ARM Secure Core and the ARM Transfer Materials; (ii) any information designated in writing by either party, by appropriate legend, as confidential; (iii) any information which if first disclosed orally is identified as confidential at the time of disclosure and is thereafter reduced to writing for confirmation and sent to the other party within thirty (30) days after its oral disclosure and designated, by appropriate legend, as confidential; and (iv) the terms and conditions of this Agreement. | |
1.11 | Core Self Test Programs means the programs identified in Schedule 1 Part K Item K1. | |
1.12 | Documentation means the documentation identified in Schedule 2 Part A. | |
1.13 | Effective Date means the date of this Agreement, subject always to the provisions of Clause 15.13. | |
1.14 | End User License means a license agreement substantially in the form set out in Schedule 6. | |
1.15 | Implementation Guide means the documentation identified in Schedule 1 Part B. | |
1.16 | Intellectual Property means any patents, patent rights, trade marks, service marks, registered designs, topography or semiconductor maskwork rights, applications for any of the foregoing, copyright, unregistered design right, trade secrets and know-how and any other similar protected rights in any country. | |
1.17 | LICENSEEs Synthesis Timing Constraints File means such timing constraints file as the LICENSEE shall finalise prior to final synthesis. | |
1.18 | Microarchitecture Compliant Core means an implementation of an ARM Secure Core manufactured under licence from ARM and which; |
(i) | executes each and every instruction in the ARMv4T Instruction Sets; | ||
(ii) | executes no additional instructions to those contained in the ARMv4T Instruction Sets; | ||
(iii) | exhibits a Pipeline Length of 3; | ||
(iv) | exhibits a Von Neumann Architecture; | ||
(v) | is Single Issue or Multiple Issue, as appropriate for the respective ARM Secure Core as identified in the relevant Technical Reference Manual; | ||
(vi) | implements the programmers model as identified in the ARM Architecture Reference Manual; | ||
(vii) | passes the respective Synthesizable Functional Test Vectors; and | ||
(viii) | has been verified in accordance with the provisions of Clause 3. |
1.19 | MME Macrocell means the MME hardware accelerator specified in the MME Technical Reference manual SC043-TRM-0001-A. | |
1.20 | MME Synthesizable RTL means the deliverables identified in Schedule 2 Part B Section 1. | |
1.21 | MME Synthesis Scripts means the deliverables identified in Schedule 2 Part B Section 2. | |
1.22 | MME Synthesizable Source means together; (i) the MME Synthesizable RTL; and (ii) the MME Synthesis Scripts. |
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1.23 | MME Transfer Materials means together (i) the MME Synthesizable Source ; (ii) the MME Validation Suite; (iii) the Documentation; (iv) the Software, together with any Updates thereto delivered to LICENSEE by ARM from time to time; and (iv) any relevant supplemental documentation released by ARM to licensees from time to time. | |
1.24 | NSP means the net sales price of any ARM Secure Core Based Product calculated by taking the aggregate invoice price charged on arms length terms by LICENSEE and its Subsidiaries in the sale or distribution of any ARM Secure Core Based Product, less any; (i) value added, turnover, import, or other tax, duty or tariff payable thereon; (ii) freight, insurance costs incurred; and (iii) amounts actually repaid or credited with respect to any ARM Secure Core Based Products returned. | |
1.25 | MME Validation Suite means the deliverables identified in Schedule 2 Part C. | |
1.26 | Packaging means the materials used to encapsulate the silicon of an ARM Secure Core Based Product. | |
1.27 | Pipeline Length means the number of clocked stages through which each single-cycle instruction must pass to complete the execution of such instruction. | |
1.28 | Single Issue means that only one instruction is issued for execution within the integer unit in any single clock cycle (where for the purposes of this definition clock means the clock that advances the pipeline). | |
1.29 | Software means the example support software for the MME Macrocell as identified in Schedule 2 Part D, together with any Updates thereto delivered to LICENSEE by ARM from time to time. | |
1.30 | Subsidiary means any company the majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by a party hereto or any company a majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by any of the aforementioned entities. The company shall be considered a Subsidiary only so long as such control exists. | |
1.31 | Synthesizable Functional Test Vectors means the synthesizable functional test vectors identified in Schedule 1 Part D. | |
1.32 | Synthesis Reference Deliverables means the deliverables identified in Schedule 1 Part C Section 3. | |
1.33 | Synthesisable RTL means the deliverables identified in Schedule 1 Part C Section 1. | |
1.34 | Synthesis Scripts means the deliverables identified in Schedule 1 Part C Section 2. | |
1.35 | Technical Reference Manual means the technical reference manual identified in Schedule 1 Part A. | |
1.36 | Trademarks means the trademarks identified in Schedule 3. | |
1.37 | Updates means any enhancements and modifications including but not limited to any error corrections to the ARM Transfer Materials including any documentation associated therewith, designed by, or for ARM, the incorporation of which ARM, in its absolute discretion, decides does not cause a new product to be created. |
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1.38 | Unique ARM Secure Core Based Product means a device manufactured by or for LICENSEE and which has a unique part number; except that a device shall not be a Unique ARM Secure Core Based Product if the device has a different part number for any or all of the following reasons; |
(i) | because it is an optically shrunk version of an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product; | ||
(ii) | because it is a version of an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has been ported to a different set of process design rules; | ||
(iii) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has a different on chip memory size; | ||
(iv) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has a different on chip memory content; | ||
(v) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has a different on chip memory type; | ||
(vi) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that incorporates a bug fix (to conform to original specification for the Unique ARM Secure Core Based Product); and | ||
(vii) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that incorporates a different revision of the ARM Transfer Materials delivered by ARM to LICENSEE from time to time. |
1.39 | Von Neumann Architecture means a microprocessor architecture which dictates that the instruction stream for the integer unit shares the same port with the data stream for such integer unit. | |
2. | Licence | |
2.1 | Subject to the provisions of Clause 9 (Confidentiality) and the payment of appropriate fees in accordance with the provisions of Clause 5, ARM hereby grants to LICENSEE, under ARMs Intellectual Property, a non-transferable (subject to Clause 15.3), non-exclusive, perpetual (subject to termination in accordance with the provisions of Clause 13) world-wide licence, to; |
(i) | use and copy the AVS and the MME Validation Suite only for the purposes of designing ARM Secure Core Based Products; | ||
modify the MME testbench in Verilog identified as Item C1 in Schedule 2 Part C; | |||
(ii) | use, copy and modify the Core Self Test Programs only for the purposes of designing ARM Secure Core Based Products; | ||
(iii) | use and copy; (a) the Implementation Guide; and (b) the Synthesisable Reference Deliverables, only for the purposes of designing ARM Secure Core Based Products; |
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modify the SC100 Core Verilog GTECH Synthesis Command Files identified as Item C3 in Schedule 1 Part C Section 3; | |||
(iv) | use, copy and modify (solely to the extent necessary to run the following deliverables on LICENSEEs tester or simulator) the Synthesizable Functional Test Vectors, only for the purposes of designing ARM Secure Core Based Products; | ||
(v) | use, copy and modify (only for the purpose of substituting functional blocks in the Synthesizable RTL with functionally equivalent LICENSEE or LICENSEEs customers functional blocks); (i) the Synthesizable RTL; and (ii) the MME Synthesizable RTL, only for the purposes of designing ARM Secure Core Based Products; | ||
(vi) | use, copy and modify; (i) the Synthesis Scripts; and (ii) the MME Synthesis Scripts, only for the purposes of designing ARM Secure Core Based Products; | ||
(vii) | manufacture and have manufactured (subject to the provisions of Clause 2.2) the ARM Secure Core Based Products created under the licences granted in Clauses 2.1(i) to 2.1(vi) inclusive; | ||
(viii) | sell, supply and distribute ARM Secure Core Based Products manufactured under the licences granted in Clause 2.1(vii) to any third party and authorise Authorised Distributors to do the same; | ||
(ix) | test and have tested (subject to the provisions of Clause 2.3) the ARM Secure Core Based Products manufactured under the licences granted in Clause 2.1(vii); |
(x) | use, copy, modify and distribute (solely to LICENSEEs customers of ARM Secure Core Based Products and subject to the terms of a confidentiality agreement no less restrictive than those contained in this Agreement) the Technical Reference Manual only for the purposes of designing ARM Secure Core Based Products; | ||
(xi) | use, copy, modify and distribute (solely to LICENSEEs customers of ARM Secure Core Based Products and subject to the terms of a confidentiality agreement no less restrictive than those contained in this Agreement) the Documentation only for the purposes of designing ARM Secure Core Based Products; |
(xii) | use, copy and modify the Software; and | ||
(xiii) | distribute the Software in source code or binary code form solely in conjunction with ARM Secure Core Based Products. |
2.2 | Subject to the provisions of Clause 9 (Confidentiality), LICENSEE may exercise its right to have ARM Secure Core Based Products manufactured by a third party manufacturer ( Manufacturer ) in accordance with the provisions of Clause 2.1 solely to manufacture ARM Secure Core Based Products for LICENSEE provided that; (a) LICENSEE agrees not to grant to the Manufacturer any license in respect of any ARM Transfer Materials for any other purpose; and (b) that each Manufacturer agrees; |
(i) | to be bound by obligations of confidentiality no less restrictive than those contained in this Agreement; |
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(ii) | to supply units of the ARM Secure Core Based Product solely to LICENSEE; and |
(iii) | to return any ARM Confidential Information and ARM Transfer Materials to LICENSEE on the earlier of; (a) the completion of the manufacture; and (b) the expiration of the confidentiality period for each ARM Transfer Material in accordance with the provisions of Clause 9. |
If any Manufacturer breaches the provisions of any of Clauses 2.2(i) to 2.2(iii), LICENSEE agrees that such breach shall be treated as a material breach of this Agreement by LICENSEE which shall entitle ARM to terminate this Agreement in accordance with the provisions of Clause 13.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. |
2.3 | Subject to the provisions of Clause 9 (Confidentiality), LICENSEE may exercise its right to have ARM Secure Core Based Products tested by a third party ( Test House ) in accordance with the provisions of Clause 2.1 provided that the Test House agrees; |
(i) | to be bound by obligations of confidentiality no less restrictive than those contained in this Agreement; and | ||
(ii) | to supply units of the tested ARM Secure Core Based Products solely to LICENSEE; and | ||
(iii) | to return any ARM Confidential Information and ARM Transfer Materials to LICENSEE on the earlier of; (a) the completion of the test; and (b) the expiration of the confidentiality period for each ARM Transfer Material in accordance with the provisions of Clause 9. |
If any Test House breaches the provisions of Clauses 2.3(i) to 2.3(iii), LICENSEE agrees that such breach shall be treated as a material breach of this Agreement by LICENSEE which shall entitle ARM to terminate this Agreement in accordance with the provisions of Clause 13.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. |
2.4 | On receipt of a request from LICENSEE, ARM may on a case by case basis grant LICENSEE the right to have ARM Secure Core Based Products designed by a designer subcontracted by LICENSEE ( Designer ) provided that each Designer agrees; |
(i) | to be bound by obligations of confidentiality no less restrictive than those contained in this Agreement; and |
(ii) | to supply units of the tested ARM Secure Core Based Products solely to LICENSEE; and |
(iii) | to return any ARM Confidential Information and ARM Transfer Materials to LICENSEE on the earlier of; (a) the completion of the design; and (b) the end of the confidentiality period for each ARM Transfer Material in accordance with the provisions of Clause 9. |
If any Designer breaches the provisions of Clauses 2.4(i) to 2.4(iii), LICENSEE agrees that such breach shall be treated as a material breach of this Agreement by LICENSEE which shall entitle ARM to terminate this Agreement in accordance with the provisions of Clause 13.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), |
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suffered, incurred or sustained as a result of or in relation to such breach. The parties shall agree for each Designer which of the ARM Transfer Materials can be delivered to such Designer. |
2.5 | No right is granted to LICENSEE to; |
(i) | except as expressly granted in Clauses 2.1, sub-license any of the rights licensed to LICENSEE under Clause 2.1; or |
(ii) | distribute any ARM Secure Core Based Product prior to verification in accordance with Clause 3, except that if it is the intention of LICENSEE, and LICENSEE does proceed, to verify a device in accordance with Clause 3.1 and 3.2, LICENSEE may distribute, in aggregate, up to two thousand (2000) prototype units of such device without having such devices verified provided that LICENSEE provides written evidence to ARM that; (a) the recipient of such devices is aware that such device has not passed the verification process by ARM; and (b) the recipient has agreed to keep the recipients use of the non verified device as confidential. |
2.6 | Except as specifically licensed in Clause 2.1, LICENSEE acquires no right, title or interest in the ARM Secure Cores, ARM Transfer Materials or any of ARMs Intellectual Property embodied therein. In no event shall the license grant set out in Clause 2.1 be construed as granting LICENSEE, expressly or by implication, estoppel or otherwise, a license to use any ARM technology except the ARM Transfer Materials and Software. LICENSEE shall reproduce and not remove or obscure any notice incorporated in the ARM Transfer Materials by ARM to protect ARMs Intellectual Property or to acknowledge the copyright and/or contribution of any third party designer. LICENSEE shall incorporate corresponding notices and/or such other markings and notifications as ARM may reasonably require on all copies of the ARM Transfer Materials used or distributed by LICENSEE. |
2.7 | For the continuance of this Agreement, LICENSEE may exercise the right to include any Subsidiary as a licensee under the terms of this Agreement provided that; |
(i) | such Subsidiary agrees in writing, as set out in Schedule 10 to be bound by the obligations of LICENSEE and to comply with all the terms and conditions of this Agreement; | ||
(ii) | any breach of the terms and conditions of this Agreement by a Subsidiary shall constitute a breach of this Agreement by LICENSEE; and | ||
(iii) | any termination of this Agreement in accordance with the provisions of Clause 13 shall be effective in respect of all Subsidiaries. |
3. | Verification | |
3.1 | For each ARM Secure Core implementation which is used in the manufacture of ARM Secure Core Based Products for sale and distribution by LICENSEE in accordance with the terms of this Agreement, LICENSEE shall in the course of generating such implementation use the ARM Transfer Materials to generate a netlist (each a Synthesized Netlist ) which includes back-annotated delays derived from the physical layout of the Synthesized Netlist. | |
3.2 | LICENSEE shall simulate the AVS on each Synthesized Netlist (defined in Clause 3.1). | |
3.3 | LICENSEE shall deliver to ARM a copy of the log results generated by running the AVS on each respective Synthesized Netlist (the Synthesized Log Results for each Synthesized Netlist). Prior to delivery of such Synthesized Log Results LICENSEE shall give ARM as much advance |
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warning as practicably possible of LICENSEEs proposed delivery of such Synthesized Log Results. | ||
3.4 | Each Synthesized Netlist shall be verified for a particular process upon ARMs acceptance of the Synthesized Log Results delivered by LICENSEE. | |
3.5 | The Synthesized Log Results shall be accepted when they indicate that no errors have been detected or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties. | |
3.6 | ARM shall notify LICENSEE, in writing, within fifteen (15) days of delivery by LICENSEE of the Synthesized Log Results ( Synthesis Verification Period ), whether the Synthesized Log Results have been accepted by ARM or have failed the in verification process. In the event that ARM fails to confirm the result of the verification process within the Synthesis Verification Period, the Synthesized Log Results shall be deemed accepted by ARM. In the event that the Synthesized Log Results fail the verification process, ARM shall provide details of the errors which cause the failure to LICENSEE and LICENSEE shall endeavour to correct the errors. The parties shall repeat the above process until either; (i) the Synthesized Log Results are accepted; or (ii) LICENSEE withdraws the Synthesized Log Results from the verification process. | |
4. | Trademark License | |
4.1 | ARM hereby grants to LICENSEE a non-transferrable (subject to Clause 15.3), non-exclusive, world-wide licence to use the Trademarks in the promotion and sale of ARM Secure Core Based Products. | |
4.2 | LICENSEE shall use one of the Trademarks, in accordance with ARMs guidelines set forth in Schedule 3 ( Guidelines ), on; (i) all ARM Secure Core Based Products sold or distributed by LICENSEE; and (ii) all documentation, promotional materials and software associated with such ARM Secure Core Based Products. ARM shall have the right to revise Schedule 3 and the Guidelines (including the right to add further trademarks or modify the Trademarks) provided that such revisions are made in respect of the Guidelines issued to all licencees of the Trademarks. Any such revisions shall be effective, upon written notice to LICENSEE; (a) for printed material upon ninety (90) days notice; and (b) immediately in respect of products to be manufactured after ninety (90) days from receipt of such notice. | |
4.3 | LICENSEE shall submit samples of all documentation, packaging, and promotional or advertising materials bearing the Trademarks to ARM from time to time as requested by ARM to verify compliance with the Guidelines. LICENSEE shall immediately rectify any documentation, packaging, and promotional or advertising materials so as to comply with the Guidelines and cease using any non-compliant materials. | |
4.4 | LICENSEE agrees to assist ARM in maintaining the validity of the Trademarks by retaining a record of its use of the Trademarks. Such records shall include samples of all uses of the Trademarks for each ARM Secure Core Based Product as well as information regarding the first use of each of the Trademarks in each country. Upon request from ARM, LICENSEE shall make available all such records to ARM. | |
4.5 | Upon ARMs request, LICENSEE shall provide, free of charge, samples of the use of the Trademarks for the purpose of trademark registration. LICENSEE shall support ARM in the application and maintenance of any registration for the Trademarks in the name of ARM. Upon request from ARM, LICENSEE shall execute any required registered user agreements (including any such other documents required by the applicable laws of any jurisdiction) for the Trademarks. In the event that LICENSEE fails to timely execute any such documents, LICENSEE hereby irrevocably appoints ARM as its attorney with respect to such matters. Any and all registrations for the Trademarks shall be procured by and for ARM, at ARMs expense. |
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4.6 | Except as provided by the terms of this Agreement, LICENSEE shall not use or register any trademark, service mark, device or logo or any word or mark confusingly similar to any of the Trademarks, in any jurisdiction. | |
5. | Fees and Royalties | |
5.1 | In consideration of the licenses granted in Clause 2.1 for the ARM Secure Core Transfer Materials, LICENSEE shall pay ARM a fee (each a Core Licence Fee ) for each Unique ARM Secure Core Based Product developed by LICENSEE as set out in and in accordance with Schedule 7 Part A. If within three (3) years after the Effective Date, LICENSEE pays ARM [*****] Core Licence Fees for [*****] Unique ARM Secure Core Based Products, then during the continuance of this Agreement, LICENSEE shall not have any obligation to pay Core Licence Fees for the [*****] Unique ARM Secure Core Based Products. | |
5.2 | In consideration of the licenses granted in Clause 2.1 for the MME Transfer Materials, LICENSEE shall pay, ARM a fee ( MME Licence Fee ) as set out in and in accordance with Schedule 7 Part B. | |
5.3 | In consideration of the licenses granted in Clause 2.1, LICENSEE shall pay to ARM a royalty ( Royalty ), as determined in accordance with the table in Schedule 8, for each unit of ARM Secure Core Based Product sold, supplied or otherwise distributed by LICENSEE. | |
5.4 | In consideration of the ARM Maintenance (defined in Clause 8.1) LICENSEE shall pay, ARM, annual fees (each a Maintenance Fee ) as set out in and in accordance with Schedule 7 Part C. The Maintenance Fees shall be fixed for two (2) years after the Effective Date and thereafter shall be subject to re-negotiation between the parties. | |
5.5 | In consideration of the ARM Support (defined in Clause 8.2) LICENSEE shall pay, ARM, annual fees (each a Support Fee ) as set out in and in accordance with Schedule 7 Part D. The Support Fees shall be fixed for two (2) years after the Effective Date and thereafter shall be subject to re-negotiation between the parties. | |
5.6 | Royalties (defined in Clause 5.3) due to ARM under this Agreement shall be paid in accordance with the terms set out in Schedule 4. | |
5.7 | LICENSEE shall keep all records of account as are necessary to demonstrate compliance with its obligations under this Clause 5 for six (6) years from the date of each royalty report. | |
5.8 | ARM shall have the right for representatives of a firm of independent Chartered Accountants to which LICENSEE shall not unreasonably object ( Auditors ), to make an examination and audit, by appointment made at least thirty (30) days prior to the audit, during normal business hours, not more frequently than once annually, of all records and accounts as may under recognised accounting practices contain information including; (i) the number of units of ARM Secure Core Based Product and the number of cores per ARM Secure Core Based Product, sold or distributed by LICENSEE under this Agreement; and (ii) the amount of Royalties payable to ARM under this Clause 5. The Auditors will report to ARM only upon whether the Royalties paid to ARM by LICENSEE were or were not correct, and if incorrect, what are the correct amounts for the Royalties. LICENSEE shall be supplied with a copy of or sufficient extracts from any preliminary and final report prepared by the Auditors. The Auditors report shall (in the absence of clerical or manifest error) be final and binding on the parties. Such audit shall be at ARMs expense unless it reveals an underpayment of Royalties of five per cent (5%) or more, in which case LICENSEE shall reimburse ARM for the costs of such audit. LICENSEE shall make good any underpayment of Royalties forthwith. If the audit identifies that LICENSEE has made an overpayment of Royalties, such overpayment will be credited with the next such payment or payments to be made by LICENSEE. |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
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5.9 | Any income or other tax which LICENSEE is required by law to pay or withhold on behalf of ARM with respect to any licence fees and/or Royalties payable to ARM under this Agreement shall be deducted from the amount of such licence fees and/or Royalties otherwise due, provided, however, that in regard to any such deduction, LICENSEE shall give such assistance as may be necessary to enable or assist ARM to claim exemption therefrom, or credit therefor, and shall furnish ARM with such certificates and other evidence of deduction and payment thereof as ARM may properly require. | |
5.10 | LICENSEE shall pay all licence fees and Royalties due to ARM under the terms of this Agreement within forty five (45) days of receipt of ARMs original invoice therefor ( Due Date ). | |
5.11 | If any sum under this Agreement is not paid by the Due Date (as defined in Clause 5.10), then (without prejudice to ARMs other rights and remedies) ARM reserves the right to charge interest on such sum on a day to day basis (as well after as before any judgement) from the day after the Due Date to the date of payment at the rate of two and a half (2.5%) per cent per annum above the base rate of The Bank of England from time to time in force. Notwithstanding the foregoing, ARM may waive this requirement, at its sole discretion, in the event that LICENSEE gives ARM advance warning that it has good cause to believe that, for reasons beyond its control, it may be unable to pay any such sum on the Due Date. | |
6. | Delivery and Acceptance | |
6.1 | ARM shall deliver the ARM Transfer Materials to LICENSEE in accordance with the delivery schedule set out in Schedule 9. | |
7. | Contract Management and Administration | |
7.1 | The parties hereby appoint the following individuals as their respective contract administrator between ARM and LICENSEE with respect to this Agreement: |
ARM | LICENSEE | |
|
||
For Legal Notices:
|
For Legal Notices, Corporate Issues, Financial Matters, Confidential Information, Design Transfer and Support | |
|
||
VP and general Counsel
|
Jay Ho Chae | |
ARM Limited
|
Vice President/System IC SBU, SP BU, MCU | |
110 Fulbourn Road
|
Hynix Semiconductor Inc. | |
Cambridge
|
1 Hyangjeong-dong Hungduk-gu | |
CB1 9JN
|
Cheongju-si | |
|
361-725 Korea | |
|
||
For Corporate Issues:
|
||
|
||
Chief Operations Officer
|
||
At the address above
|
||
|
||
For Financial Matters:
|
||
|
||
Financial Controller
|
||
At the address above
|
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For Confidential Information:
|
||
|
||
Manager of Core Licensing
|
||
At the Address above
|
||
|
||
For Design Transfer and Support
|
For Technical Matters | |
|
||
Manager of Core Licensing
|
As above | |
At the Fulbourn Road Address above
|
7.2 | The contract administrators identified herein are appointed by the parties for the receipt and dispatch on their behalf all communications relating to this Agreement. The contract administrators shall also be responsible for the good progress of the parties performance under this Agreement and the timely resolution of all technical, administrative and commercial issues which may arise from time to time during the execution of this Agreement. | |
7.3 | Each party reserves the right to change its appointment as above upon at least seven (7) days prior written notice to the other partys then current corresponding liaison. | |
7.4 | As soon as reasonably possible after the Effective Date, the parties shall mutually agree and publish a press release relating to the contents of this Agreement and the relationship thereby established between the parties. | |
8. | ARM Maintenance and Support | |
8.1 | Subject to LICENSEEs payment of the Maintenance Fees, ARM shall provide to LICENSEE, in respect of the ARM Transfer Materials through the parties contract administrator, with the following services ( ARM Maintenance ); |
(i) | the use of commercially reasonable efforts to correct any defects in the ARM Transfer Materials which cause any of the ARM Transfer Materials not to operate in accordance with the functionality described in the datasheet and/or manual for the ARM Transfer Materials, as appropriate. If ARM determines that such defects are due to errors in such datasheet and/or manual provided by ARM shall promptly issue corrections to the datasheet and/or manual and shall not be required to revise the ARM Materials, provided that use of the ARM Transfer Materials by LICENSEE is not adversely affected thereby; and | ||
(ii) | all Updates to the ARM Transfer Materials. |
8.2 | Subject to LICENSEEs payment of the Support Fees, ARM shall provide to LICENSEE, in respect of the ARM Transfer Materials through the parties contract administrator, with the following services ( ARM Support ); reasonable telephone, e-mail and written consultation pertaining to the operation and application of the ARM Transfer Materials. The ARM Support provided under this Clause 8.2 shall be limited to a total of ten (10) person days per annum. | |
8.3 | LICENSEE agrees to receive ARM Maintenance and ARM Support for the ARM Secure Core and the ARM Transfer Materials for two (2) years after the Effective Date and after such date may |
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request ARM to continue the provision of ARM Maintenance and ARM Support subject to the payment of appropriate fees mutually agreed by the parties. |
8.4 | Upon LICENSEE requesting ARM Maintenance pursuant to Clause 8.1 or ARM Support pursuant to the provisions of Clause 8.2, LICENSEE shall promptly provide ARM with such samples and technical information as ARM may reasonably require to enable ARM to provide such ARM Maintenance or ARM Support, as appropriate. | |
8.5 | For the avoidance of doubt, ARMs obligation under this Clause 8 is limited expressly to the provision of ARM Support only for LICENSEE and ARM shall be under no obligation to provide ARM Support for LICENSEEs customers. | |
8.6 | ARM Maintenance and ARM Support shall be provided from ARMs premises in Cambridge, England. Nevertheless, ARM will use reasonable efforts to provide ARM Maintenance and ARM Support to LICENSEE, at LICENSEEs premises, subject to LICENSEE bearing all reasonable travelling, accommodation and sustenance expenses incurred and agreed in advance in writing with both parties. | |
8.7 | For the avoidance of doubt, ARMs obligation under Clause 8.2 is limited expressly to the provision of ARM Support only for LICENSEE and ARM shall be under no obligation to provide ARM Support for LICENSEEs customers. | |
8.8 | Upon LICENSEE requesting ARM Support pursuant to the provisions of Clause 8, LICENSEE shall promptly provide ARM with such samples and technical information as ARM may reasonably require to enable ARM to provide ARM Support. | |
9. | Confidentiality | |
9.1 | Except as provided by Clause 9.3 and 9.4, each party shall maintain in confidence the Confidential Information disclosed by the other party and apply security measures no less stringent than the measures that such party applies to protect its own Confidential Information, but not less than a reasonable degree of care, to prevent unauthorised disclosure and use of the Confidential Information. The period of confidentiality shall be fifteen (15) years with respect to each partys Confidential Information. | |
9.2 | LICENSEE agrees that it shall not use any of ARMs Confidential Information other than for the purposes of designing, having designed, manufacturing, having manufactured, marketing and distributing ARM Secure Core Based Products whether alone or incorporated in other products and any other activities reasonably necessary in the normal course of business for LICENSEE to sell ARM Secure Core Based Products. ARM agrees that it shall only use LICENSEEs Confidential Information for LICENSEEs purposes. | |
9.3 | Notwithstanding the foregoing; LICENSEE shall have the right to disclose layout derived from the Synthesizable RTL identified in Schedule 1 Part C Section 1 and the MME Synthesisable RTL identified in Schedule 2 Part B Section 1, to a Manufacturer (as defined in Clause 2.2) pursuant to the exercise of the have manufactured rights granted in Clause 2.1 under an NDA with substantially similar terms to this Clause 9 but also including a prohibition on the reverse engineering of the ARM Transfer Materials and/or the derivatives therefrom and except that the confidentiality period for each deliverable shall be at a minimum of ten (10) years from the date of disclosure. | |
9.4 | Notwithstanding the foregoing, LICENSEE shall have the right to disclose the Core Self Test Programs, to a House (as defined in Clause 2.3) pursuant to the exercise of the have tested rights granted in Clause 2.1 under an NDA containing substantially similar terms to this Clause 9, except that the confidentiality period for each deliverable shall be at a minimum of five (5) years from the date of disclosure. |
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9.5 | The provisions of this Clause 9 shall not apply to information which: |
(i) | is known and has been reduced to tangible form by the receiving party prior to disclosure by the other party; or | ||
(ii) | is published or otherwise made available to the public other than by a breach of this Agreement by the receiving party; or | ||
(iii) | is disclosed to the receiving party by a third party without a duty of confidentiality; or | ||
(iv) | is independently conceived by the receiving party provided that the receiving party is able to provide evidence of such independent conception in the form of written records; or | ||
(v) | is released to the receiving party for disclosure to any third party, other than on a confidential basis, by the disclosing party in writing; or | ||
(vi) | is approved for release by the disclosing party; or | ||
(vii) | is released to a third party by the disclosing party without a duty of confidentiality; or | ||
(viii) | is marked (N) in the Schedules of this Agreement. |
9.6 | For the avoidance of doubt, LICENSEE Royalty reports may be disclosed in confidence to ARMs financial and legal advisors. In addition, ARM may disclose the total unit sales of ARM processor based products on an annual basis provided that the unit sales of such ARM Secure Core Based Products by LICENSEE are not separately identifiable or deducible therefrom. | |
10. | Warranties | |
10.1 | Except as expressly provided in this Agreement, the ARM Transfer Materials and Software are supplied as is and ARM makes no representations and gives no warranties express, implied or statutory, including, without limitation, the implied warranties of satisfactory quality or fitness for a particular purpose in respect thereof. | |
10.2 | ARM warrants, to LICENSEE, that; |
(i) | the Intellectual Property in the ARM Transfer Materials does not infringe any third party copyright, design right, registered design right or maskwork right or trade secret; and | ||
(ii) | ARM has the right to enter into this Agreement. |
10.3 | ARM represents and warrants that as of the Effective Date, there are no pending Claims that have been made, or actions commenced, against ARM for breach by the ARM Transfer Materials of any third party Intellectual Property. | |
10.4 | ARM warrants that the ARM Transfer Materials will be consistent and sufficient for a competent semiconductor manufacturer to produce Microarchitecture Compliant Cores, as the case may be, which meet the functionality and performance specified in the applicable Technical Reference Manual. LICENSEEs remedy for any breach of such warranty shall be for ARM, as soon as is reasonably possible, to correct any errors in the appropriate ARM Transfer Materials and deliver such corrected materials to LICENSEE in accordance with the provisions of Clause 8. | |
10.5 | LICENSEE acknowledges that the Software cannot be tested in every possible operation, and accordingly ARM does not warrant that the Software will be free from all defects or that there will be no interruption in their use. However, ARM warrants that the Software will comply with the description of their functionality specified in the related documentation. LICENSEEs remedy for |
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any breach of such warranty shall be for ARM, as soon as is reasonably possible, to correct any errors in the Software and deliver such corrected Software to LICENSEE. | ||
10.6 | ARM shall not be responsible for any recoverable or non-recoverable costs incurred, directly or indirectly, by LICENSEE in the design migration, processing, or manufacture of masks and prototypes, characterization or manufacture of production quality silicon in whatever quantity. | |
11. | Infringement | |
11.1 | LICENSEE shall notify ARM immediately upon learning of any claim which may be made or threatened that the exercise by LICENSEE of the rights hereby licensed constitutes an infringement of the patent, copyright, maskwork right, or trade secret (together Rights ) of a third party and will not take any action in relation to such claim which may be prejudicial to the interests of ARM without the written consent of ARM. | |
11.2 | ARM agrees that it will, at its expense, timely defend any suit instituted against LICENSEE and shall indemnify LICENSEE against any award of damages and costs made against LICENSEE in any such suit insofar as the same is based on a claim that the exercise by LICENSEE of its licensed rights under Clause 2.1, infringes any Right of a third party, provided that LICENSEE gives ARM timely notice in writing of the institution of such suit and permits ARM through ARMs lawyers of choice to defend the same and LICENSEE provides all available information, assistance and authority to so defend. ARM shall have control of the defence of any such suit, including appeals, and of all negotiations for settlement, including the right to effect the settlement or compromise thereof. | |
11.3 | In the event that rights licensed to LICENSEE under Clause 2.1 are, in any suit for infringement of any Right of a third party, held to constitute an infringement, ARM shall, at its option and expense, procure for LICENSEE the right to continue exercising its rights under Clause 2.1, or, to the extent commercially practicable, replace or modify the ARM Transfer Materials, as appropriate, provided that such replacement or modification of the ARM Transfer Materials maintain compatibility, so that the exercise by LICENSEE of its rights under Clause 2.1, does not constitute an infringement. | |
11.4 | ARM shall have no liability under this Clause 11 with respect to any suit or claim to the extent that infringement is due solely to; ARM shall have no liability under this Clause for any infringement arising from; |
(i) | the combination of the ARM Transfer Materials with other products not supplied by ARM if such infringement arises exclusively from such combination; | ||
(ii) | the modification of the ARM Transfer Materials unless the modification was made or approved by ARM if such infringement arises exclusively from modification; | ||
(iii) | any manufacturing process applied to the ARM Transfer Materials by LICENSEE or LICENSEEs agent; or | ||
(iv) | compliance by ARM with the LICENSEE requirement specification where such compliance necessarily lead to such infringement. |
11.5 | LICENSEE agrees that it will, at its expense, timely defend any suit instituted against ARM and shall indemnify ARM against any award of damages and costs made against ARM in any such suit insofar as the same is based on a claim that; (i) the combination of the ARM Transfer Materials with other products not supplied by ARM if such infringement arises exclusively from such combination; (ii) the modification of the ARM Transfer Materials unless the modification was made or approved by ARM if such infringement arises exclusively from modification; (iii) any manufacturing process applied to the ARM Transfer Materials by LICENSEE; or (iv) compliance by ARM with the LICENSEE requirement specification where such compliance necessarily lead |
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to infringement, infringes any Right of a third party, provided that ARM gives LICENSEE timely notice in writing of the institution of such suit and permits LICENSEE through LICENSEEs lawyers of choice to defend the same and ARM provides, at ARMs expense, all available information, assistance and authority to so defend. LICENSEE shall have control of the defence of any such suit, including appeals, and of all negotiations for settlement, including the right to effect the settlement or compromise thereof. Notwithstanding the foregoing, LICENSEE shall not be liable under the indemnification provided in this Clause 11.5 unless it is held in any suit that the infringement has been caused by the wilful action of LICENSEE. | ||
12. | Disclaimer of Consequential Damages and limitation of liability | |
12.1 | IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ITS PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT, OR THE FURNISHING, PERFORMANCE OR USE OF THE ARM SECURE CORE OR ARM TRANSFER MATERIALS LICENSED HEREBY. | |
12.2 | NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, ARM SHALL NOT BE LIABLE FOR ANY AMOUNTS IN EXCESS OF THE TOTAL CORE LICENCE FEES PAID TO ARM PURSUANT TO CLAUSE 5.1 OF THIS AGREEMENT FOR ALL PAYMENTS BY ARM TO LICENSEE MADE PURSUANT TO ALL CLAIMS IN ANY WAY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. | |
12.3 | NOTHING IN THIS CLAUSE SHALL OPERATE TO EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM EITHER PARTYS NEGLIGENCE. | |
12.4 | If the Synthesizable RTL and MME Synthesizable RTL for the ARM Secure Core simulates substantially the functionality described in the Technical Reference Manual, ARM shall not be liable for any loss or damage suffered by LICENSEE as a result of the failure of any ARM Secure Core Based Product to provide security of data processed by the device. If an ARM Secure Core Based Product fails to provide security of data processed by it, ARM shall, subject to the provisions of Clause 12.2, only be liable for any loss or damage suffered by LICENSEE as a result of such failure to the extent that such loss or damage is a direct result of the Synthesizable RTL and MME Synthesizable RTL for the ARM Secure Core failing to simulate substantially the functionality described in the Technical Reference Manual. | |
13. | Term and Termination | |
13.1 | This Agreement shall commence on the Effective Date and shall continue in force unless earlier terminated in accordance with the provisions of Clause 13.2. | |
13.2 | Without prejudice to any other right or remedy which may be available to it, either party shall be entitled summarily to terminate this Agreement forthwith by giving written notice to the other, if the other party: |
(i) | has committed a material breach of any of its obligations hereunder which is not capable of remedy; or | ||
(ii) | has committed a material breach of any of its obligations hereunder which is capable of remedy but which has not been remedied within sixty (60) days following receipt of written notice to do so; or | ||
(iii) | makes any voluntary arrangement with its creditors for the general settlement of its debts or becomes subject to an administration order; or |
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(iv) | has an order made against it, or passes a resolution, for its winding-up (except for the purposes of amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over all or substantially all of its property or assets. |
14. | Effect of Expiry and Termination | |
14.1 | Upon termination of this Agreement by ARM pursuant to Clause 13.2, LICENSEE will immediately discontinue any use and distribution of all ARM Secure Core Based Products, the ARM Secure Core, the ARM Transfer Materials, any Intellectual Property embodied therein, and any ARM Confidential Information. LICENSEE shall, at ARMs option, either destroy or return to ARM any Confidential Information, including any copies thereof in its possession, together with the ARM Transfer Materials in its possession. Within one month after termination of this Agreement LICENSEE will furnish to ARM a certificate signed by a duly authorised representative of LICENSEE that to the best of his or her knowledge, information and belief, after due enquiry, LICENSEE has complied with provisions of this Clause. | |
14.2 | Unless this Agreement is terminated by LICENSEE in accordance with the provisions of Clause 13.2, the licenses granted to LICENSEE under the terms of this Agreement shall survive (subject to the terms and conditions of this Agreement) in the event that either; (i) ARM makes any voluntary arrangement with its creditors for the settlement of its debts or becomes subject to an administration order; or (ii) ARM has an order made against it, or passes a resolution, for its winding-up (except for the purposes of amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over all or substantially all of its property or assets. Notwithstanding anything to the contrary contained elsewhere in this Agreement, if this Agreement is terminated by LICENSEE in accordance with the provisions of Clause 13.2, any and all rights, including, without limitation, all licences granted to LICENSEE hereunder shall survive such termination subject to the terms and conditions of this Agreement including, without limitation, the continued payment of Royalties in accordance with the provisions of Clause 5.3. | |
14.3 | Upon termination the provisions of Clauses 1, 5 (to the extent that any obligation under this Clause remains outstanding) 9, 10, 11, 12, 14 and 15 shall survive termination. | |
15. | General | |
15.1 | All communications between the parties including, but not limited to, notices, royalty reports, error or bug reports, the exercise of options, and support requests shall be in the English language. | |
15.2 | All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out in this Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of this Clause. Any such notice may be delivered personally, by commercial overnight courier or facsimile transmission which shall be followed by a hard copy and shall be deemed to have been served if by hand when delivered, if by commercial overnight courier 48 hours after deposit with such courier, and if by facsimile transmission when dispatched. | |
15.3 | Neither party shall assign or otherwise transfer this Agreement or any of its rights and obligations hereunder whether in whole or in part without the prior written consent of the other provided that such consent shall not be unreasonably withheld. | |
15.4 | Neither party shall be liable for any failure or delay in its performance under this Agreement due to causes, including, but not limited to, acts of God, acts of civil or military authority, fires, epidemics, floods, earthquakes, riots, wars, sabotage, third party industrial disputes and governments actions, which are beyond its reasonable control; provided that the delayed party: (i) gives the other party written notice of such cause promptly, and in any event within fourteen (14) days of discovery thereof; and (ii) uses its reasonable efforts to correct such failure or delay in its |
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performance. The delayed partys time for performance or cure under this Clause 15.4 shall be extended for a period equal to the duration of the cause. | ||
15.5 | ARM and LICENSEE are independent parties. Neither company nor their employees, consultants, contractors or agents, are agents, employees or joint venturers of the other party, nor do they have the authority to bind the other party by contract or otherwise to any obligation. Neither party will represent to the contrary, either expressly, implicitly, by appearance or otherwise. | |
15.6 | The parties agree that the terms and conditions of this Agreement shall be treated as Confidential Information hereunder and shall not be disclosed without the consent of both parties. | |
15.7 | Failure by either party to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that or any other provision. | |
15.8 | If any provision of this Agreement, or portion thereof, is determined to be invalid or unenforceable the same will be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of this Agreement will continue in full force and effect. | |
15.9 | The headings to the Clauses of this Agreement are for ease of reference only and shall not affect the interpretation or construction of this Agreement. | |
15.10 | This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument. | |
15.11 | This Agreement, including all Schedules and documents referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior or contemporaneous understandings or agreements, written or oral, regarding the subject matter. Except in respect of changes to the Trademark Guidelines (defined in Clause 4.2) which may be changed in accordance with the provisions of Clause 4.2, no amendment to, or modification of, this Agreement shall be binding unless in writing and signed by a duly authorized representatives of both parties. | |
15.12 | This Agreement shall be governed by and construed in accordance with the laws of England. In the event that ARM commences proceedings against LICENSEE under this Agreement, the parties agree to submit to the jurisdiction of the Seoul District Court, Korea, for the purpose of hearing and determining any disputes arising out of this Agreement. In the event that LICENSEE commences proceedings against ARM under this Agreement, the parties agree to submit to the jurisdiction of the High Court of Justice, London, England, for the purpose of hearing and determining any disputes arising out of this Agreement. | |
15.13 | LICENSEE and ARM acknowledge that each and every term and condition of this Agreement has been fully and completely negotiated and such terms and conditions closely relate to each other. In the event that the Korean governmental authorities, including the Korean Fair Trade Commission, during the review of this Agreement require a modification to one or more of the clauses of this Agreement, ARM shall have the option to renegotiate the entire Agreement or accept the applicable modification of the Agreement as required by such governmental authorities. | |
15.14 | Subject to the mutual agreement of the authorized executives of the parties, ARM and LICENSEE agree to issue a mutually agreed press release detailing the relationship established and products licensed under this Agreement. |
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[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
1.10 | Confidential Information means; (i) any trade secrets relating to the ARM Secure Core and the ARM Transfer Materials; (ii) any information designated in writing by either party, by appropriate legend, as confidential; (iii) any information which if first disclosed orally is identified as confidential at the time of disclosure and is thereafter reduced to writing for confirmation and sent to the other party within thirty (30) days after its oral disclosure and d esignated, by appropriate legend, as confidential; and (iv) the terms and conditions of this Agreement. | |
1.11 | Core Self Test Programs means the programs identified in Schedule 1 Part K Item K1. | |
1.12 | Documentation means the documentation identified in Schedule 2 Part A. | |
1.13 | Effective Date means the date of this Agreement, subject always to the provisions of Clause 15.13. | |
1.14 | End User License means a license agreement substantially in the form set out in Schedule 6. | |
1.15 | Implementation Guide means the documentation identified in Schedule 1 Part B. | |
1.16 | Intellectual Property means any patents, patent rights, trade marks, service marks, registered designs, topography or semiconductor maskwork rights, applications for any of the foregoing, copyright, unregistered design right, trade secrets and know-how and any other similar protected rights in any country. | |
1.17 | LICENSEEs Synthesis Timing Constraints File means such timing constraints file as the LICENSEE shall finalise prior to final synthesis. | |
1.18 | Microarchitecture Compliant Core means an implementation of an ARM Secure Core manufactured under licence from ARM and which: |
(i) | executes each and every instruction in the ARMv4T Instruction Sets; | ||
(ii) | executes no additional instructions to those contained in the ARMv4T Instruction Sets; | ||
(iii) | exhibits a Pipeline Length of 3; | ||
(iv) | exhibits a Von Neumann Architecture; | ||
(v) | is Single Issue or Multiple Issue, as appropriate for the respective ARM Secure Core as identified in the relevant Technical Reference Manual; | ||
(vi) | implements the programmers model as identified in the ARM Architecture Reference Manual; | ||
(vii) | passes the respective Synthesizable Functional Test Vectors; and | ||
(viii) | has been verified in accordance with the provisions of Clause 3. |
1.19 | MME Macrocell means the MME hardware accelerator specified in the MME Technical Reference manual SC043-TRM-0001-A. | |
1.20 | MME Synthesizable RTL means the deliverable identified in Schedule 2 Part B Section 1. | |
1.21 | MME Synthesis Scripts means the deliverables identified in Schedule 2 Part B Section 2. | |
1.22 | MME Synthesizable Source means together, (i) the MME Synthesizable RTL; and (ii) the MME Synthesis Scripts. |
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1.23 | MME Transfer Materials means together (i) the MME Synthesizable Source; (ii) the MME Validation Suite; (iii) the Documentation; (iv) the Software, together with any Updates thereto delivered to LICENSEE by ARM from time to time; and (iv) any relevant supplemental documentation released by ARM to licensees from time to time. | |
1.24 | NSP means the net sales price of any ARM Secure Core Based Product calculated by taking the aggregate invoice price charged on arms length terms by LICENSEE and its Subsidiaries in the sale or distribution of any ARM Secure Core Based Product, less any; (i) value added, turnover, import, or other tax, duty or tariff payable thereon; (ii) freight, insurance costs incurred; and (iii) amounts actually repaid or credited with respect to any ARM Secure Core Based Product s returned. | |
1.25 | MME Validation Suite means the deliverables identified in Schedule 2 Part C. | |
1.26 | Packaging means the materials used to encapsulate the silicon of an ARM Secure Core Based Product. | |
1.27 | Pipeline Length means the number of clocked stages through which each single-cycle instruction must pass to complete the execution of such instruction. | |
1.28 | Single Issue means that only one instruction is issued for execution within the integer unit in any single clock cycle (where for the purposes of this definition clock means the clock that advances the pipeline). | |
1.29 | Software means the example support software for the MME Macrocell as identified in Schedule 2 Part D, together with any Updates thereto delivered to LICENSEE by ARM from time to time. | |
1.30 | Subsidiary means any company the majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by a party hereto or any company a majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by any of the aforementioned entities. The company shall be considered a Subsidiary only so long as such control exists. | |
1.31 | Synthesizable Functional Test Vectors means the synthesizable functional test vectors identified in Schedule 1 Part D. | |
1.32 | Synthesis Reference Deliverables means the deliverables identified in Schedule 1 Part C Section 3. | |
1.33 | Synthesizable RTL means the deliverables identified in Schedule 1 Part C Section 1. | |
1.34 | Synthesis Scripts means the deliverables identified in Schedule 1 Part C Section 2. | |
1.35 | Technical Reference Manual means the technical reference manual identified in Schedule 1 Part A. | |
1.36 | Trademarks means the trademarks identified in Schedule 3. | |
1.37 | Updates means any enhancements and modifications including but not limited to any error corrections to the ARM Transfer Materials including any documentation associated therewith, designed by, or for ARM, the incorporation of which ARM, in its absolute discretion, decides does not cause a new product to be created. |
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1.38 | Unique ARM Secure Core Based Product means a device manufactured by or for LICENSEE and which has a unique part number; except that a device shall not be a Unique ARM Secure Core Based Product if the device has a different part number for any or all of the following reasons: |
(i) | because it is an optically shrunk version of an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product; | ||
(ii) | because it is a version of an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has been ported to a different set of process design rules; | ||
(iii) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has a different on chip memory size; | ||
(iv) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has a different on chip memory content; | ||
(v) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that has a different on chip memory type; | ||
(vi) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that incorporates a bug fix (to conform to original specification for the Unique ARM Secure Core Based Product); and | ||
(vii) | because it is an otherwise unmodified (except to the extent accommodated by this definition) Unique ARM Secure Core Based Product that incorporates a different revision of the ARM Transfer Materials delivered by ARM to LICENSEE from time to time. |
1.39 | Von Neumann Architecture means a microprocessor architecture which dictates that the instruction stream for the integer unit shares the same port with the data stream for such integer unit. | |
2. | Licence | |
2.1 | Subject to the provisions of Clause 9 (Confidentiality) and the payment of appropriate fees in accordance with the provisions of Clause 5, ARM hereby grants to LICENSEE, under ARMs Intellectual Property, a non-transferable (subject to Clause 15.3), non-exclusive, perpetual (subject to termination in accordance with the provisions of Clause 13) world-wide licence, to; |
(i) | use and copy the AVS and the MME Validation Suite only for the purposes of designing ARM Secure Core Based Products; | ||
modify the MME testbench in Verilog identified as Item Cl in Schedule 2 Part C; | |||
(ii) | use, copy and modify the Core Self Test Programs only for the purposes of designing ARM Secure Core Based Products; | ||
(iii) | use and copy; (a) the Implementation Guide; and (b) the Synthesisable Reference Deliverables, only for the purposes of designing ARM Secure Core Based Products; | ||
modify the SC100 Core Verilog GTECH Synthesis Command Files identified as Item C3 in Schedule 1 Part C Section 3; |
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(iv) | use, copy and modify (solely to the extent necessary to run the following deliverables on LICENSEEs tester or simulator) the Synthesizable Functional Test Vectors, only for the purposes of designing ARM Secure Core Based Products; | ||
(v) | use, copy and modify (only for the purpose of substituting functional blocks in the Synthesizable RTL with functionally equivalent LICENSEE or LICENSEEs customers functional blocks); (i) the Synthesizable RTL; and (ii) the MME Synthesizable RTL, only for the purposes of designing ARM Secure Core Based Products; | ||
(vi) | use, copy and modify; (i) the Synthesis Scripts; and (ii) the MME Synthesis Scripts, only for the purposes of designing ARM Secure Core Based Products; | ||
(vii) | manufacture and have manufactured (subject to the provisions of Clause 2.2) the ARM Secure Core Based Products created under the licences granted in Clauses 2.1(i) to 2.l(vi) inclusive; | ||
(viii) | sell, supply and distribute ARM Secure Core Based Products manufactured under the licences granted in Clause 2.1(vii) to any third party and authorise Authorised Distributors to do the same; | ||
(ix) | test and have tested (subject to the provisions of Clause 2.3) the ARM Secure Core Based Products manufactured under the licences granted in Clause 2.1(vii); |
(x) | use, copy, modify and distribute (solely to LICENSEEs customers of ARM Secure Core Based Products and subject to the terms of a confidentiality agreement no less restrictive than those contained in this Agreement) the Technical Reference Manual only for the purposes of designing ARM Secure Core Based Products; | ||
(xi) | use, copy, modify and distribute (solely to LICENSEEs customers of ARM Secure Core Based Products and subject to the terms of a confidentiality agreement no less restrictive than those contained in this Agreement) the Documentation only for the purposes of designing ARM Secure Core Based Products; |
(xii) | use, copy and modify the Software; and | ||
(xiii) | distribute the Software in source code or binary code form solely in conjunction with ARM Secure Core Based Products. |
2.2 | Subject to the provisions of Clause 9 (Confidentiality), LICENSEE may exercise its right to have ARM Secure Core Based Products manufactured by a third party manufacturer ( Manufacturer ) in accordance with the provisions of Clause 2.1 solely to manufacture ARM Secure Core Based Products for LICENSEE provided that; (a) LICENSEE agrees not to grant to the Manufacturer any license in respect of any ARM Transfer Materials for any other purpose; and (b) that each Manufacturer agrees; |
(i) | to be bound by obligations of confidentiality no less restrictive than those contained in this Agreement; | ||
(ii) | to supply units of the ARM Secure Core Based Product solely to LICENSEE; and | ||
(iii) | to return any ARM Confidential Information and ARM Transfer Materials to LICENSEE on the earlier of; (a) the completion of the manufacture; and (b) the expiration of the |
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confidentiality period for each ARM Transfer Material in accordance with the provisions of Clause 9. |
If any Manufacturer breaches the provisions of any of Clauses 2.2(i) to 2.2(iii), LICENSEE agrees that such breach shall be treated as a material breach of this Agreement by LICENSEE which shall entitle ARM to terminate this Agreement in accordance with the provisions of Clause 13.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. |
2.3 | Subject to the provisions of Clause 9 (Confidentiality), LICENSEE may exercise its right to have ARM Secure Core Based Products tested by a third party ( Test House ) in accordance with the provisions of Clause 2.1 provided that the Test House agrees: |
(i) | to be bound by obligations of confidentiality no less restrictive than those contained in this Agreement; and | ||
(ii) | to supply units of the tested ARM Secure Core Based Products solely to LICENSEE; and | ||
(iii) | to return any ARM Confidential Information and ARM Transfer Materials to LICENSEE on the earlier of; (a) the completion of the test; and (b) the expiration of the confidentiality period for each ARM Transfer Material in accordance with the provisions of Clause 9. |
If any Test House breaches the provisions of Clauses 2.3(i) to 2.3(iii), LICENSEE agrees that such breach shall be treated as a material breach of this Agreement by LICENSEE which shall entitle ARM to terminate this Agreement in accordance with the provisions of Clause 13.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. |
2.4 | On receipt of a request from LICENSEE, ARM may on a case by case basis grant LICENSEE the right to have ARM Secure Core Based Products designed by a designer subcontracted by LICENSEE ( Designer ) provided that each Designer agrees; |
(i) | to be bound by obligations of confidentiality no less restrictive than those contained in this Agreement; and | ||
(ii) | to supply units of the tested ARM Secure Core Based Products solely to LICENSEE; and | ||
(iii) | to return any ARM Confidential Information and ARM Transfer Materials to LICENSEE on the earlier of; (a) the completion of the design; and (b) the end of the confidentiality period for each ARM Transfer Material in accordance with the provisions of Clause 9. |
If any Designer breaches the provisions of Clauses 2.4(i) to 2.4(iii), LICENSEE agrees that such breach shall be treated as a material breach of this Agreement by LICENSEE which shall entitle ARM to terminate this Agreement in accordance with the provisions of Clause 13.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. The parties shall agree for each Designer which of the ARM Transfer Materials can be delivered to such Designer. |
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2.5 | No right is granted to LICENSEE to: |
(i) | except as expressly granted in Clauses 2.1, sub-license any of the rights licensed to LICENSEE under Clause 2.1; or | ||
(ii) | distribute any ARM Secure Core Based Product prior to verification in accordance with Clause 3, except that if it is the intention of LICENSEE, and LICENSEE does proceed, to verify a device in accordance with Clause 3.1 and 3.2, LICENSEE may distribute, in aggregate, up to two thousand (2000) prototype units of such device without having such devices verified provided that LICENSEE provides written evidence to ARM that; (a) the recipient of such devices is aware that such device has not passed the verification process by ARM; and (b) the recipient has agreed to keep the recipients use of the non verified device as confidential. |
2.6 | Except as specifically licensed in Clause 2.1, LICENSEE acquires no right, title or interest in the ARM Secure Cores, ARM Transfer Materials or any of ARMs Intellectual Property embodied therein. In no event shall the License grant set out in Clause 2.1 be construed as granting LICENSEE, expressly or by implication, estoppel or otherwise, a license to use any ARM technology except the ARM Transfer Materials arid Software. LICENSEE shall reproduce and not remove or obscure any notice incorporated in the ARM Transfer Materials by ARM to protect ARMs Intellectual Property or to acknowledge the copyright and/or contribution of any third party designer. LICENSEE shall incorporate corresponding notices and/or such other markings and notifications as ARM may reasonably require on all copies of the ARM Transfer Materials used or distributed by LICENSEE. |
2.7 | For the continuance of this Agreement, LICENSEE may exercise the right to include any Subsidiary as a licensee under the terms of this Agreement provided that; |
(i) | such Subsidiary agrees in writing, as set out in Schedule 10 to be bound by the obligations of LICENSEE and to comply with all the terms and conditions of this Agreement; | ||
(ii) | any breach of the terms and conditions of this Agreement by a Subsidiary shall constitute a breach of this Agreement by LICENSEE; and | ||
(iii) | any termination of this Agreement in accordance with the provisions of Clause 13 shall be effective in respect of all Subsidiaries. |
3. | Verification | |
3.1 | For each ARM Secure Core implementation which is used in the manufacture of ARM Secure Core Based Products for sale and distribution by LICENSEE in accordance with the terms of this Agreement, LICENSEE shall in the course of generating such implementation use the ARM Transfer Materials to generate a netlist (each a Synthesized Netlist ) which includes back-annotated delays derived from the physical layout of the Synthesized Netlist. | |
3.2 | LICENSEE shall simulate the AVS on each Synthesized Netlist (defined in Clause 3.1). | |
3.3 | LICENSEE shall deliver to ARM a copy of the log results generated by running the AVS on each respective Synthesized Netlist (the Synthesized Log Results for each Synthesized Netlist). Prior to delivery of such Synthesized Log Results LICENSEE shall give ARM as much advance warning as practicably possible of LICENSEES proposed delivery of such Synthesized Log Results. | |
3.4 | Each Synthesized Netlist shall be verified for a particular process upon ARMS acceptance of the Synthesized Log Results delivered by LICENSEE. |
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3.5 | The Synthesized Log Results shall be accepted when they indicate that no errors have been detected or where any errors detected have been jointly agreed, in good faith, and a waiver agreed between the parties. | |
3.6 | ARM shall notify LICENSEE, in writing, within fifteen (15) days of delivery by LICENSEE of the Synthesized Log Results ( Synthesis Verification Period ), whether the Synthesized Log Results have been accepted by ARM or have failed the in verification process. In the event that ARM fails to confirm the result of the verification process within the Synthesis Verification Period, the Synthesized Log Results shall be deemed accepted by ARM. In the event that the Synthesized Log Results fail the verification process, ARM shall provide details of the errors which cause the failure to LICENSEE and LICENSEE shall endeavour to correct the errors. The parties shall repeat the above process until either; (i) the Synthesized Log Results are accepted; or (ii) LICENSEE withdraws the Synthesized Log Results from the verification process. | |
4. | Trademark License | |
4.1 | ARM hereby grants to LICENSEE a non-transferrable (subject to Clause 15.3), non-exclusive, world-wide licence to use the Trademarks in the promotion and sale of ARM Secure Core Based Products. | |
4.2 | LICENSEE shall use one of the Trademarks, in accordance with ARMs guidelines set forth in Schedule 3 ( Guidelines ), on; (i) all ARM Secure Core Based Products sold or distributed by LICENSEE; and (ii) all documentation, promotional materials and software associated with such ARM Secure Core Based Products. ARM shall have the right to revise Schedule 3 and the Guidelines (including the right to add further trademarks or modify the Trademarks) provided that such revisions are made in respect of the Guidelines issued to all licencees of the Trademarks. Any such revisions shall be effective, upon written notice to LICENSEE; (a) for printed material upon ninety (90) days notice; and (b) immediately in respect of products to be manufactured after ninety (90) days from receipt of such notice. | |
4.3 | LICENSEE shall submit samples of all documentation, packaging, and promotional or advertising materials bearing the Trademarks to ARM from time to time as requested by ARM to verify compliance with the Guidelines. LICENSEE shall immediately rectify any documentation, packaging, and promotional or advertising materials so as to comply with the Guidelines and cease using any non-compliant materials. | |
4.4 | LICENSEE agrees to assist ARM in maintaining the validity of the Trademarks by retaining a record of its use of the Trademarks. Such records shall include samples of all uses of the Trademarks for each ARM Secure Core Based Product as well as information regarding the first use of each of the Trademarks in each country. Upon request from ARM, LICENSEE shall make available all such records to ARM. | |
4.5 | Upon ARMs request, LICENSEE shall provide, free of charge, samples of the use of the Trademarks for the purpose of trademark registration. LICENSEE shall support ARM in the application and maintenance of any registration for the Trademarks in the name of ARM. Upon request from ARM, LICENSEE shall execute any required registered user agreements (including any such other documents required by the applicable laws of any jurisdiction) for the Trademarks. In the event that LICENSEE fails to timely execute any such documents, LICENSEE hereby irrevocably appoints ARM as its attorney with respect to such matters. Any and all registrations for the Trademarks shall be procured by and for ARM, at ARMs expense. | |
4.6 | Except as provided by the terms of this Agreement, LICENSEE shall not use or register any trademark, service mark, device or logo or any word or mark confusingly similar to any of the Trademarks, in any jurisdiction. |
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5. | Fees and Royalties | |
5.1 | In consideration of the licenses granted in Clause 2.1 for the ARM Secure Core Transfer Materials, LICENSEE shall pay ARM a fee (each a Core Licence Fee ) for each Unique ARM Secure Core Based Product developed by LICENSEE as set out in and in accordance with Schedule 7 Part A. If within three (3) years after the Effective Date, LICENSEE pays ARM [*****] Core Licence Fees for [*****] Unique ARM Secure Core Based Products, then during the continuance of this Agreement, LICENSEE shall not have any obligation to pay Core Licence Fees for the [*****] Unique ARM Secure Core Based Products. | |
5.2 | In consideration of the licenses granted in Clause 2.1 for the MME Transfer Materials, LICENSEE shall pay, ARM a fee ( MME Licence Fee ) as set out in and in accordance with Schedule 7 Part B. | |
5.3 | In consideration of the licenses granted in Clause 2.1, LICENSEE shall pay to ARM a royalty ( Royalty ), as determined in accordance with the table in Schedule 8, for each unit of ARM Secure Core Based Product sold, supplied or otherwise distributed by LICENSEE. | |
5.4 | In consideration of the ARM Maintenance (defined in Clause 8.1) LICENSEE shall pay, ARM, annual fees (each a Maintenance Fee ) as set out in and in accordance with Schedule 7 Part C. The Maintenance Fees shall be fixed for two (2) years after the Effective Date and thereafter shall be subject to re-negotiation between the parties. | |
5.5 | In consideration of the ARM Support (defined in Clause 8.2) LICENSEE shall pay, ARM, annual fees (each a Support Fee ) as set out in and in accordance with Schedule 7 Part D. The Support Fees shall be fixed for two (2) years after the Effective Date and thereafter shall be subject to re-negotiation between the parties. | |
5.6 | Royalties (defined in Clause 5.3) due to ARM under this Agreement shall be paid in accordance with the terms set out in Schedule 4. | |
5.7 | LICENSEE shall keep all records of account as are necessary to demonstrate compliance with its obligations under this Clause 5 for six (6) years from the date of each royalty report | |
5.8 | ARM shall have the right for representatives of a firm of independent Chartered Accountants to which LICENSEE shall not unreasonably object ( Auditors ), to make an examination and audit, by appointment made at least thirty (30) days prior to the audit, during normal business hours, not more frequently than once annually, of all records and accounts as may under recognised accounting practices contain information including; (i) the number of units of ARM Secure Core Based Product and the number of cores per ARM Secure Core Based Product, sold or distributed by LICENSEE under this Agreement; and (ii) the amount of Royalties payable to ARM under this Clause 5. The Auditors will report to ARM only upon whether the Royalties paid to ARM by LICENSEE were or were not correct, and if incorrect, what are the correct amounts for the Royalties. LICENSEE shall be supplied with a copy of or sufficient extracts from any preliminary and final report prepared by the Auditors. The Auditors report shall (in the absence of clerical or manifest error) be final and binding on the parties. Such audit shall be at ARMs expense unless it reveals an underpayment of Royalties of five per cent (5%) or more, in which case LICENSEE shall reimburse ARM for the costs of such audit. LICENSEE shall make good any underpayment of Royalties forthwith. If the audit identifies that LICENSEE has made an overpayment of Royalties, such overpayment will be credited with the next such payment or payments to be made by LICENSEE. | |
5.9 | Any income or other tax which LICENSEE is required by law to pay or withhold on behalf of ARM with respect to any licence fees and/or Royalties payable to ARM under this Agreement shall be deducted from the amount of such licence fees and/or Royalties otherwise due, provided, however, that in regard to any such deduction, LICENSEE shall give such assistance as may be |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
9
necessary to enable or assist ARM to claim exemption therefrom, or credit therefor, and shall furnish ARM with such certificates and other evidence of deduction and payment thereof as ARM may properly require. | ||
5.10 | LICENSEE shall pay all licence fees and Royalties due to ARM under the terms of this Agreement within forty five (45) days of receipt of ARMs original invoice therefor ( Due Date ). | |
5.11 | If any sum under this Agreement is not paid by the Due Date (as defined in Clause 5.10), then (without prejudice to ARMs other rights and remedies) ARM reserves the right to charge interest on such sum on a day to day basis (as well after as before any judgement) from the day after the Due Date to the date of payment at the rate of two and a half (2.5%) per cent per annum above the base rate of The Bank of England from time to time in force. Notwithstanding the foregoing. ARM may waive this requirement, at its sole discretion, in the event that LICENSEE gives ARM advance warning that it has good cause to believe that, for reasons beyond its control, it may be unable to pay any such sum on the Due Date. | |
6. | Delivery and Acceptance | |
6.1 | ARM shall deliver the ARM Transfer Materials to LICENSEE in accordance with the delivery schedule set out in Schedule 9. | |
7. | Contract Management and Administration | |
7.1 | The parties hereby appoint the following individuals as their respective contract administrator between ARM and LICENSEE with respect to this Agreement: |
ARM | LICENSEE | |
For Legal Notices:
|
For Legal Notices, Corporate Issues, Financial Matters, Confidential Information, Design Transfer and Support | |
|
||
VP and general Counsel
|
Jay Ho Chac | |
ARM Limited
|
Vice President/System IC SBU, SP BU, MCU | |
110 Fulbourn Road
|
Hynix Semiconductor Inc. | |
Cambridge
|
1 Hyangjeong-dong Hungduk-gu | |
CB19JN
|
Cheongju-si | |
|
361-725 Korea | |
|
||
For Corporate Issues:
|
||
Chief Operations Officer
|
||
At the address above
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||
|
||
For Financial Matters:
|
||
Financial Controller
|
||
At the address above
|
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For Confidential Information:
|
||
|
||
Manager of Core Licensing
|
||
At the Address above
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||
|
||
For Design Transfer and Support
|
For Technical Matters | |
|
||
Manager of Core Licensing
|
As above | |
At the Fulbourn Road Address above
|
7.2 | The contract administrators identified herein are appointed by the parties for the receipt and dispatch on their behalf all communications relating to this Agreement. The contract administrators shall also be responsible for the good progress of the parties performance under this Agreement and the timely resolution of all technical, administrative and commercial issues which may arise from time to time during the execution of this Agreement. | |
7.3 | Each party reserves the right to change its appointment as above upon at least seven (7) days prior written notice to the other partys then current corresponding liaison. | |
7.4 | As soon as reasonably possible after the Effective Date, the parties shall mutually agree and publish a press release relating to the contents of this Agreement and the relationship thereby established between the parties. | |
8. | ARM Maintenance and Support | |
8.1 | Subject to LICENSEEs payment of the Maintenance Fees, ARM shall provide to LICENSEE, in respect of the ARM Transfer Materials through the parties contract administrator, with the following services ( ARM Maintenance ); |
(i) | the use of commercially reasonable efforts to correct any defects in the ARM Transfer Materials which cause any of the ARM Transfer Materials not to operate in accordance with the functionality described in the datasheet and/or manual for the ARM Transfer Materials, as appropriate. If ARM determines that such defects are due to errors in such datasheet and/or manual provided by ARM shall promptly issue corrections to the datasheet and/or manual and shall not be required to revise the ARM Materials, provided that use of the ARM Transfer Materials by LICENSEE is not adversely affected thereby; and | ||
(ii) | all Updates to the ARM Transfer Materials. |
8.2 | Subject to LICENSEEs payment of the Support Fees, ARM shall provide to LICENSEE, in respect of the ARM Transfer Materials through the parties contract administrator, with the following services ( ARM Support ); reasonable telephone, e-mail and written consultation pertaining to the operation and application of the ARM Transfer Materials. The ARM Support provided under this Clause 8.2 shall be limited to a total of ten (10) person days per annum. | |
8.3 | LICENSEE agrees to receive ARM Maintenance and ARM Support for the ARM Secure Core and the ARM Transfer Materials for two (2) years after the Effective Date and after such date may request ARM to continue the provision of ARM Maintenance and ARM Support subject to the payment of appropriate fees mutually agreed by the parties. | |
8.4 | Upon LICENSEE requesting ARM Maintenance pursuant to Clause 8.1 or ARM Support pursuant to the provisions of Clause 8.2, LICENSEE shall promptly provide ARM with such samples and technical information as ARM may reasonably require to enable ARM to provide such ARM Maintenance or ARM Support, as appropriate. |
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8.5 | For the avoidance of doubt, ARMs obligation under this Clause 8 is limited expressly to the provision of ARM Support only for LICENSEE and ARM shall be under no obligation to provide ARM Support for LICENSEEs customers. | |
8.6 | ARM Maintenance and ARM Support shall be provided from ARMs premises in Cambridge, England. Nevertheless, ARM will use reasonable efforts to provide ARM Maintenance and ARM Support to LICENSEE, at LICENSEEs premises, subject to LICENSEE bearing all reasonable travelling, accommodation and sustenance expenses incurred and agreed in advance in writing with both parties. | |
8.7 | For the avoidance of doubt, ARMs obligation under Clause 8.2 is limited expressly to the provision of ARM Support only for LICENSEE and ARM shall be under no obligation to provide ARM Support for LICENSEEs customers. | |
8.8 | Upon LICENSEE requesting ARM Support pursuant to the provisions of Clause 8, LICENSEE shall promptly provide ARM with such samples and technical information as ARM may reasonably require to enable ARM to provide ARM Support. | |
9. | Confidentiality | |
9.1 | Except as provided by Clause 9.3 and 9.4, each party shall maintain in confidence the Confidential Information disclosed by the other party and apply security measures no less stringent than the measures that such party applies to protect its own Confidential Information, but not less than a reasonable degree of care, to prevent unauthorised disclosure and use of the Confidential Information. The period of confidentiality shall be fifteen (15) years with respect to each partys Confidential Information. | |
9.2 | LICENSEE agrees that it shall not use any of ARMs Confidential Information other than for the purposes of designing, having designed, manufacturing, having manufactured, marketing and distributing ARM Secure Core Based Products whether alone or incorporated in other products and any other activities reasonably necessary in the normal course of business for LICENSEE to sell ARM Secure Core Based Products. ARM agrees that it shall only use LICENSEEs Confidential Information for LICENSEEs purposes. | |
9.3 | Notwithstanding the foregoing; LICENSEE shall have the right to disclose layout derived from the Synthesizable RTL identified in Schedule 1 Part C Section 1 and the MME Synthesisable RTL identified in Schedule 2 Part B Section 1, to a Manufacturer (as defined in Clause 2.2) pursuant to the exercise of the have manufactured rights granted in Clause 2.1 under an NDA with substantially similar terms to this Clause 9 but also including a prohibition on the reverse engineering of the ARM Transfer Materials and/or the derivatives therefrom and except that the confidentiality period for each deliverable shall be at a minimum of ten (10) years from the date of disclosure. | |
9.4 | Notwithstanding the foregoing, LICENSEE shall have the right to disclose the Core Self Test Programs, to a House (as defined in Clause 2.3) pursuant to the exercise of the have tested rights granted in Clause 2.1 under an NDA containing substantially similar terms to this Clause 9, except that the confidentiality period for each deliverable shall be at a minimum of five (5) years from the date of disclosure. | |
9.5 | The provisions of this Clause 9 shall not apply to information which: |
(i) | is known and has been reduced to tangible form by the receiving party prior to disclosure by the other party; or | ||
(ii) | is published or otherwise made available to the public other than by a breach of this Agreement by the receiving party; or |
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(iii) | is disclosed to the receiving patty by a third party without a duty of confidentiality; or | ||
(iv) | is independently conceived by the receiving party provided that the receiving party is able to provide evidence of such independent conception in the form of written records; or | ||
(v) | is released to the receiving party for disclosure to any third party, other than on a confidential basis, by the disclosing party in writing; or | ||
(vi) | is approved for release by the disclosing party; or | ||
(vii) | is released to a third party by the disclosing party without a duty of confidentiality; or | ||
(viii) | is marked (N) in the Schedules of this Agreement. |
9.6 | For the avoidance of doubt, LICENSEE Royalty reports may be disclosed in confidence to ARMs financial and legal advisors. In addition, ARM may disclose the total unit sales of ARM processor based products on an annual basis provided that the unit sales of such ARM Secure Core Based Products by LICENSEE are not separately identifiable or deducible therefrom. | |
10. | Warranties | |
10.1 | Except as expressly provided in this Agreement, the ARM Transfer Materials and Software are supplied as is and ARM makes no representations and gives no warranties express, implied or statutory, including, without limitation, the implied warranties of satisfactory quality or fitness for a particular purpose in respect thereof. | |
10.2 | ARM warrants, to LICENSEE, that; |
(i) | the Intellectual Property in the ARM Transfer Materials does not infringe any third party copyright, design right, registered design right or maskwork right or tradesecret; and | ||
(ii) | ARM has the right to enter into this Agreement. |
10.3 | ARM represents and warrants that as of the Effective Date, there are no pending Claims that have been made, or actions commenced, against ARM for breach by the ARM Transfer Materials of any third party Intellectual Property. | |
10.4 | ARM warrants that the ARM Transfer Materials will be consistent and sufficient for a competent semiconductor manufacturer to produce Microarchitecture Compliant Cores, as the case may be, which meet the functionality and performance specified in the applicable Technical Reference Manual. LICENSEEs remedy for any breach of such warranty shall be for ARM, as soon as is reasonably possible, to correct any errors in the appropriate ARM Transfer Materials and deliver such corrected materials to LICENSEE in accordance with the provisions of Clause 8. | |
10.5 | LICENSEE acknowledges that the Software cannot be tested in every possible operation, and accordingly ARM does not warrant that the Software will be free from all defects or that there will be no interruption in their use. However, ARM warrants that the Software will comply with the description of their functionality specified in the related documentation. LICENSEEs remedy for any breach of such warranty shall be for ARM, as soon as is reasonably possible, to correct any errors in the Software and deliver such corrected Software to LICENSEE. | |
10.6 | ARM shall not be responsible for any recoverable or non-recoverable costs incurred, directly or indirectly, by LICENSEE in the design migration, processing, or manufacture of masks and prototypes, characterization or manufacture of production quality silicon in whatever quantity. |
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11. | Infringement | |
11.1 | LICENSEE shall notify ARM immediately upon learning of any claim which may be made or threatened that the exercise by LICENSEE of the rights hereby licensed constitutes an infringement of the patent, copyright, maskwork right, or trade secret (together Rights ) of a third party and will not take any action in relation to such claim which may be prejudicial to the interests of ARM without the written consent of ARM. | |
11.2 | ARM agrees that it will, at its expense, timely defend any suit instituted against LICENSEE and shall indemnify LICENSEE against any award of damages and costs made against LICENSEE in any such suit insofar as the same is based on a claim that the exercise by LICENSEE of its licensed rights under Clause 2.1, infringes any Right of a third party, provided that LICENSEE gives ARM timely notice in writing of the institution of such suit and permits ARM through ARMs lawyers of choice to defend the same and LICENSEE provides all available information, assistance and authority to so defend. ARM shall have control of the defence of any such suit, including appeals, and of all negotiations for settlement, including the right to effect the settlement or compromise thereof. | |
11.3 | In the event that rights licensed to LICENSEE under Clause 2.1 are, in any suit for infringement of any Right of a third party, held to constitute an infringement, ARM shall, at its option and expense, procure for LICENSEE the right to continue exercising its rights under Clause 2.1, or, to the extent commercially practicable, replace or modify the ARM Transfer Materials, as appropriate, provided that such replacement or modification of the ARM Transfer Materials maintain compatibility, so that the exercise by LICENSEE of its rights under Clause 2.1, does not constitute an infringement. | |
11.4 | ARM shall have no liability under this Clause 11 with respect to any suit or claim to the extent that infringement is due solely to; ARM shall have no liability under this Clause for any infringement arising from; |
(i) | the combination of the ARM Transfer Materials with other products not supplied by ARM if such infringement arises exclusively from such combination; | ||
(ii) | the modification of the ARM Transfer Materials unless the modification was made or approved by ARM if such infringement arises exclusively from modification; | ||
(iii) | any manufacturing process applied to the ARM Transfer Materials by LICENSEE or LICENSEES agent; or | ||
(iv) | compliance by ARM with the LICENSEE requirement specification where such compliance necessarily lead to such infringement. |
11.5 | LICENSEE agrees that it will, at its expense, timely defend any suit instituted against ARM and shall indemnify ARM against any award of damages and costs made against ARM in any such suit insofar as the same is based on a claim that; (i) the combination of the ARM Transfer Materials with other products not supplied by ARM if such infringement arises exclusively from such combination; (ii) the modification of the ARM Transfer Materials unless the modification was made or approved by ARM if such infringement arises exclusively from modification; (iii) any manufacturing process applied to the ARM Transfer Materials by LICENSEE; or (iv) compliance by ARM with the LICENSEE requirement specification where such compliance necessarily lead to infringement, infringes any Right of a third party, provided that ARM gives LICENSEE timely notice in writing of the institution of such suit and permits LICENSEE through LICENSEEs lawyers of choice to defend the same and ARM provides, at ARMs expense, all available information, assistance and authority to so defend. LICENSEE shall have control of the defence of any such suit, including appeals, and of all negotiations for settlement, including the right to effect the settlement or compromise thereof. Notwithstanding the foregoing, LICENSEE shall not be |
14
liable under the indemnification provided in this Clause 11.5 unless it is held in any suit that the infringement has been caused by the wilful action of LICENSEE. | ||
12. | Disclaimer of Consequential Damages and limitation of liability |
12.1 | IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ITS PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT, OR THE FURNISHING, PERFORMANCE OR USE OF THE ARM SECURE CORE OR ARM TRANSFER MATERIALS LICENSED HEREBY. | |
12.2 | NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, ARM SHALL NOT BE LIABLE FOR ANY AMOUNTS IN EXCESS OF THE TOTAL CORE LICENCE FEES PAID TO ARM PURSUANT TO CLAUSE 5.1 OF THIS AGREEMENT FOR ALL PAYMENTS BY ARM TO LICENSEE MADE PURSUANT TO ALL CLAIMS IN ANY WAY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. | |
12.3 | NOTHING IN THIS CLAUSE SHALL OPERATE TO EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM EITHER PARTYS NEGLIGENCE. | |
12.4 | If the Synthesizable RTL and MME Synthesizable RTL for the ARM Secure Core simulates substantially the functionality described in the Technical Reference Manual, ARM shall not be liable for any loss or damage suffered by LICENSEE as a result of the failure of any ARM Secure Core Based Product to provide security of data processed by the device. If an ARM Secure Core Based Product fails to provide security of data processed by it, ARM shall, subject to the provisions of Clause 12.2, only be liable for any loss or damage suffered by LICENSEE as a result of such failure to the extent that such loss or damage is a direct result of the Synthesizable RTL and MME Synthesizable RTL for the ARM Secure Core failing to simulate substantially the functionality described in the Technical Reference Manual. | |
13. | Term and Termination | |
13.1 | This Agreement shall commence on the Effective Date and shall continue in force unless earlier terminated in accordance with the provisions of Clause 13.2. | |
13.2 | Without prejudice to any other right or remedy which may be available to it, either party shall be entitled summarily to terminate this Agreement forthwith by giving written notice to the other, if the other party: |
(i) | has committed a material breach of any of its obligations hereunder which is not capable of remedy; or | ||
(ii) | has committed a material breach of any of its obligations hereunder which is capable of remedy but which has not been remedied within sixty (60) days following receipt of written notice to do so; or | ||
(iii) | makes any voluntary arrangement with its creditors for the general settlement of its debts or becomes subject to an administration order; or | ||
(iv) | has an order made against it, or passes a resolution, for its winding-up (except for the purposes of amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over all or substantially all of its property or assets. |
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14. | Effect of Expiry and Termination | |
14.1 | Upon termination of this Agreement by ARM pursuant to Clause 13.2, LICENSEE will immediately discontinue any use and distribution of all ARM Secure Core Based Products, the ARM Secure Core, the ARM Transfer Materials, any Intellectual Property embodied therein, and any ARM Confidential Information. LICENSEE shall, at ARMs option, either destroy or return to ARM any Confidential Information, including any copies thereof in its possession, together with the ARM Transfer Materials in its possession. Within one month after termination of this Agreement LICENSEE will furnish to ARM a certificate signed by a duly authorised representative of LICENSEE that to the best of his or her knowledge, information and belief, after due enquiry, LICENSEE has complied with provisions of this Clause. | |
14.2 | Unless this Agreement is terminated by LICENSEE in accordance with the provisions of Clause 13.2, the licenses granted to LICENSEE under the terms of this Agreement shall survive (subject to the terms and conditions of this Agreement) in the event that either; (i) ARM makes any voluntary arrangement with its creditors for the settlement of its debts or becomes subject to an administration order; or (ii) ARM has an order made against it, or passes a resolution, for its winding-up (except for the purposes of amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over all or substantially all of its property or assets. Notwithstanding anything to the contrary contained elsewhere in this Agreement, if this Agreement is terminated by LICENSEE in accordance with the provisions of Clause 13.2, any and all rights, including, without limitation, all licences granted to LICENSEE hereunder shall survive such termination subject to the terms and conditions of this Agreement including, without limitation, the continued payment of Royalties in accordance with the provisions of Clause 5.3. | |
14.3 | Upon termination the provisions of Clauses 1, 5 (to the extent that any obligation under this Clause remains outstanding) 9, 10, 11, 12, 14 and 15 shall survive termination. | |
15. | General | |
15.1 | All communications between the parties including, but not limited to, notices, royalty reports, error or bug reports, the exercise of options, and support requests shall be in the English language. | |
15.2 | All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out in this Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of this Clause. Any such notice may be delivered personally, by commercial overnight courier or facsimile transmission which shall be followed by a hard copy and shall be deemed to have been served if by hand when delivered, if by commercial overnight courier 48 hours after deposit with such courier, and if by facsimile transmission when dispatched. | |
15.3 | Neither party shall assign or otherwise transfer this Agreement or any of its rights and obligations hereunder whether in whole or in part without the prior written consent of the other provided that such consent shall not be unreasonably withheld. | |
15.4 | Neither party shall be liable for any failure or delay in its performance under this Agreement due to causes, including, but not limited to, acts of God, acts of civil or military authority, fires, epidemics, floods, earthquakes, riots, wars, sabotage, third party industrial disputes and governments actions, which are beyond its reasonable control; provided that the delayed party: (i) gives the other party written notice of such cause promptly, and in any event within fourteen (14) days of discovery thereof; and (ii) uses its reasonable efforts to correct such failure or delay in its performance. The delayed partys time for performance or cure under this Clause 15.4 shall be extended for a period equal to the duration of the cause. | |
15.5 | ARM and LICENSEE are independent parties. Neither company nor their employees, consultants, contractors or agents, are agents, employees or joint venturers of the other party, nor do they have |
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the authority to bind the other party by contract or otherwise to any obligation. Neither party will represent to the contrary, either expressly, implicitly, by appearance or otherwise. |
15.6 | The parties agree that the terms and conditions of this Agreement shall be treated as Confidential Information hereunder and shall not be disclosed without the consent of both parties. | |
15.7 | Failure by either party to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that or any other provision. | |
15.8 | If any provision of this Agreement, or portion thereof, is determined to be invalid or unenforceable the same will be enforced to the maximum extent permissible so as to effect the intent of the parties, and the remainder of this Agreement will continue in full force and effect. | |
15.9 | The headings to the Clauses of this Agreement are for ease of reference only and shall not affect the interpretation or construction of this Agreement. | |
15.10 | This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument. | |
15.11 | This Agreement, including all Schedules and documents referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior or contemporaneous understandings or agreements, written or oral, regarding the subject matter. Except in respect of changes to the Trademark Guidelines (defined in Clause 4.2) which may be changed in accordance with the provisions of Clause 4.2, no amendment to, or modification of, this Agreement shall be binding unless in writing and signed by a duly authorized representatives of both parties. | |
15.12 | This Agreement shall be governed by and construed in accordance with the laws of England. In the event that ARM commences proceedings against LICENSEE under this Agreement, the parties agree to submit to the jurisdiction of the Seoul District Court, Korea, for the purpose of hearing and determining any disputes arising out of this Agreement. In the event that LICENSEE commences proceedings against ARM under this Agreement, the parties agree to submit to the jurisdiction of the High Court of Justice, London, England, for the purpose of hearing and determining any disputes arising out of this Agreement. | |
15.13 | LICENSEE and ARM acknowledge that each and every term and condition of this Agreement has been fully and completely negotiated and such terms and conditions closely relate to each other. In the event that the Korean governmental authorities, including the Korean Fair Trade Commission, during the review of this Agreement require a modification to one or more of the clauses of this Agreement, ARM shall have the option to renegotiate the entire Agreement or accept the applicable modification of the Agreement as required by such governmental authorities. | |
15.14 | Subject to the mutual agreement of the authorized executives of the parties, ARM and LICENSEE agree to issue a mutually agreed press release detailing the relationship established and products licensed under this Agreement. |
ARM LIMITED: | HYNIX SEMICONDUCTOR LIMITED | |||||||||
|
||||||||||
SIGNED
NAME: |
Illegible
|
SIGNED
NAME: |
/s/ Jay Ho Chae
|
|||||||
|
||||||||||
TITLE:
|
EVP | TITLE: | VP |
17
1. | Definitions | |
1.1 | ARM Compliant Product means an integrated circuit incorporating an ARM Compliant Core as defined in the relevant Annex 1. | |
1.2 | ARM Technology means any or all, as the context admits, of the technology identified in each Annex 1 and any Updates thereto delivered by ARM to LICENSEE. | |
1.3 | ASP means the average sales price of an ARM Compliant Product or other device which contains royalty bearing ARM Technology, as the case may be, in a Quarter, calculated by taking the figure for the aggregate of all invoices for the distribution of such ARM Compliant Product or other device which contains royalty bearing ARM Technology in such Quarter by the entity exercising the licences to manufacture or have manufactured under this TLA (notwithstanding that such distribution may be between HYNIX and a Subsidiary of HYNIX or between Subsidiaries of HYNIX), less; (i) any value added, turnover, import or other tax, duty or tariff payable by law thereon; and (ii) any freight and insurance costs included in the invoiced price, and dividing it by the number of units of such ARM Compliant Product or other device which contains royalty bearing ARM Technology, as appropriate, accounted for under such invoices. | |
1.4 | Claim means a written notice received by ARM and claiming infringement of the Intellectual Property of a third party by any of the ARM Technology and which demands that ARM cease and desist from such claimed Intellectual Property infringement. | |
1.5 | Confidential Information means; (i) the ARM Technology and derivatives thereof (including any translation, modification, compilation, abridgement or other form in which the ARM Technology has been recast, transformed or adapted) and any trade secrets relating to the ARM Technology; (ii) any information designated in writing by either party, by appropriate legend, as confidential; (iii) any information which if first disclosed orally is identified as confidential at the time of disclosure and is thereafter reduced to writing for confirmation and sent to the other party within thirty (30) days after its oral disclosure and designated, by appropriate legend, as confidential; and (iv) the terms and conditions of this TLA. | |
1.6 | Customer means any entity that has contracted with LICENSEE for the design and manufacture of an ARM Compliant Product for such entity. | |
1.7 | Designer means any entity sub-contracted by LICENSEE to provide design resource to LICENSEE. | |
1.8 | Intellectual Property means any patents, patent rights, trade marks, service marks, registered designs, topography or semiconductor mask work rights, applications for any of the foregoing, copyright, unregistered design right and any other similar protected rights in any country. |
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1.9 | LICENSEE means HYNIX and any Subsidiaries of HYNIX. | |
1.10 | Manufacturer means any entity sub-contracted by LICENSEE to manufacture integrated circuits for LICENSEE. | |
1.11 | Quarter means each calendar quarter ending the 31st March, 30th June, 30th September and 31st December of each year. | |
1.12 | Subsidiary means any company the majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by a party hereto or any company a majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by any of the aforementioned entities. A company shall be a Subsidiary only so long as such control exists. | |
1.13 | Term means the term for which the subject ARM Technology is licensed to LICENSEE by ARM as specifically set out in Section 7 of the relevant Annex 1. | |
1.14 | Test House means any entity sub-contracted by LICENSEE to test integrated circuits for LICENSEE. | |
1.15 | Trademarks means the trademarks identified in Section 6 of each Annex 1. | |
1.16 | Trademark Guidelines means the guidelines for the use of ARMs Trademarks as set out in Annex 2 and any amendment thereto delivered to LICENSEE by ARM from time to time in accordance with the provisions of Clause 2.9. | |
1.17 | Updates means any; (i) error corrections developed by or for ARM; and (ii) functional enhancements or other modifications developed by or for ARM (which ARM in its discretion decides does not constitute a new product), together with any Intellectual Property embodied therein. | |
2. | Licence | |
ARM Technology Licence | ||
2.1 | The ARM Technology shall be licensed to LICENSEE subject to the relevant license terms identified in Section 2 of the relevant Annex 1. | |
Subcontracting Design | ||
2.2 | Subject to the provisions of Clause 3 (Confidentiality), LICENSEE may exercise the right, if granted in Section 2 of the relevant Annex 1, to have ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, designed by any Designer, provided that; (a) LICENSEE does not grant to the Designer any license in respect of the ARM Technology for any other purpose; and (b) that each Designer; |
(i) | is subject to contractual obligations of confidentiality in respect of the ARM Confidential Information and ARM Technology which are in accordance with the provisions of Clause 3.3; | ||
(ii) | is subject to a contractual obligation to use the ARM Confidential Information and ARM Technology solely for the purpose of supplying the designs of the ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, solely to LICENSEE; and | ||
(iii) | is subject to a contractual obligation to return any ARM Confidential Information and ARM Technology to LICENSEE on the earlier of; (a) the completion of the design; and (b) the end of the contractual confidentiality period (in the agreement between LICENSEE and Designer) for the relevant ARM Confidential Information or ARM Technology. |
If any Designer breaches the provisions of Clauses 2.2(i) to 2.2(iii), LICENSEE agrees that such breach shall be treated as a material breach of this TLA by LICENSEE which shall entitle ARM to terminate this TLA in accordance with the provisions of Clause 14.2 and LICENSEE shall hold ARM harmless from and keep ARM |
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indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. | ||
Customer Collaboration | ||
2.3 | Subject to the provisions of Clause 3 (Confidentiality), LICENSEE may exercise the right, if granted in Section 2 of the relevant Annex 1, to have ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, designed by any Customer provided that; (a) LICENSEE does not grant to the Customer any license in respect of the ARM Technology for any purpose other than for collaborating on the design of ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, with LICENSEE and; and (b) that each Customer; |
(i) | is subject to contractual obligations of confidentiality in respect of the ARM Confidential Information and ARM Technology which are in accordance with the provisions of Clause 3.4; | ||
(ii) | is subject to a contractual obligation to use the ARM Confidential Information and ARM Technology solely for the purpose of supplying the designs of the ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, solely to LICENSEE; and | ||
(iii) | is subject to a contractual obligation to return any ARM Confidential Information and ARM Technology to LICENSEE on the earlier of; (a) the completion of the design; and (b) the end of the contractual confidentiality period (in the agreement between LICENSEE and Customer) for the relevant ARM Confidential Information or ARM Technology. |
If any Customer breaches the provisions of Clauses 2.3(i) to 2.3(iii), LICENSEE agrees that such breach shall be treated as a material breach of this TLA by LICENSEE which shall entitle ARM to terminate this TLA in accordance with the provisions of Clause 14.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. | ||
Subcontracting Manufacture | ||
2.4 | Subject to the provisions of Clause 3 (Confidentiality), LICENSEE may exercise the right, if granted in Section 2 of the relevant Annex 1, to have ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, manufactured by a Manufacturer provided that; (a) LICENSEE does not grant to the Manufacturer any license in respect of the ARM Technology for any purpose other than for manufacturing ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, solely for LICENSEE; and (b) that each Manufacturer; |
(i) | is subject to contractual obligations of confidentiality in respect of the ARM Confidential Information and ARM Technology which are in accordance with the provisions of Clause 3.2; | ||
(ii) | is subject to a contractual obligation to use the ARM Confidential Information and ARM Technology solely for the purpose of supplying units of the ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, solely to LICENSEE; and | ||
(iii) | is subject to a contractual obligation to return any ARM Confidential Information and ARM Technology to LICENSEE on the earlier of; (a) the completion of the manufacture; and (b) the end of the contractual confidentiality period (in the agreement between LICENSEE and Manufacturer) for the relevant ARM Confidential Information or ARM Technology. |
If any Manufacturer breaches the provisions of Clauses 2.4(i) to 2.4(iii), LICENSEE agrees that such breach shall be treated as a material breach of this TLA by LICENSEE which shall entitle ARM to terminate this TLA in accordance with the provisions of Clause 14.2 and LICENSEE shall hold ARM harmless from and keep ARM |
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indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. | ||
Subcontracting Testing | ||
2.5 | Subject to the provisions of Clause 3 (Confidentiality), LICENSEE may exercise the right, if granted in Section 2 of the relevant Annex 1, to have tested ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, by a Test House provided that; (a) LICENSEE does not grant to the Test House any license in respect of the ARM Technology for any purpose other than for testing ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, solely for LICENSEE; and (b) that each Test House; |
(i) | is subject to contractual obligations of confidentiality in respect of the ARM Confidential Information and ARM Technology which are in accordance with the provisions of Clause 3.5; | ||
(ii) | is subject to a contractual obligation to use the ARM Confidential Information and ARM Technology solely for the purpose of supplying units of the tested ARM Compliant Products or other devices which contain ARM Technology licensed in accordance with the terms of this TLA, as the case may be, solely to LICENSEE; and | ||
(iii) | is subject to a contractual obligation to return any ARM Confidential Information and ARM Technology to LICENSEE on the earlier of; (a) the completion of the testing; and (b) the end of the contractual confidentiality period (in the agreement between LICENSEE and Test House) for the relevant ARM Confidential Information or ARM Technology. |
If any Test House breaches the provisions of Clauses 2.5(i) to 2.5(iii), LICENSEE agrees that such breach shall be treated as a material breach of this TLA by LICENSEE which shall entitle ARM to terminate this TLA in accordance with the provisions of Clause 14.2 and LICENSEE shall hold ARM harmless from and keep ARM indemnified against all and any loss, liability, costs, damages, expenses (including the fees of lawyers and other professionals), suffered, incurred or sustained as a result of or in relation to such breach. | ||
Intercompany Matters | ||
2.6 | Any breach of this TLA by a Subsidiary of HYNIX shall entitle ARM to terminate this TLA in accordance with the provisions of Clause 14.2 as if HYNIX were the party in breach. Any termination of this TLA in accordance with the provisions of Clause 14.2 shall be effective in respect of HYNIX and all Subsidiaries. | |
Any rights granted to any Subsidiary of HYNIX hereunder shall automatically terminate upon such Subsidiary of HYNIX ceasing to be a Subsidiary of HYNIX. | ||
In the event that a Subsidiary of HYNIX is in breach of any of the terms of this TLA, HYNIX shall hold harmless and indemnify ARM against all and any loss, liability, costs, damages, expenses (including the reasonable fees of lawyers and other professionals) suffered, as a result of or in connection with such breach. | ||
Licence Restrictions | ||
2.7 | Except as specifically licensed in accordance with Clause 2.1, LICENSEE acquires no right, title or interest in any ARM Confidential Information, ARM Technology or any Intellectual Property embodied therein. In no event shall the licenses granted in accordance with Clause 2.1 be construed as granting LICENSEE, expressly or by implication, estoppel or otherwise, a license to use any ARM technology except the ARM Technology. | |
Except as expressly licensed in accordance with Clause 2.1, no right is granted to LICENSEE to sublicense the rights granted to LICENSEE under this TLA. | ||
LICENSEE shall not use or procure others to use any ARM Technology or ARM Confidential Information; (i) for the purposes of determining if any features, functions or processes provided by the ARM Technology or disclosed by the ARM Confidential Information are covered by any patents or patent applications owned by LICENSEE; or (ii) as a reference for developing inventions in respect of which LICENSEE or its agents will seek patent protection; (iii) for developing technology or products which work around any of ARMs Intellectual Property licensed |
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hereunder; or (iv) as a reference for modifying existing patents or patent applications or creating any continuation, continuation in part, or extension of existing patents or patent applications. | ||
Intellectual Property Notices | ||
2.8 | LICENSEE shall reproduce and not remove or obscure any notice incorporated in the ARM Technology by ARM to protect ARMs Intellectual Property or to acknowledge the Intellectual Property of any third party. LICENSEE shall incorporate and shall require that any Designer, Customer, Manufacturer and Test House to which any ARM Technology is provided in accordance with the terms of this Agreement, incorporates corresponding notices and such other markings and notifications as ARM may reasonably require on all copies of the ARM Technology and any derivatives thereof (including any translation, modification, compilation, abridgement or other form in which the ARM Technology has been recast, transformed or adapted) created by LICENSEE, Designer, Customer, Manufacturer or Test House, as the case may be. | |
ARM Trademarks | ||
2.9 | ARM hereby grants to LICENSEE a non-transferable (subject to Clause 16.3), non-exclusive, royalty-free, world-wide license to use the Trademarks in connection with the promotion and sale of products developed under the licences granted in this TLA. | |
LICENSEE shall use the Trademarks, in accordance with the Trademark Guidelines. ARM shall have the right to revise the Trademark Guidelines and Section 6 of any Annex 1. Any such revisions shall be effective with respect to printed materials and products to be produced or manufactured after ninety (90) days from receipt of ARMs written notice specifying the revisions to LICENSEE. | ||
Upon request from ARM, LICENSEE shall submit samples of documentation, packaging, and promotional or advertising materials bearing the Trademarks to ARM so that ARM may verify compliance with the Trademark Guidelines. In the event that any documentation, packaging, promotional or advertising material fails to comply with the Trademark Guidelines, ARM shall notify LICENSEE and LICENSEE shall rectify such documentation, packaging, and promotional or advertising materials so as to comply with the Trademark Guidelines and cease using any such non-compliant materials as soon as reasonably possible after the date of ARMs notice. | ||
LICENSEE agrees to provide reasonable assistance to ARM in maintaining the validity of the Trademarks. Upon ARMs request, LICENSEE shall provide, free of charge, a reasonable number of samples of the use of the Trademarks for the purpose of trademark registration or renewal. Upon request, LICENSEE shall at ARMs expense execute any documents required by the applicable laws of any jurisdiction for the purpose of either or both registering and maintaining the Trademarks. | ||
Except as provided by the terms of this TLA, LICENSEE shall not use or register, in any jurisdiction, any trademark, service mark, device or logo or any word or mark confusingly similar to any of the Trademarks. | ||
3. | Confidentiality | |
Restricted Disclosure | ||
3.1 | Except as expressly provided by Clauses 3.2, 3.3, 3.4, 3.5, 3.6 and 3.7, each party shall maintain in confidence the Confidential Information disclosed by the other party and apply security measures no less stringent than the measures that such party applies to its own like information, but not less than a reasonable degree of care, to prevent unauthorised disclosure and use of the Confidential Information. The period of confidentiality shall be indefinite with respect to each partys Confidential Information. | |
Permitted Disclosure to Manufacturers | ||
3.2 | LICENSEE may disclose the (i) the ARM Technology marked M in any Annex 1, and any translation, modification, compilation, abridgement or other form in which the ARM Technology marked M has been recast, transformed or adapted; (ii) any GDSII created by or for LICENSEE from the synthesizable RTL licensed under any Annex 1; and (iii) any masks created from the GDSII by or for LICENSEE, to a Manufacturer pursuant to the exercise of any have manufactured rights (if granted in Section 2 of the relevant Annex 1) solely for the purposes of having ARM Compliant Products manufactured for LICENSEE by such third party and under a non-disclosure |
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agreement containing substantially similar terms to this Clause 3, except that the confidentiality period for each deliverable shall be, at a minimum, of five (5) years from the date of disclosure. | ||
Permitted Disclosure to Designers | ||
3.3 | LICENSEE may disclose the ARM Technology marked D in any Annex 1 and any translation, modification, compilation, abridgement or other form in which the ARM Technology marked D has been recast, transformed or adapted, to a Designer pursuant to the exercise of the have designed rights (if granted in Section 2 of the relevant Annex 1) solely for the purposes of having ARM Compliant Products designed for LICENSEE by such third party and under an non-disclosure agreement containing substantially similar terms to this Clause 3, including the confidentiality period for each deliverable determined in accordance with the provisions of Clause 3.1. | |
Permitted Disclosure to Customers | ||
3.4 | LICENSEE may disclose the ARM Technology marked CS in any Annex 1 to a Customer solely for the purposes of collaborating on the design of ARM Compliant Products for such third party and under an non-disclosure agreement containing substantially similar terms to this Clause 3, including the confidentiality period for each deliverable determined in accordance with the provisions of Clause 3.1. | |
Permitted Disclosure to Test Houses | ||
3.5 | LICENSEE may disclose (i) the ARM Technology marked T in any Annex 1 and any translation, modification, compilation, abridgement or other form in which the ARM Technology marked T has been recast, transformed or adapted; and (ii) any ATPG test vectors created by or for LICENSEE from the synthesizable RTL to a Test House pursuant to the exercise of the have tested rights (if granted in Section 2 of the relevant Annex 1) solely for the purposes of having ARM Compliant Products tested for LICENSEE by such third party and under an non-disclosure agreement containing substantially similar terms to this Clause 3, except that the confidentiality period for each deliverable shall be, at a minimum, five (5) years from the date of disclosure. | |
3.6 | Other Permitted Disclosures | |
Either party may disclose Confidential Information received from the other party in the following circumstances; |
(i) | disclosure to third parties to the extent that the Confidential Information is required to be disclosed pursuant to a court order or as otherwise required by law, provided that the party required to make the disclosure promptly notifies the other party upon learning of such requirement and has given the other party a reasonable opportunity to contest or limit the scope of such required disclosure (including but not limited to making an application for a protective order); | ||
(ii) | disclosure to nominated third parties under written authority from the original discloser of the Confidential Information; and | ||
(iii) | disclosure to the receiving partys legal counsel, accountants or professional advisors to the extent necessary for them to advise upon the interpretation or enforcement of this Agreement. |
Permitted Disclosure of LICENSEE Confidential Information | ||
3.7 | LICENSEE royalty reports may be disclosed in confidence to ARMs financial and legal advisors. In addition, ARM may disclose the total unit sales, from time to time, of ARM Compliant Products and any other devices which contain royalty bearing ARM Technology, provided that the unit sales of such products by LICENSEE are not separately identifiable or deducible therefrom. | |
ARM shall be permitted to disclose LICENSEE Confidential Information to Subsidiaries of ARM subject to the same terms and conditions of confidentiality as are set out in this Agreement. | ||
Restricted Use | ||
3.8 | LICENSEE agrees that it shall not use any of ARMs Confidential Information other than pursuant to and in accordance with the exercise of any of the licences granted under this TLA. |
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Excepted Information | ||
3.9 | The provisions of this Clause 3 shall not apply to information which; |
(i) | is known to and has been reduced to tangible form by the receiving party prior to its receipt provided that such information is not already subject to any obligations of confidentiality; or | ||
(ii) | is in the public domain at the time of receipt or later becomes part of the public domain without breach of the confidentiality obligations in this TLA; or | ||
(iii) | is received from a third party without any breach of any obligation of confidentiality in respect of such information provided that such information is not subject to any continuing obligations of confidentiality; or | ||
(iv) | is identified as (N) in Section 1 of the relevant Annex 1 of this TLA. |
4. | Verification | |
4.1 | Prior to the distribution of any integrated circuit incorporating a central microprocessor unit manufactured by or for LICENSEE under the licences granted in Section 2 of any Annex 1, LICENSEE shall verify such central microprocessor unit in accordance with the verification procedure set out in Section 3 of the relevant Annex 1. | |
5. | Delivery | |
5.1 | ARM shall use reasonable efforts to deliver the ARM Technology in each Annex 1 to LICENSEE on or before the delivery dates set out in Section 1 of the relevant Annex 1. ARM shall deliver Updates for any ARM Technology to LICENSEE as soon as reasonably possible after such Update is made generally available by ARM. | |
6. | Fees and Royalties | |
Fees | ||
6.1 | HYNIX shall pay, to ARM, fees ( Fees ) as set out in and in accordance with Section 8 of the relevant Annex 1. | |
Royalties | ||
6.2 | If provided for in Section 8 of a relevant Annex 1, HYNIX shall pay, to ARM, a royalty ( Royalty ) in accordance with the provisions of such Annex 1. | |
For the purpose of calculating Royalties, only the distribution by the entity exercising the licences to manufacture or have manufactured under this TLA (notwithstanding that such distribution may be between HYNIX and a Subsidiary of HYNIX or between Subsidiaries of HYNIX) shall be relevant. | ||
Any distribution of ARM Compliant Products by LICENSEE shall, in the absence of evidence to the contrary, be deemed to be distributed under the licences granted to LICENSEE under this TLA and LICENSEE shall pay Royalties to ARM accordingly. The burden of proof for rebutting the above presumption shall be on LICENSEE. | ||
Royalty Report | ||
6.3 | HYNIX shall submit a report within thirty (30) days after the end of each Quarter, containing at least the information required by the form set out in Section 8 of each Annex 1. | |
Intercompany Sales | ||
6.4 | For transactions between any of HYNIX and the Subsidiaries of HYNIX, LICENSEE shall ensure that such transactions shall be conducted so that the ASP of any ARM Compliant Product or other device which contains royalty bearing ARM Technology licensed in accordance with the terms of this TLA, as the case may be, is not manipulated for the purpose of reducing the Royalties payable to ARM under this TLA. If any ARM Compliant Product or other device which contains royalty bearing ARM Technology is sold to HYNIX or to a Subsidiary of HYNIX then the invoice price shall be deemed to be the higher of the actual invoice price and what the invoice price of the ARM Compliant Product or other device which contains royalty bearing ARM Technology, as the case may |
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be, would have been if such ARM Compliant Product or other device which contains royalty bearing ARM Technology had been sold to an independent customer at a fair open market value. | ||
Records | ||
6.5 | For the period of five (5) years from the date that each royalty report is delivered to ARM by HYNIX, LICENSEE shall keep such records and books of account, identifying and providing invoice details for ARM Compliant Products or any other royalty bearing ARM Technology distributed under the licences granted in this TLA, as are necessary to derive the ASP for each ARM Compliant Product or any other royalty bearing ARM Technology identified in such royalty report and to demonstrate compliance with LICENSEEs obligations under this Clause 6. | |
Audit | ||
6.6 | ARM shall have the right for representatives of a firm of independent Chartered Accountants ( Auditors ), to make an examination and audit, by prior appointment during normal business hours, of all records and accounts as may under recognised accounting practices contain information bearing upon; |
(i) | the number of units of ARM Compliant Products and any other devices which contain royalty bearing ARM Technology which have been distributed by LICENSEE under this TLA; | ||
(ii) | the number of ARM microprocessor cores incorporated into any ARM Compliant Product which has been distributed by LICENSEE under this TLA; | ||
(iii) | the ASP and fair market value of any ARM Compliant Product and any other devices which contain royalty bearing ARM Technology which have been distributed by LICENSEE under this TLA; | ||
(iv) | the amounts of Royalties payable to ARM under this TLA; and | ||
(v) | any fees payable to ARM under this TLA. |
The Auditors shall be permitted to provide, to ARM, information relating to Clauses 6.6(i)-(iv), including but not limited to, information relating to the systems operated by LICENSEE to capture and record such information. Any information obtained pursuant to any audit performed in accordance with the provisions of this Clause 6.6 and provided by the Auditors to ARM shall be treated by ARM as LICENSEE Confidential Information. The Auditors conclusions shall (in the absence of clerical or manifest error) be final and binding on the parties. Such audit shall be at ARMs expense unless it reveals a net underpayment of Royalties or other fees of five per cent (5%) or more in any Quarter, in which case HYNIX shall promptly reimburse ARM for the costs of such audit. HYNIX shall make good any underpayment of royalties forthwith. If the audit identifies that HYNIX has made an overpayment, such overpayment will be credited to the next payment or payments of Royalties or fees to be made by HYNIX. | ||
Taxes | ||
6.7 | All sums stated under this TLA do not include taxes. All applicable taxes shall be payable by LICENSEE in accordance with relevant legislation in force at the relevant tax point. Any income or other tax which LICENSEE is required by law to pay or withhold on behalf of ARM with respect to any Royalties or other fees payable to ARM under this TLA may be deducted from the amount of such Royalties or other fees otherwise due, provided, however, that in regard to any such deduction, HYNIX shall give to ARM such assistance as may be necessary to enable or assist ARM to claim exemption therefrom, or credit therefor, and shall upon request furnish to ARM such certificates and other evidence of deduction and payment thereof as ARM may properly require. | |
Payment | ||
6.8 | HYNIX shall pay all Royalties and Fees due to ARM under the terms of this TLA within thirty (30) days of receipt of ARMs invoice therefor ( Due Date ). ARM shall send any invoice for payment to the address set out in Section 8 of the relevant Annex 1 and HYNIX shall provide ARM with at least ten (10) working days notice of any change to such address. | |
6.9 | If any sum under this TLA is not paid by the Due Date (defined in Clause 6.8), then (without prejudice to ARMs other rights and remedies in addition to the invoice amount) ARM reserves the right to charge interest on such sum |
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on a day to day basis (as well after as before any judgement) from the Due Date to the date of payment at the rate of five (5%) per cent per annum above the base rate of National Westminster Bank PLC from time to time in force. | ||
No Right of Set Off | ||
6.10 | All sums properly due to ARM under this Agreement shall be paid in full and LICENSEE shall not be entitled to assert against ARM any credit, set-off or counterclaim arising under any Annex 1 in order to justify withholding payment of any sum properly due under any other Annex 1. Obligations under each Annex 1 shall be construed as divisible from obligations under any other Annex 1 for the purposes of interpreting this Clause 6.10. | |
7 | Maintenance | |
7.1 | Subject to LICENSEEs payment of the appropriate Fees (defined in Clause 6.1), ARM shall provide to LICENSEE, in respect of the relevant ARM Technology the following maintenance for such ARM Technology ( Maintenance ); |
(i) | the use of commercially reasonable efforts to correct any defects in the ARM Technology which cause such technology not to operate in accordance with the functionality described in the relevant datasheet or manual for such technology. If ARM determines that such defects are due to errors in such description ARM shall promptly issue corrections to the datasheet or manual and shall not be required to revise the ARM Technology, provided that LICENSEEs use of the ARM Technology by LICENSEE is not adversely affected thereby; and | ||
(ii) | all Updates to such ARM Technology. |
7.2 | Upon LICENSEE requesting ARMs assistance pursuant to the provisions of Clause 7.1(i), LICENSEE shall promptly provide to ARM such samples and technical information as ARM may reasonably require and in a form specified by ARM to enable ARM to provide such assistance. | |
7.3 | ARMs obligation under this Clause 7 is limited expressly to the provision of Maintenance to LICENSEE and ARM shall be under no obligation to provide any maintenance to any Designer, Customer, Manufacturer, Test House or other third parties. | |
7.4 | If ARM believes at any time that any ARM Technology infringes the Intellectual Property of any third party, then ARM, at its option and expense, may develop an Update to the relevant ARM Technology which in ARMs opinion avoids such infringement and upon receipt of such Update from ARM, LICENSEE shall cease use of the ARM Technology which the Update replaces. | |
8. | Support | |
8.1 | Subject to LICENSEEs payment of the appropriate Fees (defined in Clause 6.1), ARM shall provide to LICENSEE, in respect of the relevant ARM Technology, reasonable telephone, e-mail and written consultation about the operation and application of such ARM Technology. The services provided under this Clause 8.1 shall be limited in accordance with the provisions of Section 4 of the relevant Annex 1. | |
8.2 | The support shall be provided from the relevant ARM support centre. Nevertheless, ARM will use reasonable efforts to provide support to LICENSEE, at LICENSEEs premises, subject to LICENSEE meeting all reasonable travelling, accommodation and sustenance expenses thereby incurred and agreed in advance in writing with LICENSEE. | |
8.3 | ARMs obligation under this Clause 8 is limited expressly to the provision of support to LICENSEE and ARM shall be under no obligation to provide any support any Designer, Customer, Manufacturer, Test House or other third parties. |
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8.4 | Upon LICENSEE requesting ARMs assistance pursuant to the provisions of Clause 8.1, LICENSEE shall promptly provide to ARM such samples and technical information as ARM may reasonably require to enable ARM to provide such assistance. | |
9. | Training | |
9.1 | If provided for in Section 5 of a relevant Annex 1, ARM shall provide training in respect of the relevant ARM Technology in accordance with the provisions of Section 5 of the relevant Annex 1. | |
10. | ARM Technology Functionality Warranties | |
10.1 | Except as expressly provided in this TLA, ARM provides no warranties express, implied or statutory, including, without limitation, the implied warranties of satisfactory quality or fitness for a particular purpose with respect to the ARM Technology. | |
10.2 | ARM warrants to LICENSEE that the ARM Technology will be consistent with allowing a competent semiconductor manufacturer to manufacture products which substantially conform to the functionality described in the relevant technical reference manual. LICENSEE acknowledges that the process for converting the ARM Technology delivered to LICENSEE in to silicon necessarily involves the introduction and use of technology not delivered by ARM and accordingly ARMs liability and LICENSEEs sole remedy for breach of the warranty provided under this Clause 10.2 shall be as follows; if LICENSEE can demonstrate to ARM that any defect in the silicon developed using any ARM Technology is exclusively caused by a defect in the ARM Technology as delivered to LICENSEE then ARM shall use commercially reasonable efforts to correct any errors in the ARM Technology and deliver corrected ARM Technology to LICENSEE. THE FOREGOING STATES THE ENTIRE LIABILITY OF ARM WITH RESPECT TO BREACH OF THE WARRANTY PROVIDED IN THIS CLAUSE 10.2. | |
10.3 | ARM shall not be responsible for any recoverable or non-recoverable costs incurred, directly or indirectly, by LICENSEE in the design migration, processing, or manufacture of masks and prototypes, characterization or manufacture of production quality silicon in whatever quantity. | |
11. | ARM Technology Intellectual Property Warranties | |
11.1 | ARM warrants, to ARMs knowledge and belief, that; |
(i) | the ARM Technology does not infringe any third party copyright, mask work right or trade secret; and | ||
(ii) | as at the relevant Annex Effective Date, there are no pending; (a) Claims, or (b) actions commenced against ARM for infringement by the relevant ARM Technology of any third party Intellectual Property. |
12. | Intellectual Property Indemnities | |
12.1 | Except as provided under Clause 12.2, in the event of a suit against LICENSEE based upon a claim that any of the ARM Technology delivered by ARM to LICENSEE under this TLA, when used in accordance with this TLA, infringes any third party Intellectual Property, ARM agrees, subject to the limitations of Clauses 13.1 and 13.2, to defend and indemnify LICENSEE, at ARMs expense, and to pay costs and damages finally awarded in any such suit, provided that; (i) ARM is promptly notified by LICENSEE, in writing, of any threats, claims and proceedings related thereto; (ii) ARM shall have sole control of the defence and any settlement thereof; (iii) LICENSEE shall not make any admission of liability nor settle or otherwise compromise any such claim without ARMs prior written consent; (iv) LICENSEE furnishes to ARM, upon request, any information available to LICENSEE relating to the defence of such claim; (v) LICENSEE provides reasonable assistance to ARM in the defence of such claim; and (vi) ARM, at its option and expense, may; (a) obtain for LICENSEE the right to continue to use the ARM Technology; or (b) replace or modify the ARM Technology so that it becomes non-infringing, in which event LICENSEE shall cease use of the infringing ARM Technology. THE FOREGOING STATES THE ENTIRE LIABILITY OF ARM |
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14. | Term, Termination and Expiration | |
TLA Term | ||
14.1 | Except as provided below, this TLA shall commence on the Effective Date and shall continue in force unless earlier terminated in accordance with the provisions of either of Clause 14.2 or Clause 14.3. | |
Termination by Either Party | ||
14.2 | Without prejudice to any other right or remedy which may be available to it, either party shall be entitled to immediately terminate this TLA (including all Annexes incorporated thereunder) by giving written notice to the other, if the other party: |
(i) | has committed a material breach of any of its obligations hereunder which is not capable of remedy; or | ||
(ii) | has committed a material breach of any of its obligations hereunder which is capable of remedy but which has not been remedied within a period of sixty (60) days following receipt of written notice to do so; or | ||
(iii) | any circumstances arise which would entitle the court or a creditor to appoint a receiver, administrative receiver or administrator or to present a winding-up petition or make a winding-up order; or | ||
(iv) | makes any voluntary arrangement with its creditors for the general settlement of its debts or becomes subject to an administration order; or | ||
(v) | has an order made against it, or passes a resolution, for its winding-up (except for the purposes of amalgamation or reconstruction) or has a receiver or similar officer appointed over all or substantially all of its property or assets. |
Termination by ARM | ||
14.3 | If a court of competent jurisdiction issues a judgement that any ARM Technology infringes the Intellectual Property of a third party, then the licences granted to such ARM Technology under this TLA shall terminate unless LICENSEE or ARM has obtained the necessary rights, from such third party, for LICENSEE to continue to exercise such licenses. | |
Annex Expiry | ||
14.4 | Each Annex shall commence on the Annex Effective Date (defined in each Annex 1) and shall continue in force for the Term set out therein unless earlier terminated in accordance with the provisions either Clause 14.2 or Clause 14.3. | |
15. | Effect of Expiry and Termination | |
Termination by ARM | ||
15.1 | Upon termination of this TLA by ARM in accordance with either of Clause 14.2, LICENSEE will immediately discontinue any use and distribution of all ARM Technology, ARM Confidential Information and any products embodying such technology or information. LICENSEE shall, at ARMs option, either destroy or return to ARM any ARM Confidential Information, including any copies thereof in its possession and any ARM Technology or derivatives (including any translation, modification, compilation, abridgement or other form in which the ARM Technology has been recast, transformed or adapted) thereof in its possession. Within one month after termination of this TLA LICENSEE will furnish to ARM a certificate signed by a duly authorised representative of LICENSEE that to the best of his or her knowledge, information and belief, after due enquiry, LICENSEE has complied with provisions of this Clause. | |
Upon termination of this TLA by ARM in accordance with either of Clauses 14.2; (i) the termination date shall be treated as the end of a Quarter for the purpose of accounting for Royalties to ARM; and (ii) any fees outstanding, |
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whether or not such fees have become due at the date of termination) shall become due and payable to ARM in accordance with the provisions of Clause 6. | ||
Termination by LICENSEE | ||
15.2 | Upon termination of this TLA by LICENSEE pursuant to Clause 14.2 the licenses granted under Clause 2 of this TLA shall survive such termination, subject to the terms and conditions of this TLA including but not limited to LICENSEEs continued payment, to ARM, its liquidator or receiver of any fees and Royalties due at the date of termination or in the future in accordance with the provisions of Clause 6. | |
Annex 1 Termination | ||
15.3 | Upon termination of any Annex 1 in accordance with the provisions of Clause 14.3 LICENSEE will immediately discontinue any use and distribution of all the relevant ARM Technology, ARM Confidential Information and any products embodying such technology or information. LICENSEE shall, at ARMs option, either destroy or return to ARM any ARM Confidential Information, including any copies thereof in its possession and any ARM Technology or derivatives (including any translation, modification, compilation, abridgement or other form in which the ARM Technology has been recast, transformed or adapted) thereof in its possession licensed or disclosed to LICENSEE in connections with such Annex 1. Within one month after termination of the relevant Annex 1, LICENSEE will furnish to ARM a certificate signed by a duly authorised representative of LICENSEE that to the best of his or her knowledge, information and belief, after due inquiry, LICENSEE has complied with provisions of this Clause 15.3. | |
Upon termination of any Annex 1 by ARM in accordance with either of Clauses 14.3; (i) the termination date shall be treated as the end of a Quarter for the purpose of accounting for Royalties to ARM; and (ii) any fees outstanding, whether or not such fees have become due at the date of termination) shall become due and payable to ARM in accordance with the provisions of Clause 6. | ||
Annex 1 Expiry | ||
15.4 | Upon expiry of any Annex 1 in accordance with the provisions of Clause 14.4, |
(i) | any licences granted under Section 2 of the relevant Annex 1, to use copy and modify the relevant ARM Technology to develop products shall cease; | ||
(ii) | any licences granted under Section 2 of the relevant Annex 1, to manufacture, have manufactured and sell supply or otherwise distribute products developed using the relevant ARM Technology shall survive subject to the terms and conditions of this TLA and subject to the continued payment to ARM of any fees and Royalties due at the time of expiry and in the future under the terms of this TLA and provided that such products are already being distributed at the date of expiry of the Annex 1; and | ||
(iii) | except as expressly provided to the contrary in this Clause 15.4(iii), LICENSEE shall at ARMs option, either destroy or return to ARM any ARM Confidential Information, including any copies thereof in its possession and any ARM Technology or derivatives (including any translation, modification, compilation, abridgement or other form in which the ARM Technology has been recast, transformed or adapted) thereof in its possession but LICENSEE may keep one copy of the relevant ARM Technology for the purpose of supporting the products referred to in Clause 15.4(ii). |
15.5 | Upon termination the provisions of Clauses 1, 3, 6 (to the extent that any obligation under this Clause remains outstanding), 11, 13, 15 and 16 shall survive termination. | |
16. | General | |
16.1 | All communications between the parties including, but not limited to, notices, royalty reports, error or bug reports, the exercise of options, and support requests shall be in the English language. | |
16.2 | All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out below (either party may change their respective address for service by giving notice of the change to the other party). Any such notice may be delivered personally, by commercial overnight courier or facsimile transmission which shall be followed by a hard copy and shall be deemed to have been served if by hand when |
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delivered, if by commercial overnight courier 48 hours after deposit with such courier, and if by facsimile transmission when dispatched. |
ARM Contact | LICENSEE Contact | |
16.3 | Neither party shall assign or otherwise transfer this TLA or any of its rights and obligations hereunder whether in whole or in part without the prior written consent of the other, such consent not to be unreasonably withheld. An assignment shall be deemed to include, without limitation; (i) a merger of one party with a third party, whether or not the party is a surviving entity; (ii) any transaction or series of transactions whereby a third party acquires direct or indirect power to control the management and policies of the party, whether through the acquisition of voting securities, by contract or otherwise; or (iii) the sale of more than fifty percent (50%) of the partys assets whether in a single transaction or series of transactions. | |
16.4 | Neither party shall be liable for any failure or delay in its performance under this TLA due to causes, including, but not limited to, acts of God, acts of civil or military authority, fires, epidemics, floods, earthquakes, riots, wars, sabotage, third party industrial disputes and governments actions, which are beyond its reasonable control; provided that the delayed party: (i) gives the other party written notice of such cause promptly, and in any event within fourteen (14) days of discovery thereof; and (ii) uses its reasonable efforts to correct such failure or delay in its performance. The delayed partys time for performance or cure under this Clause 16.4 shall be extended for a period equal to the duration of the cause. | |
16.5 | ARM and LICENSEE are independent parties. Neither company nor their employees, consultants, contractors or agents are agents, employees or joint venturers of the other party, nor do they have the authority to bind the other party by contract or otherwise to any obligation. Neither party will represent to the contrary, either expressly, implicitly, by appearance or otherwise. | |
16.6 | Except as expressly provided under Clause 3 of this TLA, the parties agree that the terms and conditions of this TLA shall be treated as Confidential Information hereunder and shall not be disclosed without the consent of both parties. | |
16.7 | Failure or delay by either party to enforce any provision of this TLA shall not be deemed a waiver of future enforcement of that or any other provision. | |
16.8 | The provisions contained in each clause and sub-clause of this TLA shall be enforceable independently of each of the others and if a provision of this TLA is, or becomes, illegal, invalid or deemed unenforceable by any court or administrative body of competent jurisdiction it shall not affect the legality, validity or enforceability of any other provisions of this TLA. If any of these provisions is so held to be illegal. Invalid or unenforceable but would be legal, valid or enforceable if some part of the provision were deleted, the provision in question will apply with such modification as may be necessary to make it legal, valid or enforceable. | |
16.9 | This TLA, including all Annexes, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior or contemporaneous understandings or agreements, written or oral, regarding the subject matter. Except in respect of changes to the Trademark Guidelines which may be changed in accordance with the provisions of Clause 2.9, no amendment to or modification of this TLA shall be binding unless in writing and signed by a duly Authorized representative of both parties. | |
16.10 | The ARM Technology provided under this TLA is subject to U.S. export control laws, including the U.S. Export Administration Act and its associated regulations, and may be subject to export or import regulations in other countries. LICENSEE agrees to comply fully with all laws and regulations of the United States and other countries ( Export Laws ) to assure that neither the ARM Technology, nor any direct products thereof are; (i) exported, directly or indirectly, in violation of Export Laws, either to any countries that are subject to U.S export restrictions or to any end user who has been prohibited from participating in the U.S. export transactions by any federal agency |
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of the U.S. government; or (ii) intended to be used for any purpose prohibited by Export Laws, including, without limitation, nuclear, chemical, or biological weapons proliferation. | ||
16.11 | Any ARM Technology provided to the US Government pursuant to solicitations issued on or after December 1 st 1995 is provided with the rights and restrictions described elsewhere herein. Any ARM Technology provided to the US Government pursuant to solicitations issued prior to December 1 st 1995 is provided with Restricted Rights as provided for in FAR, 48 CFR 52.227-14 (JUNE 1987) or DFAR, 48 CFR 252.227-7013 (OCT 1988), as applicable. LICENSEE shall be responsible for ensuring that the ARM Technology is marked with the Restrictive Rights Notice or Restrictive Rights Legend, as required. | |
16.12 | Except as expressly stated in this TLA, the Contracts (Rights of Third Parties) Act 1999 and any legislation amending or replacing that Act shall not apply in relation to this TLA or any agreement, arrangement, understanding, liability or obligation arising under or in connection with this TLA and nothing in this TLA shall confer on any third party the right to enforce any provision of this TLA. | |
16.13 | The validity, construction and performance of this TLA shall be governed by English Law. In the event that ARM commences proceedings against LICENSEE under this Agreement, the parties agree to submit to the jurisdiction of the Seoul District Court, Korea, for the purpose of hearing and determining any disputes arising out of this Agreement. In the event that LICENSEE commences proceedings against ARM under this Agreement, the parties agree to submit to the jurisdiction of the High Court of Justice, London, England, for the purpose of hearing and determining any disputes arising out of this Agreement. | |
IN WITNESS WHEREOF the parties have caused this TLA to be executed by their duly authorised representatives: |
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20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
1. | Definitions | |
Active Project means a project described in a Project Statement for which any fees as set out in the Fees Statement remain unpaid. | ||
ARM Services means the services to be provided by ARM to Customer and described in Section 1 of each Statement of Work, subject to any change thereto effected by Change Order. | ||
ARM Deliverables means the items identified in Section 2 of each Statement of Work, subject to any change thereto effected by Change Order. | ||
ARM Delivery Schedule means the forecast dates for the performance of the ARM Services for and delivery of the ARM Deliverables to, Customer and set out respectively in Section 1 and Section 2 of each Statement of Work, subject to any change thereto effected by Change Order. | ||
Assumptions means the assumptions made by ARM and circumstances contemplated by the parties in respect of each project as at the Effective Date (defined in each Project Statement) as set out in Section 5 of each Project Statement. | ||
Change Order means a document signed by both parties recording any changes to any Project Statement from time to time that have been mutually agreed by the parties. | ||
Confidential Information means; (i) ARM Deliverables (including any translation, modification, compilation, abridgement or other form in which the ARM Deliverables have been recast, transformed or adapted) and any trade secrets relating to the ARM Deliverables; (ii) any information designated in writing by either party, by appropriate legend, as confidential; (iii) any information which if first disclosed orally is identified as confidential at the time of disclosure and is thereafter reduced to writing for confirmation and sent to the other party within thirty (30) days after its oral disclosure and designated, by appropriate legend as confidential; and (iv) the terms and conditions of this Agreement | ||
Customer Deliverables means the items identified in Section 3 of each Statement of Work, subject to any change thereto effected by Change Order. | ||
Customer Delivery Schedule means the dates for delivery of the Customer Deliverables to ARM and set out in Section 3 of each Statement of Work, subject to any change thereto effected by Change Order. | ||
Design Rules means the process design rules specified by Customer and identified in Section 4 of each Statement of Work. | ||
Fees Statement means the statement (Schedule 2 of each Project Statement) setting out the amount of or basis for charging fees due to ARM for the performance of the ARM Services and delivery of the ARM Deliverables to Customer for each Project Statement together with the dates upon which such fees shall be due, subject to any change thereto effected by Change Order. | ||
Intellectual Property means any patents, patent rights, trade marks, service marks, registered designs, topography or semiconductor mask work rights, applications for any of the foregoing, unregistered design |
NM/CL | 1 | ARM/Magnachip Semiconductor Ltd. |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
rights, copyright and any other similar protected rights in any country to the extent recognised by any relevant jurisdiction as intellectual property, trade secrets, know-how and Confidential Information. | ||
Prefab Characterisation Conditions means the prefabrication characterisation conditions specified by Customer and identified in Section 4 of each Statement of Work. | ||
Project Statement means a statement (Annexed hereto) signed by both parties and referencing this Agreement comprising a Statement of Work and Fees Statement, subject to any change thereto effected by Change Order. | ||
Statement of Work means the statement (Schedule 1 of each Project Statement) detailing each separate project undertaken by ARM for Customer from time to time under the terms and conditions of this Agreement and including a description of the ARM Services, the ARM Deliverables, the ARM Delivery Schedule, a description of the Customer Deliverables and the Customer Delivery Schedule, subject to any change thereto effected by Change Order. | ||
Subsidiary means any company the majority of whose voting shares is now or hereafter owned or controlled, directly or indirectly, by a party hereto. A company shall be a Subsidiary only so long as such control exists. | ||
TLA means the technology license agreement identified on page one (1) of each Project Statement. | ||
2. | Provision of ARM Services | |
2.1 | ARM shall perform the ARM Services for Customer in accordance with the terms and conditions of this Agreement. | |
2.2 | ARM shall perform the ARM Services utilising such resources, employees and subcontractors as ARM in its sole discretion deems appropriate. | |
2.3 | ARM shall use commercially reasonable efforts to perform the ARM Services in accordance with the ARM Delivery Schedule. | |
3. | ARM Deliverables | |
Change Control | ||
3.1 | Either party may request an amendment to a Project Statement by Change Order. | |
3.2 | Customer may request a Change Order by submitting a request for a Change Order ( Change Order Request ) to ARM. A Change Order Request may be oral or in writing and shall not require any formality. Any request from Customer which ARM reasonably believes will affect the terms of a Project Statement may be deemed by ARM to be a Change Order Request ARM shall review any Change Order Request in good faith and report to Customer in writing in the form of a draft Change Order; (i) whether such change is technically feasible and if technically feasible; (ii) the reasonable impact on the ARM Delivery Schedule and Customer Delivery Schedule; and (iii) any necessary revision to the ARM Services, ARM Deliverables, Customer Deliverables and Fees Statement, as appropriate. ARM shall be under no obligation to accept the terms of any Change Order Request and Customer shall be under no obligation to accept the terms of any draft Change Order. If the terms of a Change Order Request are agreed by ARM and the terms of a respective draft Change Order are agreed by Customer the draft Change Order shall be signed by both parties. Customer shall bear all costs and expenses associated with any variation requested by Customer to any Project Statement including the cost of any feasibility study connected with the analysis of such variation. ARM shall be entitled to continue performing the ARM Services in accordance with the relevant Project Statement until the parties have agreed the terms of any Change Order |
NM/CL | 2 | ARM/Magnachip Semiconductor Ltd. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
3.3 | ARM may request a Change Order in response to a Change Order Request by Customer by submitting a draft Change Order to Customer. Within ten (10) working days of receiving a draft Change Order from ARM, Customer shall review the draft Change Order in good faith and report to ARM in writing whether the terms of such draft Change Order are acceptable. Customer shall be under no obligation to accept the terms of any draft Change Order. If the terms of a draft Change Order are accepted by Customer the draft Change Order shall be signed by both parties. If no report on the draft Change Order is received by ARM from Customer within ten (10) working days of receipt of the Change Order by Customer then ARM may deem the terms of such draft Change Order to have been agreed by Customer. | |
3.4 | Any Change Order shall be attached to the Project Statement. After execution of a Change Order by both parties the amendments detailed therein shall be incorporated into the Project Statement and Fees Statement as appropriate and shall form part of this Agreement | |
Delivery | ||
3.5 | Subject to the prior execution of the TLA by ARM and Customer, ARM shall use commercially reasonable efforts to deliver the ARM Deliverables to Customer in accordance with the ARM Delivery Schedule. ARM shall have no obligation to deliver the ARM Deliverables to Customer prior to execution of the TLA by ARM and Customer. | |
4 | ARM Services; Limited Warranty and Limitation of Liability | |
4.1 | ARM shall use reasonable skill and care in performing the ARM Services for Customer. | |
4.2 | Customer acknowledges that changes to any of the Design Rules, Prefab Characterisation Conditions or Assumptions may affect the ability of ARM to perform the ARM Services in accordance with the ARM Delivery Schedule and in such event the parties shall work together in good faith to minimize the impact of the change. Any change to the Project Statement resulting from any changes to any of the Design Rules, Prefab Characterization Conditions or Assumptions shall be managed by Change Order in accordance with the provisions of Clause 3. ARM shall have no liability for any delays or increased costs in the provision of the ARM Services which result directly from changes to any of the Design Rules, Prefab Characterization Conditions or Assumptions. | |
5. | ARM Deliverables and Limitation of Liability | |
5.1 | Customer acknowledges that changes to any of the Design Rules, Prefab Characterisation Conditions or Assumptions set out by the parties in the relevant Statement of Work may affect the ability of ARM to deliver the ARM Deliverables in accordance with the ARM Delivery Schedule and in such event the parties shall work together in good faith to minimize the impact of the change. Any change to the Project Statement resulting from any changes to any of the Design Rules, Prefab Characterization Conditions or Assumptions shall be managed by Change Order in accordance with the provisions of Clause 3. ARM shall have no liability for any delays or increased costs in the delivery of the ARM Deliverables which result directly from changes to any of the Design Rules, Prefab Characterization Conditions or Assumptions. | |
6. | Customer Deliverables | |
6.1 | Customer shall provide ARM with all necessary accurate information and support and co-operation that may be reasonably required to enable ARM to perform the ARM Services for and deliver the ARM Deliverables to Customer in accordance with the ARM Delivery Schedule. | |
6.2 | Customer shall use commercially reasonable efforts to deliver the Customer Deliverables to ARM in accordance with the Customer Delivery Schedule. |
NM/CL | 3 | ARM/Magnachip Semiconductor Ltd. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
6.3 | ARM shall test each Customer Deliverable within ten (10) days of its receipt from Customer, and upon completion of the testing shall report to Customer, in writing, within two (2) working days whether or not the Customer Deliverable is accepted by ARM. If ARM believes that any Customer Deliverable is not acceptable, ARM shall provide Customer with details of why the deliverable is not acceptable and Customer shall use reasonable commercial efforts to modify the Customer Deliverable so that it is acceptable to ARM. | |
6.4 | If Customer fails; (i) to deliver, in accordance with the Customer Delivery Schedule, Customer Deliverables which are accepted by ARM in accordance with the provisions of Clause 6.3; or (ii) to provide ARM with all necessary, accurate information, support and co-operation that may be reasonably required to enable ARM to provide the ARM Services for and delivery of the ARM Deliverables to Customer in accordance with the ARM Delivery Schedule and such failure prevents ARM from meeting any of its obligations under Clauses 2.3 and 3.5, ARM shall be permitted to extend any relevant dependent dates in the ARM Delivery Schedule by Change Order for such period as is reasonable. If ARMs cost of providing the ARM Services to Customer is increased as a result of a failure by the Customer; (i) to deliver, in accordance with the Customer Delivery Schedule, Customer Deliverables which are accepted by ARM in accordance with the provisions of Clause 6.3; or (ii) to provide ARM with all necessary, accurate information, support and co-operation that may reasonably be required to enable ARM to provide the ARM Services for and delivery of the ARM Deliverables to Customer in accordance with the ARM Delivery Schedule, then the Customer shall pay such increased costs reasonably incurred on a time and materials basis at ARMS then prevailing consulting rate. Such increased costs reasonably incurred may include the cost of time during which ARM resources are under utilised as a direct result of the Customers failure to deliver, in accordance with the Customer Delivery Schedule, any Customer Deliverable which is accepted by ARM in accordance with the provisions of Clause 6.3. Any such change in the cost of providing the ARM Services to Customer shall be managed by Change Order in accordance with the provisions of Clause 3.3 except that provided the terms of the Change Order are reasonable Customer shall have no right to reject such Change Order. | |
7. | Fees, Taxes and Payment | |
7.1 | In consideration of ARM performing the ARM Services for and delivering the ARM Deliverables to Customer pursuant to each Statement of Work, fees shall be due to ARM from Customer in accordance with the Fees Statement. | |
7.2 | Unless otherwise agreed in writing by the parties Customer shall pay ARM all prior approved reasonable traveling, accommodation and subsistence expenses reasonably incurred by ARM when necessarily visiting Customers premises or the premises of any third party in the performance of the ARM Services. | |
7.3 | All sums stated under the Fees Statement do not include taxes. All applicable taxes shall be payable by Customer in accordance with relevant legislation in force at the relevant tax point. Any income or other tax which Customer is required by law to pay or withhold on behalf of ARM with respect to any fees payable to ARM under this Agreement may be deducted from the amount of such fees otherwise due, provided, however, that in regard to any such deduction, Customer shall give to ARM such assistance as may be necessary to enable or assist ARM to claim exemption therefore, or credit therefore, and shall upon request furnish to ARM such certificates and other evidence of deduction and payment thereof as ARM may properly require. | |
7.4 | Customer shall pay all fees due to ARM under the terms of this Agreement within thirty (30) days of receipt of ARMs invoice therefor (Due Date). | |
7.5 | If any sum under this Agreement is not paid by the Due Date (as defined in Clause 7.4), then (without prejudice to ARM s other rights and remedies in addition to the invoice amount) ARM reserves the right to charge interest on such sum on a day to day basis (as well after as before any judgment) from the Due Date to the date of payment at the rate of five (5%) per cent per annum above the base rate of National Westminster Bank PLC from time to time in force. | |
7.6 | If Customer fails to pay any sum due to ARM under this Agreement in accordance with the Fees Statement and the provisions of this Clause 7, ARM shall, upon giving at least seven (7) days notice in writing to |
NM/CL | 4 | ARM/Magnachip Semiconductor Ltd. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
Customer, be entitled to stop providing the ARM Services and withhold delivery of any ARM Deliverable until such payment is made. If ARM has stopped providing the ARM Services to Customer in accordance with this Clause 7.6, then ARM shall have no obligation to resume the performance of the ARM Services until Customer pays to ARM, in addition to any sums properly due but not paid, a fee equal to [*****] of the total fees due to ARM in accordance with the relevant Fees Schedule. | ||
7.7 | All sums properly due to ARM under this Agreement shall be paid in full and Customer shall not be entitled to assert against ARM any credit, set-off or counterclaim arising under any Project Statement in order to justify withholding payment of any sum properly due under any other Project Statement. Obligations under each Project Statement shall be construed as divisible from obligations under any other Project Statement for the purposes of interpreting this Clause 7.7. | |
8 | Confidentiality | |
8.1 | Subject to the provisions of Clause 8.2, the confidentiality provisions set out in the TLA shall apply (prior to the execution of the TLA as well as after) to Confidential Information disclosed between the parties under this Agreement. | |
8.2 | ARM is hereby authorised to disclose the Customers Confidential Information to third party subcontractors or consultants to the extent necessary for the performance by the sub-contractor or consultant (including without limitation any supplier of tools or equipment used in ARMs design flow) of any of the work under any Statement of Work that is assigned to it provided always that any such subcontractor or consultant is bound by provisions of confidentiality no less stringent than those provided by this Clause 8. | |
8.3 | ARM shall be permitted to disclose Customer Confidential Information to Subsidiaries of ARM subject to the same terms and conditions of confidentiality as are set out in this Agreement | |
9. | Intellectual Property Ownership and Licensing |
9.1 | The ARM Deliverables shall be deemed to be derived from the ARM Technology (as defined in the TLA) under Customers have designed rights granted in Clause 2.2 of the TLA and the terms of the TLA shall apply to such ARM Deliverables accordingly. |
9.2 | Unless otherwise agreed in writing between the parties, all right, title and interest in the Customer Deliverables and any Intellectual Property embodied therein shall vest in and be owned by Customer. |
9.3 | Customer hereby grants to ARM, a royalty free, non-exclusive, non-transferable, worldwide, license (or sublicense as appropriate) to use, copy and modify the Customer Deliverables and sublicense the rights to use, copy and modify the Customer Deliverables solely to ARMs subcontractors and solely for the purpose of creating the ARM Deliverables pursuant to the terms of this Agreement. |
9.4 | Except as specifically licensed in accordance with Clause 9.3, ARM acquires no right, title or interest in the Customer Deliverables or the Intellectual Property embodied therein. In no event shall the licenses granted under Clause 9.3 of this Agreement be construed as granting to ARM, expressly or by implication, estoppel or otherwise, a license to use any Customer or third party technology other than the Customer Deliverables. |
9.5 | ARM shall not remove or obscure any notice incorporated into the Customer Deliverables by Customer to protect any Intellectual Property of Customer. |
NM/CL | 5 | ARM/Magnachip Semiconductor Ltd. |
[*****] | - | Portions of this exhibit are subject to a request for confidential treatment and have been redacted and filed separately with the Securities and Exchange Commission. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
10. | Intellectual Property Warranties and Indemnities | |
10.1 | Subject to the provisions of Clause 10.2, the intellectual property warranties and indemnities set out in the TLA shall apply to the ARM Deliverables. | |
10.2 | ARM shall have no liability for any infringement arising from the use or incorporation into the ARM Deliverables, of any Customer Deliverables, if such infringement would not have occurred but for such use or incorporation. |
11. | Limitation of Liability | |
11.1 | EXCEPT IN RESPECT OF ANY BREACH OF THE PROVISIONS OF CLAUSE 8 (CONFIDENTIALITY), IN NO EVENT SHALL EITHER PARTY BE LIABLE UNDER THIS AGREEMENT FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHETHER SUCH DAMAGES ARE ALLEGED AS A RESULT OF TORTIOUS CONDUCT OR BREACH OF CONTRACT OR OTHERWISE EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. SUCH DAMAGES SHALL INCLUDE BUT SHALL NOT BE LIMITED TO THE COST OF REMOVAL AND REINSTALLATION OF GOODS, LOSS OF GOODWILL, LOSS OF PROFITS, LOSS OR USE OF DATA, INTERRUPTION OF BUSINESS OR OTHER ECONOMIC LOSS. | |
11.2 | EXCEPT IN RESPECT OF ANY CLAIM UNDER THE INTELLECTUAL PROPERTY INDEMNITY FOR WHICH THE LIMITATION OF LIABILITY SET OUT IN THE TLA SHALL APPLY, THE MAXIMUM LIABILITY OF ARM TO CUSTOMER IN AGGREGATE FOR ALL CLAIMS MADE AGAINST ARM IN CONTRACT TORT OR OTHERWISE UNDER OR IN CONNECTION WITH THE SUBJECT MATTER OF EACH PROJECT STATEMENT UNDER THIS AGREEMENT SHALL NOT EXCEED THE TOTAL OF SUMS PAID BY CUSTOMER TO ARM IN RESPECT OF SUCH PROJECT STATEMENT. | |
11.3 | NOTHING IN THIS CLAUSE 11 SHALL OPERATE TO EXCLUDE LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM EITHER PARTYS NEGLIGENCE. | |
12. | Termination | |
12.1 | Customer may terminate any Active Project upon giving at least thirty (30) days prior written notice of its intention to do so to ARM. | |
12.2 | Without prejudice to any other right or remedy which may be available to it either party shall be entitled summarily to terminate any or all Active Projects by giving written notice to the other party if; |
(i) | the other party has committed a material breach of any of its obligations under this Agreement which is not capable of remedy; | ||
(ii) | the other party has committed a material breach of any of its obligations under this Agreement which is capable of remedy but which has not been remedied within a period of fifteen (15) working days following receipt of written notice from the party seeing remedy to do so; | ||
(iii) | the other party makes any voluntary arrangement with its creditors or becomes subject to an administration order; or | ||
(iv) | the other party has an order made against it, or passes a resolution, for its winding-up (except for the purpose of bona fide solvent amalgamation or reconstruction) or has an encumbrancer take possession or has a receiver or similar officer appointed over a material part of its property or assets. |
NM/CL | 6 | ARM/Magnachip Semiconductor Ltd. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
13. | Effect of Termination | |
13.1 | Upon termination of this Agreement in respect of an Active Project, by Customer for convenience in accordance with the provisions of Clause 12.1 , without prejudice to any other right or remedy which may be available to either party; |
(i) | the licences granted to Customer hereunder and related to the terminated Active Project shall cease; | ||
(ii) | the rights granted to ARM hereunder and related to the terminated Active Project shall cease; | ||
(iii) | Customer shall immediately return to ARM the ARM Deliverables and all ARM Confidential Information related to the ARM Deliverables identified in the Statement of Work for the terminated Active Project, including any copies and modified versions thereof in Customers possession; | ||
(iv) | ARM shall immediately return to Customer or delete from ARMs system, all Customer Deliverables and Customer Confidential Information related to Customer Deliverables identified in the Statement of Work for the terminated Active Project, including any copies and modified versions thereof; and | ||
(v) | Customer shall pay, to ARM, within thirty (30) days of receipt of an invoice therefor; |
(a) | any sums due to ARM by Customer, but not invoiced at the date of termination, for any completed milestones as set out in the Fees Statement for the terminated Active Project; | ||
(b) | an amount representing the actual work performed, as at the date of termination, by ARM (calculated at ARMs then prevailing consulting rate) towards completion of the next open milestone as set out in the Fees Statement for the terminated Active Project; and | ||
(c) | a termination fee of five percent (5%) of the total fees (excluding any royalties) that would have been due under the Fees Statement for the terminated Active Project had it not been terminated in accordance with the provisions of Clause 12.1, |
13.2 | Upon termination of an Active Project by Customer under the provisions of Clause 12.2, without prejudice to any other right or remedy which may be available to either party; |
(i) | the licences granted to Customer hereunder and related to the terminated Active Project shall survive; | ||
(ii) | the rights granted to ARM hereunder and related to the terminated Active Project shall cease; | ||
(iii) | ARM shall immediately return to Customer or delete from ARMs system, all Customer Deliverables and Customer Confidential Information related to Customer Deliverables identified in the Statement of Work for the terminated Active Project, including any copies and modified versions thereof; and | ||
(iv) | Customer shall pay, to ARM, within thirty (30) days of receipt of an invoice therefor, |
(a) | any sums due to ARM by Customer, but not invoiced at the date of termination, for any completed milestones as set out in the Fees Statement for the terminated Active Project; and |
NM/CL | 7 | ARM/Magnachip Semiconductor Ltd. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
(b) | an amount representing the actual work performed, as at the date of termination, by ARM (calculated at ARMs then prevailing consulting rate) towards completion of the next open milestone as set out in the Fees Statement for the terminated Active Project; |
13.3 | Upon termination of an Active Project by ARM under the provisions of Clause 12.2, without prejudice to any other right or remedy which may be available to either party; |
(i) | the licences granted to Customer hereunder and related to the terminated Active Project shall cease; | ||
(ii) | the rights granted to ARM hereunder and related to the terminated Active Project shall cease; | ||
(iii) | Customer shall immediately return to ARM the ARM Deliverables and all ARM Confidential Information related to the ARM Deliverables identified in the Statement of Work for the terminated Active Project, including any copies and modified versions thereof in Customers possession; | ||
(iv) | ARM shall immediately return to Customer or delete from ARMs system, all Customer Deliverables and Customer Confidential Information related to Customer Deliverables identified in the Statement of Work for the terminated Active Project, including any copies and modified versions thereof; and | ||
(v) | Customer shall pay, to ARM, within thirty (30) days of receipt of an invoice therefor; |
(a) | any sums due to ARM by Customer, but not invoiced at the date of termination, for any completed milestones as set out in the Fees Statement for the terminated Active Project; and | ||
(b) | an amount representing the actual work performed, as at the date of termination, by ARM (calculated at ARMs then prevailing consulting rate) towards completion of the next open milestone as set out in the Fees Statement for the terminated Active Project; |
13.4 | The provisions of Clauses 1, 7 (to the extent that any payment has accrued and is outstanding), 8, 11, 13 and 14 shall survive termination of the Agreement. |
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Notices | All notices which are required to be given hereunder shall be in writing (which may include electronic mail) and shall be sent to the address of the recipient set out in the Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of this Clause. Any such notice may be delivered personally, by commercial overnight courier or facsimile transmission which shall be followed by a hard copy and shall be deemed to have been served if by hand when delivered, if by commercial overnight courier 48 hours after deposit with such courier and if by facsimile transmission when dispatched. | ||
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Assignment | Except as expressly provided elsewhere in this Agreement, neither party may assign or otherwise transfer this Agreement or any of their rights and |
NM/CL | 8 | ARM/Magnachip Semiconductor Ltd. |
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obligations hereunder whether in whole or in part without the prior, written, consent of the other. |
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Non-association | ARM and Customer are independent parties. Neither party or their employees, consultants, contractors or agents, are agents, employees or joint ventures of the other party nor do they have the authority to bind the other party by contract or otherwise to any obligation. Neither party will represent to the contrary, either expressly, implicitly, by appearance or otherwise. | ||
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Waiver | Failure or delay by either party to enforce any provision of this Agreement shall not be deemed a waiver of the right to enforce, in the future, that or any other provision of this Agreement. | ||
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Force Majeure | ARM shall not be liable to Customer for any delay in or failure to perform its obligations as a result of any failure by a supplier to deliver a relevant deliverable to ARM on time. If such delay continues for a period of more than thirty (30) days, then either party shall be entitled to terminate this Agreement by written notice to the other party. | ||
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Neither party shall be liable for any failure or delay in its performance under this Agreement due to causes, including, but not limited to, acts of God, acts of civil or military authority, fires, epidemics, floods, earthquakes, riots, wars, sabotage, third party industrial disputes and governments actions, which are beyond its reasonable control; provided that the delayed party: (i) gives the other party written notice of such cause promptly, and in any event within fourteen (14) days of discovery thereof; and (ii) uses its reasonable efforts to correct such failure or delay in its performance. The delayed partys time for performance or cure under this Clause shall be extended for a period equal to the duration of the cause. | |||
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Severance | The provisions contained in each clause and sub-clause of this Agreement shall be enforceable independently of each of the others and if any provision of this Agreement is or becomes invalid, illegal or deemed unenforceable for any reason by any court or administrative body of competent jurisdiction it shall not affect the legality, validity or enforceability of any other provisions of this Agreement. If any of these provisions is so held to be illegal, invalid or unenforceable but would be legal, valid or enforceable if some part of the provision were deleted, the provision in question will apply with such modification as may be necessary to make it legal, valid or enforceable. | ||
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Entire Agreement | This Agreement, including all Project Statements, constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior or contemporaneous understandings or agreements, written or oral, regarding the subject matter. No amendment to or modification of this Agreement shall be binding unless in writing and signed by a duly Authorized representative of both parties | ||
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Export | The ARM Deliverables provided under this Agreement are subject to U.S. export control laws, including the U.S. Export Administration Act and its associated regulations, and may be subject to export or import regulations in other countries. Customer agrees to comply fully with all laws and regulations of the United States and other countries (Export Laws) to assure that neither the ARM Deliverables, nor any direct products thereof are; (i) exported, directly or indirectly, in violation of Export Laws, either to any countries that are subject to U.S export restrictions or to any end user who has been prohibited from participating in the U.S. export transactions by any federal agency of the U.S. government; or (ii) intended to be used for any purpose prohibited by Export Laws, including, without limitation, nuclear, chemical, or biological weapons proliferation. |
NM/CL | 9 | ARM/Magnachip Semiconductor Ltd. |
20 February, 2007 | CONFIDENTIAL | LEC-DMA-00137-V3.0 |
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Any ARM Deliverables provided to the US Government pursuant to solicitations issued on or after December 1 st 1995 is provided with the rights and restrictions described elsewhere herein. Any ARM Deliverables provided to the US Government pursuant to solicitations issued prior to December 1 st 1995 is provided with Restricted Rights as provided for in FAR, 48 CFR 52.227-14 (JUNE 1987) or DFAR, 48 CFR 252.227-7013 (OCT 1988), as applicable. Customer shall be responsible for ensuring that the ARM Deliverables is marked with the Restrictive Rights Notice or Restrictive Rights Legend, as required. | |||
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Incorporation | Each Project Statement generated from time to time and referencing this Agreement shall be incorporated into and form part of this Agreement. | ||
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Precedence | Notwithstanding anything to the contrary contained elsewhere in this Agreement, if any of the provisions contained in a Project Statement conflict or are inconsistent with any of the provisions of any of Clauses 1 to 14 of this Agreement inclusive, then to the extent that the provisions contained in such Project Statement are inconsistent with any of the provisions of any of Clauses 1 to 14 of this Agreement inclusive and solely for the purposes of interpretation of this Agreement with respect to such Project Statement, the provisions contained in such Project Statement shall prevail over and shall supersede the conflicting or inconsistent provisions in Clauses 1 to 14 of this Agreement inclusive. | ||
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Notwithstanding anything to the contrary contained elsewhere in this Agreement or any Project Statement, if any of the provisions contained in the TLA conflict or are inconsistent with any of the provisions of any of Clauses 1 to 14 of this Agreement inclusive, then to the extent that the provisions contained in the TLA are inconsistent with any of the provisions of any of Clauses 1 to 14 of this Agreement inclusive, the provisions contained in the TLA shall prevail over and shall supersede the conflicting or inconsistent provisions in Clauses 1 to 14 of this Agreement inclusive. | |||
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English Law | The validity, construction and performance of this Agreement shall be governed by English Law. |
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/s/Graham Budd
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/s/ Robert Krakauer
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NAME: Graham Budd | NAME: Robert Krakauer | ||||||||
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TITLE: EVP and General Manage Processors Division | TITLE: President |
NM/CL | 10 | ARM/Magnachip Semiconductor Ltd. |
1. | Contract Product shall mean all products that MC and SW are currently co-developing and will co-develop in the future and all their Derivative Products, and product specifications for the Contract Product shall be specified in the Contract on Development of the Contract Product. | ||
2. | Derivative Product shall mean any product whose gamma is changed from the Contract Product (in case of source driver) and any product whose design is changed from the Contract Product (reinforcement and complement of its characteristics). | ||
3. | Technical Information shall mean any technical information, including but not limited to product specifications, test plan, assembly plan and RT plan that are required for MC to manufacture and sell the Contract Product. The Technical Information which shall be kept confidential is classified and specified as Confidential Information. The details are based on Attachment 1. | ||
4. | Co-development shall mean a series of development activities for which SW takes the responsibility of design for the Contract Product, MC manufactures it, SW and MC jointly validate characteristics of the products and MC completes the development in accordance with the rule on new product introduction (NPI, hereinafter). |
1. | SW shall grant to MC the license that permits MC to manufacture and sell the Contract Product using SWs Technical Information (including license to subcontract manufacturing and re-license). | ||
2. | MC shall pay a running royalty to SW as prescribed in Article 7 of this Contract and in the Development Contract for the Contract Product in return for the grant of license as prescribed paragraph 1 of this Article. |
1. | In accordance with the Product Specification as prescribed in the Development Contract for the Contract Product, MC and SW shall conduct development work in a good faith. In case of Derivative Product, MC and SW may determine product specification and development schedule through discussion when the development is needed. | ||
2. | When MC manufactures the Contract Product, SW shall provide needed technological support to MC based on the Technical Information prescribed in paragraph 3, Article 2 of this Contract. |
3. | In case the development work is hindered due to the reasons for which one of the two parties is not responsible during the development work that was being executed based on this Contract, the party shall immediately notify the other party of the disturbance and if the reason for the disturbance is not removed through mutual consultation, either of the two parties may terminate this Contract by delivering written notice to the other party without taking any responsibility for contract violation. | ||
4. | The development work stipulated in this Contract shall be deemed to be completed at the time when the Contract Product or the Derivative Product passes examination by the Quality Evaluation and Judgment Committee as stipulated in MCs NPI, and SW shall provide utmost cooperation so that the Contract Product or Derivative Product passes the examination by the Quality Evaluation and Judgment Committee. |
1. | The Contract Product that MC manufactured or produced in accordance with license granted under Article 3 of this Contract, shall be supplied to LG.Philips LCD Co., Ltd., before any other entity in the volume that was agreed with LG.Philips LCD Co., Ltd. | ||
2. | After fulfilling the supply obligation to LG.Philips LCD Co., Ltd., stipulated in Article 1 of the Contract, MC may sell the Contract Product to a third party without any restriction, under the condition that when MC sells the Contract Product to a third party, the timing shall be six (6) months or more after LG.Philips LCD Co., Ltd. conducted the first mass production of LCD modules that have the Contract Product attached. |
1. | SW shall provide Technical Information on the Contract Product as prescribed in Attachment 1 to MC under its responsibility and at its cost as per procedures and methods mutually agreed between the two parties. | ||
2. | MC may ask for additional Technical Information without charge that is required to manufacture and sell the Contract Product through consultation with SW, and SW shall respond to such request. |
1. | MC shall pay a running royalty which is equivalent to a certain percentage of the Net Selling Price of the Contract Product in return for the license granted by SW based on this Contract by end of the next month of the month when the Contract Product was sold. | ||
2. | The Net Selling Price referred to in this Contract shall mean the total selling amount minus all the expenses incurred for sales of the Contract Product including, but limited to the following amount and it is set as 0.1% of the total selling price. |
Discount given in accordance with transaction discount practice | |||
Price of the Contract Products that were returned due to defect | |||
Value-added tax imposed in relation to sale of the Contract Product | |||
Insurance and transportation charges incurred in relation to sale of the Contract Product |
3. | The rate of the running royalty for the Contract Product is determined based on agreement between the two parties when the Development Contract is sealed and the Development Contract, in principle, shall be signed 15 days before initiation of development of the Contract Product. |
4. | The rate of the running royalty, payment terms and penalty interest due to delinquencies are determined and prescribed in the Development Contract. |
1. | The cost for design of the Contract Product is wholly borne by SW. | ||
2. | The sample production cost for the Contract Product is wholly borne by MC under the condition that Masks consumed in this case shall be limited to 1.5 sets per product. | ||
3. | Additional Mask costs that exceed the limit of paragraph 2 of this Article shall be paid by the party that caused those costs. | ||
4. | The development schedule for the Contract Product is agreed between the two parties to meet the deadlines required by LG.Philips LCD Co., Ltd. |
1. | After finishing the first manufacturing of the Contract Product using Technical Information provided by SW, MC shall provide the reliability test result for the products. If the reliability test result indicates any problem that is caused by flawed design, SW shall provide the technical support to MC to resolve the identified problem with no charge. | ||
2. | When there is any request by MC during the Contract period, SW shall provide to MC with no charge the design related technical support required for manufacturing, testing, field application engineering (FAE) and sale of the Contract Product using the Technical Information based on mutual consultation between the two parties. The detailed contents and method of technical support are determined and agreed by MC and SW based on MCs request. |
1. | The intellectual properties for the technical information that MC provided for the Contract Product is owned by MC and those for the technical information that SW provided for the Contract Product is owned by SW. | ||
2. | The technical information that is developed jointly by MC and SW is co-owned by MC and SW and in case the co-owned technical information violates intellectual property of a third who raises claim for that or files related lawsuits, MC and SW shall respond to the claim or the lawsuits under the joint responsibility and joint payment for the incurred costs. |
1. | In case MC finds any design flaw(s) after careful observation during sales or use of the Contract Product, it my take corrective measures including, but not limited to, recalls or may request that SW fix the flaw(s) including, but not limited to, design modification. | ||
2. | In case of paragraph 1, SW shall take the responsibility of fixing the flaw(s) at its expense and compensate for all the losses that may have inflicted on MC due to design flaw(s) including costs for recall and product liability to a third party. |
1. | Unless terminated per paragraph 2 and 3 of this Article, this Contract remains effective for five years after it is signed, and it is automatically renewed every year in case there is no written notice of termination of either of the two parties three months before expiry of the Contract at the latest. | ||
2. | In case either of the parties violates the Contract, the other party may demand the violating party, in written manner, to execute its obligations within 30 days at minimum and in case such obligations are not fulfilled within the time frame given, it may immediately terminate the Contract via written notice. | ||
3. | In case either of the following occurs to either of the two parties, the other party may immediately terminate the Contract via written notice. |
a. | Bills or checks that are issued, guaranteed for payment or accepted by either of the two parties bounced or are suspended for trading. | ||
b. | Forcible execution including seizure, provisional seizure and provisional disposition, is commenced to either of the two parties or their main assets | ||
c. | Bankruptcy, liquidation, composition or company disorganization is commenced to either of the two parties. | ||
d. | Due to any other events, usual business cannot be conducted. |
4. | When the Contract is terminated or expired, the license granted as per this Contract immediately loses its effect and MC shall immediately return to SW or scrap according to SWs instruction all related technical documents and other materials (including copies) held by MC or its subcontractors. But the Contract Product that is being |
manufactured or kept in stock may be sold, used or disposed in accordance with terms and conditions of the Contract within one year after the termination or expiration and it may postpone return of technical document or other materials during the period. |
1. | Should either of the parties to this Contract fail to perform this Contract due to force majeure, such as earthquake, hurricane, flood, fire or any other unpreventable or unavoidable event, the party affected by the force majeure may be exempt from liability and shall immediately notify the other party in written form about the force majeure. | ||
2. | In case such force majeure continues for 60 days or longer, either of the two parties may immediately terminate the Contract in written form without any responsibility for the other party. |
1. | All disputes that can happen in relation to this Contract are resolved by Seoul Central District Court which shall be the competent court. | ||
2. | The articles of the Contract including, but not limited to Article 10, 11, 13, 14, 15, 16, 18 and any other articles that shall remain effective even after the Contract expires or is terminated, if need be. | ||
3. | Deficiencies to this Contract or matters in relation to its interpretation are determined through mutual agreement and in case no agreement is established, commercial practices apply and in case no such commercial practices do not exist, related laws and regulations apply. | ||
4. | The Contract may be revised based on written agreement and sealing (signature) of the two parties. | ||
5. | The agreement reached verbally or in written form before this Contract is sealed shall lose its effect and replaced by this Contract. |
1. | Test Plan | ||
2. | Assembly Plan | ||
3. | R/T Plan | ||
4. | Custom Tape manufacturing information | ||
5. | Mask (FAB/Bump) manufacturing information |
1. | Sharp and Hyundai shall execute the Agreement and all other transactions (hereinafter referred to as Individual Agreements) signed under the Agreement in good faith and sincerity, respecting mutual interest and based on mutual trust. |
2. | Details of the Agreement shall be applicable to all Individual Agreements signed between Sharp and Hyundai unless otherwise stipulated in the special agreement. |
1. | Individual Agreements shall stipulate names, quantities, delivery dates, delivery places, delivery methods, unit prices or payment amount and other necessary descriptions of traded goods (hereinafter referred to as Completed Goods). |
2. | Individual Agreements shall be deemed in effect in the case Sharp submits Hyundai an order form containing descriptions mentioned in the preceding paragraph, in the case Hyundai issues Sharp a confirmation of order or in the case Hyundai notifies Sharp its receipt of an order by phone or other means. |
3. | Notwithstanding the preceding paragraph, in the case Hyundai fails to issue a confirmation of order or take any measures upon receipt of the order form from Sharp, Hyundai shall be deemed to have accepted the Sharps order. |
4. | In the case Sharp needs to change descriptions of an order form, it may do so after consulting with Hyundai. |
1. | Sharp may supply Hyundai necessary materials, components, half-finished products, and products (hereinafter referred to as Supplied Goods) to produce Completed Goods. In this case, Hyundai shall make use of Supplied Goods to produce Completed Goods. Supplied Goods shall be managed pursuant to this Article and Article 5. |
i. | Supplied Goods are charged and their price, payment due date, payment method and other necessary details shall be separately determined by Sharp. However, in the case Sharp exceptionally acknowledges the necessity, they can be provided free of charge. | ||
ii. | Sharp takes full ownership of Supplied Goods and Supplied Goods used in components, work in progress and Completed Goods regardless of whether or not they are paid. | ||
iii. | For those Supplied Goods that were delivered to Hyundai directly by Sharps appointed vendor, Hyundai shall issue a goods receipt slip immediately. |
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iv. | Upon receipt of Supplied Goods, Hyundai shall inspect them without any delay and in the case defective goods or overage or shortage is found, such cases shall be immediately reported to Sharp. Hyundai shall compensate for all damages caused by not sending out the aforementioned notice promptly. | ||
v. | To insure Supplied Goods, Sharp may subscribe to accident insurance and relevant cost shall be borne by Hyundai. While Hyundai bears the cost, it has the right to choose an insurance company. |
1. | Supplied Goods and Leased Equipment shall be managed in the following manner: |
i. | Hyundai shall keep Supplied Goods and Leased Equipment with the care of a good manager and not use them for other than producing Completed Goods or transfer, sublease to the third party or mortgage them without an approval of Sharp. | ||
ii. | Hyundai shall clearly specify that Sharp takes full ownership of Supplied Goods and Leased Equipment all the time. | ||
iii. | In the case Supplied Goods and Leased Equipment managed by Hyundai are or may be put or under seizure, provisional attachment or sentenced to provisional injunction by the third party, Hyundai shall make a point and prove that they are the property of Sharp and immediately notify Sharp and follow its instructions. | ||
iv. | Sharp or Sharps agent is allowed to access Hyundais office and warehouse at all times to check usage, storage and maintenance of Supplied Goods and Leased Equipment or can ask Hyundai to submit the report. | ||
v. | In the case Supplied Goods and Leased Equipment are demolished, tarnished, deformed or stolen; Hyundai shall compensate the loss amount claimed by Sharp. | ||
vi. | In the case Sharp demands return of Supplied Goods and Leased Equipment or the Agreement is terminated for some reasons, Hyundai shall hand over Supplied Goods and Leased Equipment to Sharp immediately at its own expense. | ||
vii. | The blueprint, specifications and other documents borrowed by Hyundai from Sharp shall also be returned to Sharp immediately as mentioned in the preceding paragraph. |
1. | For delivery of Completed Goods, Hyundai shall deliver Sharp ordered quantities of Completed Goods to the deliver location on the delivery date. | |
2. | In the case where Hyundai makes delivery of Completed Goods to the delivery location earlier than the delivery date, Sharp may keep them. However, until hand-over is completed on the delivery date except for the case pursuant to Article 3-2, Hyundai |
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takes full ownership of Completed Goods and bears related risks such as demolishing. | ||
3. | In the case Sharp faces damages caused by delivery of Completed Goods not made in accordance with Individual Agreements, Sharp may claim for such damages against Hyundai. | |
4. | At the time Completed Goods are delivered by Hyundai, it shall attach delivery slips specified by Sharp. In the case Hyundai fails to fulfill this requirement, Sharp may refuse to accept Completed Goods. | |
5. | In the case Hyundai enters Sharps premises; it shall follow Sharps instructions. | |
6. | In the case accidents attribute to Hyundai during delivery of Completed Goods, Hyundai shall compensate Sharp or the third party for relevant damages. | |
7. | In the case Sharp asked for specific packaging and handling during delivery of Completed Goods, they shall be fulfilled. | |
8. | Hyundai shall bear all expenses such as carriage charge, packing expense and insurance cost incurred until the delivery of Completed Goods. |
1. | At the time of receiving Completed Goods from Hyundai, Sharp shall issue a written slip confirming goods receipt. |
2. | Upon receipt of goods, Sharp shall promptly inspect them. And if there are any defective goods or shortages found, such cases are reported to Hyundai. Inspection methods, pass/fail criteria and other details related to inspection shall be determined by Sharp. |
3. | After the inspection, only when Sharp acknowledges that goods are acceptable, hand-over of goods shall be deemed to be completed. |
4. | Ownership of Completed Goods shall be transferred from Hyundai to Sharp at the time delivery of Completed Goods mentioned in the preceding paragraph is finished. |
5. | Sharp may skip inspection of delivered Completed Goods described in the paragraph 2 depending on the situation. In such case, the delivery is deemed to be completed at the time Sharp issues a written slip confirming goods receipt. |
1. | In the case Sharp found out defective Completed Goods are delivered or shortage detected and reported this to Hyundai regardless the inspection described in the preceding paragraph took place or not, Hyundai shall follow Sharps given instructions whether it be delivery of replaced goods, repair of defective goods or fulfillment or shortage within the given deadline. |
2. | In the case Sharp did not make any demands from preceding paragraph against handling defective goods, deduction of payment shall be carried out and its details shall be separately discussed and determined between Sharp and Hyundai. |
3. | In the case Sharp selected acceptable goods out of the defective lot and repaired defective goods, all costs incurred shall be borne by Hyundai. |
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4. | In the case Hyundai received a notification on defective goods and goods to be returned from Sharp, Hyundai shall bear all costs incurred to receive them immediately. Damages incurred from demolishing, tarnishing and deforming while Sharp is keeping defective goods and goods to be returned in custody shall be borne by Hyundai unless their cause attributed to Sharp. |
1. | Hyundai shall carry out proper quality control and strict shipping inspection during production and delivery of Completed Goods and make sure product quality is maintained to satisfy Sharps standards and specifications. |
2. | If desired, Sharp can ask Hyundai to establish proper quality control system and Hyundai shall satisfy this. |
1. | Unless otherwise specified separately in the Individual Agreements, Hyundai shall offer Sharp warrant of goods for one year since delivery of Completed Goods is made. In the case tarnished Completed Goods are found during the warranty period, they shall be either replaced in accordance with Sharps instructions or repaired with relevant costs borne by Hyundai within the warranty period. |
2. | The warranty period described in the preceding paragraph may be extended depending on types of Completed Goods upon discussion between Sharp and Hyundai. |
3. | In the case Sharp faced damages occurred from tarnished Completed Goods in accordance with preceding paragraph 2, it can claim compensations for such damages against Hyundai. |
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1. | Sharp and Hyundai shall not disclose or leak all information about the other party related to the Agreement and Individual Agreements obtained to the third party without prior approval of the other party. |
2. | Hyundai shall not copy or reuse blueprints, specifications and materials provided by Sharp without gaining a prior approval and also refrain from transferring, opening, leaking or using them to the third party. |
3. | Even after this provision and the Agreement are terminated, their effectiveness remains valid. |
1. | Except in the case where a written consent was gained from Sharp in advance, Hyundai shall not use design, technical data, blueprint and specification of Completed Goods neither for itself nor the third party. |
2. | Without gaining a prior consent, Hyundai shall not entrust whole or part of producing Completed Goods to the third party. Even in the case where Sharp has granted entrustment to the third party, Hyundai shall not be exempted from its duties and obligations under the Agreement and Individual Agreements. |
1. | Regardless of defects are found in the Completed Goods, in the case Completed Goods themselves attributed damages to lives, bodies and properties of the third party or a dispute arises with the third party, Hyundai shall resolve this under its responsibility and bear relevant costs regardless of warranty period stated in the Article 10. However, this shall not apply to the case where damages attributed to Sharp. |
2. | While producing the Completed Goods, Hyundai shall make sure and pay extra attention to avoid harming the surrounding and if and when damages or disputes occur from operation, Hyundai shall resolve this under its responsibility and bear relevant costs. |
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3. | In the case damages are caused to Sharp under paragraph 2 situations, such damages shall be compensated by Hyundai. |
1. | Sharp may terminate whole or part of the Agreement and Individual Agreements immediately without giving a separate notification to Hyundai in any one of the following cases: |
i. | Infringe any provisions of the Agreement or Individual Agreements | |
ii. | Admit that it cannot execute the contract within contract period | |
iii. | Sentenced to seizure, provisional injunction, face public sale, Subject to bankruptcy, composition, liquidation, corporate rehabilitation or there are such possibilities | |
iv. | Sentenced business suspension and cancellation from the regulators | |
v. | Checks overdue, insolvency | |
vi. | Business are shut down, suspended or changed or business are managed by third parties or there are such possibilities | |
vii. | An act of breach found against Sharp | |
viii. | Harm public order and morality, and maintaining contract with Sharp is considered inadequate | |
ix. | Financial state is instable or there are such possibilities | |
x. | Other reasons similar to one of the above |
2. | In the case Hyundai is under one of the above and received a notification from Sharp, Hyundai shall settle all debts it has against Sharp immediately | |
3. | In the case damages are caused to Sharp due to contract termination under paragraph 1, Sharp may claim compensation for damages against Hyundai | |
4. | In the case the contract is terminated pursuant to paragraph 1 and a request was made by Sharp, Hyundai shall hand over Completed Goods (work in process included) before the delivery to Sharp. In return, Sharp shall pay Hyundai the amount of Completed Goods agreed with Hyundai. | |
5. | In the case the contract is terminated pursuant to paragraph 1, Sharp may produce Completed Goods in needed volume itself or ask the third party for production and sell them. In this case, all industrial properties held by Hyundai are deemed to have granted to Sharp. Grant of properties shall be determined upon discussion between Sharp and Hyundai. |
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1. | In the case disputes or differences in opinions arise under the Agreement or Individual Agreements, or items not covered under the Agreement or individual Agreements appear, they shall be resolved upon discussion between Sharp and Hyundai. |
2. | The lawsuits filed related to the Agreement or Individual Agreements shall be governed in the Daejeon District Court. |
1. | The previous master agreement on production and supply of Completed Goods signed between Sharp and Hyundai shall have lose its effects after the Agreement come into effect. However, ancillary contracts and memorandum that were signed between Sharp and Hyundai shall remain effective unless otherwise they are in conflict with the Agreement. |
2. | The Agreement shall be applicable to Individual Agreements that were signed between Sharp and Hyundai before the Agreement comes into effect. |
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MAGNACHIP SEMICONDUCTOR LLC
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By: | ||||
Name: | ||||
Title: | ||||
Dated: | ||||
By: | ||||
Name: | ||||
Title: | ||||
A-4
1 | The Holders signature must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution as defined by Rule 17Ad-15 under the Exchange Act. |
1 | The Holders signature must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution as defined by Rule 17Ad-15 under the Exchange Act. |
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Board adopts Plan, with an initial reserve of 30,000,000 Units.
Members of the Company approve Plan.
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Date of Grant: |
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Number of Option Units: |
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Exercise Price per Unit: |
US$
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Total Units Purchased: |
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Total Exercise Price (Total Units X Price per Unit) |
US$
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Cash: |
US$
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Check: |
US$
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Unit Tender Exercise: | Contact Plan Administrator | ||||
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Cashless Exercise: | Contact Plan Administrator | ||||
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Net Exercise: | Contact Plan Administrator |
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Check: |
US$
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Unit Withholding: | Contact Plan Administrator |
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My address is: | |||
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My Tax Identification Number is: | |||
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Very truly yours,
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(Signature) | ||||
MagnaChip Semiconductor LLC
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By: | ||||
Title: | ||||
Dated: | ||||
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Date of Grant: |
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Number of Option Units: |
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Exercise Price per Unit: |
US$
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Total Units Purchased: |
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Total Exercise Price (Total Units X Price per Unit) |
US$
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Cash: |
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Check: |
US$
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Unit Tender Exercise: | Contact Plan Administrator | ||||
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Cashless Exercise: | Contact Plan Administrator | ||||
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Net Exercise: | Contact Plan Administrator |
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Check: |
US$
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Unit Withholding: | Contact Plan Administrator |
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My address is:
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My Social Security Number is:
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Very truly yours,
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(Signature) | ||||
By:
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Title:
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Dated:
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Signature
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Print Name | ||||
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Signature | ||||
Print Name | ||||
1. | The name, address and taxpayer identification number of the taxpayer are: |
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Name: | |||||||||
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Address: | |||||||||
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Social Security Number: | ||||||||||
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2. | The following is a description of each item of property with respect to which the election is made: |
3. | The property was transferred to the undersigned on: |
The taxable year for which the election is made is: |
4. | The nature of the restriction to which the property is subject: |
5. | The following is the fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) of the property with respect to which the election is made: |
6. | The following is the amount paid for the property: |
7. | A copy of this election has been furnished to the Company, the corporation for which the services were performed by the undersigned. |
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Date: | |||
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1. Establishment, Purpose and Term of Plan
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1.1 Establishment
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1.2 Purpose
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1.3 Term of Plan
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2. Definitions and Construction
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2.1 Definitions
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2.2 Construction
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3. Administration
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3.1 Administration by the Committee
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3.2 Authority of Officers
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3.3 Administration with Respect to Insiders
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3.4 Committee Complying with Section 162(m)
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3.5 Powers of the Committee
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3.6 Option or SAR Repricing
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3.7 Indemnification
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4. Shares Subject to Plan
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4.1 Maximum Number of Shares Issuable
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4.2 Annual Increase in Maximum Number of Shares Issuable
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4.3 Adjustment for Unissued or Forfeited Predecessor Plan Shares
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4.4 Share Counting
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4.5 Adjustments for Changes in Capital Structure
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4.6 Assumption or Substitution of Awards
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5. Eligibility, Participation and Award Limitations
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5.1 Persons Eligible for Awards
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5.2 Participation in the Plan
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5.3 Incentive Stock Option Limitations
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6. Stock Options
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6.1 Exercise Price
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6.2 Exercisability and Term of Options
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6.3 Payment of Exercise Price
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6.4 Effect of Termination of Service
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6.5 Transferability of Options
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7. Stock Appreciation Rights
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7.1 Types of SARs Authorized
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7.2 Exercise Price
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7.3 Exercisability and Term of SARs
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7.4 Exercise of SARs
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7.5 Deemed Exercise of SARs
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7.6 Effect of Termination of Service
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7.7 Transferability of SARs
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8. Restricted Stock Awards
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8.1 Types of Restricted Stock Awards Authorized
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8.2 Purchase Price
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8.3 Purchase Period
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8.4 Payment of Purchase Price
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8.5 Vesting and Restrictions on Transfer
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8.6 Voting Rights; Dividends and Distributions
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8.7 Effect of Termination of Service
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8.8 Nontransferability of Restricted Stock Award Rights
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9. Restricted Stock Unit Awards
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9.1 Grant of Restricted Stock Unit Awards
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9.2 Purchase Price
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9.3 Vesting
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9.4 Voting Rights, Dividend Equivalent Rights and Distributions
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9.5 Effect of Termination of Service
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9.6 Settlement of Restricted Stock Unit Awards
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9.7 Nontransferability of Restricted Stock Unit Awards
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10. Performance Awards
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10.1 Types of Performance Awards Authorized
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10.2 Initial Value of Performance Shares and Performance Units
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10.3 Establishment of Performance Period, Performance Goals and Performance
Award Formula
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10.4 Measurement of Performance Goals
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10.5 Settlement of Performance Awards
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10.6 Voting Rights; Dividend Equivalent Rights and Distributions
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10.7 Effect of Termination of Service
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10.8 Nontransferability of Performance Awards
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11. Cash-Based Awards and Other Stock-Based Awards
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11.1 Grant of Cash-Based Awards
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11.2 Grant of Other Stock-Based Awards
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11.3 Value of Cash-Based and Other Stock-Based Awards
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11.4 Payment or Settlement of Cash-Based Awards and Other Stock-Based Awards
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11.5 Voting Rights; Dividend Equivalent Rights and Distributions
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11.6 Effect of Termination of Service
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11.7 Nontransferability of Cash-Based Awards and Other Stock-Based Awards
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12. Standard Forms of Award Agreement
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12.1 Award Agreements
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12.2 Authority to Vary Terms
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13. Change in Control
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13.1 Effect of Change in Control on Awards
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13.2 Effect of Change in Control on Nonemployee Director Awards
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13.3 Federal Excise Tax Under Section 4999 of the Code
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14. Compliance with Securities Law
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15. Compliance with Section 409A
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15.1 Awards Subject to Section 409A
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15.2 Deferral and/or Distribution Elections
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15.3 Subsequent Elections
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15.4 Payment of Section 409A Deferred Compensation
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16. Tax Withholding
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16.1 Tax Withholding in General
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16.2 Withholding in or Directed Sale of Shares
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17. Amendment, Suspension or Termination of Plan
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18. Miscellaneous Provisions
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18.1 Repurchase Rights
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18.2 Forfeiture Events
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18.3 Provision of Information
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18.4 Rights as Employee, Consultant or Director
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18.5 Rights as a Stockholder
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18.6 Delivery of Title to Shares
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18.7 Fractional Shares
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18.8 Retirement and Welfare Plans
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18.9 Beneficiary Designation
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18.10 Severability
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18.11 No Constraint on Corporate Action
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18.12 Unfunded Obligation
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18.13 Choice of Law
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1 | Amount to equal number of shares of common stock (as adjusted by the conversion ratio in the Conversion) remaining available for grant under 2009 Common Unit Plan upon its termination immediately following the Conversion. Number to be determined and inserted prior to approval of plan by Company stockholders. |
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2 | Amount to equal number of unvested shares (as adjusted by the conversion ratio in the Conversion) subject to options and restricted stock awards outstanding under the 2009 Common Unit Plan at the time of its termination immediately following the Conversion. Number to be determined and inserted prior to approval of plan by Company stockholders. |
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3 | Amount to equal the number in Sec. 4.1, as determined under footnote 1. Number to be determined and inserted prior to approval of plan by Company stockholders. | |
4 | Amount to equal 4% of the number of shares of common stock estimated to be outstanding immediately after completion of the IPO. Number to be determined and inserted prior to approval of plan by Company stockholders. This number (required by Sec. 422 regs) is intentionally set at twice the 2% annual evergreen increase so that the 2% evergreen will continue to apply regardless of future dilution. |
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John McFarland, Corporate Secretary | ||||
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Board of Directors of MagnaChip Semiconductor LLC
adopts Plan with a reserve of [
] shares (subject
to increases and other adjustments as provided by
the Plan), subject to approval by the stockholders
of MagnaChip Semiconductor Corporation and to be
effective upon the Conversion.
Effective date of statutory conversion of MagnaChip
Semiconductor LLC into the Company.
Plan approved by the stockholders of the Company.
Effective date of registration of Stock under
Section 12 of the Exchange Act.
Effective date of initial Form S-8 under the Plan.
5.4(c)
Section 162(m) Award Limits.
Subject to
adjustment as provided in Section 4.5, no Covered
Employee shall be granted within any fiscal year of
the Company one or more Awards intended to qualify
for treatment as Performance-Based Compensation
which in the aggregate are for more than [
] shares
or, if applicable, which could result in such
Covered Employee receiving more than $[
] for each
full fiscal year of the Company contained in the
Performance Period for such Award.
Because the Committee may change the targets under
performance goals, Section 162(m) requires
stockholder reapproval of the material terms of
performance goals no later than the annual meeting
in the 5th year following the year in which the
public company stockholders initially approved such
material terms. See Treas. Reg.
1.162-27(e)(4)(vi).
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1. | Establishment, Purpose and Term of Plan | 1 | |||||
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1.1 | Establishment | 1 | ||||
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1.2 | Purpose | 1 | ||||
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1.3 | Term of Plan | 1 | ||||
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2. | Definitions and Construction | 1 | |||||
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2.1 | Definitions | 1 | ||||
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2.2 | Construction | 5 | ||||
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3. | Administration | 6 | |||||
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3.1 | Administration by the Committee | 6 | ||||
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3.2 | Authority of Officers | 6 | ||||
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3.3 | Power to Adopt Sub-Plans or Varying Terms with Respect to Non-U.S. | |||||
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Employees | 6 | |||||
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3.4 | Power to Establish Separate Offerings with Varying Terms | 6 | ||||
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3.5 | Policies and Procedures Established by the Company | 6 | ||||
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3.6 | Indemnification | 7 | ||||
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4. | Shares Subject to Plan | 7 | |||||
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4.1 | Maximum Number of Shares Issuable | 7 | ||||
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4.2 | Annual Increase in Maximum Number of Shares Issuable | 8 | ||||
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4.3 | Adjustments for Changes in Capital Structure | 8 | ||||
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5. | Eligibility | 8 | |||||
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5.1 | Employees Eligible to Participate | 8 | ||||
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5.2 | Exclusion of Certain Stockholders | 9 | ||||
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5.3 | Determination by Company | 9 | ||||
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6. | Offerings | 9 | |||||
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7. | Participation in the Plan | 10 | |||||
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7.1 | Initial Participation | 10 | ||||
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7.2 | Continued Participation | 10 | ||||
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8. | Right to Purchase Shares | 11 | |||||
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8.1 | Grant of Purchase Right | 11 | ||||
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8.2 | Calendar Year Purchase Limitation | 11 | ||||
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9. | Purchase Price | 12 | |||||
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10. | Accumulation of Purchase Price through Payroll Deduction | 12 |
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10.1 | Amount of Payroll Deductions | 12 | ||||
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10.2 | Commencement of Payroll Deductions | 12 | ||||
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10.3 | Election to Decrease or Stop Payroll Deductions | 12 | ||||
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10.4 | Administrative Suspension of Payroll Deductions | 13 | ||||
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10.5 | Participant Accounts | 13 | ||||
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10.6 | No Interest Paid | 13 | ||||
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11. | Purchase of Shares | 13 | |||||
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11.1 | Exercise of Purchase Right | 13 | ||||
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11.2 | Pro Rata Allocation of Shares | 14 | ||||
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11.3 | Delivery of Title to Shares | 15 | ||||
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11.4 | Return of Plan Account Balance | 15 | ||||
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11.5 | Tax Withholding | 15 | ||||
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11.6 | Expiration of Purchase Right | 15 | ||||
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11.7 | Provision of Reports and Stockholder Information to Participants | 15 | ||||
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12. | Withdrawal from Plan | 16 | |||||
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12.1 | Voluntary Withdrawal from the Plan | 16 | ||||
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12.2 | Return of Plan Account Balance | 16 | ||||
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13. | Termination of Employment or Eligibility | 16 | |||||
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14. | Effect of Change in Control on Purchase Rights | 16 | |||||
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15. | Nontransferability of Purchase Rights | 17 | |||||
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16. | Compliance with Securities Law | 17 | |||||
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17. | Rights as a Stockholder and Employee | 17 | |||||
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18. | Notification of Disposition of Shares | 18 | |||||
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19. | Legends | 18 | |||||
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20. | Designation of Beneficiary | 18 | |||||
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20.1 | Designation Procedure | 18 | ||||
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20.2 | Absence of Beneficiary Designation | 19 | ||||
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21. | Notices | 19 | |||||
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22. | Amendment or Termination of the Plan | 19 |
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1 | Amount to equal 2% of the number of shares of common stock estimated to be outstanding immediately after completion of the IPO. Number to be determined and inserted prior to approval of plan by Company stockholders. |
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2 | Amount to equal 2% of the number of shares of common stock estimated to be outstanding immediately after completion of the IPO. Number to be determined and inserted prior to approval of plan by Company stockholders. |
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3 | Determined so that a stock price below approximately $5 per share will not further increase the number of shares a participant may purchase in any offering period, assuming a purchase price equal to 95% of the purchase date stock price. |
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John McFarland, Corporate Secretary
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[ ] |
Board of Directors of MagnaChip Semiconductor LLC adopts Plan with a
reserve of [
] shares (subject to increases and other adjustments as
provided by the Plan), subject to approval by the stockholders of
MagnaChip Semiconductor Corporation following the Conversion and to be
effective upon the registration of the Companys common stock under
Section 12 of the Exchange Act.
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[ ] |
Effective date of statutory conversion of MagnaChip Semiconductor LLC
into the Company.
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[ ] |
Plan approved by the stockholders of MagnaChip Semiconductor
Corporation.
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[ ] |
Effective date of registration of Stock under Section 12 of the
Exchange Act.
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[ ] |
Date on which Pre-Registration Offering Period commenced.
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[ ] |
Registration Date (date on which initial Form S-8 registration is
effective).
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and | |||
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Francisco Partners, L.P. | |||
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One Letterman Drive | |||
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Building C, Suite 410 | |||
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San Francisco, CA 94129 USA | |||
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Facsimile No.: +1-415-418-2999 | |||
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Attn: Dipanjan Deb | |||
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and | |||
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DLA Piper US LLP | |||
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2000 University Avenue | |||
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East Palo Alto, CA 94303 | |||
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Facsimile No.: +1-650-833-2001 | |||
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Attn: Micheal Reagan, Esq. | |||
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(ii) To the Officer: | at the last known residential address. |
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MAGNACHIP SEMICONDUCTOR, LTD.
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By: | /s/ Dipanjan Deb | |||
Name: | Dipanjan Deb | |||
Title: | Director |
OFFICER
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/s/ Sang Park | ||||
Sang Park | ||||
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Participant:
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Sang Park | |
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Date of Grant:
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December 8, 2009 | |
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Number of Option Units:
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2,240,000, subject to adjustment as provided by the Option Agreement. | |
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Exercise Price:
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US $1.16 | |
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Initial Vesting Date:
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The date one (1) year after the Date of Grant | |
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Option Expiration Date:
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The date ten (10) years after the Date of Grant | |
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Local Law:
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The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
Vested Units:
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Except as provided in the Option Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Number of Option Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||
Prior to Initial Vesting Date | 0.00 | |
On Initial Vesting Date | 0.34 | |
Plus, on completion of next period of three (3) months | 0.09 | |
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 | |
Plus, on completion of next period of three (3) months | 0.09 | |
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
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/s/ John McFarland | /s/ Sang Park | ||
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Signature | |||
Its:
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SVP & General Counsel | 12/18/09 | ||
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Date | |||
Address:
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891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
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Address | ||||
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ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Option Agreement and Exercise Notice; and Operating Agreement |
Participant:
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Sang Park | |
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Date of Grant:
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December 8, 2009 | |
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Total Number of Units:
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2,240,000, subject to adjustment as provided by the Restricted Unit Agreement. | |
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Fair Market Per Unit on Date
of Grant:
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US $0.74 | |
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Initial Vesting Date:
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The Date of Grant | |
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Local Law:
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The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
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Vested Units:
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Except as provided in the Restricted Unit Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Total Number of Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
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Prior to Initial Vesting Date | 0.0 | ||
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On Initial Vesting Date | 0.34 | ||
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Plus, on completion of next period of one (1) year | 0.33 | ||
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Plus, on completion of next period of one (1) year | 0.33 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||||||||
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By: | /s/ John McFarland | /s/ Sang Park | ||||||||
Its: SVP & General Counsel | Signature | |||||||||
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Date 12/18/2009 | |||||||||
Address:
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891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
Address |
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Restricted Unit Agreement; Assignment Separate from Certificate; and Operating Agreement |
1) | This Agreement shall be in effect for one (1) year from October 1, 2004 to September 30, 2005 (the Initial Term). | ||
2) | Prior to the expiration of the Initial Term, A and B may renew this Agreement or enter into a new agreement based on mutual consensus. |
1) | B shall devote his academic and technological knowledge and capabilities to serve the best interests of A. | ||
2) | During the term of this Agreement, B shall faithfully perform his duties in accordance with national laws and regulations, As articles of association and its internal rules and regulations, and the decisions made by As Board of Directors. | ||
3) | B shall only work to advance the interests of A during the term of this Agreement and shall not execute any transactions related to As business based on his or any third partys calculations without the prior written approval of A. B shall not be hired as an employee or a director of other companies that are competitors of A. |
1) | Position: A shall hereby employ B as Executive Vice President of A. In the event of a change in As management hierarchy, B shall follow the applicable guidelines. | ||
2) | Salary |
1. | A shall pay B a base salary at the rate of KRW 220 million per annum (the Salary), payable to B in accordance with the standard payroll practices of A. In the event of a change in As payroll system, B shall follow the applicable guidelines. |
2. | B shall be eligible to earn a bonus and incentives based on his management performance and the results of his project. |
3) | Severance Pay: Bs severance pay for the service period following the expiration of this Agreement shall follow As applicable rules and regulations. |
1) | B shall participate in the public insurance system as required by law, including health insurance, national pension and employment insurance, etc., and A shall support such benefits in accordance with the law. | ||
2) | Vacation | ||
B shall be entitled to annual vacation in accordance with the terms of As executive annual vacation system. |
1) | Prior to the expiration of this Agreement, A shall terminate this Agreement with a written notice if B falls into any of the following categories (as hereinafter listed). |
1. | Indicted for a crime and sentenced to probation or higher degree of penalty. | ||
2. | Declared as mentally total incompetent, mentally partial incompetent or bankrupt. | ||
3. | Misrepresented his identity, qualifications, or work experiences, or committed fraud in entering into this Agreement. | ||
4. | B cannot work in his capacity for one (1) month or longer due to his own faults. | ||
5. | A determines that due to physical or mental illness or incapacity, B is unable to perform his duties. | ||
6. | A determines that due to cancellation or reduction of business plans, the purpose of hiring B is lost. | ||
7. | Material violation of the provisions specified in this Agreement. |
2) | Termination of this Agreement in accordance with the causes listed in the previous clause (except sub-clauses 1 and 4) shall be communicated by delivery to B of a 30 days advance written notice from A. Termination pursuant to sub-clauses 1 and 4 in the previous clause shall occur immediately concurrent with the occurrence of the cause. |
1) | During the effect of this Agreement, B shall immediately notify A in the event that B has invented, found or created any items in connection with his employment with A or using As time and resources, and B hereby agrees to transfer all intellectual property rights, including patents, utility models, software, and copyrights, thereby acknowledging the automatic possession of all intellectual property rights by A. At the |
request of A, B hereby agrees to produce and submit documents (i.e., application forms) required for intellectual property rights registration including, but not limited to, patents, through a dedicated agent at home or abroad. In such cases, the costs required for intellectual property rights registrations shall be paid by A, but B is not entitled to receive any additional compensation other than the compensation stipulated in As standard compensation guidelines governing such inventions. | |||
2) | Pursuant to the previous clause, during the effective period of this Agreement, B shall immediately notify A on the details of his inventions, findings or creations except those related to the intellectual property rights automatically possessed by A (i.e., inventions other than the service inventions). A shall possess a preferential right to negotiate with B (i.e., first negotiation rights) on the acquisition by transfer or usage rights of such inventions other than service inventions. B hereby agrees that he will not transfer or grant usage rights to third parties in more favorable terms than the terms offered by A regarding such inventions other than service inventions, unless A surrenders the aforementioned first negotiation rights in writing. However, As first negotiation rights shall expire in the event that A fails to request a priority negotiation in writing to B within three (3) months from the date when A receives such notice from B. | ||
3) | As to the inventions, findings or creations, for which B desires to be exempt from the aforementioned clauses 1 and 2 due to violation against an existing agreement signed with a third party, and the not-yet-filed inventions, which B wants to exclude from the aforementioned clauses 1 and 2, B shall list such inventions, findings or creations in the attached sheet together with the description thereon, and represent that the descriptions are true without omission. If B does not fill in the attached sheet, it shall be assumed that there are neither other agreements with third parties nor any items B wants to be excluded from the aforementioned clauses 1 and 2. |
1) | During the effect of this Agreement and after the termination of this Agreement, B shall maintain confidentiality of all confidential or proprietary information including, but not limited to, business management data, technical data, drawings, and documentation of A, its affiliates, and customers that B will gain knowledge of or acquire in the course of business. B shall not disclose such confidential or proprietary information or use them for the benefit of B or other third parties. Until the first anniversary of the date of termination of this Agreement, B shall not, directly and indirectly in the name of a third party, own any interest in, operate or perform any services for any business which is in competition with any business of A. However, this restriction shall not apply in the event that B negotiates with A in advance and receives approval from A. |
1) | Provisions not specified in this Agreement shall follow the rules and regulations articulated by A, and the laws and regulations of the Republic of Korea. | ||
2) | B hereby understands and agrees that this Agreement is not a labor contract pursuant to the Labor Standard Act, and therefore the rights and benefits applied to As employees based on the labor laws of the Republic of Korea, As employment policies, and collective bargaining agreements, etc., that are not stipulated in this Agreement, shall not apply to B. | ||
3) | In the event of legal disputes arising out of or related to this Agreement, the governing court shall be the court located in the territory of the headquarter of A. |
Participant:
|
Taeyoung Hwang | |
|
||
Date of Grant:
|
December 8, 2009 | |
|
||
Number of Option Units:
|
1,400,000, subject to adjustment as provided by the Option Agreement. | |
|
||
Exercise Price:
|
US $1.16 | |
|
||
Initial Vesting Date:
|
The date one (1) year after the Date of Grant | |
|
||
Option Expiration Date:
|
The date ten (10) years after the Date of Grant | |
|
||
Local Law:
|
The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
|
||
Vested Units:
|
Except as provided in the Option Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Number of Option Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
Prior to Initial Vesting Date
|
0.00 | |||
|
||||
On Initial Vesting Date
|
0.34 | |||
|
||||
Plus, on
completion of next periods of three (3) months
|
0.09 | |||
|
||||
Plus, on
completion of each of next three (3) periods of three (3) months
|
0.08 | |||
|
||||
Plus, on
completion of next period of three (3) months
|
0.09 | |||
|
||||
Plus, on
completion of each of next three (3) periods of three (3) months
|
0.08 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Taeyoung Hwang | ||
|
||||
Its:
|
CEO & Chairman | Signature | ||
Dec. 15, 2009 | ||||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Option Agreement and Exercise Notice; and Operating Agreement |
Participant:
|
Taeyoung Hwang | |
|
||
Date of Grant:
|
December 8, 2009 | |
|
||
Total Number of Units:
|
840,000, subject to adjustment as provided by the Restricted Unit Agreement. | |
|
||
Fair Market Per Unit on Date
of Grant:
|
US $0.74 | |
Initial Vesting Date:
|
The Date of Grant | |
|
||
Local Law:
|
The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
|
||
Vested Units:
|
Except as provided in the Restricted Unit Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Total Number of Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
Prior to Initial Vesting Date
|
0.0 | |||
|
||||
On Initial Vesting Date
|
0.34 | |||
|
||||
Plus, on completion of next period of one (1) year
|
0.33 | |||
|
||||
Plus, on completion of next period of one (1) year
|
0.33 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Taeyoung Hwang | ||
|
||||
Its:
|
CEO & Chairman | Signature | ||
Dec. 15, 2009 | ||||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Restricted Unit Agreement; Assignment Separate from Certificate; and Operating Agreement |
|
Signature |
/s/ Brent A. Rowe
|
||||
|
Date | 3/15/06 |
1. | an annualized payment determined by subtracting from US$528,000 the amount determined by multiplying US$528,000 by the number of calendar days from April 4, 2006, to the date of termination, divided by 1,096; and | ||
2. | an accrued bonus payment determined by subtracting from US$528,000 all performance-based bonuses accruing during the period from April 4, 2006, to the date of termination. For purposes of this Offer Letter Supplement, a bonus does not accrue until the date the bonus would have been paid in accordance with the normal policies and procedures of the Company. For example, if executives of the Company receive FY2007 bonuses on February 25, 2008, then no FY2007 bonus accrues for purposes of this calculation until February 25, 2008. |
1. | You leave voluntarily on April 4, 2008, and the performance based payout on February 25, 2007, totals 40% of your base salary and on March 31, 2008, totals 80% of your base salary. You would refund the Company $176,321.17 , which is the lesser of $176,321.17 ($528,000 $528,000*730 / 1096) or $264,000.00 ($528,000 (0.40*$220,000) (0.80*$220,000)). |
1
2. | You are terminated for cause on December 4, 2007, and you are not granted a performance based payout in 2007 covering the fiscal year 2006. You would refund the Company $255,328.47 , which is the lesser of $255,328.47 ($528,000$528,000*566 / 1096) or $528,000.00 ($528,000 (0.0*220,000) (0.0*220,000)). | ||
3. | You are terminated without cause on June 30, 2008, and the performance based payout on April 30, 2007, totals 20% of your base salary, and on February 1, 2008, totals 80% of your base salary, which was raised to $250,000 on January 1, 2008. You would refund the Company $159,459.85 , which is the lesser of $159,459.85 ($528,000$528,000*765 / 1096) or $284,000.00 ($528,000 (0.20*$220,000) (0.80*$250,000)). | ||
4. | You leave voluntarily on March 4, 2007, and the performance based payout on March 1, 2007, totals 80% of your base salary. You would refund the Company $352,000.00 , which is the lesser of $367,094.89 ($528,000$528,000*334 / 1096) or $352,000.00 ($528,000 (0.80*$220,000)). | ||
5. | You are terminated without cause on March 31, 2009, and the performance based payout on April 30, 2007, totals 20% of your base salary, and on February 1, 2008, totals 80% of your base salary, and the Company has said that it would pay you a performance bonus of 60% of your base salary on April 1, 2009. You would refund the Company $1,927.01 , which is the lesser of $1,927.01 ($528,000$528,000*1092 / 1096) or $308,000.00 ($528,000 (0.20*$220,000) (0.80*$220,000) (0.0*220,000)). |
|
Regards,
MagnaChip Semiconductor LLC |
|
|
||
|
/s/ Sang Park | |
|
||
|
President and CEO
Sang Park |
|
Acknowledged and Agreed: | |
|
||
|
/s/ Brent Rowe 12/20/06 | |
|
||
|
Brent A. Rowe |
2
Participant:
|
Brent Rowe | |
|
||
Date of Grant:
|
December 8, 2009 | |
|
||
Number of Option Units:
|
840,000, subject to adjustment as provided by the Option Agreement. | |
|
||
Exercise Price:
|
US $1.16 | |
|
||
Initial Vesting Date:
|
The date one (1) year after the Date of Grant | |
|
||
Option Expiration Date:
|
The date ten (10) years after the Date of Grant | |
|
||
Tax Status of Option:
|
Nonstatutory Option | |
|
||
Vested Units:
|
Except as provided in the Option Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Number of Option Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||
Prior to Initial Vesting Date | 0.00 | |
On Initial Vesting Date | 0.34 | |
Plus, on completion of next period of three (3) months | 0.09 | |
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 | |
Plus, on completion of next period of three (3) months | 0.09 | |
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Brent Rowe | ||
|
||||
|
Signature | |||
Its:
|
CEO & Chairman | 12/16/09 | ||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plant, as amended to the Date of Grant; Option Agreement and Exercise Notice; and Operating Agreement |
Participant:
|
Brent Rowe | |
|
||
Date of Grant:
|
December 8, 2009 | |
|
||
Total Number of Units:
|
560,000, subject to adjustment as provided by the Restricted Unit Agreement. | |
|
||
Fair Market Per Unit on Date
of Grant:
|
US $0.74 | |
|
||
Initial Vesting Date:
|
The Date of Grant | |
|
||
Vested Units:
|
Except as provided in the Restricted Unit Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Total Number of Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||
Prior to Initial Vesting Date | 0.0 | |
On Initial Vesting Date | 0.34 | |
Plus, on completion of next period of one (1) year | 0.33 | |
Plus, on completion of next period of one (1) year | 0.33 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Brent Rowe | ||
|
||||
|
Signature | |||
Its:
|
CEO & Chairman | 12/16/2009 | ||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Restricted Unit Agreement; Assignment Separate from Certificate; form of Section 83(b) Election; and Operating Agreement |
Page 2 | September 5, 2006 |
(a) | Visas and Work Permits. The Company will provide the necessary services and cover the cost to obtain the necessary visas and/or work permits to enable the employee to legally work and stay in Korea for the duration that the employee is assigned to perform services in Korea. | ||
(b) | School tuition for children. The Company will pay gross tuition, including school bus fees, for your two children at a foreign school in Korea. | ||
(c) | Housing support. The Company understands that you have located rental housing in Seoul (the apartment) for which you the lessor requires a key money deposit ( jeonse ) in the amount of KRW750,000,000 (the key money deposit). Subject to the conditions set forth herein, the Company agrees to enter a lease arrangement with the apartment owner for your benefit in which the Company leases the apartment and pays the key money deposit in the Companys name; provided, however, that (i) the Company shall in no event be obligated for more than the KRW750,000,000 key money deposit; (ii) the Company shall retain all rights to and under the key money deposit; (iii) you, the apartment owner, and all other holders of security on the apartment agree to provide the Company with a first-priority jeonse right registration on the apartment as first-priority security for the Companys key money deposit; (iv) you and the apartment owner shall provide all required assistance to effect such jeonse right registration; (v) you shall be responsible for all maintenance fees, resident fees, utilities, and other costs and expenses related to your occupancy of the apartment; and (vi) upon termination of your employment with the Company for any reason, you will immediately (x) vacate the apartment, or (y) arrange for the substitution of the Company on the apartment lease, the return of the full key money deposit to the Company, and the release of the Company from all obligations related to the apartment and this housing support provision. This offer of housing support is conditional upon your tender to the Company of an accurate, up-to-date copy of the real property registry and current and prospective lease agreements for the apartment. If the Company in its sole discretion determines that entering the lease, providing the key money deposit, and effecting the jeonse registration are impractical or not in the reasonable best interests of the Company, you and the Company agree to negotiate a suitable substitute arrangement that effects the intent of you and the Company parties under this housing support provision. | ||
(d) | Company Car. The Company will furnish a company car with a driver to go to and from work, but during the day, driver will be in a pool for general corporate use. | ||
(e) | Tax treatment. The Company shall provide for tax equalization commencing in the tax year when the employment begins through the end of tax year of termination of employment. The employee shall minimize U.S. taxes as permitted by Section 901 and 911 of the Internal Revenue Code. For the avoidance of doubt, this provision shall be interpreted to mean that the employees total tax liability shall not be higher than it would have been had the employee remained in the U.S. The Company will provide tax preparation services to assist the Company with the preparation of the employees personal income tax returns for the U.S. and Korea. |
Page 3 | September 5, 2006 |
(f) | Vacation. The employee shall be entitled to annual vacation of three weeks per year and, while in an expatriate status in Korea, an additional two weeks of home leave per year, inclusive of business-class flight expenses for one trip to the U.S. for employee. | ||
(g) | Health insurance. The employee shall be eligible to participate in or purchase as necessary and be reimbursed for medical, disability and life insurance plans as per the Companys plans and policies. | ||
(h) | The Company shall pay or reimburse the employee for all reasonable out-of-pocket expenses incurred by the employee in connection with the employees employment hereunder upon submission of appropriate documentation or receipts in accordance with the policy and procedures of the Company as are in effect from time to time. |
Sincerely,
|
||||
/s/ Robert Krakauer | ||||
Robert Krakauer | ||||
Executive Vice President, Corporate Operations,
and Chief Financial Officer MagnaChip Semiconductor LLC |
||||
Page 4 | September 5, 2006 |
|
||
/s/ Margaret Sakai
|
Participant:
|
Margaret Sakai | |
Date of Grant:
|
December 8, 2009 | |
Number of Option Units:
|
336,000 subject to adjustment as provided by the Option Agreement. | |
Exercise Price:
|
US$1.16 | |
Initial Vesting Date:
|
The date one (1) year after the Date of Grant | |
Option Expiration Date:
|
The date ten (10) years after the Date of Grant | |
Local Law:
|
The laws, rules and regulations of [Name of Country] , of which the Participant is a resident. | |
Vested Units:
|
Except as provided in the Option Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Number of Option Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
Prior to Initial Vesting Date | 0.00 | |||
On Initial Vesting Date | 0.34 | |||
Plus, on completion of next period of three (3) months | 0.09 | |||
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 | |||
Plus, on completion of next period of three (3) months | 0.09 | |||
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Margaret Sakai | ||
|
||||
|
Signature | |||
Its:
|
CEO & Chairman | 12.18.2009 | ||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Option Agreement and Exercise Notice; and Operating Agreement |
Participant:
|
Margaret Sakai | |
Date of Grant:
|
December 8, 2009 | |
Total Number of Units:
|
336,000, subject to adjustment as provided by the Restricted Unit Agreement. | |
Fair Market Per Unit on Date of Grant:
|
US $0.74 | |
Initial Vesting Date:
|
The Date of Grant | |
Local Law:
|
The laws, rules and regulations of [ Name of Country ], of which the Participant is a resident. | |
Vested Units:
|
Except as provided in the Restricted Unit Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Total Number of Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||
Prior to Initial Vesting Date | 0.0 | |
On Initial Vesting Date | 0.34 | |
Plus, on completion of next period of one (1) year | 0.33 | |
Plus, on completion of next period of one (1) year | 0.33 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Margaret Sakai | ||
|
||||
|
Signature | |||
Its:
|
CEO & Chairman | 12.18.2009 | ||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Restricted Unit Agreement; Assignment Separate from Certificate; and Operating Agreement |
|
||
|
||
|
891 Daechi-dong, Kangnam-gu, Seoul, | |
|
135-178, Korea | |
|
Tel: 82-2-3459-3675 | |
|
Fax: 82-2-3459-3686 | |
|
www. magnachip.com |
Sincerely,
|
||||
/s/ Sang Park | ||||
Sang Park/CEO & Chairman | ||||
MagnaChip Semiconductor, Ltd. | ||||
/s/ Heung Kyu Kim | ||||
Heung Kyu Kim | ||||
Participant:
|
Heungkyu Kim | |
|
||
Date of Grant:
|
December 8, 2009 | |
|
||
Number of Option Units:
|
560,000, subject to adjustment as provided by the Option Agreement. | |
|
||
Exercise Price:
|
US $ 1.16 | |
|
||
Initial Vesting Date:
|
The date one (1) year after the Date of Grant | |
|
||
Option Expiration Date:
|
The date ten (10) years after the Date of Grant | |
|
||
Local Law:
|
The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
|
||
Vested Units:
|
Except as provided in the Option Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Number of Option Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
Prior to Initial Vesting Date
|
0.00 | |||
|
||||
On Initial Vesting Date
|
0.34 | |||
|
||||
Plus, on completion of next period of three (3) months
|
0.09 | |||
|
||||
Plus, on completion of each of next three (3) periods of three (3) months
|
0.08 | |||
|
||||
Plus, on completion of next period of three (3) months
|
0.09 | |||
|
||||
Plus, on completion of each of next three (3) periods of three (3) months
|
0.08 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Heungkyu Kim | ||
|
||||
|
Signature | |||
Its:
|
CEO & Chairman | Dec. 18, 2009 | ||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Option Agreement and Exercise Notice; and Operating Agreement |
Participant:
|
Heungkyu Kim | |
|
||
Date of Grant:
|
December 8, 2009 | |
|
||
Total Number of Option Units:
|
280,000, subject to adjustment as provided by the Restricted Unit Agreement. | |
|
||
Fair Marker Per Unit on Date of Grant:
|
US $ 0.74 | |
|
||
Initial Vesting Date:
|
The Date of Grant | |
|
||
Local Law:
|
The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
|
||
Vested Units:
|
Except as provided in the Restricted Unit Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Total Number of Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
Prior to Initial Vesting Date
|
0.0 | |||
|
||||
On Initial Vesting Date
|
0.34 | |||
|
||||
Plus, on completion of next period of one (1) year
|
0.33 | |||
|
||||
Plus, on completion of next period of one (1) year
|
0.33 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
|
/s/ Sang Park | /s/ Heungkyu Kim | ||
|
||||
|
Signature | |||
Its:
|
CEO & Chairman | Dec. 18, 2009 | ||
|
||||
|
Date | |||
Address:
|
891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
|||
Address | ||||
|
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Restricted Unit Agreement; Assignment Separate from Certificate; and Operating Agreement |
|
||
|
891 Daechi-dong, Gangnam-gu Seoul,
135-178 Korea Tel: 82-2-3459-3675 Fax: 82-2-3459-3686 |
|
|
www.magnachip.com |
(a) | School tuition for children. MagnaChip will reimburse middle and high school tuition for your two children at a foreign school upon receiving a tuition receipt and other documentation acceptable to MagnaChip. The reimbursement amount shall not exceed KRW32,400,000 in total per each years reimbursement. | ||
(b) | Housing support. MagnaChip will reimburse temporary housing fee in the amount of up to KRW4,000,000 for your first month of employment upon receiving a receipt and/or other documentation acceptable to MagnaChip. You will also be provided with housing allowance in the amount of KRW3,600,000 per month upon receiving a receipt and/or other documentation acceptable to MagnaChip.. | ||
(c) | Moving expenses & Others. MagnaChip will pay reasonable, fully justified moving expenses in the amount of up to KRW8,000,000 upon receiving a receipt and/or other documentation acceptable to MagnaChip. MagnaChip will also pay one-way airline tickets from your country origin to Korea in economy class for you, and upon their relocation to Korea, for your spouse and up to two children upon receiving a receipt and/or other documentation acceptable to MagnaChip. |
MAGNACHIP SEMICONDUCTOR, LTD.
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/s/ Sang Park | ||||
Sang Park | ||||
CEO/Chairman
MagnaChip Semiconductor, Ltd. |
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Dr. Taejong Lee
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Signature: | /s/ Taejong Lee | |||
Participant:
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Taejong Lee | |
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Date of Grant:
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December 8, 2009 | |
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Number of Option Units:
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392,000, subject to adjustment as provided by the Option Agreement. | |
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Exercise Price:
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US $1.16 | |
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Initial Vesting Date:
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The date one (1) year after the Date of Grant | |
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Option Expiration Date:
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The date ten (10) years after the Date of Grant | |
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Local Law:
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The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
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Vested Units:
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Except as provided in the Option Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Number of Option Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
Prior to Initial Vesting Date | 0.00 | |||
On Initial Vesting Date | 0.34 | |||
Plus, on completion of next period of three (3) months | 0.09 | |||
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 | |||
Plus, on completion of next period of three (3) months | 0.09 | |||
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
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/s/ Sang Park | /s/ Taejong Lee | ||
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Signature | |||
Its:
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CEO & Chairman | Dec. 18, 2009 | ||
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Date | |||
Address:
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891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
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Address | ||||
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ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Option Agreement and Exercise Notice; and Operating Agreement |
Participant:
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Taejong Lee | |
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Date of Grant:
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December 8, 2009 | |
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Total Number of Units:
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168,000, subject to adjustment as provided by the Restricted Unit Agreement. | |
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Fair Market Per Unit on Date
of Grant:
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US $ 0.74 | |
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Initial Vesting Date:
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The Date of Grant | |
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Local Law:
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The laws, rules and regulations of [Nome of Country], of which the Participant is | |
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a resident. | |
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Vested Units:
|
Except as provided in the Restricted Unit Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Total Number of Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||||
Prior to Initial Vesting Date | 0.0 | |||
On Initial Vesting Date | 0.34 | |||
Plus, on completion of next period of one (1) year | 0.33 | |||
Plus, on completion of next period of one (1) year | 0.33 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
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/s/ Sang Park | /s/ Taejong Lee | ||
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Signature | |||
Its:
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CEO & Chairman | Dec. 18, 09 | ||
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Date | |||
Address:
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891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
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Address | ||||
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ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Restricted Unit Agreement; Assignment Separate from Certificate; and Operating Agreement |
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(i) | If to the Company: |
MagnaChip Semiconductor, Ltd.
891 Daechi-dong, Kangnam-gu Seoul 135-738 Korea Fax: 82-2-3459-3898 Attn: Executive Vice President, Strategic Operations and Chief Financial Officer |
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(ii) | If to the Officer: | at the last known residential address on the personnel records of the Company; |
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MAGNACHIP SEMICONDUCTOR, LTD.
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By: | /s/ Dr. Youm Huh | |||
Name: | Dr. Youm Huh | |||
Title: | Representative Director | |||
OFFICER
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/s/ John McFarland | |||||
John McFarland | |||||
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Participant:
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John McFarland | |
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Date of Grant:
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December 8, 2009 | |
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Number of Option Units:
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224,000, subject to adjustment as provided by the Option Agreement. | |
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Exercise Price:
|
US $1.16 | |
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Initial Vesting Date:
|
The date one (1) year after the Date of Grant | |
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Option Expiration Date:
|
The date ten (10) years after the Date of Grant | |
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Local Law:
|
The laws, rules and regulations of [Name of Country], of which the Participant is a resident. | |
Vested Units:
|
Except as provided in the Option Agreement and provided the Participants Service has not terminated prior to the applicable date, the number of Vested Units (disregarding any resulting fractional Unit) as of any date is determined by multiplying the Number of Option Units by the cumulative Vested Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||
Prior to Initial Vesting Date | 0.00 | |
On Initial Vesting Date | 0.34 | |
Plus, on completion of next period of three (3) months | 0.09 | |
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 | |
Plus, on completion of next period of three (3) months | 0.09 | |
Plus, on completion of each of next three (3) periods of three (3) months | 0.08 |
ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Option Agreement and Exercise Notice; and Operating Agreement |
Participant:
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John McFarland | |
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Date of Grant:
|
December 8, 2009 | |
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Total Number of Units:
|
336,000, subject to adjustment as provided by the Restricted Unit Agreement. | |
|
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Fair Market Per Unit on Date
of Grant:
|
US $0.74 | |
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Initial Vesting Date:
|
The Date of Grant | |
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Local Law:
|
The laws, rules and regulations of [Name of Country], of which the Participant is | |
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a resident. | |
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Vested Units:
|
Except as provided in the Restricted Unit Agreement and provided the | |
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Participants Service has not terminated prior to the applicable date, the number | |
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of Vested Units (disregarding any resulting fractional Unit) as of any date is | |
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determined by multiplying the Total Number of Units by the cumulative Vested | |
|
Ratio (not to exceed 1.0) determined as of such date as follows: |
Vested Ratio | ||
Prior to Initial Vesting Date | 0.0 | |
On Initial Vesting Date | 0.34 | |
Plus, on completion of next period of one (1) year | 0.33 | |
Plus, on completion of next period of one (1) year | 0.33 |
MAGNACHIP SEMICONDUCTOR LLC | PARTICIPANT | |||
By:
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/s/ Sang Park | /s/ John McFarland | ||
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Signature | |||
Its:
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CEO & Chairman | 12/18/2009 | ||
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|
Date | |||
Address:
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891 Daechi-dong,
Gangnam-gu Seoul, Korea 135-738 |
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Address | ||||
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ATTACHMENTS: | 2009 Common Unit Plan, as amended to the Date of Grant; Restricted Unit Agreement; Assignment Separate from Certificate; and Operating Agreement |
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To the Company:
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MagnaChip Semiconductor, Ltd. | |
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891 Daechi-dong, Gangnam-Gu
Seoul 135-738 Korea |
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Facsimile No: 82-2-6903-3898 | |
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Attn: General Counsel | |
To the Officer:
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at the last known residential address. |
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MAGNACHIP SEMICONDUCTOR, LTD.:
|
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By: | /s/Sang Park | |||
Sang Park | ||||
Chairman and Chief Executive Officer | ||||
ADVISOR:
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/s/Robert Krakauer | ||||
Robert Krakauer | ||||
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MAGNACHIP SEMICONDUCTOR CORPORATION | ||||||
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By: | |||||
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Name: | |||||
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Title: | |||||
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INDEMNITEE | ||||||
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Address: | ||||||
Facsimile: | ||||||
E-mail: |
Jurisdiction of | ||
Subsidiary | Incorporation | |
MagnaChip Semiconductor S.A.
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Luxembourg | |
MagnaChip Semiconductor B.V.
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The Netherlands | |
MagnaChip Semiconductor, Ltd.
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Korea | |
MagnaChip Semiconductor, Inc.
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California | |
MagnaChip Semiconductor SA Holdings LLC
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Delaware | |
MagnaChip Semiconductor Finance Company
|
Delaware | |
MagnaChip Semiconductor Limited
|
United Kingdom | |
MagnaChip Semiconductor Limited
|
Taiwan | |
MagnaChip Semiconductor Limited
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Hong Kong SAR | |
MagnaChip Semiconductor Inc.
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Japan | |
MagnaChip Semiconductor Holding Company Limited
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British Virgin Islands | |
MagnaChip Semiconductor (Shanghai) Company Limited
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China |