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EXHIBIT 10 - ggg
CONFIDENTIAL TREATMENT REQUSTED
HSC/MEMC AGREEMENT
This Agreement is made this 27th day of December, 1994, by and between Hemlock
Semiconductor Corporation, having its principal place of business at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("HSC" or "Supplier") and MEMC Electronic
Materials, Inc. having its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ (City
of ▇'▇▇▇▇▇▇), ▇.▇. ▇▇▇ ▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("MEMC" or "Customer").
Whereas, HSC and MEMC desire to enter into this Agreement to govern the terms of
the sale by HSC to MEMC of Polycrystalline Silicon;
Now, therefore, in consideration of the mutual obligations stated herein, it is
hereby agreed as follows:
1. DEFINITIONS:
1.1 Actual Purchases means the number of tons of Material shipped by
Supplier to MEMC and MEMC Affiliates during a specified period, and
includes any Stockpile quantities shipped during that period.
1.2 Base Purchase Quantity for the calendar years [CONFIDENTIAL MATERIAL
HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] of this Agreement is
as follows:
Year Base Purchase Quantity
---- ----------------------
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1.3 The Base Unit Price for the Base Purchase Quantity for the calendar
years [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH SEC] of this Agreement is as follows:
Year Base Unit Price Ceiling Price*
---- --------------- -------------
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
*[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC]
1.4 Contract Purchase Quantity is defined in paragraph 5.1.
1.5 Specified period means the period from [CONFIDENTIAL MATERIAL HAS
BEEN DELETED AND FILED SEPARATELY WITH SEC] through and including
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC].
1.6 Material means the Polycrystalline Silicon identified in Appendix I.
1.7 MEMC Affiliate means (i) any business entity that, directly or
indirectly, through one or more intermediaries, owns or control at
least forty percent (40%) of the voting stock of MEMC; or (ii) any
business entity in which MEMC directly or indirectly, through one or
more intermediaries, owns, controls or has a partnership interest in
at least forty percent (40%) of the assets or voting stock of that
entity; or (iii) any business entity that is a successor (whether by
change of name, dissolution, merger, consolidation, reorganization or
otherwise) to any such entity or its business and assets.
1.8 Minimum Purchase Quantity for the calendar years [CONFIDENTIAL
MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] of this
Agreement is as follows:
Year Minimum Purchase Quantity
---- -------------------------
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]
1.9 Stockpile is defined in Section 9.
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2. SCOPE:
2.1 Customer agrees to purchase from Supplier, and Supplier agrees to sell
to Customer, the Polycrystalline Silicon identified in Appendix I
("Material"). MEMC Affiliates may, at their option, purchase from
Supplier pursuant to this Agreement but shall not be required to do
so. Purchases by, or on behalf of, MEMC Affiliates shall be credited
against the Minimum Purchase Quantity. Every year MEMC will provide
Supplier with the Contract Purchase Quantity for the following
calendar year, pursuant to the provisions of paragraph 5.1. Each year
MEMC and any MEMC Affiliate electing to purchase during that year will
issue a Purchase Order incorporating by reference the terms and
conditions of this Agreement; Release Orders will be issued quarterly
pursuant to the provisions of Section 8.
2.2 In consideration of the foregoing commitment, Supplier agrees to
participate in the MEMC SUPPLIER IMPROVEMENT PROCESS, as set forth in
the document dated March 20, 1989 (which may be revised by MEMC from
time to time), and understands that its continuing participation in
this program is a condition to Customer's obligation to purchase
hereunder.
3. TERM: [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC]. This Agreement supercedes the former supply agreement dated
November 18, 1991.
4. SPECIFICATIONS: The current specifications for the Materials are set
forth in Appendix I ("Specifications"). Supplier understands that
Customer manufactures its products to the specifications of its customers
and that such specifications are subject to change. It is expected that
new or more stringent specifications for Supplier's Materials will, in
good faith, be necessary during the term of this Agreement so that
Customer will able to respond to its customers' requirements and be
able to improve the quality of its products. Supplier has committed
technical resources to reducing the impurities in the Materials to the
levels shown on Appendix II. Supplier will promptly review any changes
made by Customer to the Specifications along with Customer's
requested schedule to implement the revised Specifications, and, within
sixty (60) days, will either (i) accept, indicating the time
required to implement the revised Specifications, or (ii) reject
those changes in writing. Customer will consider the changes accepted if
no written objections are received within the sixty (60) day review
period. Supplier's consent shall not be unreasonably withheld. In the
event that Supplier does not accept said revised Specifications, or in the
event that the revised Specifications are not implemented within the
time period requested by Customer; and further provided that another
supplier can met the revised Specifications, then Customer may
purchase less than the Minimum Purchase Quantity.
5. QUANTITY:
5.1 The Contract Purchase Quantity for the calendar year [CONFIDENTIAL
MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] shall be
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC]. Prior to October 1 of each successive year MEMC will
provide Supplier with notification of the Contract Purchase Quantity
for the following year, specifying an amount [CONFIDENTIAL MATERIAL
HAS BEEN DELETED AND FILED SEPARATELY WITH SEC].
5.2 Supplier shall offer for sale to Customer [CONFIDENTIAL MATERIAL HAS
BEEN DELETED AND FILED SEPARATELY WITH SEC] of the Contract
Purchase Quantity and Customer shall be obligated to purchase the
Minimum Purchase Quantity for the year. Furthermore, in each
calendar quarter, Customer must purchase at least [CONFIDENTIAL
MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] of the
Contract Purchase Quantity and no more than [CONFIDENTIAL MATERIAL
HAS BEEN DELETED AND FILED SEPARATELY WITH SEC] of the Contract
Purchase Quantity. In any given year, upon Supplier's request,
Customer will release Supplier from its obligation to offer to sell
the Material to the extent that Customer does not intend to
purchase; and upon Customer's request, Supplier will release
Customer from its obligation to purchase to the extent that there
are other purchasers for the Material.
6. PRICING:
6.1 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC].
6.2 The invoice unit price will be set for the first calendar quarter of
the year according to the Contract Purchase Quantity for the year. In
each quarterly Release Order (referenced in Paragraph 8.1 below),
Customer will forecast its purchases for the entire calendar year;
these forecasts will be used for the sole purpose of determining the
invoice unit price for the following quarter. At the end of the year,
if the invoice unit price differs from the unit price calculated using
the Actual Purchases for the year, then the appropriate credit or
debit will be issued by Supplier to Customer's account on or before
December 31 of the relevant year.
6.3 Unless changed pursuant to the provisions of this Section 6, the price
shall not be increased during the Initial Term of this Agreement.
6.4 [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH
SEC].
6.5 Customer shall be liable for or shall reimburse Supplier for federal,
state and local sales, excise and use taxes or their equivalent, as
applicable. Taxes payable by Customer shall be billed as a separate
line item on the invoice.
6.6 Supplier represents that prices for the Materials furnished to
Customer under this Agreement are no less favorable than the prices
Supplier charges to other customers for the same or comparable
grade/quality Polycrystalline Silicon, in the same or less quantities.
If during the Term of this Agreement, Supplier sells Polycrystalline
Silicon of comparable grade/quality to another customer at a lower
price or on more favorable provisions, then Supplier will offer the
same terms to Customer. This Section shall be implemented as follows:
(a) On or before January 30 Supplier shall notify Customer of more
favorable terms given to other customers in the preceding
calendar year.
(b) If Supplier gives more favorable terms to more than one other
customer, Customer must select the terms given to one of the
customers which it deems most favorable.
(c) The more favorable terms, if accepted by Customer, shall be
applied against future purchases by Customer.
This Section shall not apply to spot quantity sales of less than 25 tons, to
sales made to Supplier's Joint Venture partners, sales made under the provisions
of agreement which also include technology purchases or sales made to the U.S.
Government.
No more than once per calendar year, Customer may engage an independent
certified auditor to audit the records of Supplier solely to ascertain
compliance with this provision. Auditor will comply with reasonable
confidentiality agreements and will report to Customer only whether Supplier has
or has not complied with this Section. If the auditor reports that Supplier has
not complied with this Section, all costs of the audit will be borne by the
Supplier. Supplier will cooperate as necessary for the conduct of this audit.
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7. INVOICES: Invoices shall be rendered to the billing address set forth on
the Release Order and shall include the number of tons of
Material sold and delivered to Customer. Any credits due may be
applied by Customer against Supplier's invoice with appropriate
information attached. Any credits due Customer that are not so applied
for any reason shall be refunded by Supplier within thirty (30) days
after the date the credit arose. Customer shall pay Supplier any
undisputed amounts due within thirty (30) days of the later of the receipt
of Supplier's invoice or the receipt of the Material.
8. RELEASE ORDERS:
8.1 At least sixty (60) days prior to each calendar quarter, MEMC will
issue a Release Order to Supplier. Each Release Order shall be deemed
to incorporate this Agreement and specify the Materials to be
delivered during the next three months along with the delivery
schedule and any special delivery instructions. MEMC may specify that
Materials be delivered to any facility of an MEMC Affiliate.
8.2 Supplier shall promptly acknowledge each Release Order in writing.
Supplier may reject a Release Order only if (i) Customer fails to
provide the ordering information required by this Agreement, (ii)
Customer does not correctly state pertinent prices or other amounts,
or (iii) the Release Order contains non-preprinted terms and
conditions that impose commercially unreasonable obligations on
Supplier. If Supplier rejects a Release Order, it shall inform
Customer in writing of the specific grounds for such rejection.
8.3 The Release Order shall be deemed accepted unless Supplier has
rightfully rejected the Release Order within ten (10) days after the
date on which the Release Order was issued. No changes by Supplier to
a Release Order, including adjustment of price or the shipment dates,
shall be effective unless agreed upon in writing by Customer. If
Customer does not agree to the changes proposed by Supplier, and if
Supplier does not have any of the grounds permitted by this Agreement
for rejection of a Release Order, the Release Order shall be accepted
by Supplier as submitted by Customer.
8.4 Customer may cancel a Release Order in whole or in part without
liability if a cancellation notice is sent to Supplier no less than
twenty (20) days before the scheduled shipment. Supplier will do all
that is reasonable under the circumstances to accommodate any request
for a schedule change.
9. INVENTORY: [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY
WITH SEC].
10. SHIPMENT:
10.1 Shipments will be made F.O.B. Hemlock, Michigan, freight collect.
Title and risk of loss or delay shall pass to Customer upon Supplier's
delivery to the carrier at the shipping point.
10.2 Supplier shall insure that the Materials are properly packed and
marked and shipped in suitable containers. Unless otherwise agreed by
the parties, all shipments will be in truck loads.
10.3 The scheduled shipment date will be specified in the Release Order. In
the event that Supplier fails to ship ordered Materials within three
(3) working days of the scheduled shipment date, and if in the opinion
of Customer, the respective plant is in risk of needing said Material
to continue uninterrupted production, Supplier will expedite the
shipment. In such an event, Supplier will issue a credit to Customer
for the difference between the shipment costs for the method of
transportation originally specified by Customer in the Release Order
and costs required to expedite the shipment. Customer may refuse to
accept Material shipped more than seven (7) days prior to the
scheduled shipment date.
10.4 Customer shall furnish written shipping instructions to Supplier no
later than ten (10) days prior to the scheduled shipment date. In the
absence of such instructions, Supplier may chose a carrier and ship to
the address specified on the face of this document, at Supplier's
expense.
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11. TECHNICAL COOPERATION:
11.1 Customer and Supplier shall each name a technical coordinator. The
technical coordinators shall provide the principal interface between
Customer and Supplier on technical matters and they may clarify,
explain and provide further details as required for the performance of
this Agreement, but they shall have no authority to make any
agreements between them which change any of the terms and conditions
of this, or any other agreement between the parties. Supplier agrees
that work related to this Agreement shall be the primary assignment
for its technical coordinator, which shall take priority over any
other assignment. The parties may mutually agree to increase or
decrease these commitments.
11.2 Every quarter, or as requested by either party, the parties will meet
to discuss common problems and concerns, the progress made and to set
the priorities for the next period.
11.4 The parties will work on improving packaging, handling, and shipping
processes to eliminate surface contamination and to alleviate
environmental concerns. If the parties agree, there may be an
additional handling charge for any resulting new process.
11.5 Supplier shall provide Customer with at least ninety (90) days written
notice of any significant proposed change in raw materials or methods
of manufacture employed in producing any Material sold hereunder; the
reasons for the proposed change; and the effect which Supplier
estimates such change will have upon the Specifications for the
Materials. If Customer objects to the proposed change and Supplier
elects to make such change despite Customer's objection or if Supplier
makes such a change without prior notification to Customer, then
Customer will be excused from any obligation to purchase from Supplier
under this Agreement. Supplier understands that any significant change
in processing will require re-qualification of Supplier's materials.
Customer's obligations hereunder shall ▇▇▇▇▇ during such
re-qualification period. Improvements in quality resulting from
efforts to continuously control existing processes are not considered
to be changes in process.
12. CONFIDENTIALITY:
12.1 During the performance of this Agreement, each party may disclose
information to the other party which the disclosing party considers
confidential and proprietary ("Confidential Information"). Each party
agrees that: (i) it shall not disclose any Confidential Information
which it receives from the disclosing party to any third party or to
any personnel of either party except those who require access to such
Confidential Information to accomplish the purpose of this Agreement;
and (ii) it shall not use the Confidential Information disclosed by
the other party for any purpose other than the purposes for which that
Confidential Information was disclosed to it.
12.2 Confidential Information shall not include, and neither party shall
have any obligation with respect to information which: (i) is known to
the receiving party at the time of receipt from the disclosing party
as shown by documentary evidence; or (ii) is rightfully obtained by
the receiving party from a third party having no obligation to the
disclosing party; or (iii) is either published or otherwise available
to the public at the time of its receipt by the receiving party from
the disclosing party or later becomes published or available to the
public other than by a breach of this Agreement; or (iv) was
discovered, developed or invented by the receiving party independently
of the information received hereunder from the disclosing party.
12.3 The obligations in this Section 12 shall extend for ten (10) years
beyond the termination of this Agreement.
13. WARRANTY:
13.1 Supplier warrants that the Materials delivered under this Agreement
will conform to the applicable Specifications, will be free from
defects in material and workmanship, and when used by Customer will
produce silicon wafers that consistently conform to customers'
requirements.
13.2 Upon notice by Customer to Supplier of a breach of the foregoing
warranty, Supplier shall promptly instruct Customer to either dispose
of said Materials or return said Materials to Supplier, freight
collect. At Customer's option, Supplier will either issue a credit for
the defective Materials or replace said Materials at Supplier's
expense, including all shipping and handling costs. [CONFIDENTIAL
MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH SEC]. In the
event that said Materials are, at Customer's discretion, required to
ensure continued uninterrupted production, then Supplier will take
all necessary steps to expedite delivery of the replacement
Materials. The breach of the warranty of ny portion of a lot shall
be sufficient grounds to reject the entire lot.
13.3 Supplier agrees to hold Customer harmless and indemnify Customer from
and against any and all liability, loss, cost, claim, suit, judgement
or expense including reasonable attorney's fees arising out of or in
any way related to an infringement of any patent or copyright or a
violation of any trade secret or other proprietary right of any third
party in any of the items provided to Customer pursuant to this
Agreement.
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14. FORCE MAJEURE: Neither party shall be liable for delay in performance or
non-performance caused by circumstances beyond the reasonable
control of the party affected including, but not limited to, acts of God;
fire; flood; war; government regulations, direction, or request; or
inability to obtain packaging or raw material or equipment. The party so
affected shall provide the other party with written notice thereof
within a reasonable time of the occurrence. The party receiving notice
may elect to (i) terminate, without further liability, the
applicable Release Orders as to Materials not already delivered, or (ii)
suspend the time for performance. In the absence of a written notice,
the second option will be deemed to have been elected. Notwithstanding
the foregoing, Customer, by written notice to Supplier, may reduce the
Contract Purchase Quantity by an amount no greater than the quantity which
was either not shipped or suspended pursuant to the provisions of this
paragraph.
15. CLAIMS: It is the intent of the parties that any disputes relating to this
Agreement be resolved in an amicable manner, fair and equitable to
both parties under the circumstances. If a dispute should arise between
the parties relating to this Agreement which cannot be resolved by the
personnel directly involved, either party may invoke the provisions
of this section by sending a written notice stating the dispute in clear
and concise language and designating its executive officer who shall
have appropriate authority to be its representative in negotiations. The
party receiving the notice shall, within five (5) business days, serve its
notice upon the invoking party, designating its executive officer
with similar authority to be its representative, and stating its
counter-statement of the dispute. After the exchanges of notices, the
designated executive representatives will establish a mutually
convenient date for conciliation. Prior to the executive
representatives' meeting, either side may make reasonable requests for
information pertaining to the defined dispute provided such requests are
not burdensome to comply with and can be accomplished within two business
days. At such conciliation, the parties will in good faith endeavor to
settle the dispute. Unless the other party objects, a party may enlist
one additional person to attend the conciliation to assist. Unless
otherwise agreed by the parties, if the parties are unable to resolve the
matter between them within seven (7) business days following the first
meeting of the designated executive representatives, either party may
initiate litigation. Nothing said during the conciliation sessions shall
be admissible in a court of law, since all such sessions were
undertaken as settlement efforts. Once invoked, this procedure is
mandatory.
16. HARDSHIP: If during the term of this Agreement, either Party believes that
(a) the price of the Products supplied under this Agreement
with due consideration to the Annual Purchase Commitment is grossly out
of line based on conditions then existing in the marketplace, (b) the
volume commitments are not consistent with market conditions, or (c) the
quality of any products supplied under this agreement deviates from the
level attained by the state of the art available to suppliers of
comparable products, the parties shall meet at the request of either to
negotiate in good faith to resolve such issues with appropriate
remedial action. It is understood that neither Party shall be
obligated to change any term of this Agreement, unless both Parties
are in agreement.
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17. GENERAL:
17.1 Notice. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be sufficiently given if
delivered in person, via telex, fax, or if sent by overnight courier,
by Air Mail, registered or certified, addressed to the appropriate
party at the following respective addresses (or at such addresses as
the parties may later specify):
If to Supplier addressed to: Hemlock Semiconductor Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President Marketing & Sales & Quality
If to Customer addressed to: MEMC Electronic Materials, Inc.
▇.▇. ▇▇▇ ▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Corporate VP Quality & Facilities
cc: MEMC Electronic Materials, Inc.
▇.▇. ▇▇▇ ▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President & General Counsel
17.2 Assignment. Either party may assign or transfer its rights and
delegate its obligations hereunder to the purchaser of, or successor
to, all or substantially all of its assets. Except as set forth in the
preceding sentence, neither party may, whether by operation of law or
otherwise, assign or otherwise transfer any of its rights nor delegate
any of its obligations under this Agreement without the other party's
prior written consent. Any attempted assignment, transfer, or
delegation without such consent shall be void and of no benefit, and
will not be binding upon the parties hereto and their respective
successors and assigns.
17.3 Order of Precedence. In the event of an conflict the handwritten or
hand-typed provisions on the face of Customer's Purchase Order or
Release Order shall govern; but such terms shall be in effect for that
Purchase Order or Release Order only. Any preprinted terms and
conditions on a Purchase Order or on Supplier's quotation,
acknowledgment, or invoice shall be deemed superseded and deleted.
17.4 Modifications. This Agreement shall not be varied by any oral
agreement or representation or by other than an instrument in writing
of subsequent date, executed by both parties by their duly authorized
representatives.
17.5 Waiver. The failure of either party to exercise any of its rights or
to enforce any of the provisions of this Agreement on any occasion
shall not be a waiver of such right or provision, nor affect the right
of such party thereafter to enforce each and every provision of this
Agreement.
17.6 Severability. If any provision of this Agreement is invalid or
unenforceable under applicable law, such provision shall be modified
to the extent necessary to cure its invalidity and this Agreement as
so modified shall continue in full force and effect.
17.7 Headings. The headings are inserted for convenience only and shall not
limit or affect any of the terms hereof.
17.8 Entire Agreement. This Agreement constitutes the entire agreement
between the parties, and supersedes all previous agreements between
the parties with respect to the subject matter hereof.
17.9 Relationship. Except as expressly provided, this Agreement does not
create any relationship of agency, partnership or employment between
the parties.
17.10Governing Law. The validity of this Agreement and any Purchase Order,
the construction and enforcement of their terms and the interpretation
of the rights and duties of the parties shall not be governed by the
provisions of the 1980 U.N. Convention on Contracts for the
International Sale of Goods, but instead shall be governed by the
internal law of the State of Missouri. Any action relating to this
Agreement or any Purchase Order or Release Order issued under it shall
be brought in an appropriate court in the United States.
MEMC Electronic Materials, Inc. Hemlock Semiconductor Corporation
BY /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ BY /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
TITLE President & COO TITLE President & CEO
DATE 1/26/95 DATE 4/20/95