UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 2
<checked-box>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 1995
COMMISSION FILE NUMBER 0-17187
LOGIC DEVICES INCORPORATED
(Exact name of registrant as
specified in its charter)
CALIFORNIA 94-2893789
(State of Incorporation) (I.R.S. Employer
Identification No.)
628 EAST EVELYN AVENUE
SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices,
including Zip Code)
(408) 737-3300
(Registrant's telephone number,
including Area Code)
Securities registered pursuant to Section 12(b) of the Act
Title of Class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class)
-----------------------
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
,
The aggregate market value, of voting stock held by non-affiliates of the
registrant on April 19, 1996 was approximately $28,508,312. On that date,
there were 6,001,750 shares of Common Stock issued and outstanding.
Page 1 of 22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
LOGIC DEVICES INCORPORATED
Date: July 13, 1996 By: /S/ WILLIAM J. VOLZ
William J. Volz, President and
Principal Executive Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
3.1 Articles of Incorporation, as amended [3.1] (1).
3.2 Bylaws, as amended. [3.2] (1).
4.1 Form of Warrant to purchase 2,500 share of common stock. [4.1] (14)
4.2 Form of Warrant to purchase 31,850 shares of common stock. [4.2] (14)
10.1 Master Agreement dated August 11, 1988 between Registrant, Howard L.
Farkas, Burton W. Kanter, William Volz, Albert Morrison, Jr., as trustee
of the T.C. Family Trust, Burton W. Kanter, as trustee of the Logical
Trust, L.A. Hellerstein, as trustee, the Farkas Trusts, and Solomon A.
Weisgal as trustee of the Bea Ritch Trusts, with exhibits. [10.1] (1).
10.2 Logic Devices Incorporated Stock Purchase Plan. [10.2] (1).
10.3 Incentive Stock Agreement dated September 1, 1986 between Registrant and
certain employees and former employees of Registrant, including William
Volz, James McAllister, Todd Ashford and Jesse Huffman. [10.3] (1).
10.4 Standard Industrial Lease - Net dated August 31, 1983. Exercise of
Option dated October 30, 1985 and Lease Modification and Extension
Agreement dated August 13, 1988, all between Registrant and Golden Gate
Commercial Company, covering a portion of Registrant's principal
facility in Sunnyvale, California. [10.4] (1).
10.5 Standard Industrial Lease - Net dated October, 1985 and Lease
Modification and Extension Agreement dated August 15, 1988, each between
Registrant and Golden Gate Commercial Company covering a portion of
Registrant's principal facility in Sunnyvale, California. [10.5] (1).
10.6 Agreement of Lease dated May 4, 1989 between Registrant and the Koger
Company covering Registrant's facility in St. Petersburg, Florida.
[10.7] (5)
10.7 Sales Incentive Plan. [10.11] (1).
10.8 Agreement dated December 1, 1988 between Registrant and AT&T
Microelectronics. [10.24] (4).
10.9 Logic Devices Incorporated incentive and non-qualified stock option
plan. [10.26] (6).
10.10 Stock option agreement between Todd J. Ashford and the Registrant,
dated May 15, 1990. [10.27] (7)
10.11 Stock option agreement between Tony Bell and the Registrant, dated
April 16, 1990. [10.28] (7)
10.12 SRAM Development Memorandum of Understanding between the Registrant and
OKI Electric Industry Co., Ltd. dated March 3, 1992. [10.32] (9) (15)
10.13 Form of Warrant to purchase an aggregate of 220,000 shares of Common
Stock. [10.23] (12)
10.14 Form of Registration Agreement regarding the Warrants referenced in
Exhibit 10.14. [10.24] (12)
10.15 Foundry Capacity Agreement between Zentrum Mikroelektronik Dresden
(ZMD) and Logic Devices Incorporated, dated December 14, 1995. (15)
11.1 Computation of Earnings per Common Share
23.1 Consent letter of Meredith Cardozo
26.1 Financial Data Schedule
___________________
[ ] Exhibits so marked have been previously filed with the Securities and
Exchange Commission as exhibits to the filings shown below under the
exhibit numbers indicated following the respective document description
and are incorporated herein by reference.
(l) Registration Statement on Form S-18 ("Registration Statement"), as filed
with the Securities and Exchange Commission ("SEC") on August 23, 1988.
(2) Amendment No. 1 to Registration Statement as filed with the SEC on
September 27, 1988.
(3) Amendment No. 2 to Registration Statement, as filed with the SEC on
October 7, 1988.
(4) Annual Report on Form 10-K for the fiscal year ended December 31, 1988,
as filed with the SEC on April 14, 1989.
(5) Annual report on Form 10-K for the fiscal year ended December 31, 1989,
as filed with the SEC on April 14, 1990.
(6) Proxy Statement relating to the Annual Meeting of Shareholders held on
June 12, 1990, as filed with the SEC on May 24, 1990.
(7) Annual Report on Form 10-K for the fiscal year ended December 31, 1990,
as filed with the SEC on April 14, 1991.
(8) Annual Report on Form 10-K for the fiscal year ended December 31, 1991,
as filed with the SEC on April 14, 1992.
(9) Annual Report on Form 10-K for the fiscal year ended December 31, 1992,
as filed with the SEC on April 15, 1993.
(10) Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
as filed with the SEC on March 31, 1994.
(11) Annual Report on Form 10-K for the fiscal year ended December 31, 1994,
as filed with the SEC on March 31, 1995.
<PAGE>
(12) Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K for the
year ended December 31, 1994, as filed with the SEC on April 29, 1995.
(13) Registration Statement on Form S-3 as filed with the SEC on August 31,
1995 [Registration No. 33-62299]
(14) Quarterly Report on 10-Q for the quarter ended September 30, 1995, as
filed with the SEC on November 14, 1995.
(15) Confidential treatment has been requested with respect to certain
portions of such agreements and the confidential portions omitted have
been filed separately with the Commission pursuant to a confidential
treatment request.
<PAGE>
EXHIBIT 10.15
[ ] - denotes information for which
confidential treatment has been
requested by the Registrant.
The confidential protions
omitted have been filed
separately with the Commission
pursuant to a confidential
treatment request.
FOUNDRY CAPACITY AGREEMENT BETWEEN
ZENTRUM MIKROELEKTRONIK AND LOGIC DEVICES INC
This Foundry Capacity Agreement ("Agreement") is entered into as of December
14, 1995 (the "Effective Date") by and between ZENTRUM MIKROELEKTRONIK DRESDEN
GmbH, a German limited liability entity ("ZMD") and LOGIC DEVICES
INCORPORATED, a California corporation ("LDI").
1. DEFINITIONS
1 "Foundry Products" or "Products" shall mean integrated circuits
developed and/or licensed by LDI which are set forth in ATTACHMENT A
hereto and which LDI desires ZMD to manufacture for sale by LDI.
Such Attachment will be amended from time to time to conform to
LDI's ongoing design and development efforts.
2 "Committed Capacity" shall mean the annual firm volume commitment of
LDI.
3 "Confidential Information" and "Proprietary Information" shall mean
for purposes of this Agreement:
(a) Any information disclosed by one party to the other pursuant to
or in connection with this Agreement which is in written,
graphic, machine readable or other tangible form and is marked
confidential, proprietary, or in some other manner to indicate
its confidential nature; and
(b) Any information orally disclosed by one party to the other
pursuant to or in connection with this Agreement provided that
such information is designated as confidential at the time of
disclosure and reduced to a writing delivered to the receiving
party within thirty (30) days of the oral disclosure and
detailing the confidential information involved.
4 "Pre-Payment Fee" for a year shall mean [
] of the purchase price for the Committed Capacity for such year.
2. TERM AND COMMITMENT.
1 This Agreement shall become effective as of Effective Date and shall
remain in effect until the close of business on December 31, 1996,
unless an "annual renewal" of this Agreement has been agreed to on
or before June 15, 1996. This Agreement may be renewed for
successive one (1) year periods by the parties using the "annual
renewal" procedure set forth below. For purposes of this Agreement,
an "annual renewal" of this Agreement is agreed to only if all of
the following are satisfied at any time on or before June 15 of the
then current contract year: (i) the Committed Capacity and a price
for the Products for the next calendar year have been agreed to in
writing, (ii) ZMD has received from LDI a firm, non-cancelable,
Purchase Order for the entire Committed Capacity for the next
calendar year, and (iii) the Pre-Payment Fee for the next calendar
year (determined in accordance with Section 2.2 hereof) has been
received by ZMD. If all such requirements are satisfied then this
Agreement shall be renewed for one (1) year, until the close of
business of December 31 of the next calendar year. If no agreement
on price or Committed Capacity for the next calendar year has been
reached in writing on or before June 15 of the then current year or
ZMD has not received the Purchase Order or the Pre-Payment Fee for
the next year on or before such date, then this Agreement shall
terminate as of the close of business of December 31 of the then
current calendar year. This Agreement may also be terminated
earlier as provided in Section 12 hereof.
<PAGE>
2 Payment by LDI of the Pre-Payment Fee for the initial year or a
renewal year provides LDI the right to purchase the Committed
Capacity for the year to which the Pre-Payment Fee relates. Such
payment serves to reserve ZMD's capacity in the amount of the
Committed Capacity for such year. The Pre-Payment Fee is in the
nature of a "security deposit", chargeable against the final amounts
payable under this Agreement or any renewal thereof. The Pre-
Payment Fee shall not bear interest. The Pre-Payment Fee for the
first year shall be Seven Hundred Ninety Two Thousand Dollars
($792,000) and shall be due and payable by LDI simultaneously with
the execution by the parties of this Agreement. If the Agreement is
renewed for a year in accordance with Section 2.1 hereof, then the
Pre-Payment Fee shall remain unused also for such renewal year, and
LDI needs to pay on or before the applicable June 15 only the
incremental Pre-Payment Fee, if any, for its commitment for the
renewal year. In case of a renewal, the Pre-Payment Fee will not be
used by ZMD at the end of the original period but only at the end of
such renewal period unless the Agreement is again renewed, in which
case the same rules apply. By way of example, if the Committed
Capacity for 1997 is [ ] wafers at a unit price of [ ], then
LDI must pay as additional Pre-Payment Fee, on or before June 15, [
]. However, if the Committed Capacity for 1997 were [ ] wafers
at a unit price of [ ], then no additional Pre-Payment Fee would
be payable and ZMD would offset against payments due from LDI at the
end of the first year the amount of [ ].
3 The parties agree that LDI shall have a right of first refusal for
ZMD's capacity for 1997 set forth on ATTACHMENT B hereto, which must
be exercised, if at all, together with the "annual renewal" for 1997
on or before June 15, 1996. Except as set forth in the immediately
preceding sentence, ZMD shall have no obligation to reserve any
capacity for LDI for any period outside the current contract term
and agreed to "annual renewal(s)". ZMD may enter into transactions
with third parties regarding its entire capacity outside such time
period, which may leave insufficient or no capacity for a future
"annual renewal".
4 In the event for whatever reason, except as expressly permitted
herein, LDI purchases less than its Committed Capacity for the year,
LDI shall pay to ZMD, upon written demand and invoice from ZMD, the
full purchase price for the shortfall. The parties agree that this
amount constitutes a reasonably estimate of the damages ZMD would
incur for such failure by LDI in light of ZMD's reservation of its
capacity, and this amount shall constitute liquidated damages (not a
penalty) for LDI's failure to honor its commitment hereunder for
such year. This remedy shall be ZMD's exclusive remedy for LDI's
failure to purchase the Committed Capacity for a year. However,
this exclusive remedy shall not affect any other remedy ZMD may have
hereunder or under applicable law for any other reason.
5 In the event LDI is expressly permitted herein to purchase less than
the Committed Capacity for a year, ZMD shall use the excess Pre-
Payment Fee for such year as payment for Products as soon as
reasonably feasible thereafter. If any such excess Pre-Payment Fee
remains at the end of a contract year and is not carried over to the
next year in accordance with Section 2.2 hereof, ZMD shall refund
such amount to LDI at the end of such contract year.
<PAGE>
3. PRODUCTION OF FOUNDRY PRODUCTS.
1 The Committed Capacity for the first year of this Agreement shall be
[ ] Products (wafers). The
Committed Capacity for a year shall constitute a firm, non-
cancelable commitment by LDI for such year. Any additional capacity
shall be subject to negotiation by the parties.
2 LDI shall provide to ZMD complete product specifications and tapes
for the Products to enable ZMD to manufacture the Products. ZMD
will use CMOS 0.8 micron technology to manufacture the Products, and
will process the Product in accordance with ZMD standard processing
specifications as well as in accordance with any additional
processing requirements for such Products as may be agreed-upon in
good faith and in writing by ZMD and LDI. ZMD will offer to LDI new
process technologies (0.6u, 6" and any others) as they become
available.
3 During the first seven (7) calendar days of each calendar month
during the term of this Agreement including any renewal hereof, LDI
shall provide by facsimile to ZMD written rolling forecasts of LDI's
anticipated wafer delivery requirements for the next six full
calendar months (the "Forecast").
(a) Each Forecast shall show the quantity of wafer deliveries for
each month and shall include the specific Products and
technology for the wafers listed. The Forecasts for 1996 and
1997 shall comply with the volume ramp-up schedule attached
hereto as ATTACHMENT B plus or minus ten percent (10%) per
month, unless ZMD agrees otherwise in writing. LDI shall make
good faith efforts to ensure that all Forecasts are reasonable
estimates of its anticipated needs. Subject to the obligations
contained in this Section 3.3(a), and except as provided in
Sections 3.1 and 3.3(b) hereof, all Forecasts (and any response
to them) will be for planning purposes only, and will not
create any obligation to purchase and/or sell Products.
(b) Each Forecast shall constitute a commitment by LDI to purchase
a minimum of the following percentages of the amounts indicated
in the Forecast:
Month in the First Second Third Fourth Fifth Sixth
month of month of month of month of month of month of
Forecast forecast forecast forecast forecast forecast forecast
Minimum percentage
commitment for
amounts forecast 100% 100% 100% 75% 50% 0%
for that month
With respect to the forecasted amounts after the third month of
the Forecast, LDI shall be free to change the mix of the
specific Products and technology for the wafers listed.
(c) ZMD shall provide a written response to each Forecast within
five (5) working days of ZMD's receipt of such Forecast.
Subject to the other terms of this Agreement, ZMD's response to
each such Forecast shall accept the Forecast for the quantities
in the first three months to the extent they are within the
amounts allowed for LDI pursuant to this Section 3.3 and
Section 3.1. ZMD's response may accept and/or reject whole or
in part any additional Forecast quantities for those months.
<PAGE>
4 ZMD will be responsible for procuring the masks for the Products.
The cost for production of the masks shall be borne by LDI for
normal production mode and by ZMD to the extent it causes the number
of masks produced to exceed the normal production mode.
5 In the event of any material delays in delivery or any excessive
warranty defects (as provided in Section 6.4 hereof), LDI may adjust
the Forecast to take into consideration the effect of such delays
and quality problems on LDI's need for the affected Product, in a
way mutually agreed to by the parties. Except as otherwise provided
in Section 6.4, there shall be no effect on LDI's Committed Capacity
for the year, unless ZMD agrees otherwise.
4. PRICING, PAYMENT AND DELIVERY.
1 The Pre-Payment Fee for a year shall be non-refundable except as
expressly provided herein.
2 The parties hereby agree to the price of [ ] per wafer
for Products purchased during the first year of this Agreement,
which price is based on LDI's Committed Capacity of [ ] Products
for the first year (1996). The prices for the second and later
years of this Agreement must be negotiated and agreed upon in
accordance with Section 2.1 hereof. However, with respect to the
pricing of the Products for 1997, ZMD agrees that any unit price
increase will be limited to [ ] of the prices for 1996, provided
that (a) the 0.8 micron CMOS processing technology is used, (b) at
least the volume reflected on Exhibit B is LDI's Committed Capacity
for 1997, and (c) the aggregate changes in the exchange rate as
published from time to time in the Wall Street Journal between the
Deutsch Mark and the US Dollar (i) on the Effective Date of this
Agreement and (ii) on the "annual renewal" date and thereafter
during 1997, at any time exceeds [ ]. When such change exceeds [
], ZMD shall have the right to adjust prices. All prices will be
agreed to in US Dollars and set forth on the invoice in US Dollars
unless the parties agree otherwise. All prices are F.O.B. ZMD's
plant in Dresden, Germany.
3 The terms and conditions of this Agreement shall govern the sale by
ZMD to LDI of all Products and related foundry services, and such
terms and conditions shall supersede all pre-printed terms and
conditions contained in any purchase order, order acknowledgment
form, invoice or other business form submitted by either party to
the other.
4 Payment terms are net thirty (30) days from date of invoice.
Invoices shall show the number of wafers. All overdue amounts shall
bear interest at the rate of 1-1/2% per month, or the highest rate
permitted by applicable law, whichever is less, until paid in full.
Interest shall accrue on a daily basis. LDI shall make payment into
an account from time to time designated by ZMD and set forth on
ATTACHMENT D hereto.
<PAGE>
5 If LDI is delinquent in payment of any amount due hereunder ZMD
shall have the right, at its option, in addition to other rights and
remedies it may have, to suspend its performance hereunder until
such time as all such delinquencies are cured, and the time for
ZMD's performance shall be adjusted accordingly. Such suspension in
performance shall not extend the term of this Agreement beyond the
term herein provided nor relieve LDI from its commitments hereunder,
including, without limitation, its full Committed Capacity for the
year. If due to such suspension ZMD is not able to delivery the
full quantities of the Committed Capacity, LDI shall nevertheless be
liable to ZMD for the full purchase price of such Committed Capacity
in addition to other remedies ZMD may have for LDI's failure to
timely pay.
6 The prices and fees do not include sales, use, transfer, property,
ad valorem, excise, privilege or value added taxes, import duties,
export duties or other custom duties or tariffs or any other taxes,
duties or charges not based on ZMD's net income, all of which shall
be paid by LDI. LDI agrees to promptly pay, or reimburse ZMD for,
the amount of such tax or charge and all reasonable attorneys' fees
and other costs and expenses incurred by ZMD in connection
therewith, and the amount of any fine or penalty assessed against
ZMD in connection therewith. Where applicable, LDI will provide
ZMD with exemption certificate(s) in form and substance satisfactory
to the relevant taxing or governmental authorities.
7 ZMD shall use commercially reasonable efforts to achieve on-time
delivery and to provide linear shipments as ordered by LDI so as to
not concentrate deliveries within any given time frame unless
otherwise agreed to by LDI.
8 All processed wafers or other items to be delivered under this
Agreement shall be properly packed, marked and shipped by ZMD in
the manner specified below:
(a) A packing list shall accompany each shipping package unit
containing: Bill of Lading or equivalent, invoice bearing
purchase order number(s), where applicable; the device code(s)
of the circuits on such wafers, respective wafer or item
quantities; wafer lot information and history (PCM electrical
test data or probe yield); and the location to which wafers or
items are shipped. Each shipping package unit shall be
properly marked with the applicable order number(s); and
(b) Wafers shall be shipped in a rigid wafer boat of the type
customarily used by silicon wafer vendors. Such boat shall be
sealed in an envelope to shield the wafers from environmental
contamination.
9 ZMD shall deliver all Products to a freight forwarder designated by
LDI. Delivery of Products shall be F.O.B. ZMD's facility in
Dresden, Germany and upon delivery to the freight forwarder or
carrier at such facility the risk of loss or damage to the Products
shall pas to LDI. LDI shall be responsible for all export and
import formalities applicable to the Products.
10 In the event that any payment under this Agreement becomes
restricted for any reason, the party whose payment obligations is
restricted agrees, at its own expense, to immediately take whatever
steps or actions may be necessary to assure such payment.
5. RELIABILITY AND QUALITY.
1 Subject to the provisions of Section 5.2 hereof, wafer acceptance
will be subject to process control monitor acceptance criteria
("PCMA Criteria"), which shall be mutually agreed upon in writing
between ZMD and LDI on a process-by-process basis, and attached
hereto as ATTACHMENT C. The PCMA Criteria shall include, among
other things, yield requirements and Product specifications
including required characteristics and applicable ranges.
<PAGE>
2 LDI acknowledges that in its design of the Products it has violated
ZMD's design rules for the applicable wafer technology and LDI
believes that such violations will not adversely affect the
performance and specifications of the Products in any way. LDI
hereby expressly waives and releases ZMD from any and all failures,
claims, breaches and liabilities arising out of or resulting in any
way from LDI's failure to observe the design rules. If due to such
violation of design rules, a Product fails the PCMA Criteria, such
Product shall be deemed to have passed the PCMA Criteria and ZMD
shall be entitled to full payment therefor and all obligations of
LDI hereunder shall be unaffected. LDI shall further defend,
indemnify and hold harmless ZMD from any and all claims, actions,
liabilities, damages, costs and expenses (including, without
limitation, reasonable attorneys fees and costs) arising out of or
relating to (i) any failure by LDI to observe ZMD's design rules and
(ii) any Product which is defective due to LDI's failure to observe
ZMD's design rules.
3 ZMD shall give LDI advance written notice of any proposed change(s)
("Proposed Change Notice") in materials and/or to its existing
manufacturing process, which, to the best of ZMD's knowledge, is/are
likely to affect the form, fit, performance, maintainability,
operation, function, reliability, interface, interconnectability,
compatibility, design rules, models, or size of the chips for
Products. Such Proposed Change Notice shall describe the nature of
the proposed change(s), including reasons for the change(s), the
anticipated schedule for implementation of the change(s), and other
relevant technical and logistic considerations, including, without
limitation, quality and reliability data to the extent available.
LDI shall approve or disapprove any such proposed change promptly,
but in no event may any such change be disapproved later than thirty
(30) business days after receipt of the Proposed Change Notice. If
LDI disapproves such proposed change within such thirty (30)
business day period, ZMD shall continue to manufacture and deliver
to LDI unchanged Products in accordance with this Agreement for a
minimum of six (6) months from the date ZMD issues the Proposed
Change Notice. At any time after the expiration of three (3) months
following the Proposed Change Notice, ZMD, in its discretion and by
then giving a minimum of three (3) months prior written notice to
LDI, may stop manufacture and delivery of the Product involved
without liability.
4 Subject to the other terms of this Agreement, LDI reserves the right
to make any changes it deems appropriate to the design of Products
to be fabricated for it by ZMD, provided, however, that each such
change must be documented by LDI through written change notices.
LDI will be responsible for all applicable reasonable costs, if any,
related to such change.
5 During the term of this Agreement including any renewal hereof, ZMD
shall maintain fab and test lot traceability for Products
manufactured hereunder.
6 ZMD will promptly after discovery advise LDI of defects and/or
nonconformity in Products already shipped to and/or in lots
currently in manufacture for LDI. During the term of this Agreement
including any renewal hereof, ZMD will provide LDI with written
quarterly quality assurance reports regarding Products manufactured
on behalf of LDI. All Products shipped shall be deemed accepted by
LDI and the provisions of Section 6 shall be LDI's only recourse for
non-conforming Product.
<PAGE>
6. WARRANTY.
1 ZMD warrants to LDI that the Products delivered will conform to the
PCMA Criteria, subject to the provisions of Section 5.2 hereof, (the
"PCMA Criteria Warranty") for a period of one (1) year following
delivery by ZMD or until the wafer is cut into dies, whichever
occurs first. ZMD warrants to LDI that ZMD has and can transfer to
LDI good title to the Products free and clear of all liens, claims
and encumbrances (other than liens, claims or encumbrances relating
to alleged intellectual property infringement). These warranties
are personal to LDI and non-transferable.
The warranties contained in this Section 6.1 do not cover any
failure to conform to the PCMA Criteria resulting from (i) assembly
not performed by ZMD, (ii) design or application of a Product, (iii)
combination of a Product with another component by a party other
than ZMD, (iv) any failure by LDI to observe any design rules of ZMD
(as referred to in Section 5.2 hereof), or (v) misuse, abuse,
abnormal conditions, failure to follow ZMD's instructions,
alteration or repair by anyone other than ZMD or shipment damage.
The warranties also do not cover any individual die.
2 THE WARRANTIES CONTAINED IN SECTION 6.1 ARE THE ONLY WARRANTIES
GIVEN BY ZMD AND ZMD EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES,
WHETHER EXPRESS, IMPLIED, OR STATUTORY, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS
FOR A PARTICULAR PURPOSE, AND THE STATUTORY WARRANTY OF NON-
INFRINGEMENT, AND ANY WARRANTY THAT MAY ARISE BY REASON OF USAGE OF
TRADE, CUSTOM OR COURSE OF DEALING, AND LDI HEREBY EXPRESSLY WAIVES
ANY SUCH WARRANTIES.
3 LDI's exclusive remedy, and ZMD's exclusive obligation and
liability, with respect to any Product which does not conform to an
express warranty set forth in Section 6.1, shall be to (i) perform
failure analysis and to repair or replace such Product, without
charge, and redeliver it to LDI or, in appropriate cases as
determined by ZMD in its sole discretion (except as provided below),
to refund to LDI the amount paid for such Product, or (ii) to cause
the encumbrance on the title to be removed. However, in the event
LDI shows to ZMD that LDI's customer has canceled its order to LDI
for the products containing the affected Products, LDI shall have
the right to require that ZMD refund to LDI the amount paid for such
Product rather than repair or replace such Product. Upon
discovering such defect, LDI shall promptly return the affected
Products (in wafer form only) to ZMD, adequately packaged, within
the warranty period at LDI's expense with a detailed statement of
the defect. LDI shall obtain a return material authorization (RMA)
number and show it on the packaging. Any repaired or replaced
Product shall be only warranted for the remainder of the original
warranty period. If ZMD's examination of the Products returned by
LDI does not disclose any warranty defect, LDI agrees to pay ZMD's
applicable charges for unpacking, testing and repacking the Products
for reshipment to Buyer. If ZMD's testing does disclose a warranty
defect, ZMD will reimburse the return shipping charges paid by LDI
for such Products.
4 In the event the number of warranty defects in the opinion of both
parties are excessive and are due to problems with the process used
by ZMD, LDI, in addition to the remedies in Section 6.3 hereof, may
request that ZMD stop shipment, in which case ZMD shall stop
shipment and production until such problems are resolved. Parties
shall agree to the appropriate production ramp up and LDI's
Committed Capacity for the year and the related Purchase Order of
LDI and the Forecasts shall be adjusted accordingly without any
liability of LDI. The provisions of Section 6.3 and 6.4 constitute
LDI's exclusive remedy, and ZMD's sole liability, in the event of
excessive warranty defects of Products.
<PAGE>
7. USE RESTRICTIONS.
LDI agrees that it will not use, or permit the use of, any Product as a
critical or important component in life support devices or systems or in
any devices or systems relating to or involving atomic energy, without the
express prior written consent of ZMD. ZMD shall not be responsible or
liable to LDI or any third party for any such use of any Product. LDI
agrees to defend, indemnify and hold harmless ZMD, its officers,
directors, employees and agents, from and against any and all claims,
liabilities, actions, losses, injuries, damages, costs and expenses,
including expert fees, attorneys' fees and other legal expenses and costs,
which arise in any way out of, involve or relate to any such unauthorized
use of any Product. LDI shall promptly notify ZMD of such a claim or
allegation when it comes to its attention. ZMD shall have the right, at
its option, to participate in such action with its own counsel at its own
expense.
8. NO CONSEQUENTIAL DAMAGES; NO "COVER" REMEDY.
1 Under no circumstances shall ZMD be liable for any special,
indirect, incidental or consequential damages of any kind or nature
whatsoever arising out of or in any way related to this Agreement,
the Products or the use or inability to use any Products, including,
without limitation, lost goodwill, lost profits, work stoppage or
impairment of other goods, and whether arising out of breach of
warranty, breach of contract, tort (including negligence), strict
liability or otherwise, even if advised of the possibility of such
damage or if such damage could have been reasonably foreseen, and
notwithstanding any failure of essential purpose of any exclusive
remedy provided herein. In addition, in no event shall ZMD be
liable for the costs of procurement of substitute goods or services.
2 In no event shall ZMD's total liability relating to or in connection
with any Products or this Agreement, whether based on contract,
warranty, tort (including negligence), strict liability or
otherwise, exceed the actual amount paid to ZMD by LDI hereunder
during the most recent full calendar year.
9. REPRESENTATIONS AND WARRANTIES: INDEMNIFICATION
1 LDI represents and warrants to ZMD that all technology, processes,
masks, designs and other information transferred or disclosed to ZMD
by LDI pursuant to the terms of this Agreement shall be free from
any claims of infringement or violation of valid and enforceable
trade secret, trademark, copyright, and/or mask work rights of
others; and that LDI shall defend, indemnify and hold ZMD harmless
from and against any claims to the contrary, provided however that
LDI shall receive (i) prompt written notification of any claim for
which it is providing indemnification under this Section 9.1, (ii)
the right to assume, in a prompt fashion, sole control of the
defense or settlement of such claim (provided that LDI cannot commit
ZMD to the payment of any sums in settlement or otherwise), and
(iii) reasonable assistance from ZMD, at LDI's request and expense
and provided further that if LDI assumes sole control of the defense
of such claim, ZMD may, at its expense, participate in such defense.
<PAGE>
2 ZMD represents and warrants to LDI that all technology, processes,
masks, design rules and parameters and other information used by it
in any process employed in the fabrication of Products pursuant to
the terms of this Agreement shall be free from any claims of
infringement or violation of valid and enforceable trade secret,
trademark, copyright, and/or mask work rights of others; and ZMD
shall defend, indemnify and hold LDI harmless from and against any
claims to the contrary; provided however that ZMD shall receive (i)
prompt written notification of any claim for which it is providing
indemnification under this Section 9.1, (ii) the right to assume, in
a prompt fashion, sole control of the defense or settlement of such
claim (provided that ZMD cannot commit LDI to the payment of any
sums in settlement or otherwise), and (iii) reasonable assistance
from LDI, at ZMD's request and expense and provided further that if
ZMD assumes sole control of the defense of such claim, LDI may, at
its expense, participate in such defense.
10. CONFIDENTIAL INFORMATION.
1 Each party shall treat as confidential all Confidential Information
provided by the other party, shall not use or disclose such
Confidential Information except to its employees on a need to know
basis and except as contemplated in this Agreement and then only
subject to written confidentiality agreement. Without limiting the
above, each party shall use at least the same procedures and degree
of care which it uses to prevent the disclosure of its confidential
information of like importance and shall in no event use less than
reasonable procedures and a reasonable degree of care.
Notwithstanding the above, no party shall have any obligations with
respect to Confidential Information of the other party which:
(a) Such party shows was generally known and available to the
public at the time it was disclosed, or becomes generally known
and available to the public thereafter through no fault of the
receiver;
(b) Such party shows was known to the receiver without obligation
of confidentiality at the time of disclosure;
(c) Is disclosed with the prior written consent of the disclosing
party;
(d) Such party shows that it becomes known to the receiver without
any obligation of confidentiality;
(e) Such party shows was developed by such party independent of the
Confidential Information and by persons who had no access to
the Confidential Information; or
(f) Is disclosed pursuant to the order or requirement of any court,
agency, or other governmental body having jurisdiction;
provided however, that, prior to any such disclosure pursuant to Section
10.1(f) above, the party seeking disclosure shall notify the other party
and take all reasonable actions in an effort to minimize the nature and
extent of such disclosure.
2 Each party agrees that the terms of this Agreement shall be treated
as Confidential Information and not disclosed, provided however that
any and all parties may disclose the terms and conditions of this
Agreement in confidence to its legal counsel, accountants, banks,
and financing sources and their advisors, or pursuant to written
confidentiality agreements having terms at least as restrictive as
those in this Section 10 in connection with an actual or proposed
merger or acquisition, and/or in connection with the enforcement of
its rights under this Agreement. The existence of this Agreement
shall not be confidential and, without limiting the foregoing, LDI
may disclose the existence of this Agreement pursuant to its
obligations as a reporting company under the Securities Exchange Act
of 1934 and ZMD may use LDI as a reference account if it so desires.
<PAGE>
3 Without limiting the foregoing, in order to facilitate exchanges of
Confidential Information amongst themselves, the parties may
negotiate and execute one or more mutually satisfactory non-
disclosure agreements.
4 The obligations of this Article 10 shall survive the expiration or
termination of this Agreement or any renewal thereof for a period of
three (3) years after it expires or terminates. In the event of any
breach of this covenant, the parties shall promptly discuss and
cooperate in good faith with respect to measures to mitigate any
harmful effect of such breach.
11. PURCHASE OF FINISHED PRODUCTS.
LDI may purchase the Product in cut and packaged finished product form
(rather than as wafers) from ZMD upon terms and conditions, including
prices, to be separately negotiated and agreed upon by the parties. When
agreed upon, such terms and conditions shall be contained in a separate
Attachment to this Agreement which must be executed by the parties.
12. TERMINATION.
This Agreement may be terminated during the initial term or any renewal
term hereof only as described below.
1 This Agreement may be terminated earlier and at any time:
(a) By either party, immediately upon written notice to the other
party, if such other party fails to perform or otherwise
defaults in any of its material obligations under this
Agreement and fails to cure such default within ninety (90)
days (thirty (30) days for the non-payment of money) after
written notice thereof to such other party, or with respect to
a default that cannot reasonably be cured within such ninety
(90) day period, if such other party fails to commence and
pursue a cure in good faith within such ninety (90) day period
and diligently pursue such cure thereafter until completed; or
(b) If such other party makes any arrangement with its creditors
generally, or has a receiver appointed for all or a substantial
part of its business or properties, or an insolvency,
bankruptcy or similar proceeding is brought by or against such
other party and involving such other party as debtor, and if
brought against such other party is not dismissed within sixty
(60) days from its institution, or if such other party goes
into liquidation or otherwise ceases to function as a going
concern; or
(c) As provided elsewhere in this Agreement.
<PAGE>
2 If LDI terminates this Agreement pursuant to Section 12.1 hereof,
LDI will have no further liability for the Committed Capacity to the
extent not delivered to LDI as of the effective date of termination,
but must pay for all Product delivered and all other amounts
incurred, all of which amounts shall accelerate and become
immediately due and payable. ZMD will unless otherwise requested in
writing by LDI, cease all further production of Products required by
LDI's purchase orders under this Agreement. If so requested by LDI,
ZMD will complete and deliver all Products pursuant to LDI's
purchase orders for the remainder of the contract year or such
shorter period as LDI shall indicate, and invoice LDI for the
Products. The provisions of this Agreement shall continue to apply
to such continued production and purchase.
3 If ZMD terminates this Agreement pursuant to Section 12.1 hereof,
ZMD shall be entitled to (i) continue to completion the Products
then in process, deliver them to LDI and receive payment therefor,
(ii) receive liquidated damages as provided in Section 2.4 hereof.
All amounts incurred shall accelerate and become immediately due and
payable. ZMD will provide to LDI at its request a reasonable phase
out period, but only if termination was not due to a payment
default. The provisions of this Agreement shall continue to apply
to any continued deliveries and purchases.
4 During this Agreement and following termination thereof for whatever
reason (including expiration), the parties will cooperate in
connection with any issue raised by either of them with respect to
intellectual property rights of third parties. Without limiting the
foregoing, upon written notice to the others, either party hereto
may suspend (i) performance of its obligations, or (ii) providing
capacity to the extent that such party has reasonable concerns that
its future performance in connection with such matters will subject
it to claims by others with respect to such matters, provided
however that no such suspension will affect any obligation to pay
for Product delivered and/or manufactured prior to the date of
written notice concerning such matters. In the event that ZMD
exercises any of its rights pursuant to this Section 12.4, the
Committed Capacity for the affected year will be equitably adjusted.
5 Termination pursuant to Section 12.1 hereof shall be in addition to
any and all other rights and remedies, if any, that either party may
have against the other, unless a remedy is designated as exclusive,
and all remedies other than the exclusive remedies shall be
cumulative and may be exercised singularly or concurrently.
6 In addition to this Section 12.6, the following sections shall
survive the termination of this Agreement for whatever reason
(including expiration): Sections 2.2, 2.4, 3.1, 4.1, 4.6, 5.2, 5.6
(other than the reports), 6, 7, 8, 9, 10, 12.3 and 12.4 (and the
other provisions of this Agreement to the extent contemplated in
<section><section> 12.3 and 12.4), 12.5, 13, 14, 15 and 17.
13. PROPRIETARY RIGHTS.
All discoveries, improvements and inventions, conceived or first reduced
to practice, as those terms are used before the U.S. Patent Office, in the
performance of this Agreement solely by one party shall be the sole and
exclusive property of such party and such party shall retain any and all
rights to file as its sole discretion any patent or other applications
thereon.
<PAGE>
14. DISPUTE RESOLUTION.
The parties shall cooperate and attempt in good faith to resolve any and
all disputes arising out of and/or relating to this Agreement. Without
limiting the foregoing, within thirty (30) days of a written demand to
meet to resolve such a dispute, senior management of each party with the
authority to negotiate and resolve the issues shall meet in San Jose,
California or in some other mutually agreeable location to discuss the
issues, from time to time during the forty-five (45) day period following
such demand (or longer if agreeable to the parties) as reasonably
requested by either party involved, and such senior management will
attempt to resolve the dispute. If more than one set of meetings occurs
or is advisable under this Agreement the location of such sets of meetings
shall alternate between Dresden, Germany and San Jose, California so as to
be not unduly burdensome for one party. If the dispute cannot be so
resolved, the parties shall discuss what further steps to take.
15. NOTICES.
All notices required or permitted hereunder shall be in writing and shall
be deemed given and effective (i) when delivered personally, by fax (with
confirmed answer-back and confirmed by regular airmail), or by
international express, or (ii) five (5) days after the postmark date if
mailed by certified or registered airmail, postage prepaid, addressed to a
party at its address stated below or to such other address as such party
may designate by written notice to the other party in accordance with the
provisions of this Section.
If to ZMD: Zentrum Mikroelektronik Dresden GmbH
GrenzstraBe 28
01109 Dresden, Germany
Attention: Gunter Ziegenbalg
Fax: 011-49-351-8822-334
with a cc to: Pacific Silicon Technologies
1250 Oakmead Parkway
Suite 210
Sunnyvale, California 94086
Attention: Eduard Weichselbaumer
Fax no: (408) 955-9021
with a 2d cc to: General Counsel Associates
1891 Landings Drive
Mountain View, CA 94043
Attention: Anne L. Neeter, Esq.
Fax no.: (415) 428-3901
If to LDI: LOGIC Devices Incorporated
628 East Evelyn Avenue
Sunnyvale, California 94086
USA
Attention: William Volz, President
Fax no.: (408) 733-6415
with a cc to: [to be provided]
<PAGE>
16. FORCE MAJEURE
Neither party shall be liable for any failure to perform or delay in
performing any of its obligations hereunder (other than the payment of
money) when such failure or delay is due to circumstances beyond its
reasonable control, including, without limitation, any natural
catastrophe, fire, war, riot or civil unrest, strike, lockout or other
general labor disturbance, late or nondelivery by suppliers, shortage or
unavailability of materials, components or transportation facilities,
assertion by a third party of an infringement claim, or any act, refusal
to act, regulation, order or intervention of any governmental authority.
Upon the occurrence of such circumstances, the affected party shall
immediately notify the other party with as much detailed information
thereof as possible, and shall keep the other party informed of any
further developments. Immediately after such condition is removed, the
affected party shall perform such obligation with all due speed. If such
circumstances prevent or delay a party's performance of a material
obligation hereunder for more than four (4) consecutive months, then
either party may at any time thereafter, provided that such circumstances
are then continuing, upon written notice to the other party, terminate
this Agreement, without any liability to the other party by virtue of such
termination. However, such termination shall not affect any liability of
any party to the other on any other basis and shall not prejudice the
rights of either party against the other which may have accrued up to the
date of such termination. If due to a force majeure event affecting ZMD,
ZMD is unable to deliver the Committed Capacity for the year, the
Committed Capacity will be equitably adjusted.
17. MISCELLANEOUS.
1 This Agreement constitutes the entire agreement between the parties
hereto relating to the subject matter hereof and supersedes all
prior oral and written and all contemporaneous oral negotiations,
commitments and understandings of the parties. This Agreement may
not be changed or amended except by a writing executed by both
parties hereto.
2 This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns (to the
extent this Agreement is assignable). No party may assign this
Agreement without the prior written consent of the other party
hereto, except that each party may assign this Agreement without the
consent of the other if this Agreement is assigned as part of the
transfer of the business to which this Agreement pertains. Any
prohibited assignment or attempted assignment without the other
party's prior written consent shall be null and void.
3 No delay or failure by either party to exercise or enforce at any
time any right or provision of this Agreement shall be considered a
waiver thereof or of such party's right thereafter to exercise or
enforce each and every right and provision of this Agreement. A
waiver to be valid shall be in writing, but need not be supported by
consideration. No single waiver shall constitute a continuing or
subsequent waiver.
4 This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute
but one and the same document.
5 If any provision of this Agreement shall be held illegal, invalid or
unenforceable, in whole or in part, such provision shall be modified
to render it legal, valid and enforceable while to the fullest
extent possible preserving the business and financial intent and
impact of the original provision, and the legality, validity and
enforceability of all other provisions of this Agreement shall not
be affected thereby.
6 In construing or interpreting this Agreement, the word "or" shall
not be construed as exclusive, and the word "including" shall not be
limiting. This Agreement shall be fairly interpreted in accordance
with its terms without any strict construction in favor of or
against either party and ambiguities shall not be interpreted
against the drafting party.
<PAGE>
7 Nothing in this Agreement shall prohibit LDI from purchasing
Products and/or foundry services from other suppliers nor prohibit
ZMD from offering wafers and/or foundry services to others.
8 This Agreement has been negotiated in accordance with and shall be
deemed to be a contract made under and governed by the laws of the
State of California, without regard to its conflicts and/or choice
of law provisions.
9 The English version is the official version of this Agreement. If
this Agreement is translated into any other language and a conflict
exists between the translation and the English version, the English
version shall control.
10 Nothing in this Agreement shall be deemed to create a general or
limited partnership or an agency relationship between the parties;
the parties are independent contractors. No party shall be entitled
to act or assume any obligation on behalf of or to bind the other in
any way.
IN WITNESS WHEREOF, each party to this Agreement represents and warrants that
each of the representatives signing on their respective behalves is authorized
to enter into this Agreement and to bind that party to its terms.
ZMD: LDI:
ZENTRUM MIKROELEKTRONIK DRES- LOGIC DEVICES INC.
DEN GmbH
By: _/s/ William J. Volz__
By: _/s/ Dr. Kurt Garbrecht _ Name: William J. Volz
Name: Dr. Kurt Garbrecht Title: President
Title: Chief Executive Officer
<PAGE>
ATTACHMENT A
PRODUCTS
<PAGE>
ATTACHMENT B
RAMP UP SCHEDULE
<PAGE>
ATTACHMENT C
PCMA CRITERIA
1. Yield requirements for a Product will be mutually agreed upon after
ZMD has manufactured at least one hundred twenty (120) wafers (5 lots)
of a Product. Before such yield requirements are mutually agree upon,
no minimum yield requirements shall apply.
<PAGE>
ATTACHMENT D
DESIGNATED ACCOUNT
Until further notice from ZMD, payment shall be made into a designated account
in the US in the name of Pacific Silicon Technologies, with account number:
______________________________.
