Ibm Foundry Agreement

Portions have been omitted and filed separately with the Securities and Exchange Commission in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended, and the Registrant's request for confidential treatment.]


IBM Microelectronics
Essex Junction, Vermont


Agreement for Purchase of Products
(Foundry)


Name and Address of Buyer:


Cyrix Corporation Agreement Number: CY2 2703 North Central Expressway Customer Number: Richardson, Texas 75080 Commencement Date:


Address of IBM: IBM Customer Account
Representative: 1000 River Street Essex Junction, Vermont 05452


This agreement ("Agreement") is entered into by and between International Business Machines Corporation ("IBM"), incorporated under the laws of the State of New York, and Cyrix Corporation, ("Buyer"), incorporated under the laws of the State of Delaware.


Buyer agrees to purchase and IBM agrees sell certain semiconductor products in accordance with the terms and conditions of this Agreement including its attachments ("Attachments").


1.0 DEFINITIONS 1.1 "Buyer Deliverable Items" shall mean the items listed in Section 2.0 of
Attachment A 1.2 "Commencement Date" shall mean the date this Agreement is executed by
Buyer and IBM. 1.3 "Distribution Point" shall mean the IBM location designated by IBM from
which Product is shipped to Buyer. Distribution Points may be redesignated
at IBM's sole discretion. 1.4 "Engineering Change" shall mean a mechanical or electrical change to the
Product which affects form, fit, function or maintainability. 1.5 "Harmful Code" shall mean any computer code, programming instruction or a
set of instructions that is intentionally constructed with the ability to
damage, interfere with or otherwise adversely affect computer programs,
data files or hardware without the consent or intent of the computer user.
This definition includes, but is not limited to, self-replicating and
self-propagating programming instructions commonly called viruses or
worms. 1.6 "NRE" shall mean non-recurring engineering charges unique to Products
manufactured under this Agreement. 1.7 "Person" shall mean any person, company or other legally recognized
entity. 1.8 "Plant of Manufacture" shall mean the IBM location that manufactures the
Products and/or assembly and ships Product to IBM Distribution Points or
Buyer. 1.9 "Product(s)" shall mean the IBM product(s) to be sold and purchased under
this Agreement as specified in Section 1.0 Attachment A. 1.10 "Purchase Order" shall mean a Purchase Order issued by Buyer for
Product(s) in accordance with Section 6.0. 1.11 "Purchase Order Lead Time" shall mean the period between Purchase Order
issuance by Buyer and the requested shipment date as specified in
Attachment A. 1.12 "Scheduled Shipment Date" shall mean the date requested by Buyer on the
Purchase Order and accepted by IBM. 1.13 "Shipment Date" shall mean the date for shipment of Product requested by
Buyer in a Purchase Order. 1.14 "Subsidiary" shall mean a corporation, company or other entity: 1) more
than 50% of whose outstanding shares or securities (representing the right
to vote for the election of directors or other managing authority) are; or
2) which does not have outstanding shares or securities, as may be the
case in a partnership, joint venture or unincorporated association, but
more than 50% or whose ownership interest representing the right to make
the decisions for such corporation, company or other entity is: now or
hereafter, owned or controlled, directly or indirectly, by a party hereto,
but such corporation, company or other entity shall be deemed to be a
Subsidiary only so long as such ownership or control exists.


1.15 "Unit" shall mean a single wafer of Product.


2.0 WORK SCOPE


2.1 IBM agrees to sell Products to Buyer as requested by Buyer and accepted by
IBM in accordance with Section 6.0. 2.2 IBM will not have any installation, warranty or maintenance
responsibilities for Products except as referred to in Section 17.0. 2.3 Nothing in this Agreement shall be interpreted nor construed in any way as
limiting, abrogating or diminishing any rights or obligations of either
party, including intellectual property rights, as set forth in the
Agreement for Purchase of Products between International Business Machines
Corporation and Cyrix Corporation dated April 7, 1994, as amended.


3.0 TERM OF AGREEMENT

The term of this Agreement will begin on the Commencement Date and will
end on December 31, 1997(the "Contract Period"), subject, however, to
earlier termination as permitted under Section 13.0.


4.0 SCHEDULE


4.1 IBM and Buyer agree to complete their respective responsibilities in the
time frame specified in Purchase Orders issued by Buyer and accepted by
IBM in accordance with Section 6.0. 4.2 Products will be ordered and delivered under this Agreement during
scheduling periods (the "Scheduling Periods"). The first Scheduling Period
shall begin on the Commencement Date and conclude on December 31, 1996.
Subsequent Scheduling Periods shall be twelve (12) months each, and shall
begin immediately following the conclusion of the first Scheduling Period,
and run consecutively for the duration of the Contract Period.


5.0 PRODUCT DEMAND FORECASTS


5.1 The first Product demand forecast agreed to by Buyer and IBM is set forth
in Attachment A. The forecast covers the Contract Period and is broken out
by Product and month and shall constitute on the part of Buyer an
obligation to purchase such forecasted quantities and on the part of IBM
an obligation to supply such forecasted quantities in 1996 and up to [ * ]
Units per month during 1997. Buyer may adjust the Product demand forecast
set forth in Attachment A only once per calendar quarter and only upon six
(6) month's prior written notice to IBM, subject to Section 5.2. 5.2 Buyer may request quantities of Products that exceed the Product demand
forecast provided pursuant to Section 5.1 and that have been accepted by
IBM. Such requests are subject to rejection by IBM for any reason,
including but not limited to resource availability.


6.0 PURCHASE ORDERS


6.1 Buyer shall order Products by issuing written Purchase Orders. IBM shall
ship Units in accordance with such Purchase Orders. Purchase Orders must
be placed in advance, with at least the Purchase Order Lead Time specified
in Attachment A, to allow IBM to meet Buyer's requested Shipment Date. IBM
may reject Buyer's requested Shipment Date if such requested Shipment Date
does not comply with the Purchase Order Lead Time. Requested Shipment
Dates will be deemed accepted by IBM if the Purchase Order requesting such
Shipment Date is accepted by IBM. If so accepted, a requested Shipment
Date shall constitute a Scheduled Shipment Date. Buyer may request an
improved Scheduled Shipment Date. However, such a request may be rejected
by IBM for any reason. 6.2 Purchase Orders will be deemed accepted by IBM unless rejected in writing
by IBM, specifying the reasons for rejection, within fourteen (14)
calendar days after receipt of the Purchase Order. Purchase Orders may be
rejected by IBM only if a Purchase Order requests quantities of Products
that exceed Product demand forecasts that were accepted by IBM, requests a
Shipment Date that is less than the Purchase Order Lead Time or does not
comply with the terms and conditions of this Agreement . 6.3 Purchase Orders issued to IBM shall include the following:
6.3.1 Product(s) being purchased;
6.3.2 quantity of Units requested;
6.3.3 Unit price per Attachment A;
6.3.4 billing address;
6.3.5 shipping instructions, including carrier, destination address and
requested Shipment Dates;
6.3.6 reference to this Agreement and Agreement Number. 6.4 This Agreement shall take precedence over and govern in case of any
additional, different and/or conflicting terms and conditions in any
Purchase Order(s). Purchase Orders may not vary the terms of this
Agreement. Additional, different and/or conflicting terms and conditions
on a Purchase Order shall be of no effect.


6.5 Notwithstanding any other provision of this Agreement, in the event that
IBM's ability to supply the Product is constrained for reasons beyond its
reasonable control which may include but are not limited to component
availability or force majeure, and the Scheduled Shipment Date cannot be
met, IBM will reduce the quantities to be supplied to Buyer in proportion
to the reduction in quantities of Products for the same time periods to be
supplied to satisfy customers other than Buyer, which shall include IBM
internal customers. Receipt of such allocated supply and later delivery of
all undelivered ordered quantities after the constraint ends shall
constitute Buyer's exclusive remedy in the event of such supply
constraint.


7.0 PRICING


7.1 Buyer shall pay IBM the NRE applicable to the Product as set forth in
Section 3.0 of Attachment A, as well as such other sums for special
services as are separately listed or referenced in such Section. Amounts
due at particular milestones pursuant to the schedule set forth in
Attachment A shall accrue and be invoiced at the applicable milestones. 7.2 The Unit price for each Unit ordered shall be calculated at the time the
applicable Purchase Order is accepted using the Price Matrix set forth in
Attachment A. 7.3 For the duration of this Agreement IBM will not increase the Unit prices
set forth in Attachment A unless mutually agreed upon between IBM and the
Buyer.


8.0 BUYER'S PURCHASE OBLIGATION


8.1 IBM will review the quantity of Units of Product ordered by Buyer,
pursuant to Product Purchase Orders, at the end of the each three (3)
month calendar quarter period beginning on the Commencement Date (or, as
of any earlier termination of this Agreement due to an uncured default of
Buyer, IBM may conduct such review as of the date of such termination). 8.2 If Buyer's total orders of Units for any such three (3) month period have
fallen short of the quantity of Units as set forth in the Product demand
forecast, IBM shall invoice Buyer for the total number of Units forecasted
for such period less the quantity of Units that Buyer ordered during such
period. [ *
*
*
* ] 8.3 Such invoice, if any, will be due and payable within thirty (30) days of
the date of invoice. 8.4 The charges in Sections 8.1 and 8.2 will not apply to Purchase Orders that
are cancelled with adequate notice to IBM pursuant to Section 12.1 below. 8.5 [ *
*
*
*
*
*
* ]


9.0 TITLE AND SHIPMENT


9.1 Title to each Unit of Product passes to Buyer on the date of shipment from
the IBM Plant of Manufacture. 9.2 IBM shall ship all Products FOB, IBM's Plant of Manufacture, in single or
multiple lots. 9.3 Risk of loss will pass to Buyer upon shipment from IBM's Plant of
Manufacture.


10.0 INVOICING, PAYMENT TERMS, SECURITY INTEREST, TAXES


10.1 IBM shall invoice Buyer for all Units upon shipment. Payments under this
Agreement shall be due within thirty (30) days of the date of invoice. If
Buyer's account becomes in arrears, in addition to IBM's right to hold the
Buyer in default under the terms of the Agreement, IBM reserves the right
to ship to Buyer on a COD basis until the account is again current. 10.2 Buyer agrees to pay amounts equal to any taxes resulting from this
Agreement, or any activities hereunder, exclusive of taxes based on IBM's
net income. Buyer shall be responsible for any personal property taxes
assessable on Products after delivery to the carrier. 10.3 Buyer hereby certifies that it holds a valid Reseller's Exemption
Certificate for Products purchased for resale in each applicable taxing
jurisdiction. Based on this certification, IBM shall, where the law
permits, treat Buyer as exempt from applicable state and/or local sales
tax for Products purchased hereunder. 10.4 Where required by state or local law, Buyer shall provide IBM with a valid
Reseller's Exemption Certificate for each taxing jurisdiction to which IBM
will ship Products. 10.5 Buyer shall notify IBM promptly in writing of any modification or
revocation of its exempt status. Buyer shall reimburse IBM for any and all


assessments resulting from a refusal by a taxing jurisdiction to recognize
any Buyer exemption certificates, or from Buyer's failure to have a valid
certificate. If Buyer purchases Product under this Agreement for internal
use, Buyer agrees to notify IBM and pay applicable sales tax.


11.0 INTEREST ON OVERDUE PAYMENTS


Buyer shall be liable for interest on any overdue payment required to be
made to IBM under this Agreement, commencing on the date such payment
becomes due, at an annual rate which is the greater of ten percent (10%)
or one percent point higher than the prime interest rate quoted by the
head office of Citibank, N.A., New York, at the close of banking on such
date, or on the first business day thereafter if such date falls on a
non-business day. If such interest rate exceeds the maximum legal rate in
the jurisdiction where a claim therefore is being asserted, the interest
rate shall be reduced to such maximum legal rate.


12.0 CANCELLATION CHARGES, RESCHEDULING AND ORDER CHANGE PROVISIONS


12.1 Buyer may cancel a Purchase Order or any portion thereof upon written
notice to IBM. If the written cancellation notice is delivered to IBM less
than six (6) months prior to forecasted delivery, then a cancellation
charge, as specified in Attachment A, will immediately become due for each
canceled Unit. 12.2 No cancellation charges will be due if cancellation occurs due to IBM's
inability to meet Scheduled Shipment Dates. 12.3 [ *
*
*
*
*
*
*
* ]


13.0 TERMINATION OF AGREEMENT


13.1 If either party is in default of any material provision of this Agreement
and such default is not corrected within sixty (60) days of receipt of
written notice, this Agreement may be terminated by the party not in
default. 13.2 If Buyer terminates due to IBM default, all outstanding Purchase Orders
shall be automatically canceled without charge to Buyer, unless IBM and
Buyer mutually agree not to cancel any or all such Purchase Orders. 13.3 If IBM terminates due to Buyer default, IBM will continue processing
work-in-process on a cash-in-advance basis. If IBM terminates due to Buyer
default, all outstanding Purchase Orders shall be automatically canceled
and adjustment charges and cancellation charges will apply in addition to
any other amounts then due at IBM's discretion (except that IBM shall fill
such Purchase Orders if Buyer provides for payment in advance or a letter
of credit sufficient to guaranty payment thereof), provided, however, that
IBM will have no obligation to accept new Purchase Orders. 13.4 Notwithstanding the provisions of Section 13.1:
13.4.1 either party shall have the right to terminate this Agreement
immediately if:
13.4.2 The other party files a petition in bankruptcy, undergoes a
reorganization pursuant to a petition in bankruptcy, is adjudicated a
bankrupt, becomes insolvent, becomes dissolved or liquidated, files a
petition for dissolution or liquidation, makes an assignment for benefit
of creditors, or has a receiver appointed for its business; or
13.4.3 The other party is subject to property attachment or court
injunction or court order which has a substantial negative effect on its
ability to fulfill its obligations under the present Agreement.
13.4.4 Buyer shall unreasonably withhold its consent for IBM to make
Mandatory Engineering Changes or Elective Engineering Changes under
Section 14.0.
13.4.5 in the case of IBM, IBM believes, in its sole discretion, that
Buyer's designs infringe unlicensed copyrighted or trade secret works or
patents of any third party, or in the case of Buyer, Buyer believes in its
sole discretion that IBM's process technologies as utilized hereunder
infringe unlicensed copyrighted or trade secret works or patents of any
third party. Prior to such termination becoming effective, in the event
that the parties disagree as to the existence or extent of such
infringement, the party first believing such infringement exists shall at
its sole expense as to outside counsel fees submit the issue for
resolution by outside counsel having expertise in the area of the law
involved. Such party shall designate a list of five (5) of such counsel,
from which the other party shall choose one, and the parties shall provide
such assistance as may be necessary to enable the chosen counsel to
provide a written opinion to both parties as to such infringement within
thirty (30) days of when such counsel is chosen. In the event that the
parties agree as to such infringement, they shall work together to resolve
the issue, with the understanding that the party that is the originator of
the materials to which the infringement applies shall bear the primary
responsibility to use commercially practicable efforts to redesign the
infringing materials or secure a license sufficient to enable IBM to
perform its obligations under this Agreement. Should such redesign or
license not be available within a reasonable period of time, or should the
parties disagree as to the existence of such infringement, either party
believing such infringement exists may;


13.4.5.1 terminate production of the infringing Product; or
13.4.5.2 terminate the Agreement if more than one Product is infringing,
except that IBM will manufacture and ship wafers to Buyer for all
accepted Purchase Order received from Buyer prior to an event of
termination under Section 13.4.5, to the extent allowable by law,
and provided that the maximum period for such manufacture shall be
three (3) months.


Nothing in this Agreement shall be interpreted as compelling continued
production if such production could be reasonably considered a willful
infringement. 13.5 In the event of termination under Section 13.4, all amounts owing to IBM
shall become immediately due and payable.


14.0 ENGINEERING CHANGES


14.1 IBM may implement manufacturing Engineering Changes required to satisfy
governmental standards, protect data integrity, or for safety,
environmental or other reasons as reasonably determined by IBM ("Man ...