EXHIBIT 10.12
MEMBRANE MANUFACTURE AND SUPPLY AGREEMENT
This Membrane Manufacture and Supply Agreement (this "Agreement") is
entered into as of March 31, 2001, between Millipore Corporation ("Millipore"),
a Massachusetts corporation with its principal place of business at 80 Ashby
Road, Bedford, MA 01730, andMykrolis Corporation ("Mykrolis"), a Delaware
corporation with its principal place of business at Patriots Park, Bedford, MA
01730.
RECITALS
1. Millipore currently owns all of the issued and outstanding common
stock of Mykrolis.
2. Millipore and Mykrolis have entered into a Master Separation and
Distribution Agreement as of March 28, 2001 (the "Master Agreement") under
which, among other things, the business of Millipore's Microelectronics Division
is to be taken over by, and the assets and liabilities associated therewith are
to be transferred to and assumed by, Mykrolis at the Separation Date (as defined
in the Master Agreement).
3. After the Separation Date, in order to enable Millipore and Mykrolis
to carry on their respective businesses as separate companies, Millipore and
Mykrolis desire to provide for a manufacturing and supply arrangement relating
to certain membranes that are used by and incorporated into products of both
Millipore andMykrolis, so as to appropriately ensure both Millipore and Mykrolis
a continuing supply of such membranes.
4. The Master Agreement provides for this Agreement to be entered into
as of the Separation Date.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
1. Definitions
The following terms shall have the meanings assigned to them below whenever they
are used in this Agreement. Capitalized terms used in this Agreement without
definition and which are defined in the Master Agreement shall have the meanings
assigned to them in the Master Agreement. Except where the context otherwise
requires, words imparting the singular shall include the plural and vice versa,
words denoting any gender shall include all genders and words denoting persons
shall include bodies corporate and vice versa.
"Flat Sheet UPE Membranes" shall mean (i) rollstock UPE Membranes typically
less than 300 microns in sheet thickness including both phobic and philic
Membranes, and (ii) polypropylene sterilizing membrane (Solvex), each as
produced by Millipore at the Premises immediately prior to the Separation Date,
or as modified as provided in this Agreement.
"Hollow Fiber UPE Membranes" shall mean phobic, tubular UPE Membranes
having an outer diameter typically in the range of 400 to 1500 microns and an
inner diameter typically in the range of 200 to 500 microns. For purposes of
illustration, Hollow Fiber UPE Membranes include, as of the date hereof, those
Membranes listed under the heading "Hollow Fiber UPE Membranes" in Exhibit A
hereto. Such listing shall not be deemed to preclude the addition of other
Hollow Fiber UPE Membranes during the term of this Agreement as provided herein.
"JSA" shall mean a Joint Services Agreement that may be entered into
between the parties and amended from time to time during the Term of this
Agreement, which would provide specific mechanisms for carrying out forecasting,
maintenance of inventory levels, quality parameters, on-time delivery
measurement, and the like.
"Lease" shall mean the lease of the Premises as set forth in Section 2
hereof.
"Membranes" shall mean UPE Membranes and Other Membranes as well as any
other membranes or materials that the parties may hereafter agree to add to this
definition of Membranes.
"Millipore Equipment" shall have the meaning set forth in Section 2(e)(ii)
hereof.
"Mykrolis Equipment" shall have the meaning set forth in Section 2(e)(i)
hereof.
"Mykrolis Permitted Persons" shall mean those employees or consultants of
Mykrolis that are involved regularly or from time to time in the manufacture of
UPE Membranes and reasonably need access to the Premises for such purposes.
"Other Flat Sheet UPE Membranes" shall mean Flat Sheet UPE Membranes other
than Treated Flat Sheet UPE Membranes. Other Flat Sheet UPE Membranes include,
as of the date hereof, those Membranes listed under the heading "Other Flat
Sheet UPE Membranes" in Exhibit A hereto.
"Other Membranes" shall mean those membranes listed under the heading
"Other Membranes" in Exhibit A hereto, each as produced by Millipore immediately
prior to the Separation Date, or as modified as provided in this Agreement.
"Other Membrane Products" shall mean devices or other products which
include one or more Other Membranes as a material or component.
"Other UPE Membranes" shall mean all UPE Membranes other than Treated Flat
Sheet UPE Membranes.
"Other UPE Products" shall mean devices or other products which include
Other UPE Membranes as a material or component.
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"Premises" shall have the meaning set forth in Section 2(a) hereof.
"Releases" shall mean any purchase orders or other documents of purchase
that Millipore may place with Mykrolis for UPE Membranes, or that Mykrolis may
place with Millipore for Other Membranes.
"Supplied Party" shall mean a party to this Agreement that orders certain
Membranes pursuant to this Agreement and to whom such Membranes are sold.
"Supplying Party" shall mean a party to this Agreement that manufactures
certain Membranes ordered by the other party pursuant to this Agreement and that
sells such Membranes to the other party.
"Term" or "Term of this Agreement" shall mean the effective period of this
Agreement as set forth in Section 4 hereof.
"Treated Mykrolis Membranes" shall mean Treated Flat Sheet UPE Membranes
and Treated Other Mykrolis Membranes.
"Treated Mykrolis Products" shall mean devices or other products which
include Treated Mykrolis Membranes as a material or component.
"Treated Other Mykrolis Membranes" shall mean those Mykrolis membranes that
are chemically treated using Millipore's VMF4 Line or using Millipore's
patented VMF4 technology, including those membranes listed under the heading
"Treated Other Mykrolis Membranes" in Exhibit A hereto, and such other membranes
as may be added to such list and to this definition as provided in Section 2(o)
hereof.
"Treated Flat Sheet UPE Membranes" shall mean Flat Sheet UPE Membranes that
are chemically treated using Millipore's VMF4 Line or using Millipore's patented
VMF4 technology, including, as of the date hereof, those Membranes listed under
the heading "Treated Flat Sheet UPE Membranes" in Exhibit A hereto.
"UPE Membranes" shall mean microporous membranes produced from an ultrahigh
molecular weight polyethylene material by a melt cast process, as produced by
Millipore at the Premises immediately prior to the Separation Date, or as
modified as provided in this Agreement.
"UPE Products" shall mean devices or other products which include UPE
Membranes as a material or component.
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2. Space and Transition Services for UPE Membrane and Treated Other Mykrolis
Membrane Manufacture
In order to enable Mykrolis, during a limited transition period following the
Separation, to manufacture UPE Membranes (including Hollow Fiber UPE Membranes,
Treated Flat Sheet UPE Membranes and Other Flat Sheet UPE Membranes) and Treated
Other Mykrolis Membranes in the same production areas and with the same
processes as such UPE Membranes and Treated Other Mykrolis Membranes were
manufactured prior to the Separation Date (both (i) for its own use and sale and
for its sale of UPE Products, and (ii) for supply of Flat Sheet UPE Membranes to
Millipore as provided in this Agreement), Millipore and Mykrolis agree to the
following arrangements regarding Mykrolis' use of space and manufacturing
equipment and regarding Millipore's services to Mykrolis in facilitating
Mykrolis' manufacture of UPE Membranes and Treated Other Mykrolis Membranes.
(a) Millipore hereby leases to Mykrolis, and Mykrolis hereby leases from
Millipore, the areas within Buildings "C", "D" and "F" of Millipore's
facility at 80 Ashby Road, Bedford, MA, as more specifically
described and shown in Exhibit B hereto (the "Premises") for purposes
of manufacture of UPE Membranes and Treated Other Mykrolis Membranes
and warehousing of raw materials and components used in such
manufacture.
(b) The Lease shall commence as of the Separation Date and continue
through the end of the Term, provided however that Mykrolis shall
have the right to terminate such Lease prior to the end of the Term
upon 12 months prior written notice to Millipore.
(c) Mykrolis shall pay to Millipore rent for the Premises initially in
the amount set forth in Exhibit C hereto. For each year of the Lease
beginning on the first anniversary of the Separation Date, rent shall
be increased by 5% over the prior year's rent. The initial rent
payment shall be made within 15 days following the Separation Date on
a pro-rated basis for the period beginning with the Separation Date
and ending on the last day of the calendar quarter during which such
initial payment is made. Each subsequent payment shall be made on or
before the first day of each subsequent calendar quarter during the
period of the Lease.
(d) At all times during the period of the Lease, Mykrolis Permitted
Persons shall have access to the Premises for the purposes specified
in clause (a) of this Section 2, including reasonable ingress and
egress through other parts of Millipore's facility at 80 Ashby Road.
Without limiting the generality of the foregoing, Millipore shall
provide security badges to such Mykrolis Permitted Persons enabling
their entry to the Premises. Mykrolis agrees to provide an initial
list of such Mykrolis Permitted Persons to Millipore's facilities
personnel (as shall be identified to Mykrolis by Millipore) promptly
after the execution of
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this Agreement, and to promptly update such list from time to time as
necessary with any additions or deletions. In addition, Mykrolis
Permitted Persons shall be (i) provided, to the same extent provided
to Millipore employees, with access to the use of restrooms, the
"Building E" cafeteria and other common areas, and to conference
rooms as reasonably necessary for meetings relating to UPE Membranes
manufacture, and (ii) permitted to use mailroom services, telephone
and voicemail systems, information services, fax, copy machines,
cafeteria/refreshment services, and the like, at prices/rates
consistent with those charged to internal Millipore users of such
services and supplies. Without limiting the generality of the
parties' respective obligations of confidentiality and non-use as
described in Article VI of the Master Agreement, Mykrolis hereby
agrees that any information of Millipore that the Mykrolis Permitted
Persons gain access to as a result of their presence in Millipore's
facility shall be subject to strict obligations of confidentiality
and non-use as provided in, and subject to the limitations and other
provisions of, such Article VI.
(e) For purposes of clarification, the parties acknowledge that:
(i) the following equipment currently used in the manufacture of
UPE Membranes and/or Treated Other Mykrolis Membranes
(collectively, the "Mykrolis Equipment") is owned, as of and
following the Separation Date, by Mykrolis:
- Slurry Mixing Vessel
- Extrusion Line
- NZE (2 units)
- Testing: Flow, BP, Porisimetry, Dimensions (for
phobic Flat Sheet UPE Membranes and for Hollow Fiber
UPE Membranes)
- Monomer Chemical Mixing Vessel (for philic Flat
Sheet UPE Membranes)
- Batch Extractor (2 units) (for Hollow Fiber UPE
Membranes)
- Hollow Fiber Annealing Line
and
(ii) the following equipment currently used in the manufacture of
UPE Membranes and/or Treated Other Mykrolis Membranes
(collectively, the "Millipore Equipment") is owned, as of and
following the Separation Date, by Millipore:
- Slurry Mix Stations 1-3 Control Modules
- Film 1 Annealing Line
- VMF4 Line (for hydrophilization/chemical
modification)
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- Testing: Flow, Wet Time, Stability (for philic Flat Sheet
UPE Membranes).
- Monomer Chemical Mixing Stations 4 - 6
(f) At all times during the period of the Lease, Millipore shall provide
Mykrolis with access to and use of the Millipore Equipment, each as
necessary for use in the manufacture of UPE Membranes or Treated
Other Mykrolis Membranes. All such access to and use of such
Millipore Equipment shall be scheduled in advance, in accordance with
mechanisms for scheduling and for prioritizing time between Mykrolis
and Millipore needs as shall be provided in a JSA or otherwise
separately agreed by the parties on or before the Separation Date.
Mykrolis shall pay Millipore machine hour charges as set forth in
Exhibit C for use of the Millipore Equipment. Millipore shall invoice
Mykrolis for such amounts on a quarterly basis.
(g) At all times during the period of the Lease, Millipore will supervise
and provide operational assistance to Mykrolis in its use of the
Millipore Equipment, as may be requested by Mykrolis or as may be
determined advisable by Millipore in its sole judgment in order to
protect against damage to such Millipore Equipment or injury to its
operators in accordance with standards and procedures in effect prior
to the Separation Date. Notwithstanding the foregoing, Mykrolis is
responsible for using the Millipore Equipment in substantial
compliance with operating procedures in effect prior to the
Separation Date and in a safe manner, and shall assume all
responsibility and liability for any personal injury or damage to the
Millipore Equipment or other property damage resulting from Mykrolis'
use of such Millipore Equipment. Millipore will also provide a
reasonable level of general technical support for assistance in
resolving technical problems in UPE Membrane manufacture. All
Millipore supervisory, operational assistance, and technical support
time shall be charged to Mykrolis at the rates per person-hour as set
forth in Exhibit C.
(h) At all times during the period of the Lease,
(i) Subject to the provisions of clause (g) above, Millipore shall
be responsible for maintaining the Millipore Equipment in its
current operational capability, unless otherwise agreed, and
(ii) Mykrolis shall be responsible for maintaining the Mykrolis
Equipment in its current operational capability and condition,
unless otherwise agreed.
(i) Upon the request of either party, the parties agree to negotiate, in
good faith and consistent with the Millipore LRP model for capacity
and space expansion/renovation, one or more modifications of the
Premises or the Lease terms as may be necessary or appropriate to
meet increased demand of either the Supplying Party or the Supplied
Party for one or more Membranes supplied
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hereunder, or for other good reason, provided that Millipore shall
have no obligation hereunder to incur any expense in order to
increase UPE Membrane manufacturing capacity.
(j) Except as may be otherwise agreed, during the period of the Lease,
Mykrolis shall be fully responsible for regulatory, health, safety
and environmental compliance, as well as hazardous and solid waste
disposal, spill response and the like, generated by Mykrolis' use of
the Premises and Mykrolis' manufacture of UPE Membranes and Treated
Other Mykrolis Membranes. Mykrolis shall also be responsible for
completing the conversion from Genesolv to Vertrel as the UPE
Membranes extraction solvent , consistent with the conversion plan in
place as of the Separation Date, and for disposal of any remaining
Genesolv. Notwithstanding the foregoing, at all times during the
period of the Lease, Millipore reserves the right to enter the
Premises as it determines necessary or desirable for purposes of
health, safety and environmental compliance or other reasonable
purposes that relate to or impact any areas of its 80 Ashby Road
facility other than the Premises, provided that such access does not
unreasonably interfere with Mykrolis' use of the Premises.
(k) Millipore requires the full capabilities to manufacture (or have
manufactured) UPE Membranes for its and its Affiliated Companies' use
and sale, and for its and its Affiliated Companies' use in
manufacturing (or having manufactured) UPE Products for sale, in the
Millipore Core Business. Accordingly, to facilitate Millipore's
manufacture of UPE Membranes following the termination of the Lease,
(i) Mykrolis acknowledges that it plans, consistent with
Millipore's pre-Separation Date LRP, to increase its UPE
Membrane manufacturing capacity on or prior to the termination
of the Lease, and in connection therewith to acquire new
equipment in replacement of the existing Extrusion Line and one
NZE. If such plan is, in fact, implemented (or if Mykrolis
shall otherwise in its own discretion deem it appropriate),
Mykrolis agrees to grant Millipore an option to purchase prior
to or at the termination of the Lease, and leave in their then
current locations, the Extrusion Line and one NZE system used
in manufacture of UPE Membranes, at their then current book
values and at such other reasonable terms as the parties may
agree at such time. Mykrolis agrees to notify Millipore, at the
time of its notice of termination of the Lease, as provided in
Section 2(b) above, as to whether it is granting Millipore such
option;
and
(ii) Mykrolis agrees to provide Millipore with the know-how
(including copies of all pertinent documentation) and a
reasonable amount of
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transition assistance necessary for Millipore to be able to
continue the UPE Membrane manufacturing process immediately
upon the termination of the Lease, so as to be able to make UPE
Membrane in the same process and of the same quality as made
and supplied under this Agreement. All Mykrolis transition
assistance time shall be charged to Millipore at the rates per
person-hour as set forth in Exhibit C.
(l) Mykrolis requires the full capabilities to manufacture (or have
manufactured) UPE Membranes and Treated Other Mykrolis Membranes.
Accordingly, to facilitate Mykrolis' manufacture of UPE Membranes and
Treated Mykrolis Membranes at a different location following the
termination of the Lease,
(i) Mykrolis shall remove and transport, at its own expense, the
Mykrolis Equipment (subject to Millipore's option to purchase
certain items of such Mykrolis Equipment as set forth in clause
(k)((i) above) from the Premises to a location of its choice,
on or before the termination of the Lease. Mykrolis shall use
its best efforts to avoid or minimize damage to Millipore's
facility from such removal, and shall promptly reimburse
Millipore for its actual costs of repairing such facility as a
result of any such damage;
and
(ii) Millipore shall provide Mykrolis with know-how (including
copies of all pertinent documentation) and a reasonable amount
of transition assistance relating to the design,
specifications, functionality, operation and maintenance of the
Millipore Equipment, such that Mykrolis can make or have made,
and operate and maintain, equipment substantially equivalent or
comparable to the Millipore Equipment, or successfully
outsource the functions performed by the Millipore Equipment in
the manufacture of UPE Membranes and Treated Other Mykrolis
Membranes. All Millipore transition assistance shall be charged
to Mykrolis at the rates per person-hour as set forth in
Exhibit C.
(m) In the event that any know-how results from or is developed in the
course of the manufacture of UPE Membranes or Treated Other Mykrolis
Membranes in the Premises during the term of the Lease (including the
use of Millipore Equipment in such manufacture), whether by employees
of Millipore, employees of Mykrolis or jointly, such know-how shall
be jointly owned by Mykrolis and Millipore. Millipore shall have
rights to use such know-how in all fields other than the Mykrolis
Core Business, and Mykrolis shall have rights to use such know-how in
all fields other than the Millipore Core Business.
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(n) During the period of the Lease, if requested by Mykrolis, Millipore
agrees to perform quality control testing of the UPE Membranes and
Treated Other Mykrolis Membranes for Mykrolis on a contract basis, in
accordance with the test specifications in effect as of the date of
this Agreement, as may be modified by agreement of the parties. Such
testing will be scheduled between the parties, and will be charged to
Mykrolis at the rates per person-hour as set forth on Exhibit C.
(o) All amounts payable by Mykrolis to Millipore, or by Millipore to
Mykrolis, pursuant to this Section 2 ,except for the lease payments
provided in clause (c) above, shall be payable within forty-five (45)
days following receipt of invoice. Any late payments shall be subject
to interest at a rate of 12% per annum.
(p) Mykrolis shall have the right to add other membranes to the list and
definition of "Treated Other Mykrolis Membranes" during the period of
the Lease, subject to (i) Millipore's approval (on grounds of safety,
compliance with laws, or avoidance of damage to the Millipore
Equipment or the Premises) of the manufacture of such additional
Treated Other Mykrolis Membranes, which approval shall not be
unreasonably withheld or delayed, and (ii) scheduling of use of the
Millipore Equipment as shall be negotiated by the parties in good
faith.
3. Supply of Membranes
Subject to the terms and provisions of a JSA that may be in effect from time to
time:
(a) Mykrolis agrees to sell to Millipore, from time to time during the
Term, Flat Sheet UPE Membranes, in the amounts contained in
Millipore's Releases , and Millipore agrees to sell to Mykrolis, from
time to time during the Term, Other Membranes in the amount contained
in Mykrolis' Releases. Except as set forth in Section 6(a) hereof,
neither party shall have any minimum or maximum purchase requirements
for any or all of such Membranes hereunder, either per order or in
the aggregate.
(b) Unless otherwise agreed by both parties in writing, this Agreement
applies to all Releases placed by a Supplied Party with a Supplying
Party during the Term. The terms and conditions of this Agreement
shall apply to any Release, whether or not this Agreement or its
terms and conditions are expressly referenced in the Release.
(c) Unless otherwise agreed by both parties in writing for a specific
transaction, no inconsistent or additional term or condition in any
Release, or in any acknowledgment, invoice or other document issued
by a Supplying Party or its representative in connection with a
particular purchase by a Supplied Party, shall be applicable to a
transaction within the scope of this Agreement. Both
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parties specifically agree that any terms and conditions in any such
documents which are in any way inconsistent with this Agreement shall
be inapplicable, and the terms of this Agreement shall govern.
4. Term and Termination
(a) The effective period of this Agreement (the "Term") shall begin on
the Separation Date and continue thereafter for a period of five (5)
years or until earlier termination in accordance with clause (b) or
(c) of this Section 4. Any Release issued by a Supplied Party before
the effective date of termination and in accordance with Section 6(a)
hereof shall be fulfilled by the Supplying Party.
(b) Either party may terminate this Agreement prior to the date five (5)
years following the Separation Date without prejudice to any rights
or liabilities accruing up to the date of termination:
(i) in the event of a material breach by the other party of any of
the terms and conditions of this Agreement, by giving the other
party notice of such breach, and provided that such breach
shall not have been cured within sixty (60) days following such
notice; and
(ii) immediately, by written notice thereof, if any of the following
events or an event analogous thereto occurs:
a. an adjudication has been made that the other party is
bankrupt or insolvent;
b. the other party has filed bankruptcy proceedings or has
had such proceedings filed against it, except as part of
a bona fide scheme for reorganization;
c. a receiver has been appointed for all or substantially
all of the property of the other party;
d. the other party has assigned or attempted to assign this
Agreement for the benefit of its creditors; or
e. the other party has begun any proceeding for the
liquidation or winding up of its business affairs.
(c) Termination under this Section 4 shall be in addition to and not a
substitute for other rights or causes of action of the terminating
party.
(d) Termination of this Agreement shall not in any way operate so as to
impair or destroy any of the rights or remedies of either party,
either at law or in equity, nor shall it relieve the parties of their
obligations pursuant to Sections 2(k) (l) and (m), 7, 8, 11, 12,
14,15 and 16 hereof.
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5. Price
(a) During the period of this agreement prices for the Membranes shall be
at the Supplying Party's fully burdened manufacturing cost for such
Membranes, consistent with U.S. Generally Accepted Accounting
Principles ("Manufacturing Cost"), plus twenty percent (20%). On the
first anniversary of the Separation Date and on each anniversary
thereafter during the Term, the Manufacturing Costs will be adjusted
to reflect the then current cost to manufacture the Membranes, which
shall be set by the Supplying Party after an "open-book" review by
the parties.
(b) Prices and deliveries will be FOB 80 Ashby Road, Bedford, MA.
6. Orders, Delivery and Payment
Subject to the terms and provisions of a JSA that may be in effect from time to
time:
(a) Each Supplied Party will provide the corresponding Supplying Party
with a rolling one year forecast of its demand for Membranes
hereunder (a "One-Year Forecast") which will be updated on a
quarterly basis, at least thirty (30) days prior to the start of each
calendar quarter. Each such One-Year Forecast shall include a sub-
forecast for the first three months within the One-Year Forecast (a
"3 Month Forecast"). The Supplied Party must provide Releases for
delivery, during the three months covered by such 3 Month Forecast,
of such Membranes in quantities not more than 0% less or 30% greater
than the quantities set forth in such 3 Month Forecast. Except for
such commitment with respect to the 3 Month Forecasts, the One-Year
Forecasts will be used for planning purposes only and are not
binding. A Supplying Party will ship Membranes so as to arrive on the
delivery date set forth in a Release, provided that the delivery date
set forth in such Release is not less than 30 days following the date
such Supplying Party receives such Release and provided that the
amounts set forth in such Release are within the range provided above
in accordance with the applicable 3 Month Forecast.
(b) A Supplied Party shall make payment to the Supplying Party within
forty-five (45) days after the later of (i) receipt of ordered
Membranes, and (ii) receipt of such Supplying Party's invoice for
such Membranes. All payments shall be made in U.S. Dollars. Late
payments shall be subject to interest at a rate of 12% per annum.
(c) All Product shall be tested, inspected and packaged for delivery by
the Supplying Party as mutually agreed by the parties.
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7. Non-Competition
Except as otherwise provided in Section 3 hereof or elsewhere in this Agreement:
(a) Millipore agrees that neither it nor any of its Affiliated Companies
will (i) sell outside of the Millipore Core Business any UPE
Membranes or UPE Products, or (ii) sell any UPE Membranes or UPE
Products to any distributor, OEM manufacturer or other third party
that has rights to, or that Millipore or any such Affiliated Company
has reason to believe will, resell such UPE Membranes or UPE Products
outside of the Millipore Core Business or sell other products which
include UPE Membranes or UPE Products as materials or components
outside of the Millipore Core Business.
(b) Mykrolis agrees that neither it nor any of its Affiliated Companies
will (i) sell into the Millipore Core Business any Other UPE
Membranes or Other UPE Products, or (ii) sell any Other UPE Membranes
or Other UPE Products to any distributor, OEM manufacturer or other
third party that has rights to, or that Mykrolis or any such
Affiliated Company has reason to believe will, resell such Other UPE
Membranes or Other UPE Products into the Millipore Core Business or
sell other products which include Other UPE Membranes or Other UPE
Products as materials or components into the Millipore Core Business.
(c) Millipore agrees that neither it nor any of its Affiliated Companies
will (i) sell into the Mykrolis Core Business any Other Membranes or
Other Membrane Products, or (ii) sell any Other Membranes or Other
Membrane Products to any distributor, OEM manufacturer or other third
party that has rights to, or that Millipore or any such Affiliated
Company has reason to believe will, resell such Other Membranes or
Other Membrane Products into the Mykrolis Core Business or sell other
products which include Other Membranes or Other Membrane Products as
materials or components into the Mykrolis Core Business.
(d) Mykrolis agrees that neither it nor any of its Affiliated Companies
will (i) sell outside of the Mykrolis Core Business any Other
Membranes, Other Membrane Products, Treated Mykrolis Membranes or
Treated Mykrolis Products, or (ii) sell any Other Membranes, Other
Membrane Products, Treated Mykrolis Membranes or Treated Mykrolis
Products to any distributor, OEM manufacturer or other third party
that has rights to, or that Mykrolis or any such Affiliated Company
has reason to believe will, resell such Other Membranes, Other
Membrane Products, Treated Mykrolis Membranes or Treated Mykrolis
Products outside of the MMI Core Business or sell other products
which include Other Membranes, Other Membrane Products, Treated
Mykrolis Membranes or Treated Mykrolis Products as materials or
components outside of the Mykrolis Core Business.
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(e) In the event that subsequent to the date hereof either party
discovers any pre-existing distribution arrangements that would
conflict with the provisions of this Agreement, the parties agree
that any such pre-existing arrangements shall not constitute a breach
hereunder, and they further agree: (i) to use reasonable commercial
efforts to cause any such terms of distribution agreements that are
inconsistent with such provisions to be amended so as to be
consistent with such provisions, (ii) not to amend any distribution
agreements following the date of this Agreement so as to be
inconsistent with such provisions, and (iii) not to renew or enter
into any distribution agreements or other agreements containing terms
inconsistent with such provisions following the date of this
Agreement.
8. Warranties and Indemnification
(a) Each Supplying Party warrants to the corresponding Supplied Party
that:
(i) All Membranes supplied to the Supplied Party hereunder shall
conform to the specifications for such Membranes as in effect
as of the date of this Agreement and as provided to the
Supplied Party, as such specifications may be amended as agreed
by the parties ;
(ii) All Membranes supplied hereunder shall be free of defects in
materials and workmanship;
(iii) It will abide by all applicable laws and regulations in
manufacturing and supplying Membranes pursuant to this
Agreement; and
(iv) All Membranes supplied hereunder will be manufactured in strict
conformity with ISO 9002 and cGMP standards.
(b) In the event of a breach of the foregoing warranties, the Supplying
Party's sole obligation to the Supplied Party shall be to repair,
replace or refund, at the Supplying Party's option, any non-
conforming Membranes.
(c) THE SUPPLYING PARTY MAKES NO OTHER WARRANTY, EXPRESSED OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE. FURTHERMORE, THE SUPPLYING PARTY SHALL
NOT BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR ANY OTHER
INDIRECT DAMAGES RESULTING FROM ECONOMIC LOSS OR PROPERTY DAMAGE
SUSTAINED BY THE SUPPLIED PARTY FROM THE USE OF THE SUPPLIED
MEMBRANES.
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(d) Each Supplying Party agrees to indemnify and hold the corresponding
Supplied Party harmless from and against any claim or legal action by
a third party against such Supplied Party (including reasonable
attorneys' fees associated therewith) based on damages incurred as a
result of property damages, personal injury or death, to the
proportionate extent arising from a breach of any of the above
warranties of the Supplying Party or from the Supplying Party's
negligent action or omission.
(e) Without limiting any other rights or remedies that a Supplied Party
may have, if such Supplied Party determines that delivered Membranes
do not conform to the agreed specifications for such Membranes, then
such Supplied Party may reject or withdraw its acceptance thereof and
shall notify the Supplying Party in writing of such nonconformity or
error within thirty (30) days from receipt of such Membranes by the
Supplied Party. The Supplied Party may subject any Membrane to
internal testing for purposes of determining conformity to
specifications. The Supplying Party shall have fifteen (15) days
after receipt of written notice of nonconformity or error to replace
nonconforming Membranes at the expense of the Supplying Party. If so
directed by the Supplying Party, the Supplied Party shall return
nonconforming Membranes to the Supplying Party's manufacturing
facilities, at the Supplying Party's expense and using such carrier
and such delivery dates and terms as the Supplying Party shall
reasonably specify.
(f) The parties agree to have their representatives meet at least once
every three (3) months (unless otherwise agreed) to review compliance
with the manufacturing, specifications, product quality, forecasting
and delivery terms set forth in this Agreement, and to agree on any
necessary corrective actions or modifications to the JSA as then in
effect.
9. Membrane Modifications; New Membranes.
(a) Each Supplying Party agrees that it will not substantially change the
Membranes that it will supply hereunder or their formulation,
manufacturing or testing processes, process equipment, other aspects
of form, fit or function, or production location, unless the Supplied
Party approves such change in writing, which approval may require
formal validation and qualification and possibly customer
notification. The implementation of any such accepted changes shall
be subject to the parties' agreement on any change in price or other
terms of supply as may be necessitated or requested by a party as a
result of such change.
(b) If any new or improved UPE Membranes (i) result from research and
development work (A) to be conducted by Millipore pursuant to the
Research Agreement between Millipore and Mykrolis entered into as of
the date of this Agreement, or (B) that may be conducted by either
Millipore or Mykrolis after
14
the Separation Date but during the Term of this Agreement, or (ii)
are requested by Millipore to be added to the supply provisions
hereof, and are: (A) specified in Millipore's pre-Separation Date
LRP, or agreed to by Mykrolis, and (B) technically feasible for
Mykrolis to manufacture, it is intended that such UPE Membranes be
added to this Agreement both in terms of Mykrolis' supply to
Millipore and Mykrolis' manufacture of such UPE Membranes, and they
shall be so added to this Agreement upon agreement by the parties as
to specifications and pricing, which pricing shall be consistent in
methodology with the pricing hereunder.
(c) Without limiting the provisions of clauses (a) and (b) of this
Section 9, Mykrolis agrees following the Separation Date at its own
expense to continue work in improving UPE Membranes in the areas
planned prior to the Separation Date and noted in Millipore's LRP.
10. Access to Facilities
At any time during the Term, upon reasonable advance notice by a Supplied Party,
such Supplied Party's authorized representatives and customers (subject to
appropriate confidentiality obligations) shall be provided access to the
facilities of the Supplying Party to audit or verify conformity of Membrane
manufacture to ISO 9002 and cGMP standards and other applicable laws and
regulations. During the period of the Lease, Millipore's authorized
representatives shall be provided access to the Premises for the purpose of
auditing or troubleshooting (to be coordinated with Mykrolis) of technical
problems with UPE Membranes or their manufacture. Also, during the period of
the Lease, Mykrolis customers (subject to appropriate confidentiality
obligations and on reasonable advance notice, and for the purposes indicated
above) shall be provided access to the areas of Millipore's 80 Ashby Road
facility where the Millipore Equipment is located and used.
11. Insurance
Each Supplying Party agrees to procure and maintain, at all times during the
Term, product liability insurance with respect to the Membranes supplied by it
(Broad Form Vendor's Endorsement) and contractual liability coverage, with the
minimum limits of $5,000,000 (Five Million Dollars). Each Supplying Party
shall, upon request by the Supplied Party, furnish to the Supplied Party a
certificate of insurance evidencing the foregoing coverage and limits. The
insurance provider shall not be changed without providing the Supplied Party
with ten (10) days' prior written notice.
15
12. Notices
Any notice or other communication required or permitted to be given by either
party pursuant to the terms of this Agreement shall be in writing and shall be
deemed given if and when delivered by hand or sent by certified mail, return
receipt requested, overnight courier, confirmed telecopy, or confirmed
electronic mail transmission, addressed as follows:
If to Millipore: Millipore Corporation
80 Ashby Road
Bedford, MA 01730
Attn: President, Membrane Technology Division
Fax: (781) 533-3143
with a copy to: Millipore Corporation
80 Ashby Road
Bedford, MA 01730
Attn: General Counsel
Fax: (781) 533-3125
If to Mykrolis: Mykrolis Corporation
Patriots Park
Bedford, MA 01730
Attn:Vice President, Manufacturing
Fax: (781) 533-3117
with a copy to: Mykrolis Corporation
Patriots Park
Bedford, MA 01730
Attn: General Counsel
Fax: (781) 533-3125
or to such electronic mail address as may be specified by an addressee party to
the other party by one of the other means provided above, or to such other
address, telecopy number or electronic mail address as may be specified by an
addressee party to the other by one of the means provided above.
13. Force Majeure
The obligations of a party under this Agreement will be suspended to the extent
that it is wholly or partially precluded from complying with its obligations
under this Agreement by force majeure. Force majeure includes, but is not
restricted to, fire, storm, flood, earthquake, explosion, accident, act of the
public enemy, war, rebellion, insurrection, sabotage, epidemic, quarantine
restriction, labor dispute, labor shortage, transportation embargo or failure or
delay in transportation, act of God, act (including laws, regulations,
disapprovals or failure to
16
approve) of any government agency, whether national, municipal, or otherwise.
During the existence of any such force majeure condition, the affected party
shall nevertheless use its best efforts to remove the cause thereof.
14. No Other Rights
Neither party shall have any rights hereunder to any patents or other
intellectual property of the other party, except as specifically set forth
herein. Without limiting the generality of the foregoing, neither party shall
have any rights to use any trademarks of the other party for any purpose, in
connection with the Membranes to be manufactured or supplied hereunder.
15. Incorporation of Provisions from Master Agreement, Conflicts
(a) The following provisions of the Master Agreement, mutatis mutandis,
are hereby incorporated by reference into this Agreement for all
purposes:
Article VI (Confidentiality);
Article IX (Dispute Resolution);
Section 10.3 (Governing Law);
Section 10.6 (Counterparts);
Section 10.7 (Binding Effect; Assignment);
Section 10.8 (Severability);
Section 10.9 (Failure or Indulgence Not Waiver;
Remedies Cumulative);
Section 10.10 (Amendment);
Section 10.11 (Authority);
Section 10.12 (Interpretation).
In the event of any conflict between any of the foregoing incorporated
provisions of the Master Agreement and any other provision of this
Agreement, such other provision of this Agreement shall prevail.
(b) In the event of any conflict between any of the provisions of this
Agreement and any provision of the Master Patent License Agreement,
the Master Patent Grantback License Agreement or the Master Trade
Secret and Know-How Agreement, each dated as of even date herewith
between the parties hereto, the provisions of such other agreements
shall prevail.
16. Entire Agreement
This Agreement, including Exhibits A, B, C and D attached hereto, is the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes any prior negotiations and agreements or understandings and any
contemporaneous oral agreements or understandings with respect to the subject
matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives effective as of the date first
set forth above.
MILLIPORE CORPORATION MYKROLIS CORPORATION
By: /s/Francis J. Lunger By: /s/Jean-Marc Pandraud
---------------------------- ------------------------
Name: Francis J. Lunger Name: Jean-Marc Pandraud
------------------------- ---------------------
Title: Executive Vice President Title: President
------------------------- ---------------------
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EXHIBIT A
Membranes Covered By Supply Agreement
Membrane Description Note
Other Membranes
---------------
GIPU00000 0.2 um philic PES
VIPP00000 0.1 um philic PES Still in final development. May end up with
different catalog number as product is finalized.
Other Flat Sheet UPE Membranes
---------------------------
DOHP00000 0.65 um phobic, thick UPE
GOHT 0.25 um phobic UPE
GPHP00000 0.2 um PP Membrane
TPGP00000 0.2 um phobic, thin UPE
TPVP00000 0.1 um phobic, thin UPE
TPZP00000 0.05 um phobic, thin UPE
UPBP00000 1.0 um phobic, thick UPE
UPDP 0.65 um phobic UPE
UPGP00000 0.2 um phobic, thick UPE
UPHP00000 0.45 um phobic, thick UPE
UPVP00000 0.1 um phobic, thick UPE
UPZP00000 0.05 um phobic, thick UPE
VOHT 0.15 um phobic UPE
ZOHT 0.05 um phobic UPE
UPHP000LC Improved 0.45um UPE
Treated Flat Sheet UPE Membranes
---------------------------
JOTD00000 0.25 um Charged, philic UPE
VOTN00000 0.10 um Charged, neutral UPE
WOTD00000 0.15 um Charged, philic UPE
WOTN00000 0.15 um Charged, neutral UPE
ZOTD00000 0.05 um Charged, philic UPE
Hollow Fiber UPE Membranes
---------------------------
UFGP00000 LHVD 0.1 um UPE Hollow Fiber
UFGP 0.1 um UPE Hollow Fiber
UFWP00000 PI-250 UPE Hollow Fiber
UFZP 0.05 um UPE Hollow Fiber
UFGP43016 0.1 um UPE Hollow Fiber Mat
UFGP95832 0.1 um UPE Hollow Fiber Mat
UFGP95835 0.1 um UPE Hollow Fiber Mat
UFZP43016 0.05 um UPE Hollow Fiber Mat
Treated Other Mykrolis Membranes
---------------------------
TYTD00000 Charged, Philic Tyvek substrate for Copper Anode
FPHP00000 0.45 um Philic PTFE Membrane
FPVP00000 0.1 um Philic PTFE Membrane
VFPN00000 0.1 um neutral, philic PTFE
PFAP00000 PFA Hollow Fiber Membrane still in development, but which will be
produced by MMI with their own equipment.
19
Exhibit B
BEDFORD MEMBRANE MFG.
Mykrolis Space Occupancy = 4612 Sq. Ft.
Type: Location Sq. Ft. Comments
Manufacturing:
- --------------
- --------------------------------------------------------------------------------
Extrusion D-101 1527
D-102 195
D-104 138
HF Annealing F-105 1008
Extraction C-103 720
- --------------------------------------------------------------------------------
Total Mfg. (Sq. Ft.) = 3588
Warehouse:
- ----------
Incoming D-108 240 15 Pallets Spaces allowance
Raw Materials D-108 464 29 Pallet Spaces allowance
Finished Goods D-108 128 8 Pallet Spaces (safety stock +20%)
WIP Staging C-101 128 8 Pallet Spaces allowance
Flammable Storage D-183/184 0 Nothing stored in Flammable
storage area
- --------------------------------------------------------------------------------
Total Whse. (Sq. Ft.) = 960
Offices:
- --------
- --------------------------------------------------------------------------------
Bldg. F (2) 64 4 cubicles
- --------------------------------------------------------------------------------
Typical Raw Mat. Storage
DOP 3
Mineral Oil 2
PE 2
Base-30 12
Blue Patapar 1
Genesolve 3
Vertrel 3
Cores 1
Cartons/Boxes 2
--
29
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EXHIBIT C
Membrane Supply Agreement - Rates and Charges
Machine Hour Rates 2000 2001 Markup Agreement
Standard Cost Incr 20% Total Price
5%
----------------------------------------------------------------------------------------------------
MIX Room $ 219.58 $10.98 $46.11 $276.67 $277.00
----------------------------------------------------------------------------------------------------
VMF 4 Machine $ 346.32 $17.32 $72.73 $436.36 $436.00
----------------------------------------------------------------------------------------------------
Annealing $ 209.57 $10.48 $44.01 $264.06 $264.00
----------------------------------------------------------------------------------------------------
--------------------------------------------------- --------------------------------------
Tech Support and Transition Assistance QC
Costs Costs
Per Per
Person Person
Hour Hour
Labor Only $ 46.90
Dept Overhead $ 9.10 2000 Standard $ 46.10
Cost $ 56.00 2001 cost incr. 5% $ 2.31
Mark up 20% $ 11.20 Markup 20% $ 9.68
Total $ 67.20 Total $ 58.09
Use $ 67.00 Use $ 58.00
--------------------------------------------------- --------------------------------------
---------------------------------------------------
Rent in First Year
Per year, payable quarterly $280,000
---------------------------------------------------
On the first anniversary of the Separation Date, and on each anniversary
thereafter, all above rates, except rent, will be adjusted to the
provider's standard cost, plus 20%, as of such anniversary date. Rent will
be adjusted 5% annually
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