-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J8bULj0RL7vTA4K9TFOktdMFuIXlfSgC6l+pyrZPvC8TBIZ+mkbQiPlC3Q6Cyp28 UKMXGIL8ccV6+idjm65jtg== 0000891618-96-002533.txt : 19961107 0000891618-96-002533.hdr.sgml : 19961107 ACCESSION NUMBER: 0000891618-96-002533 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951229 FILED AS OF DATE: 19961106 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADAPTEC INC CENTRAL INDEX KEY: 0000709804 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 942748530 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-15071 FILM NUMBER: 96655291 BUSINESS ADDRESS: STREET 1: 691 S MILPITAS BLVD STREET 2: M/S25 CITY: MILPITAS STATE: CA ZIP: 95035 BUSINESS PHONE: 4089458600 MAIL ADDRESS: STREET 1: 691 SOUTH MILPITAS BLVD STREET 2: M/S25 CITY: MILPITAS STATE: CA ZIP: 95035 10-Q/A 1 AMENDED FORM 10-Q FOR QUARTER ENDED 12/29/95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities --- Exchange Act of 1934 For the quarterly period ended December 29, 1995 or Transition report pursuant to Section 13 or 15(d) of the Securities --- Exchange Act of 1934 For the transition period from ______ to _______ Commission file number 0-15071 ADAPTEC, INC. (Exact name of registrant as specified in its charter) CALIFORNIA 94-2748530 (State of Incorporation) (I.R.S. Employer Identification No.) 691 S. MILPITAS BLVD., MILPITAS, CALIFORNIA 95035 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (408) 945-8600 N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- The number of shares outstanding of common stock as of January 19, 1996 was 52,562,638. This document consists of 4 pages, excluding exhibits, of which this is page 1. 2 TABLE OF CONTENTS
Page Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 3 Signatures 4
2 3 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.1* Option Agreement I Between Adaptec Manufacturing (S)Pte. Ltd. and Taiwan Semiconductor Manufacturing Co., Ltd. dated October 23, 1995 10.2* Option Agreement II Between Adaptec Manufacturing (S)Pte. Ltd. and Taiwan Semiconductor Manufacturing Co., Ltd. dated October 23, 1995 27** Financial Data Schedule
*The Company has requested confidential treatment for portions of these agreements. **Previously filed. No Reports on Form 8-K were filed during the quarter. 3 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ADAPTEC, INC. ----------------------------------------- Registrant \s\PAUL G. HANSEN ----------------------------------------- Paul G. Hansen, Vice-President, Finance and Chief Financial Officer (Principal Financial Officer), Assistant Secretary Date: November 5, 1996 \s\ANDREW J. BROWN ----------------------------------------- Andrew J. Brown, Corporate Controller (Principal Accounting Officer) Date: November 5, 1996 4 EX-10.1 2 OPTION AGREEMENT I 1 EXHIBIT 10.1 OPTION AGREEMENT I Between Adaptec Manufacturing (S) Pte. Ltd. And Taiwan Semiconductor Manufacturing Co., Ltd. October 23, 1995 2 TABLE OF CONTENTS 1. DEFINITIONS 1 2. VOLUME CAPACITY 2 3. WAFER PRICE 3 4. OTHER PURCHASE TERMS AND CONDITIONS 3 5. OBLIGATION TO PAY OPTION FEE FOR OPTION CAPACITY 3 6. FAILURE TO PURCHASE THE OPTION CAPACITY; 4 FIRST RIGHT OF REFUSAL 7. TERM AND TERMINATION 4 8. BOARD APPROVAL 5 9. LIMITATION OF LIABILITY 5 10. NOTICE 5 11. ENTIRE AGREEMENT 6 12. GOVERNING LAW 6 13. ARBITRATION 6 14. ASSIGNMENT 7 15. CONFIDENTIALITY 7 16. FORCE MAJEURE 7 17. NO AGENCY 7 18. GOVERNMENTAL APPROVAL 7 19. COUNTERPARTS 8 3 OPTION AGREEMENT I THIS AGREEMENT is made and becomes effective as of October 23, 1995 (the "Effective Date") by Taiwan Semiconductor Manufacturing Co., Ltd. ("TSMC"), a company organized under the laws of the Republic of China with its registered address at No. 121, Park Ave. 3, Science Based Industrial Park, Hsinchu, Taiwan and Adaptec Manufacturing (S) Pte. Ltd., a company organized under the laws of Singapore, with its registered address at 6 Battery Road, 532-00, Singapore 049909 ("Customer"). RECITALS WHEREAS, TSMC currently supplies Customer with wafers and Customer wishes to increase the volume of wafers to be purchased from TSMC; WHEREAS, in order to increase its output, TSMC must accelerate its ramp up in Fab 3 and advance the start of Fab 4; WHEREAS, as a condition to TSMC's acceleration of these facilities, TSMC has asked that Customer make a capacity commitment and advance payment for the right to buy additional capacity, and Customer is willing to do so: AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, the parties agree as follows: 1. DEFINITIONS (a) "Base Capacity" used in this Agreement shall mean the annualized run rate that TSMC commits to provide the Customer as set forth in Exhibit B. (b) "Customer Committed Capacity" used in this Agreement shall mean the total capacity that Customer agrees to purchase from TSMC pursuant to this Agreement, either itself or by an Affiliate, and as set forth in Exhibit B. (c) "Foundry Agreement" used in this Agreement shall mean the Foundry Agreement between TSMC and Adaptec, Inc., dated October 29, 1993, together with any amendments thereto. (d) "Option Capacity" used in this Agreement shall mean the firm capacity commitment made by Customer pursuant to this Agreement, for which 1 4 capacity Customer agrees to pay the Option Fee as defined in Section 1(e) below. (e) "Option Fee" used in this Agreement shall mean the deposit that Customer agrees to place with TSMC as the advance payment for the wafers comprising the Option Capacity. (f) "TSMC Committed Capacity" used in this Agreement shall mean the total capacity that TSMC agrees to provide to Customer or its Affiliates, consisting of Base Capacity and Option Capacity as set forth in Exhibit B. (g) "Wager Equivalent" used in this Agreement shall mean the number of six-inch wafers, adjusted by the equivalency factor based on 1996 Base Capacity as set forth on Exhibit A, by which capacity commitments are measured hereunder. An example of such calculation is set forth on Exhibit B-1. Any and all capacity commitments referred to in this Agreement shall be for the calender year and measured in Wafer Equivalents. (h) "Affiliates" used in this Agreement shall mean a party which holds at least a seventy-five percent (75%) ownership interest in Customer or a party in which Customer's parent holds at least a seventy-five percent (75%) ownership interest. 2. VOLUME COMMITMENT (a) Customer agrees to purchase annually form TSMC, either itself or through its Affiliates, the Customer Committed Capacity set forth for such year on Exhibit B and, subject to the payment of the Option Fee by Customer under Section 5 below, TSMC agrees to provide to Customer the TSMC Committed Capacity, as set forth in Exhibit B. In any calender year, the orders placed by Customer or its Affiliates shall first apply to fulfill the Base Capacity portion of the Customer Committed Capacity, and then the Option Capacity portion. (b) Each month, Customer agrees to provide to TSMC a six-month rolling forecast of the number of wafers that Customer will purchase, with the volume for the first twelve weeks being frozen (i.e., Customer must purchase all of the quantity forecast for the delivery in the first twelve weeks of the forecast). The forecast must be based on wafers out. (c) TSMC will use its best efforts to cause its fabs to be capable of producing wafers of more advanced specifications, as set forth in the TSMC Technology Road Map attached to Exhibit C. (The parties anticipate that the conversion factor for migration of 6" to 8" inch wafers will 1.78.) 2 5 ----------------------------------------------------------- Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- 3. WAFER PRICE (a) The prices for wafers purchased by Customer during the term of this Agreement shall not be more than TSMC's average wafer prices to the optionees (i.e., other customers that are parties to option agreements similar to this Agreement) for the same technology, the same fab and the same period of time, taking into account Customer's total volume across all TSMC fabs. At Customer's request, TSMC shall permit an independent third party mutually agreed upon by the parties to audit such books and records as may be required to verify TSMC's most favored customer pricing obligations in the preceding sentence. Such audits shall be at Customer's expense at any time during the term of this Agreement upon at least one (1) month prior written notice to TSMC. In the event that the wafer prices do not comply with the first sentence, TSMC will make proper price changes for all unfilled orders upon Customer's notice in writing. (b) The parties shall negotiate in good faith each year the wafer prices for the Option Capacity of the following year, and if no agreement is reached by the parties before October of each year for the succeeding calendar year, the parties agree to submit the dispute to the binding arbitration pursuant to Section 13 below, and under such circumstances, neither party shall have the right to terminate this Agreement under Section 7 below. 4. OTHER PURCHASE TERMS AND CONDITIONS The Foundry Agreement, together with any amendments thereto, will apply to all purchases of wafers by Customer from TSMC, except that the provisions of this Agreement will supersede the Foundry Agreement with respect to the subject matter hereof. 5. OBLIGATION TO PAY OPTION FEE FOR OPTION CAPACITY (a) Customer agrees to pay to TSMC the Option Fee in the amount of [****] per Wafer Equivalent for the right to purchase the Option Capacity pursuant to this Agreement. The Option Fee is set forth in Exhibit D, and Customer agrees to pay the Option Fee for the entire term of this Agreement $19.6M in cash by November 15, 1995. The Option Fee, once paid, shall be non-refundable, except as provided in Section 6(a) and Section 7(d), and will be credited against payments due for wafers purchased by Customer for the Option Capacity provided by TSMC under this Agreement. 3 6 6. FAILURE TO PURCHASE THE OPTION CAPACITY; FIRST RIGHT OF REFUSAL If, in any calendar year, for any reason, Customer is not able to use or purchase all or a portion of the Customer Committed Capacity for that year, Customer shall promptly notify TSMC of such in writing and first offer TSMC such capacity for sales to any third parties. TSMC may, at its option, accept such offer, in whole or in part, within thirty (30) days following Customer's notification and, if TSMC so accepts, the Option Fee attributable to that capacity will be refunded to Customer without interest. In the event that TSMC decides not to accept such offer, Customer may sell such unused capacity to third parties reasonably acceptable to TSMC (given the processes and capacity then available in its fabs), within two months after TSMC's written notice that it will not accept such offer. If Customer fails to sell such unused Customer Committed Capacity, TSMC shall not be required to refund any portion of the unapplied Option Fee applicable to that unused capacity. TSMC is entitled to sell or use any such capacity thereafter. Forfeiture of the applicable Option Fee shall be TSMC's sole remedy for Customer's failure to purchase the Customer Committed Capacity in any calendar year. 7. TERM AND TERMINATION (a) TERM The term of this Agreement shall commence from the Effective Date, and continue until December 31, 1999. (b) TERMINATION BY TSMC FOR CUSTOMER'S FAILURE TO PAY THE OPTION FEE TSMC may terminate this Agreement if Customer fails to pay the Option Fee pursuant to Section 5 above, and does not cure or remedy such breach within thirty (30) days of receiving written notice of such breach. (c) TERMINATION FOR OTHER BREACH OR FOR BANKRUPTCY Either party may terminate this Agreement if, (i) the other party breaches any material provisions of this Agreement (other than Customer's breach of Section 5 above), and does not cure or remedy such breach within one hundred and twenty (120) days of receiving written notice of such breach, or (ii) becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceeding relating to insolvency, receivership or liquidation, if such petition or proceeding is not dismissed with prejudice within sixty (60) days after filing. 4 7 (d) EFFECT OF TERMINATION In the event of termination of this Agreement, each party shall remain liable to the other party for any outstanding and matured rights and obligations at the time of termination, including payment of the Option Fee applicable to the used Option Capacity and for the wafers already ordered and shipped to Customer. Any wafers then in process pursuant to a Customer order may be completed and shipped to Customer and the applicable Option Fee amount applied against such wafers. In the event Customer terminates this Agreement pursuant to the terms of Section 7(c), any portion of the Option Fee then remaining, which has not been applied against purchases of wafers, will be refunded to Customer within thirty (30) days of termination of this Agreement. 8. BOARD APPROVAL Customer shall obtain the approval by its board of directors of this Agreement, and submit to TSMC, at the time of executing this Agreement, an authentic copy of its board resolution authorizing the representative designated below to execute this Agreement. 9. LIMITATION OF LIABILITY In no event shall either party be liable for any indirect, special, incidental or consequential damages (including loss of profits or loss of use) resulting from, arising out of or in connection with such party's performance or failure to perform under this Agreement, or resulting from, arising out of or in connection with the production, supply and/or purchase and sale of the wafers, whether due to a breach of contract, breach of warranty, tort, or negligence of such party, or otherwise. 10. NOTICE All notices required or permitted to be sent by either party to the other party under this Agreement shall be sent by registered mail prepaid, or by personal delivery, or by fax. Any notice given by fax shall be followed by a confirmation copy within ten (10) days. Unless changed by written notice given by either party to the other, the addresses and fax numbers of the respective parties shall be as follows: 5 8 To TSMC: TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. No. 121, Park Avenue 3 Science-Based Industrial Park Hsinchu, Taiwan Republic of China FAX: 886-35-781545 To Customer: ADAPTEC MANUFACTURING (S) PTE. LTD. Block 1001 Jalan Bukit Merah #07/01-20 Singapore 0315 With a copy to: ADAPTEC, INC. Attention: Vice President, Procurement 691 South Milpitas Boulevard Milpitas, California 95035 FAX: (408) 262-2533 11. ENTIRE AGREEMENT This Agreement, including Exhibits A-D, and together with the Foundry Agreement, constitutes the entire Agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior to contemporaneous understandings, agreements, dealings and negotiations, oral or written, regarding the subject matter hereof. No modification, alteration or amendment of this Agreement shall be effective unless in writing and signed by both parties. No waiver of any breach or failure by either party to enforce any provision of this Agreement shall be deemed a waiver of any other or subsequent breach, or a waiver of future enforcement of that or any other provision. 12. GOVERNING LAW This Agreement will be governed by and interpreted in accordance with the laws of the State of California. 13. ARBITRATION Each party will use its best efforts to resolve amicably any disputes or claims under this Agreement between the parties. In the event that a resolution is not reached among the parties within thirty (30) days after written notice by any party of the 6 9 dispute or claim, the dispute or claim shall be finally settled by binding arbitration in the San Francisco Bay Area, California under the Rules of Commercial Arbitration of the American Arbitration Association by three (3) arbitrators appointed in accordance with such rules. The arbitration proceeding shall be conducted in English. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. 14. ASSIGNMENT This Agreement shall be binding on and inure to the benefit of each party and its permitted successors and assigns. Customer may assign its purchase rights and obligations under this Agreement (a) to third parties in accordance with Section 6 above, and (b) to its Affiliates. Except as provided in Section 6, neither party shall assign any of its rights hereunder, nor delegate its obligations hereunder, to any third party, without the prior written consent of the other. 15. CONFIDENTIALITY Neither party shall disclose the existence or contents of this Agreement except as required by Customer's assignment of this Agreement to any third parties pursuant to Sections 6 and 14 above, in confidence to its advisors, as required by applicable law, or otherwise with the prior written consent of the other party. 16. FORCE MAJEURE Neither party shall be responsible for delays or failure in performance resulting from acts beyond the reasonable control of such party. Such acts shall include but not be limited to acts of God, war, riot, labor stoppages, governmental actions, fires, floods, and earthquakes. If such delays or failures on the party of either party continue for a period of more than one hundred twenty (120) days, the other party may terminate this Agreement upon written notice, subject to Section 7(d). 17. NO AGENCY No agency, partnership, joint venture, teaming agreement or other joint relationship is created hereby and neither party, nor any of its agents or representatives, has any authority of any kind to bind the other party in any respect whatsoever. 18. GOVERNMENTAL APPROVAL TSMC represents and warrants to Customer that no governmental approval or registration by or with the ROC is required for this Agreement or for the transactions contemplated hereby. In the event any such approval or registration is required, TSMC agrees to indemnify and hold Customer 7 10 harmless from any and all loss or damage to Customer which may result from the failure to procure such approval or effect such registration. 19. COUNTERPARTS This Agreement may be executed in two counterparts, together which will constitute a fully executed Agreement. IN WITNESS WHEREOF, the parties, have executed this Agreement as of the Effective Date by their duly authorized representatives. TAIWAN SEMICONDUCTOR ADAPTEC MANUFACTURING MANUFACTURING CO., LTD. (S) PTE. LTD. By: /s/ DONALD BROOKS By: /s/ SAM KAZARIAN ------------------ ------------------ Donald Brooks Sam Kazarian President Director and Attorney-In-Fact 8 11 Exhibit A CAPACITY FACTOR TABLE Masking W-Plug Complexity Capacity Generic Technology Layers(A) Layers(B) Index(C) Factor(D) (w/o ESD or Polyimide) 1.5um SPDM (BiCMOS) 16 16 1.23 1.2um SPDM (Logic) 13 13 1.00 1.0um SPDM (Logic) 13 13 1.00 1.0um DPDM (BiCMOS) 18 18 1.38 0.8um SPDM (Logic) 13 13 1.00 0.8um DPDM (MixMode) 14 14 1.08 0.8um SPTM (Logic Salicide) 17 17 1.31 0.8um DPDM (BiCMOS) 22 22 1.69 0.6um SPDM (Logic) 14 1 14.5 1.12 0.6um SPTM (Logic) 16 1 16.5 1.27 0.6um DPDM (MixMode) 15 1 15.5 1.19 0.6um DPDM (SRAM) 20 20 1.54 0.6um TPSM (DRAM) 15 1 15.5 1.19 0.6um QPDM (DRAM) 18 1 18.5 1.42 0.5um SPDM (Logic) 14 2 15 1.15 0.5um SPTM (Logic SACVD) 16 3 17.5 1.35 0.5um SPTM (Logic-CMP) 21 3 22.5 1.73 0.5um DPDM (SRAM) 20 1 20.5 1.58 0.5um QPDM (DRAM) 21 1 21.5 1.65 0.35um SPTM (Logic-CMP) 21 3 22.5 1.73 Remarks: (1) Masking Layer of w/i ESD (or Polyimide) = Masking Layer of w/o ESD (or Polyimide) + 1 (2) Masking Layer of Mixed-Mode(DP) = Masking Layer of Logic(SP) + 1 (3) Complexity Index (C) = (A) + (B) / 2 (4) Capacity Factor (D) = (C) / 13, normalized to 0.8um SPDM as 1 Date of issue: 6/9/95 12 EXHIBIT B CUSTOMER/TSMC COMMITTED CAPACITY Unit: K 6" Wafer Equivalent
1996 1997 1998 1999 2000 ---- ---- ---- ---- ---- Take or Pay * * Capacity Base Capacity * * * * * (For Options) X% of Base 90% 80% 70% 60% 50% Capacity Option I * * * * Capacity Option II * * * * Capacity TSMC Committed * * * * * Capacity (Base Capacity + Option Capacity) Customer Committed * * * * * Capacity (X% Base Capacity + Option Capacity)
Deposits Required: Option I - At contract signing $19.6M Option II - June 30, 1996 $46.2M ----------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- [*****] 13 Exhibit B1 WAFER EQUIVALENT CALCULATION TO CALCULATE THE WEIGHTED CAPACITY FACTOR
WEIGHTED CAPACITY WAFER PERCENTAGE CAPACITY PROCESS FACTOR CAPACITY OF VOLUME FACTOR .8um SPDM * * * * .6um SPTM * * * * TOTAL VOLUME * * * * 1996 WEIGHTED CAPACITY FACTOR * .6um SPTM * * * * TOTAL VOLUME * * * 1997 WEIGHTED CAPACITY FACTOR * TO CALCULATE THE EQUIVALENT CAPACITY 1997 COMMITTED CAPACITY * 1997 EQUIVALENT CAPACITY *** *
1997 EQUIVALENT CAPACITY = (1996 WEIGHTED CAPACITY FACTOR/1997 WEIGHTED CAPACITY FACTOR) * 1997 COMMITTED CAPACITY ----------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- [*****] 14 Exhibit C TSMC TECHNOLOGY ROAD MAP TSMC CMOS Technology Roadmap MIXED 0.6um 0.5um 0.35um MODE 2P3M 2P3M 2P4M 3V 3V LOGIC 0.6um 0.5um 0.35um 1P3M 1P3M 1P4M 3V 1P3M 3V SRAM 0.6um 0.5um 0.45um 0.35um 3V 3V 3V Q1 Q2 Q3 Q4 * * * * * ------------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ------------------------------------------------------------- [*****] 15 EXHIBIT D OPTION FEE (OPTION I) Year Option Capacity Option Fee Due Date Established (Unit: Wafer (Unit: US$) Equivalent) 1995 * $19.6M November 15, 1995 ----------------------------------------------------------- *Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- [* * *] EX-10.2 3 OPTION AGREEMENT II 1 EXHIBIT 10.2 OPTION AGREEMENT II Between Adaptec Manufacturing (S) Pte. Ltd. And Taiwan Semiconductor Manufacturing Co., Ltd. October 23, 1995 2 TABLE OF CONTENTS 1. DEFINITIONS 1 2. VOLUME CAPACITY 2 3. WAFER PRICE 3 4. OTHER PURCHASE TERMS AND CONDITIONS 3 5. OBLIGATION TO PAY OPTION FEE FOR OPTION CAPACITY 3 6. FAILURE TO PURCHASE THE OPTION CAPACITY; 4 FIRST RIGHT OF REFUSAL 7. TERM AND TERMINATION 4 8. BOARD APPROVAL 5 9. LIMITATION OF LIABILITY 5 10. NOTICE 5 11. ENTIRE AGREEMENT 6 12. GOVERNING LAW 6 13. ARBITRATION 7 14. ASSIGNMENT 7 15. CONFIDENTIALITY 7 16. FORCE MAJEURE 7 17. NO AGENCY 7 18. GOVERNMENTAL APPROVAL 8 19. COUNTERPARTS 8 3 OPTION AGREEMENT II THIS AGREEMENT is made and becomes effective as of October 23, 1995 (the "Effective Date") by Taiwan Semiconductor Manufacturing Co., Ltd. ("TSMC"), a company organized under the laws of the Republic of China with its registered address at No. 121, Park Ave. 3, Science Based Industrial Park, Hsinchu, Taiwan and Adaptec Manufacturing (S) Pte. Ltd., a company organized under the laws of Singapore, with its registered address at 6 Battery Road, 532-00, Singapore 049909 ("Customer"). RECITALS WHEREAS, TSMC currently supplies Customer with wafers and Customer wishes to increase the volume of wafers to be purchased from TSMC; WHEREAS, in order in increase its output, TSMC must accelerate its ramp up in Fab 3 and advance the start of Fab 4; WHEREAS, as condition to TSMC's acceleration of these facilities, TSMC has asked that Customers make a capacity commitment and advance payment for the right to buy additional capacity, and Customer is willing to do so: AGREEMENT NOW, THEREFORE, in consideration of the mutual convents and conditions contained herein the parties agree as follows: 1. DEFINITIONS (a) "Base Capacity" used in this Agreement shall mean the annualized run rate that TSMC commits to provide to Customer as set forth in Exhibit B. (b) "Customer Committed Capacity" used in this Agreement shall mean the total capacity that Customer agrees to purchase from TSMC pursuant to this Agreement, either itself or by an Affiliate, and as set forth in Exhibit B. (c) "Foundry Agreement" used in this Agreement shall mean the Foundry Agreement between TSMC and Adaptec, Inc., dated October 29, 1993, together with any amendments thereto. (d) "Option Capacity" used in this Agreement shall mean the firm capacity commitment made by Customer pursuant to this Agreement, for which 1 4 capacity Customer agrees to pay the Option Fee as defined in Section 1(e) below. (e) "Option Fee" used in this Agreement shall mean the deposit that Customer agrees to place with TSMC as the advance payment for the wafers comprising the Option Capacity. (f) "TSMC Committed Capacity" used in this Agreement shall mean the total capacity that TSMC agrees to provide to Customer or its Affiliates, consisting of Base Capacity and Option Capacity as set forth in Exhibit B. (g) "Wafer Equivalent" used in this Agreement shall mean the number of six-inch wafers, adjusted by the equivalency factor based on 1996 Base Capacity as set forth on Exhibit A, by which capacity commitments are measured hereunder. An example of such calculation is set forth on Exhibit B-1. Any and all capacity commitments referred to in this Agreement shall be for the calendar year and measured in Wafer Equivalents. (h) "Affiliates" used in this Agreement shall mean a party which holds at least a seventy-five percent (75%) ownership interest in Customer or a party in which Customer's parent holds at least a seventh-five percent (75%) ownership interest. 2. VOLUME COMMITMENT (a) Customer agrees to purchase annually from TSMC, either itself or through its Affiliates, the Customer Committed Capacity set forth for such year on Exhibit B and, subject to the payment of the Option Fee by Customer under Section 5 below, TSMC agrees to provide to Customer the TSMC Committed Capacity, as set forth in Exhibit B. In any calendar year, the orders placed by Customer or its Affiliates shall first apply to fulfill the Base Capacity portion of the Customer Committed Capacity, and then the Option Capacity portion. (b) Each month, Customer agrees to provide to TSMC a six-month rolling forecast of the number of wafers that Customer will purchase, with the volume for the first twelve weeks being frozen (i.e., Customer must purchase all of the quantity forecast for the delivery in the first twelve weeks of the forecast). The forecast must be based on wafers out. (c) TSMC will use its best efforts to cause its fabs to be capable of producing wafers of more advanced specifications, as set forth in the TSMC Technology Road Map attached as Exhibit C. (The parties anticipate that the conversion factor for migration of 6" to 8" inch wafers will 1.78.) 2 5 ----------------------------------------------------------- Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- 3. WAFER PRICE (a) The prices for wafers purchased by Customer during the term of this Agreement shall not be more than TSMC's average wafer prices to the optionees (i.e., other customers that are parties to option agreements similar to this Agreement) for the same technology, the same fab and the same period of time, taking into account Customer's total volume across all TSMC fabs. At Customer's request, TSMC shall permit an independent third party mutually agreed upon by the parties to audit such books and records as may be required to verify TSMC's most favored customer pricing obligations in the preceding sentence. Such audits shall be at Customer's expense at any time during the term of this Agreement upon at least one (1) month prior written notice to TSMC. In the event that the wafer prices do not comply with the first sentence, TSMC will make proper price changes for all unfilled orders upon Customer's notice in writing. (b) The parties shall negotiate in good faith each year the wafer prices for the Option Capacity of the following year, and if no agreement is reached by the parties before October of each year for the succeeding calendar year, the parties agree to submit the dispute to the binding arbitration pursuant to Section 13 below, and under such circumstances, neither party shall have the right to terminate this Agreement under Section 7 below. 4. OTHER PURCHASE TERMS AND CONDITIONS The Foundry Agreement, together with any amendments thereto, will apply to all purchases of wafers by Customer from TSMC, except that the provisions of this Agreement will supersede the Foundry Agreement with respect to the subject matter hereof. 5. OBLIGATION TO PAY OPTION FEE FOR OPTION CAPACITY (a) Customer agrees to pay to TSMC the Option Fee in the amount of [* *] per Wafer Equivalent for the right to purchase the Option Capacity pursuant to this Agreement. The Option Fee is set forth in Exhibit D, and Customer agrees to pay the Option Fee for the entire term of this Agreement $46.2M in cash by June 30, 1996. The Option Fee, once paid, shall be non-refundable, except as provided in Section 6(a) and Section 7(d), and will be credited against payments due for wafers purchased by Customer for the Option Capacity provided by TSMC under this Agreement. (b) Customer agrees to deliver to TSMC, within seven (7) days following the Effective Date, a promissory note in an amount of the Option Fee and evidencing the payment required pursuant to Section 5(a), payable to TSMC or 3 6 order, which promissory note shall be in the form of Exhibit E. The promissory note shall be cancelled and returned by TSMC to customer within seven (7) days after receipt of the corresponding Option Fee by TSMC. 6. FAILURE TO PURCHASE THE OPTION CAPACITY; FIRST RIGHT OF REFUSAL If, in any calendar year, for any reason, Customer is not able to use or purchase all or a portion of the Customer Committed Capacity for that year, Customer shall promptly notify TSMC of such in writing and first offer TSMC such capacity for sales to any third parties. TSMC may, at its option, accept such offer, in whole or in part, within thirty (30) days following Customer's notification and, if TSMC so accepts, the Option Fee attributable to that capacity will be refunded to Customer without interest. In the event that TSMC decides not to accept such offer, Customer may sell such unused capacity to third parties reasonably acceptable to TSMC (given the processes and capacity then available in its fabs), within two months after TSMC's written notice that it will not accept such offer. If Customer fails to sell such unused Customer Committed Capacity, TSMC shall not be required to refund any portion of the unapplied Option Fee applicable to that unused capacity. TSMC is entitled to sell or use any such capacity thereafter. Forfeiture of the applicable Option Fee shall be TSMC's sole remedy for Customer's failure to purchase the Customer Committed Capacity in any calendar year. 7. TERM AND TERMINATION (a) TERM The term of this Agreement shall commence from the Effective Date, and continue until December 31, 2000. (b) TERMINATION BY TSMC FOR CUSTOMER'S FAILURE TO PAY THE OPTION FEE TSMC may terminate this Agreement if Customer fails to pay the Option Fee pursuant to Section 5 above, and does not cure or remedy such breach within thirty (30) days of receiving written notice of such breach. 4 7 (c) TERMINATION FOR OTHER BREACH OR FOR BANKRUPTCY Either party may terminate this Agreement if, (i) the other party breaches any material provisions of this Agreement (other than Customer's breach of Section 5 above), and does not cure or remedy such breach within one hundred and twenty (120) days of receiving written notice of such breach, or (ii) becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceeding relating to insolvency, receivership or liquidation, if such petition or proceeding is not dismissed with prejudice within sixty (60) days after filing. (d) EFFECT OF TERMINATION In the event of termination of this Agreement, each party shall remain liable to the other party for any outstanding and matured rights and obligations at the time of termination, including payment of the Option Fee applicable to the used Option Capacity and for the wafers already ordered and shipped to Customer. Any wafers then in process pursuant to a Customer order may be completed and shipped to Customer and the applicable Option Fee amount applied against such wafers. In the event Customer terminates this Agreement pursuant to the terms of Section 7(c), any portion of the Option Fee then remaining, which has not been applied against purchases of wafers, will be refunded to Customer within thirty (30) days of termination of this Agreement. 8. BOARD APPROVAL Customer shall obtain the approval by its board of directors of this Agreement, and submit to TSMC, at the time of executing this Agreement, an authentic copy of its board resolution authorizing the representative designated below to execute this Agreement. 9. LIMITATION OF LIABILITY In no event shall either party be liable for any indirect, special, incidental or consequential damages (including loss of profits or loss of use) resulting from, arising out of or in connection with such party's performance or failure to perform under this Agreement, or resulting from, arising out of or in connection with the production, supply and/or purchase and sale of the wafers, whether due to a breach of contract, breach of warranty, tort, or negligence of such party, or otherwise. 10. NOTICE All notices required or permitted to be sent by either party to the other party under this Agreement shall be sent by registered mail postage prepaid, or by personal 5 8 delivery, or by fax. Any notice given by fax shall be followed by a confirmation copy within ten (10) days. Unless changed by written notice given by either party to the other, the addresses and fax numbers of the respective parties shall be as follows: To TSMC: TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. No. 121, Park Avenue 3 Science-Based Industrial Park Hsinchu, Taiwan Republic of China FAX: 886-35-781545 To Customer: ADAPTEC MANUFACTURING (S) PTE. LTD. Block 1001 Julan Bukit Merah #07/01-20 Singapore 0315 With a copy to: ADAPTEC, INC. Attention: Vice President, Procurement 691 South Milpitas Boulevard Milpitas, California 95035 FAX: (408) 262-2533 11. ENTIRE AGREEMENT This Agreement, including Exhibits A-E, and together with the Foundry Agreement, constitutes the entire Agreement between the parties with respect to the subject matter hereof, and supersedes and replaces all prior to contemporaneous understandings, agreements, dealings and negotiations, oral or written, regarding the subject matter hereof. No modification, alteration or amendment of this Agreement shall be effective unless in writing and signed by both parties. No waiver of any breach or failure by either party to enforce any provision of this Agreement shall be deemed a waiver of any other or subsequent breach, or a waiver of future enforcement of that or any other provision. 12. GOVERNING LAW This Agreement will be governed by and interpreted in accordance with the laws of the State of California. 13. ARBITRATION 6 9 Each party will use its best efforts to resolve amicably any disputes or claims under this Agreement between the parties. In the event that a resolution is not reached among the parties within thirty (30) days after written notice by any party of the dispute or claim, the dispute or claim shall be finally settled by binding arbitration in the San Francisco Bay Area, California under the Rules of Commercial Arbitration of the American Arbitration Association by three (3) arbitrators appointed in accordance with such rules. The arbitration proceeding shall be conducted in English. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. 14. ASSIGNMENT This Agreement shall be binding on and inure to the benefit of each party and its permitted successors and assigns. Customer may assign its purchase rights and obligations under this Agreement (a) to third parties in accordance with Section 6 above, and (b) to its Affiliates. Except as provided in Section 6, neither party shall assign any of its rights hereunder, nor delegate its obligations hereunder, to any third party, without prior written consent of the other. 15. CONFIDENTIALITY Neither party shall disclose the existence or contents of this Agreement except as required by Customer's assignment of this Agreement to any third parties pursuant to Sections 6 and 14 above, in confidence to its advisors, as required by applicable law, or otherwise with the prior written consent of the other party. 16. FORCE MAJEURE Neither party shall be responsible for delays or failure in performance resulting from acts beyond the reasonable control of such party. Such acts shall include but not be limited to acts of God, war, riot, labor stoppages, governmental actions, fires, floods, and earthquakes. If such delays or failures on the party of either party continue for a period of more than one hundred twenty (120) days, the other party may terminate this Agreement upon written notice, subject to Section 7(d). 17. NO AGENCY No agency, partnership, joint venture, teaming agreement or other joint relationship is created hereby and neither party, nor any of its agents or representatives, has any authority of any kind to bind the other party in any respect whatsoever. 7 10 18. GOVERNMENTAL APPROVAL TSMC represents and warrants to Customer that no governmental approval or registration by or with the ROC is required for this Agreement or for the transactions contemplated hereby. In the event any such approval or registration is required, TSMC agrees to indemnify and hold Customer harmless from any and all loss or damage to Customer which may result from the failure to procure such approval or effect such registration. 19. COUNTERPARTS This Agreement may be executed in two counterparts, together which will constitute a fully executed Agreement. IN WITNESS WHEREOF, the parties, have executed this Agreement as of the Effective Date by their duly authorized representatives. TAIWAN SEMICONDUCTOR ADAPTEC MANUFACTURING MANUFACTURING CO., LTD. (S) PTE. LTD. By: /s/ Donald Brooks By: /s/ Sam Kazarian ------------------ ------------------ Donald Brooks Sam Kazarian President Director and Attorney-In-Fact 8 11 Exhibit A CAPACITY FACTOR TABLE Masking W-Plug Complexity Capacity Generic Technology Layers(A) Layers(B) Index(C) Factor(D) (w/o ESD or Polyimide) 1.5um SPDM (BiCMOS) 16 16 1.23 1.2um SPDM (Logic) 13 13 1.00 1.0um SPDM (Logic) 13 13 1.00 1.0um DPDM (BiCMOS) 18 18 1.38 0.8um SPDM (Logic) 13 13 1.00 0.8um DPDM (MixMode) 14 14 1.08 0.8um SPTM (Logic Salicide) 17 17 1.31 0.8um DPDM (BiCMOS) 22 22 1.69 0.6um SPDM (Logic) 14 1 14.5 1.12 0.6um SPTM (Logic) 16 1 16.5 1.27 0.6um DPDM (MixMode) 15 1 15.5 1.19 0.6um DPDM (SRAM) 20 20 1.54 0.6um TPSM (DRAM) 15 1 15.5 1.19 0.6um QPDM (DRAM) 18 1 18.5 1.42 0.5um SPDM (Logic) 14 2 15 1.15 0.5um SPTM (Logic SACVD) 16 3 17.5 1.35 0.5um SPTM (Logic-CMP) 21 3 22.5 1.73 0.5um DPDM (SRAM) 20 1 20.5 1.58 0.5um QPDM (DRAM) 21 1 21.5 1.65 0.35um SPTM (Logic-CMP) 21 3 22.5 1.73 Remarks: (1) Masking Layer of w/i ESD (or Polyimide) = Masking Layer of w/o ESD (or Polyimide) + 1 (2) Masking Layer of Mixed-Mode(DP) = Masking Layer of Logic(SP) + 1 (3) Complexity Index (C) = (A) + (B) / 2 (4) Capacity Factor (D) = (C) / 13, normalized to 0.8um SPDM as 1 Date of issue: 6/9/95 12 EXHIBIT B CUSTOMER/TSMC COMMITTED CAPACITY Unit: K 6" Wafer Equivalent
1996 1997 1998 1999 2000 ---- ---- ---- ---- ---- Take or Pay * * Capacity Base Capacity * * * * * (For Options) X% of Base 90% 80% 70% 60% 50% Capacity Option I * * * * Capacity Option II * * * * Capacity TSMC Committed * * * * * Capacity (Base Capacity + Option Capacity) Customer Committed * * * * * Capacity (X% Base Capacity + Option Capacity)
Deposits Required: Option I - At contract signing $19.6M Option II - June 30, 1996 $46.2M ----------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- [****] 13 Exhibit B1 WAFER EQUIVALENT CALCULATION TO CALCULATE THE WEIGHTED CAPACITY FACTOR
WEIGHTED CAPACITY WAFER PERCENTAGE CAPACITY PROCESS FACTOR CAPACITY OF VOLUME FACTOR .8um SPDM * * * * .6um SPTM * * * * TOTAL VOLUME * * * * 1996 WEIGHTED CAPACITY FACTOR * .6um SPTM * * * * TOTAL VOLUME * * * 1997 WEIGHTED CAPACITY FACTOR * TO CALCULATE THE EQUIVALENT CAPACITY 1997 COMMITTED CAPACITY * 1997 EQUIVALENT CAPACITY *** *
1997 EQUIVALENT CAPACITY = (1996 WEIGHTED CAPACITY FACTOR/1997 WEIGHTED CAPACITY FACTOR) * 1997 COMMITTED CAPACITY ----------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- [*****] 14 Exhibit C TSMC TECHNOLOGY ROAD MAP TSMC CMOS Technology Roadmap MIXED 0.6um 0.5um 0.35um MODE 2P3M 2P3M 2P4M 3V 3V LOGIC 0.6um 0.5um 0.35um 1P3M 1P3M 1P4M 3V 1P3M 3V SRAM 0.6um 0.5um 0.45um 0.35um 3V 3V 3V Q1 Q2 Q3 Q4 * * * * * ------------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ------------------------------------------------------------- [*****] 15 EXHIBIT D OPTION FEE (OPTION II) Year Option Capacity Option Fee Due Date Established (Unit: Wafer (Unit: US$) Equivalent) 1995 * $46.2M June 30, 1996 ----------------------------------------------------------- *Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- [****] 16 EXHIBIT E STANDARD FORM OF PROMISSORY NOTE Amount: $46,200,000.00 Due Date: June 30, 1996 The undersigned, Adaptec manufacturing (S) Ptd. Ltd. (the "Maker"), unconditionally promise to pay to Taiwan Semiconductor Manufacturing Co., Ltd., or its order the sum of forty-six million, two hundred thousand dollars ($46,200,000), plus interest calculated from the due date stated herein to the date of full payment at the rate 10% per annum on any unpaid portion of the principal amount stated herein, and said payment will be made to such account as Maker may direct. This Note shall be governed in all respects by the laws of the State of California. The Maker of this Note agrees to waive protests and notice of whatever kind in connection with the delivery, acceptance, performance, default or enforcement of this Note. Issue Dated: October __, 1995 Issue Place: Singapore By: ______________________ Title: ______________________________ Adaptec Manufacturing (S) Pte. Ltd. 6 Bartery Road. 530-00 Singapore 049909 ----------------------------------------------------------- * Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions. ----------------------------------------------------------- [*****] -----END PRIVACY-ENHANCED MESSAGE-----