Packaging & Test Services Agreement

PACKAGING & TEST SERVICES AGREEMENT


BY AND AMONG


AMKOR TECHNOLOGY, INC.


AMKOR ELECTRONICS, INC.


C.I.L. LIMITED


ANAM USA, INC.


AND


ANAM INDUSTRIAL CO., LTD.


JANUARY 1, 1998 2
TABLE OF CONTENTS


Page


Article I Purpose 3


Article II Definitions 4


Article III Marketing & Sales Services 5


Article IV Purchase Commitments & Forecasts 6


Article V Packaging Services 8


Article VI Specifications, Quality & Reliability 8


Article VII Electronic Data & Information Exchange 9


Article VIII Delivery & Risk of Loss 10


Article IX Pricing & Invoicing 10


Article X Packaging Services Warranty 11


Article XI Intellectual Property Warranty & Indemnifications 12


Article XII Intellectual Property Ownership & Licenses 13


Article XIII Research & Development & Technology Ownership 15


Article XIV Liability Limitations 15


Article XV Term 15


Article XVI Arbitration 16


Article XVII Miscellaneous 17


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PACKAGING AND TEST SERVICES AGREEMENT


This Packaging and Test Services Agreement ("Agreement") is made and entered into this 1st day of January 1998 ("Effective Date") by and among Amkor Technology, Inc., a corporation organized and existing under the laws of the state of Delaware, with offices located at 1345 Enterprise Drive, West Chester, Pennsylvania 19380; Amkor Electronics, Inc., a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with offices located at 1345 Enterprise Drive, West Chester, Pennsylvania 19380; C.I.L. Limited, a corporation organized and existing under the laws of the Cayman Islands, with offices located at CIBC Building, Edward Street, Grand Cayman, Cayman Islands; Anam USA, Inc., a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with offices located at 1345 Enterprise Drive, West Chester, Pennsylvania 19380; and, Anam Industrial Co., Ltd., a corporation organized and existing under the laws of the Republic of Korea, with offices located at 280-8 Sungsu 2-ga, Sungdong-ku, Seoul 133-120, Korea ("Parties").


RECITALS


WHEREAS, Amkor Technology, Inc. ("ATI") is the parent corporation of, among other legal entities, Amkor Electronics, Inc. ("Amkor") and C.I.L. Limited ("CIL"); and


WHEREAS, Anam Industrial Co., Ltd. ("AICL"), a publicly traded Korean company, is engaged in the business, inter alia, of performing various semiconductor packaging and test services and desires to market said services to the semiconductor industry through Amkor and CIL; and


WHEREAS, Amkor and CIL are engaged in the business of marketing subcontract packaging and test services to the semiconductor industry and desire to purchase such services from AICL; and


WHEREAS, Anam USA, Inc. ("Anam USA"), a wholly-owned subsidiary of AICL, is a trading company that will establish financing arrangements for AICL, Amkor and CIL with respect to the services and transactions contemplated hereunder.


NOW THEREFORE, in consideration for the mutual covenants and promises contained herein and in reliance thereon, the Parties hereby agree as follows:


1. ARTICLE I - PURPOSE


The Parties hereto have enjoyed a well-established and synergistic
business relationship whereby Amkor and CIL and their respective
Affiliates have established numerous relationships with semiconductor
companies to provide integrated circuit packaging and test services. A
substantial portion of these services has been performed by AICL, who,
in turn, has relied on Amkor and CIL for their worldwide marketing and
sales capabilities.


The purpose of this Agreement is to establish a long-term arrangement
between the Parties to provide Packaging Services to the semiconductor
industry. The Parties believe that such a long-term relationship, under
the terms and conditions of this Agreement, is necessary to assure
their respective long-term profitability and growth and is in their
respective best interests.


3 4 2. ARTICLE II - DEFINITIONS


2.1 "Affiliate" of a Party shall mean an entity that is controlled
by such Party or by an entity controlling such Party. For the
purposes of the foregoing, "control" means ownership, directly
or indirectly, of at least fifty percent (50%) of the voting
stock of the controlled entity.


2.2 "Bankruptcy Event" shall mean any of the following events or
circumstances with respect to a Party: (i) such Party ceases
conducting its business in the normal course; (ii) becomes
insolvent or becomes unable to meet its obligations as they
become due; (iii) make a general assignment for the benefit of
its creditors; (iv) petitions, applies for, or suffers or
permits with or without its consent the appointment of a
custodian, receiver, trustee in bankruptcy or similar officer
for all or any substantial part of its business or assets; or
(v) avails itself or becomes subject to any proceeding under
the U.S. Bankruptcy Code or any similar state, federal or
foreign, including Korean, statute relating to bankruptcy,
insolvency, reorganization, receivership, arrangement,
adjustment of debts, dissolution or liquidation, which
proceeding is not dismissed within sixty (60) days of
commencement thereof.


2.3 "Customer" shall mean a third party with whom Amkor, CIL or
AICL, as the case may be, enters into a contractual
arrangement to provide Packaging Services.


2.4 "Die" shall mean the semiconductor wafers and/or die supplied
to AICL by Customers for the Packaging Services.


2.5 "Direct Material Costs" shall mean direct material costs
incurred in the performance of Packaging Services .


2.6 "Customer Contract" shall mean a contract (including the Amkor
or CIL Quotation) between Amkor or CIL, as the case may be,
and a Customer to provide Packaging Services to such Customer.


2.7 "Intellectual Property Rights" shall mean all rights in, to,
or arising out of: (i) any U.S., international or foreign
patent or any application therefor and any and all reissues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof; (ii) inventions (whether
patentable or not in any country), invention disclosures,
improvements, trade secrets, proprietary information,
know-how, technology and technical data; (iii) copyrights,
copyright registrations, mask works, mask work registrations,
and applications therefor in the U.S. or any foreign country,
and all other rights corresponding thereto throughout the
world; and (iv) any other proprietary rights in or to
Technology anywhere in the world.


2.8 "Packaging Services" shall mean providing integrated circuit
assembly, packaging and test services, or related services by
AICL with respect to Customer Die .


2.9 "Products" shall mean integrated circuits assembled and/or
tested by AICL for Amkor, CIL or their respective Customers.


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2.10 "Qualified Facilities" shall mean any of AICL's four (4)
Korean factories which are qualified to perform Packaging
Services for Customer Products pursuant to Customer
requirements, specifications and other similar criteria.


2.11 "Quotation" shall mean the written quotation provided by Amkor
or CIL to their Customers which contains the material terms of
agreement for Packaging Services.


2.12 "Technology" shall mean all technology, however embodied,
including all know-how, show-how, techniques, processes,
specifications, recipes, mask works, design rules, trade
secrets, inventions (whether or not patented or patentable),
algorithms, routines, software, net lists, files, databases,
works of authorship, devices and hardware.


2.13 "Term" shall mean the term of this Agreement as defined in
Section 15.1.


2.14 "Total Device Revenue" shall mean all amounts billed to
Customers by Amkor or CIL for Packaging Services including 1)
base price, 2) material and process adders, 3) gold/silver
adders, 4) fast track premiums, and 5) lot charges, but
excluding packing/shipping materials (i.e., trays) and
miscellaneous charges such as tooling and non-recurring
engineering costs.


3. ARTICLE III - MARKETING & SALES SERVICES


3.1 Amkor will provide Packaging Services to Customers that
principally are located in the United States. CIL will provide
Packaging Services to Customers that principally are located
outside of the United States excluding the Republic of Korea
which will be serviced directly by AICL.


3.2 Amkor and CIL, either directly or through their respective
Affiliates, will enter into Customer Contracts for Packaging
Services and, upon execution of same, will provide AICL with
the material terms and conditions thereof.


3.3 Amkor and CIL will use commercially reasonable efforts to
enter into Customer Contracts so as to maximize the
utilization of AICL's manufacturing capacity consistent with
the respective interests of the Parties, their respective
obligations under the Agreement, and the operational and
business requirements of the manufacturing and packaging
facilities of ATI's Affiliates. In furtherance of the
foregoing, Amkor's and CIL's responsibilities to AICL will
include using reasonable commercial efforts to:


3.3.1 actively and diligently market Packaging Services to
potential and existing Customers;


3.3.2 provide timely Forecasts (as defined below in Section
4.1) to permit AICL to efficiently plan its capacity
requirements; and


3.3.3 arrange through an Affiliate of ATI, Amkor-Anam,
Inc., for the supply to AICL of all direct materials
to enable AICL to package and test products in
accordance with the relevant Customer Contract.


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3.4 CIL will have the sole discretion to have Packaging Services
performed by any of (Subject to the purchase commitment
described in Article IV below, Amkor and i) the Affiliates of
ATI, (ii) third parties, or (iii) AICL.


4. ARTICLE IV - PURCHASE COMMITMENTS & FORECASTS


4.1 Amkor and CIL shall have the right of first refusal with
respect to substantially all of the utilization of AICL's
capacity subject to the terms herein. In order to facilitate
an orderly and equitable capacity reservation and allocation
process, Amkor, CIL, and AICL agree that Amkor will coordinate
the process for commitment and allocation of AICL's capacity
among the Customers based on a mutually agreed upon set of
rules for equitably reserving and allocating AICL's capacity
(the "Commitment & Allocation Policy"). Amkor, CIL and AICL
shall use commercially reasonable efforts to obtain each month
from their Customers a six-month rolling forecast of such
Customers' requirements ("Forecasts"). Updates to said
Forecasts shall be communicated to Amkor as demand changes are
received from the Customers.


4.2 AICL will provide Amkor and CIL, on a monthly basis, a
six-month rolling capacity plan ("Capacity Plan") by package,
for packaging services, and by test platform, for test
services. AICL will further provide a weekly notification to
Amkor and CIL of any changes in delivery schedules or
equipment ratings to the Capacity Plan since the last monthly
report. In order to facilitate AICL's capacity planning and
materials procurement services, Amkor and CIL will include
with their Forecasts to AICL their assessment of these
Forecasts. AICL will use the Customers' Forecasts and Amkor's
and CIL's assessment of these Forecasts only as a guide of
anticipated requirements, and such Forecasts and judgements
will not constitute a commitment by either (i) AICL to Amkor
or CIL, or (ii) by Amkor or CIL to AICL. Such Customer
Forecasts will not constitute a commitment by the Customers to
furnish Die for packaging or testing in amounts at least equal
to their respective Forecasts.


4.3 In addition to the Forecasts, Amkor, CIL and AICL will
annually prepare a sales projection by month and by package
for the upcoming fiscal year ("Annual Plan") in order to
facilitate AICL's longer-range capacity and space planning.
AICL will use the Annual Plan only as a guide to anticipated
requirements and such projections will not constitute a
commitment by either (i) AICL to Amkor or CIL, or (ii) by
Amkor or CIL to AICL.


4.4 Amkor and CIL will consult with AICL prior to making
commitments to its Customers with respect to processing
specifications or cycle time. AICL will be obligated to
process all Die received from Amkor's and CIL's Customers in
accordance with the processing and cycle time specifications
agreed to by Amkor and CIL and their Customers and in
accordance with the commitments of capacity made by Amkor and
CIL to their Customers.


4.5 Immediately upon receipt of each lot of Die from the Customers
at either AICL's bonded warehouse in Korea or Amkor's shipping
office in San Jose, California, AICL will provide an accurate,
firm ship date for the completed packaged and/or


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tested Products. For bulk Die receipts (i.e., Die shipments
from a given Customer for a given package that exceed the
current week's processing commitment as made by either Amkor
or CIL to the given Customer), AICL will immediately provide a
planned ship date for the quantity of Die exceeding the
current week's loading commitment. AICL shall commit that this
planned ship date will be considered a "not later than" ship
date by Amkor, CIL and the Customer.


4.6 In the event that Customers of Amkor or CIL send Die that has
not been Forecasted or committed to AICL ("Unforecasted Die")
for Packaging Services, AICL will be obligated to perform the
requested services within the agreed upon cycle time for those
Customers, provided that AICL's capacity and raw materials
inventory, at that point in time, on the line in question is
sufficient to satisfy the cycle time commitments for the Die
already awaiting production plus the Unforecasted Die, and
also provided that Amkor or CIL has engaged such Customers'
business as evidenced by a Customer Contract.


4.7 In the event that the volume of Customer Die awaiting
Packaging Services exceeds AICL's capacity or raw materials
inventory to process that Die within the cycle times agreed
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