Wafer Foundry Agreement, Dated August 1, 2007

EXHIBIT 10.9


CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. THE LOCATIONS OF THE OMITTED MATERIALS ARE INDICATED BY THE FOLLOWING NOTATION: [***]


WAFER FOUNDRY AGREEMENT


By and Between


POLAR SEMICONDUCTOR, INC.


and


ALLEGRO MICROSYSTEMS, INC.


DATED AUGUST 1, 2007


ALLEGRO MICROSYSTEMS, INC. PROPRIETARY INFORMATION


WAFER FOUNDRY AGREEMENT


This Wafer Foundry Agreement ("Agreement") is made and entered into this 1st day of August, 2007, (the "Effective Date") by and between Allegro MicroSystems Inc., a corporation duly organized and existing under the laws of the State of Delaware, ("Allegro"), and Polar Semiconductor, Inc., a corporation duly organized and existing under the laws of the State of Delaware ("PSI"). PSI and Allegro are sometimes referred to herein individually as a "Party" and collectively as the "Parties".


Witnesseth:


WHEREAS, Allegro wishes to purchase certain semiconductor wafers; and


WHEREAS, PSI wishes to manufacture and sell such semiconductor wafers to Allegro; and


WHEREAS, the Parties wish to set forth their respective rights and obligations with respect to the purchase and sale of such semiconductor wafers; and


WHEREAS, Allegro desires PSI to use certain technology and intellectual property rights owned or otherwise controlled by Allegro for the purpose of manufacturing semiconductor wafers in accordance with this Agreement, and in furtherance thereof, Allegro desires to grant to PSI a non-exclusive license to use such technology and intellectual property rights for such purpose in accordance with this Agreement.


NOW, THEREFORE, in consideration of the mutual promises made herein, the Parties hereto agree as follows:


Definitions:


As used in this Agreement, the following terms will have the following respective meanings:


A) "Wafers" means the semiconductor Wafers for Device Types, fabricated by PSI
using the process technologies listed in Appendix A. Wafers will include
Engineering Wafers, Risk Wafers, Production Wafers, and Process
Qualification Wafers, as defined below.


B) "Device Type" will mean any of the various Allegro integrated circuit
devices specified by Allegro.


C) "Process Qualification Wafers" or "PQW" means Wafers manufactured for the
purposes of qualifying a new or changed Wafer manufacturing process, in
accordance with Section 2.1 of this Agreement.


D) "Engineering Wafers" will mean any Wafers manufactured with unverified
masks or requiring process splits for product characterization based on
qualified processes, as described in Section 2.2 of this Agreement.


E) "Risk Wafers" will mean non-engineering, non-Process Qualification Wafers
fabricated by PSI at Allegro's request, as referenced in Appendix C, and
prior to Mass Production Wafer Approval, as referenced in Appendix B.


ALLEGRO MICROSYSTEMS, INC. PROPRIETARY INFORMATION


F) "Production Wafers" will mean those Wafers manufactured at PSI after
successful Mass Production Wafer Approval, as referenced in Appendix B.


G) "Allegro Wafer Manufacturing Technology" means, from time to time during
the term of this Agreement, those certain processes and related technical
information, whether or not patentable, then owned or controlled by
Allegro, necessary for manufacturing Wafers, and listed in Appendix N
attached hereto, as such Appendix may from time to time, during the term of
this Agreement, be amended by Allegro in its sole and absolute discretion
in order for PSI to fulfill its obligations hereunder. In no event shall
Allegro Wafer Manufacturing Technology be deemed to include any process or
technical information previously known by PSI prior to its receipt from
Allegro, received from another party, becomes part of the public domain, or
is independently developed by PSI.


H) "Allegro WMT Documentation" means, from time to time during the term of
this Agreement, all documents and other manifestations, in any form
whatsoever (including, without limitation, Allegro WMT Production Records,
operating procedures, masks, reticles, and the like) that describe,
memorialize or otherwise make manifest the processes or other inventions
comprising the Allegro Wafer Manufacturing Technology and the use thereof
by PSI.


I) "Allegro WMT Production Records" means all production records, data,
analyses, and the like generated by PSI in the course of manufacturing
Wafers.


J) "Allegro Intellectual Property Rights" means, from time to time during the
term of this Agreement, all right, title and interest in, to and under the
Allegro Wafer Manufacturing Technology then owned or otherwise controlled
by Allegro.


K) "PSI Bloomington Wafer Fab Facility" means that certain facility owned by
PSI and located at 2800 East Old Shakopee Road, Bloomington, Minnesota.


L) "PSI Wafer Manufacturing Technology" means, from time to time during the
term of this Agreement, those certain processes and related technical
information, whether or not patentable, then owned or controlled by PSI,
used by PSI in manufacturing Wafers, and listed in Appendix N, attached
hereto, as such Appendix shall from time to time during the term of this
Agreement be amended in order to reflect the manufacturing processes or
other inventions then being used by PSI to fulfill its obligations under
this Agreement. It is further understood and agreed to by the Parties that
technical information, documentation and intellectual property rights
related to PSI's [***] process shall not be included within PSI Wafer
Manufacturing Technology or PSI Intellectual Property Rights.


M) "PSI WMT Documentation" means, from time to time during the term of this
Agreement, all documents and other manifestations, in any form whatsoever
(including, without limitation, operating procedures, masks, reticles, and
the like) that describe, memorialize or otherwise make manifest the
processes or other inventions comprising the PSI Wafer Manufacturing
Technology and the use thereof by PSI.


N) "PSI Intellectual Property Rights" means, from time to time during the term
of this Agreement, all right, title and interest in, to and under the PSI
Wafer Manufacturing


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Patents and the PSI Wafer Manufacturing Technology then owned or otherwise
controlled by PSI. It is further understood and agreed to by the Parties
that technical information, documentation and intellectual property rights
related to PSI's [***] process shall not be included within PSI Wafer
Manufacturing Technology or PSI Intellectual Property Rights.


Section 1. Scope and Grant of License:


1.1 Subject to the terms of this Agreement, PSI will fabricate certain Wafers
ordered by Allegro, and PSI will deliver and sell such Wafers to Allegro.


1.2 This Agreement does not constitute a purchase order or release for such
services. PSI will not undertake any expenses or other acts on Allegro's
behalf before receiving and agreeing to an actual purchase order or other
written authorization from Allegro.


1.3 Subject to the terms and conditions set forth in this Agreement, Allegro
grants to PSI, and PSI accepts, a non-exclusive, royalty-free license under
the Allegro Intellectual Property Rights, limited in accordance with the
terms and conditions of this Agreement, to use the manufacturing processes
and other inventions comprising the Allegro Wafer Manufacturing Technology
and the Allegro WMT Documentation in order to make the Wafers in compliance
with PSI's obligations under this Agreement or such other uses as the
Parties may agree to in writing. Such license shall be limited to the
manufacture of Wafers by PSI in the PSI Bloomington Wafer Fab Facility (or
such other facility operated or subcontracted by PSI and to which Allegro
consents in its sole and absolute discretion), shall not be sublicensed or
otherwise transferred by PSI to any third party, and shall be subject to
revocation, in whole or in part, by Allegro at any time in Allegro's sole
and absolute discretion, and in the event of such revocation, PSI shall
cease any further use of such portion or all, as specified by Allegro, of
such manufacturing processes, other inventions and Allegro Wafer
Manufacturing Technology.


1.3.1 The license granted by Allegro to PSI, under Section #.1 of this
Agreement, shall terminate upon the expiration or termination of this
Agreement.


1.3.2 Upon the termination of the license granted by Allegro to PSI, in
this Section 1 of this Agreement, PSI shall promptly return to Allegro
any and all Allegro WMT Documentation and, if requested in writing by
Allegro, PSI shall certify that all Allegro WMT has been returned to
Allegro


1.3.3 Allegro shall have the right, upon reasonable notice to PSI, during
the term of this Agreement, during reasonable times to inspect and
copy the Allegro WMT Documentation. Documentation and information
received by Allegro from PSI in this manner shall be used solely by
Allegro to manufacture Wafers during a force majeure condition or if a
default event has occurred, unless otherwise agreed to in writing by
PSI and Allegro.


1.3.4 PSI agrees at all times during the term of this Agreement to maintain
the Allegro WMT Production Records in a manner at least as rigorous as
it maintains its own information of a similar nature and consistent
with PSI's implementation of the requirements, as set forth in the TS
16949 specifications.


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1.3.5 PSI agrees at all times during the term of this Agreement to maintain
the PSI WMT Documentation in a manner at least as rigorous as those it
maintains its own information of a similar nature and consistent with
PSI's implementation of the requirements, as set forth in the TS 16949
specifications.


Section 2. Wafer Fabrication:


PSI will fabricate all Wafers at its Bloomington, Minnesota facility, using the process technologies listed in Appendix A, as specified by Allegro.


2.1 PSI will provide Allegro with PQW or qualification reports to establish
wafer fabrication processes with the following conditions:


2.1.1 Wafer lot sizes will be as specified in Appendix E;


2.1.2 Split Wafer lots for PQW will be mutually agreed upon by Allegro and
PSI;


2.1.3 All instructions for such PQW will be documented in Allegro purchase
orders;


2.1.4 PQW processed to standard conditions will meet optical and electrical
specification(s) as referenced in Appendix A;


2.1.5 PQW not processed to standard conditions will meet optical and
electrical specification(s) as referenced in Appendix A;


2.1.6 Allegro acknowledges that the sale of all PQW not processed to
standard conditions, but processed correctly within practical limits
according to the mutually agreed upon process flow, will be made AS IS
and with all faults and without warranties, either express or implied,
except as provided in Section 2.1.5;


2.1.7 Future Wafer processes, including modifications to current Wafer
processes, that are developed by PSI may be added to this Agreement by
mutual consent. Subject to Allegro's prior written consent, PSI may
terminate the use of a Wafer process at the PSI Fab (provided that
such changes are not initiated at Allegro's request) (i) PSI will
provide all PQWs to Allegro free of charge, and (ii) PSI will
reimburse Allegro for the purchase of masks for qualification of each
process with a change requiring mask changes. At least [***] prior to
the date of the discontinuance of any process, with respect to any
Wafers, PSI will provide Allegro with written notice of its intent to
terminate such Wafer process and will cooperate with Allegro on a
transition plan that allows Allegro to meet all of Allegro's
contractual obligations with Allegro's customers that provides
Allegro's customer with a maximum supply of [***] of inventory.


2.1.8 PSI may subcontract various wafer processes at an outside
subcontractor subject to Allegro's prior written consent.


2.1.9 PSI will not transfer Allegro product from one fabrication facility
to another regardless of the process or technology being qualified at
another fab without Allegro's written approval.


2.2 PSI will accept Allegro's purchase orders for Engineering Wafers for Device
Types, based on qualified processes with the following conditions:


2.2.1 Wafer lot sizes will be as specified in Appendix E;


2.2.2 Split Wafer lots for Engineering Wafers will be mutually agreed upon
by Allegro and PSI;


2.2.3 Special instructions for Engineering Wafers will be documented in
Allegro purchase orders;


2.2.4 Engineering Wafers processed to PSI's standard process specifications
will meet optical and electrical specification(s), as referenced in
Appendix A


2.2.5 Engineering Wafers not processed to standard conditions will meet
optical and electrical specification(s), as referenced in Appendix A;
and


2.2.6 Allegro acknowledges that the purchase of all Engineering Wafers that
meet agreed upon Process Control Module Specifications, according to
the mutually agreed


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upon process flow, will be made AS IS and with all faults and without
warranties, either express or implied, except as provided in Section
2.2.5.


2.3 PSI will accept Allegro's purchase orders for Risk Wafers with the
following conditions:


2.3.1 Wafer lot sizes will be as specified in Appendix E;


2.3.2 Purchase orders for Risk Wafers must be accompanied by a Risk Wafer
Production Authorization, as referenced in Appendix C;


2.3.3 Risk Wafers will meet optical and electrical specification(s), as
referenced in Appendix A;


2.3.4 Allegro acknowledges that the purchase of such Risk Wafers will meet
acceptance criteria, as set forth in Appendix A.


2.4 PSI will accept purchase orders for Production Wafers with the following
conditions:


2.4.1 Wafer lot sizes will be as specified in Appendix E; and


2.4.2 Both Parties have determined that the Device Type has been
successfully approved for Mass Production Wafers, as set forth in
Appendix B.


2.5 Upon acceptance, PSI will fabricate Production Wafers ordered by Allegro
with specifications listed in Appendix A. These specifications may be
changed only upon mutual agreement in writing by both Parties. PSI will
comply with all the requirements set forth in "Allegro's Quality Plan", as
set forth in Appendix G.


2.6 PSI will make available PSI's wafer evaluation and electrical data, as set
forth in Appendix A, to Allegro through electronic means for each lot of
Wafers delivered to Allegro prior to the shipment of the Wafers. PSI will
also supply relevant reliability, optical and process control information,
as set forth in Appendix F and Appendix G by request.


2.7 PSI will follow Allegro's change procedures (as set forth in Appendix F and
Appendix G) with respect to processes utilized to manufacture Allegro.


2.8 For any lots not meeting the relevant criteria, as specified above, PSI
will provide a Non-Conforming Material Permission ("NMP") sheet
electronically to the Director of Manufacturing Engineering, as set forth
in Appendix G, along with all applicable data, for Allegro's review. If the
material is determined by Allegro to be acceptable, Allegro will complete
the NMP and PSI will deliver the acceptable Wafers to Allegro.


Section 3. Forecast, Purchase Orders, Deliveries, Delivery Performance, Expedited Delivery:


3.1 Allegro will provide, by the 15th of each calendar month, a six (6) month,
rolling non-binding forecast, for months subsequent to the current month,
of the total Production Wafers required, by process technology, as set
forth in Appendix A. The forecast will also include Wafer quantity
estimates for Engineering Wafer requirements. The forecast will be used for
planning purposes only and does not represent a commitment by Allegro to
make any purchases. The only commitment to purchase will arise from
purchase orders or purchase requirements.


3.2 Allegro will issue purchase orders for each of the following: (1)
Engineering Wafers, (2) Risk Wafers, (3) Production Wafers and (4) Process
Qualification Wafers.


3.3 Allegro's purchase requirements, with requested delivery dates, will be
submitted weekly via a purchase order, and/or a purchase order release, and
will result in a binding purchase obligation by Allegro to PSI, subject to
cancellation charges, as set for in Section 3.5. PSI will acknowledge and
provide a scheduled ship date in writing for each purchase requirement


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within [***]. Cycle-time requirements will be as defined in Appendix H.
Any changes to Appendix H will require mutual agreement in writing. PSI
will commence Production Wafer starts within [***] business days following
the acknowledgment to the extent accepted. PSI will commence Engineering
Wafer starts within [***] business days following the acknowledgment to the
extent accepted.


3.4 PSI will provide Allegro with real-time on-line access to Allegro WIP and
delivery information. PSI will promptly notify Allegro of any delivery
deviations beyond the tolerance specified in 3.9 and 3.10.


3.5 Purchase orders for Wafers are cancelable. Purchase Order cancellations for
Wafers will incur charges (Wafer Termination Charges) for Work in Progress
(WIP), according to the following schedule:


Process Technologies
(Excluding [***]) [***]
-------------------- ----- Before Wafer Scribe [***]% of Wafer Price [***]% of Wafer Price Prior to Device Mask [***]% of Wafer Price [***]% of Wafer Price Subsequent to Device Mask and Prior
to Resistor Mask [***]% of Wafer Price [***]% of Wafer Price Subsequent to Resistor Mask and Prior
to Contact Mask [***]% of Wafer Price [***]% of Wafer Price Subsequent to Contact Mask [***]% of Wafer Price [***]% of Wafer Price


All Wafer lots on hold, in excess of [***], will be reviewed by Allegro and
PSI. This review will result in a formal determination of whether the lots
should be terminated, finished or remain on hold. After[***] of a Wafer lot
being placed on hold, and provided that PSI notifies Allegro's Director of
Planning in writing within [***] business days, Wafers can be terminated by
PSI and termination charges, as set forth in this Section 3.5, are applied.


3.6 Within [***] working days of receipt of Allegro's forecast, referred to in
Section 3.1, PSI will provide a [***] rolling non-binding capacity view,
covering [***] subsequent to the current month, of the total capacity
available, by process technology, as set forth in Appendix A.


3.7 PSI guarantees certain reserve capacity, as set forth in Appendix D of this
Agreement.


3.8 PSI will accept all orders for quantities up to the applicable re ...