Foundry Manufacturing Agreement

CONFIDENTIAL TREATMENT

FOUNDRY MANUFACTURING AGREEMENT

THIS FOUNDRY MANUFACTURING AGREEMENT (the "Agreement") is entered into on February 27, 2007 (the "Effective Date") by and between OmniVision International Holding Ltd., a Cayman Islands company, having its registered office at Second Floor, Zephyr House, Mary Street, P. O. Box 709, George Town, Grand Cayman, Cayman Islands, British West Indies ("OmniVision") and Powerchip Semiconductor Corp., a company duly incorporated under the laws of the Republic of China, having its principal office located at No. 12, Li-Hsin Rd. 1, Hsinchu Science Park, Hsinchu, Taiwan, R.O.C. ("PSC"). OmniVision and PSC are each a " Party" and collectively the "Parties".

RECITALS

WHEREAS , OmniVision intends to have a manufacturing source for its CMOS image sensor products;

WHEREAS, PSC is in the business of providing foundry services for integrated circuits;

WHEREAS, the Parties wish to exploit and further jointly develop certain pixel related process technology (the "Target Technology" as defined herein) for PSC to process certain CMOS Image Sensors (CIS) products of OmniVision design (the " Products" as defined herein) at PSC.

NOW, THEREFORE , in consideration of the foregoing and the covenants and promises contained in this Agreement, the Parties agree as follows:

SECTION I
DEFINITIONS

1.1 "Additional Contributions" shall mean the resources contributed by the parties in furtherance of this Agreement as set forth in Exhibit E.

1.2 "Background Technology" shall have the meaning set forth in Section 5.1.

1.3 "Development Schedule" shall have the meaning set forth in Exhibit A.

1.4 "Intellectual Property Right(s)" shall mean any and all intellectual property rights associated with technologies, processes, procedures, products, designs, inventions (whether patentable or not), discoveries, know-how, and documents thereof, including, without limitation: patents, utility models and the like issued anywhere in the world, and applications therefor, including any additions, continuations, continuations-in-part, divisions, reissues, renewals and extensions based thereon; copyrights and all other literary property and rights in works of authorship, as well as all rights, title and interest in and to all copyrights, copyright registrations, certificates of copyrights and copyrighted




*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

Confidential

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interests; all mask work rights, mask work applications, and mask work registrations; and trade secrets.

1.5 "Processes" shall mean the processes and technologies represented by the Target Technology jointly developed by PSC and OmniVision which will be used by PSC to provide foundry services to OmniVision for the manufacture of the Products during the term of this Agreement.

1.6 "Products" shall mean OmniVision integrated circuit products containing CMOS image sensors with specifications set forth in Exhibit A, to be manufactured by PSC for OmniVision under this Agreement.

1.7 "Proprietary Technology" shall have the meaning set forth in Section 5.1.

1.8 "Qualification" shall have the meaning set forth in Section 2.1.

1.9 "Quality and Reliability Specifications" shall mean the parametric, electrical, process flow, quality, and reliability specifications, as well as other standards or requirements, for the Products. The initial set of Quality and Reliability Specifications adopted by OmniVision will be furnished to PSC within fifteen (14) days after the Effective Date.

1.10 "Target Technology" shall have the meaning set forth in Exhibit C.

SECTION II
PROCESS DEVELOPMENT; QUALIFICATIONS

2.1 Both Parties shall make good faith efforts to develop the Processes in accordance with the Development Schedule. The Processes shall be tested at PSC for the Products prior to production (the "Qualifications") so that the Products manufactured by the Processes will conform to the Quality and Reliability Specifications. PSC shall make good faith efforts complete the Qualifications at least one month before the production date in accordance with the Development Schedule, such that OmniVision can plan and place its wafer order accordingly. Each Party shall give the other party 90-day prior written notice in the event that the Party expects not to meet the above schedule for any reason, and the Parties will discuss in good faith for expeditious resolution.

2.2 OmniVision shall, upon the full Qualification of the Processes and throughout the remainder term of this Agreement, provide PSC on a monthly basis, six-month rolling forecasts (each a "Rolling Forecast") of the estimated volume requirements, as initially set forth in Exhibit B. Notwithstanding the foregoing, PSC agrees that, as a pre-condition to OmniVision92s commitment to purchase, the terms and conditions set forth elsewhere in this Agreement (including, without limitation, wafer price, capacity reserve and quality, reliability and yield requirements) shall be satisfied and continue to be satisfied. Loading volumes for the remaining months of a Rolling Forecast shall represent the bona fide




*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.



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projection of the demands by OmniVision based on the current market condition, and are provided to PSC for planning purposes and not binding upon OmniVision.

2.3 PSC shall confirm the Rolling Forecast within 5 working days after receipt and shall make commercially reasonable efforts to provide capacity per OmniVision forecasts.

2.4 [***]

SECTION III
PURCHASE AND SUPPLY

3.1 OmniVision will place purchase orders (each a "Purchase Order") for the quantities of Products required by OmniVision. A Purchase Order shall include any and all purchase information released or issued by OmniVision specifically relating thereto, including any and all reasonable instructions that shall govern the particular purchases.

3.2 PSC shall notify OmniVision in writing within five (5) working days upon receipt of a Purchase Order, either to accept the Purchase Order or to suggest the way in which PSC wishes to modify the Purchase Order. A Purchase Order placed by OmniVision shall be deemed accepted by PSC absent a timely, written notice of intent to modify. In the event of modification, PSC and OmniVision shall consult with each other immediately to resolve the differences in good faith.

3.3 OmniVision will make a refundable, interest-bearing deposit in the amount of four (4) million US Dollars (the "Deposit") into PSC92s designated bank account on the Effective Date as a down payment, in the form of wire transfer.

3.4 The prices for the Products shall be consistent with Exhibit B. Unless otherwise agreed to by the Parties in writing, payment terms shall be net thirty (30) days from the date OmniVision receives an invoice; provided however, that OmniVision shall not be invoiced earlier than the actual shipment of the Products. PSC may issue quotations from time to time so long as no terms and conditions of such quotations shall contradict with this Agreement. If there is any discrepancy or contradiction between the terms and conditions of this Agreement and those of any quotation, this Agreement shall prevail.

SECTION IV
SHIPMENT AND ACCEPTANCE; WARRANTIES

4.1 The Products shall be packed and labeled according to OmniVision requirements which will contain the trademark, logo or other indicia of OmniVision and suitable for shipment according to a standard not less than the then prevailing manufacturing practices of the industry. PSC shall deliver the Products to OmniVision or its designated party on the trade term of FCA or pursuant to other applicable delivery term as agreed by both Parties in writing. Title and risk of loss to the Products shall pass to OmniVision consistent with the terms and conditions of INCOTERMS 2000.




*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

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4.2 Upon the receipt of the Products by OmniVision or its designated party, OmniVision shall notify PSC within fifteen (15) days (the "Acceptance Period" ), in writing, if there is any obvious visual defect other than the failure of the Products to meet the Quality and Reliability Specifications (for example, broken or damaged package boxes, wrong products or incorrect quantity of the Products). If the rejection is based on a failure of the Products to meet the Quality and Reliability Specifications, the Parties shall follow the procedure set forth in Section 4.3 below, and OmniVision may request that any pending and unshipped Purchase Orders be held until the origin and nature of the problems is ascertained, and such request shall be honored by PSC.

4.3 PSC warrants that the Products delivered hereunder shall meet the Quality and Reliability Specifications and shall be free from defects in material and workmanship under normal and intended use of the Product. If there is any defect in the Products, the Parties shall promptly enter into a discussion upon notification by OmniVision to reach a mutual agreement on the best solution, and PSC shall as soon as reasonably practicable repair, replace or credit OmniVision for such non-conforming Products, or take other reasonable actions to cure the problems to the satisfaction of OmniVision.

4.4 OmniVision may, with PSC92s consent, such consent not to be unreasonably withheld, send its representatives to visit PSC92s production facilities. Such visit shall be conducted during PSC92s normal working hours. While staying on the production facilities, OmniVision92s representatives shall fully comply with PSC92s internal rules and regulations.

4.5 PSC shall keep records of all process and production control information and summaries of production monitors concerning the manufacture of the Products for a period of five (5) years from the date of production, and upon OmniVision92s request, shall provide OmniVision such process and production control information.

4.6 THE LIABILITY FOR ANY CLAIM ARISING FROM ANY CAUSE INCLUDING, BUT NOT LIMITED TO, THE MANUFACTURE, SALE, OR DELIVERY OF ANY PRODUCTS, SHALL IN NO EVENT EXCEED THE TOTAL AMOUNT FOR THE PURCHASE AND SALE OF THE PRODUCTS UNDER THIS AGREEMENT FOR WHICH THE DEFAULTING PARTY HAS BREACHED CONTRACTUAL OBLIGATIONS.

4.7 EXCEPT WITH RESPECT TO CONFIDENTIAL OBLIGATION UNDER SECTION 5.4, NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR CONSEQENTIAL DAMAGE ...