EXHIBIT 10.42
CONFIDENTIAL TREATMENT
FUMED SILICA SUPPLY AGREEMENT
This FUMED SILICA SUPPLY AGREEMENT (this "Agreement"), executed and
effective as of the 16th day of January, 2004, is between Cabot Corporation
("Cabot"), a Delaware corporation, and Cabot Microelectronics Corporation
("CMC"), a Delaware corporation. With respect to the supply by Cabot to CMC of
Fumed Silica (defined below), this Agreement replaces and supercedes the
parties' agreement regarding Fumed Silica pursuant to the Fumed Metal Oxide
Supply Agreement executed on January 20, 2000 as amended on December 12, 2001
and December 17, 2003 by and between Cabot and CMC (together, the "FMO Supply
Agreement"). The Parties agree that except as otherwise explicitly stated herein
nothing in this Agreement amends or modifies, or is intended to amend or modify,
any of the terms or conditions of, or the rights, duties or obligations of
either of the Parties with respect to the supply by Cabot to CMC of Fumed
Alumina, whether under the FMO Supply Agreement or that certain Fumed Alumina
Supply Agreement by and between the Parties executed December 12, 2001 (the
"Unit C Agreement").
WHEREAS, CMC desires to continue to purchase certain fumed silica
products from Cabot for an additional period beyond the initially contemplated
expiration of June 30, 2005 of the Original FMO Supply Agreement pursuant to the
terms of this Agreement; and
WHEREAS, Cabot desires to continue to provide such fumed silica
products to CMC pursuant to the terms of this Agreement; and
WHEREAS, Cabot continues to provide and CMC continues to purchase
certain fumed alumina products pursuant to the terms of the FMO Supply Agreement
and the Unit C Agreement, unaffected by the terms of this Agreement; and,
WHEREAS, both parties desire that their sole undertaking and agreement
with respect to fumed silica be replaced with and governed by this Agreement and
not by the FMO Supply Agreement, and are simultaneously herewith entering into
an Amendment No. 3 to Fumed Metal Oxide Supply Agreement to such effect;
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. TERM OF THIS AGREEMENT
(a) This Agreement shall commence as of the date hereof, and shall
continue until December 31, 2009 (the "First Term"). Unless either party shall
give a notice of non-renewal prior to June 30, 2008, this Agreement shall
continue after the First Term until terminated by either party by a written
notice of termination, which shall terminate this Agreement effective on the
first June 30 or December 31 more than 18 months after the date such notice is
delivered. The First Term, together with any continuations, are referred to
herein as the "Term". Each year of the Term beginning on the effective date or
an anniversary thereof is referred to herein as a "Term Year",
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including the stub period, if any, between the last anniversary of the effective
date and the end of the Term.
SECTION 2. PRODUCTS
2.1 Purchase and Sale.
(a) Subject to the terms and conditions of this Agreement, during the
Term, Cabot shall provide to CMC, and CMC shall purchase from Cabot, the Fumed
Silica (as defined below) in such quantities as specified by CMC, subject to
Sections 2.3 through 3.3 below. "Fumed Silica" means:
the fumed silica of the grades and meeting the product
specifications set forth on Schedules A.1 hereto, with respect to
fumed silica to be produced by Cabot at its Tuscola, Illinois
facility and of the grades and meeting the product specifications
set forth in Schedules A.2 hereto, with respect to fumed silica
produced by Cabot at its Barry, Wales facility (taken together,
Schedules A.1 and A.2 are hereinafter referred to collectively as
the "Specifications").
(b) Subject to the provisions of Section 8.7 below, any amendment to
the Specifications shall require the prior written consent of both CMC and
Cabot. Except as provided in Section 8.3 or otherwise in this Agreement or
otherwise agreed to by Cabot, any increase in costs incurred by Cabot in
manufacturing the Fumed Silica to comply with changes requested by CMC to the
Specifications, or changes necessary to comply with changes to the
Specifications to manufacturing processes or otherwise, shall be paid by CMC. If
such costs are removed or otherwise cease to be incurred by Cabot, then CMC will
no longer be obligated to pay such costs to Cabot, and Cabot will notify CMC
within ten (10) business days of the cessation of such costs. If such costs are
reduced, then CMC will only be obligated to pay such reduced costs and Cabot
will notify CMC within ten (10) business days of the reduction of such costs.
2.2 Forecasts.
CMC shall provide Cabot with forecasts (the "Forecasts") of the
quantities of Fumed Silica that CMC expects to purchase from Cabot (the
"Forecasted Quantities"). The Forecasts shall identify by grade, the Forecasted
Quantities and the Cabot facility or facilities that will produce and deliver to
CMC such Forecasted Quantities (including the volume to be made at each plant).
CMC shall provide the following Forecasts to Cabot:
(a) not more than sixty (60) but not less than thirty (30) days prior
to each January 1, April 1, July 1 and October 1 during the Term, a Forecast
indicating the Forecasted Quantity for each month of the calendar quarter
commencing on such January 1, April 1, July 1 and October 1 (the "Quarterly
Forecast"); provided, however, that in such Quarterly Forecast, the Forecasted
Quantity for any month may not exceed the Forecasted Quantity for the previous
month by more than 20%;
(b) not more than sixty (60) but not less than thirty (30) days prior
to each July 1 and January 1 during the Term, a semi-annual Forecast indicating
the Forecasted Quantity for the six (6) month period commencing on such July 1
and January 1 (the "Six Month Forecast");
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(c) not more than sixty (60) but not less than thirty (30) days prior
to each July 1, a one (1) year Forecast indicating the Forecasted Quantity for
the calendar year commencing on the following July 1 (the "Annual Forecast");
and
(d) on or around each July 1, an eighteen (18) month Forecast
indicating the Forecasted Quantity for the eighteen month period commencing on
the following July 1 (the "18 Month Forecast"); provided, however, that CMC
shall provide Cabot with a revised eighteen (18) Month Forecast for the
remainder of the eighteen (18) month period covered by the last 18 Month
Forecast as soon reasonably practicable after CMC becomes aware of any material
changes to such 18 Month Forecast.
For the purposes of this Agreement, Forecasts delivered by CMC to Cabot
after the execution hereof shall, upon the effectiveness of this Agreement, be
deemed to have been delivered hereunder.
With respect to planned shutdowns of Cabot's manufacturing facilities,
the parties shall work together and cooperate with each other regarding
necessary adjustments to forecasts and delivery schedules hereunder.
2.3 Cabot's Maximum Supply Obligations. (a) The obligation of Cabot to
supply Fumed Silica to CMC under this Agreement shall be subject to each of the
following maximum volume limitations:
(i) the maximum annual volume of Fumed Silica from Cabot's
Tuscola, Illinois facility (the "Tuscola Plant") shall be [ ]
pounds per Term Year. In addition to the foregoing, the
maximum monthly volume of Fumed Silica from the Tuscola Plant
for any given month shall be up to [ ] pounds per month
provided that the total of such monthly volumes does not
exceed [ ] pounds per Term Year from the Tuscola Plant; and,
(ii) the maximum annual volume of Fumed Silica from Xxxxx'x Xxxxx,
Wales facility (the "Xxxxx Plant") shall be [ ] pounds per
Term Year. In addition to the foregoing, the maximum monthly
volume of Fumed Silica from the Xxxxx Plant shall be [ ]
pounds per month provided that the total of such monthly
volumes does not exceed [ ] pounds per Term Year from the
Xxxxx Plant.
In clarification of the above Section 2.3(a), any volumes of Fumed
Silica supplied by Cabot under the Dispersions Services Agreement, by and
between the Parties, dated January 20, 2000 and amended as of December 17, 2003,
shall not be considered in calculating the maximum volumes of Fumed Silica Cabot
is obligated to supply hereunder.
(b) In addition to, but not in derogation of the volume limitations set
forth in 2.3(a) above, in the event that CMC orders volumes of Fumed Silica from
Cabot in excess of Forecasted Quantities, Cabot shall not be obligated to supply
to CMC such Fumed Silica in excess of the following volumes:
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(i) for any calendar quarter and any plant, [ ] of the volumes of
Fumed Silica for such plant set forth in CMC's Quarterly
Forecast;
(ii) for any calendar half year (beginning on or after July 1,
2004) and for any plant, [ ] of the volumes of Fumed Silica
for such plant set forth in CMC's Sixth Month Forecast; and
(iii) for any year beginning January 1, 2005 and for any plant, [ ]
of the volumes of Fumed Silica for such plant set forth in
CMC's Annual Forecast.
(c) The maximum supply obligations set forth in Sections 2.3(a) and (b)
are referred to herein as the "Maximum Volumes". If CMC shall request volumes of
Fumed Silica in excess of the Maximum Volumes described in Sections 2.3(a) and
(b) above, Cabot shall use commercially reasonable efforts to supply such
volumes ("Excess Volumes"); provided that Cabot shall not be obligated to breach
its contractual obligations with other customers or to take any actions which it
deems detrimental to its business, in order to supply CMC with Excess Volumes.
Within five (5) business days of CMC's request for Excess Volumes in any of the
forecasts or orders for Excess Volumes, which orders if filled CMC agrees to
purchase, Cabot shall notify CMC of whether it will supply such Excess Volumes
to CMC.
2.4 Minimum Volumes.
(a) CMC shall be obligated to purchase from Cabot during each six month
period covered by a Six Month Forecast a "Minimum Volume," meaning at least 90%
of the aggregate volumes of Fumed Silica forecasted to be purchased by CMC as
set forth in each Six Month Forecast. Cabot and CMC recognize that damages for
CMC's failure to purchase Minimum Volumes would be difficult to ascertain and
prove. Cabot and CMC agree that if, during any six month period CMC fails to
purchase from Cabot the Minimum Volume of Fumed Silica for such six month
period, CMC shall pay to Cabot liquidated damages in an amount equal to the
product obtained by multiplying
(i) the difference (in pounds) between (x) the applicable Minimum
Volume and (y) the amount of Fumed Silica actually purchased
by CMC during the relevant six month period times.
(ii) [ ] Cabot and CMC agree that such liquidated damages are the
sole and exclusive remedy for CMC's failure to purchase
Minimum Volumes. Cabot and CMC further agree that such
liquidated damages represent a reasonable estimate of Cabot's
damages and do not constitute a penalty.
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SECTION 3. EXCLUSIVITY; RESALE AND NON-COMPETE
3.1 Exclusivity; Exception Thereto.
(a) CMC shall purchase from Cabot all of the Fumed Silica necessary to
produce the products produced by CMC on the effective date of this Agreement,
but only up to the total of the Maximum Volumes. This obligation shall continue
even if CMC's purchase of Fumed Silica falls below [ ] pounds in any two
consecutive six month periods commencing on January 1 and July 1, respectively.
With respect to products developed and produced by CMC after the effective date
of this Agreement, CMC shall not be obligated to purchase from Cabot any of the
fumed silica necessary to produce such products.
(b) During the Term of this Agreement, Cabot shall not knowingly,
without CMC's prior written consent, directly or indirectly, sell any Fumed
Silica to any person or entity other than CMC for use in the production of any
goods or products that compete with any CMP (chemical mechanical polishing)
consumable goods and products produced by CMC, provided, however, that CMC
continues to purchase at least [ ] pounds of Fumed Silica during any two
consecutive six month period commencing on January 1 and July 1, respectively,
during the Term of this Agreement. In the event that CMC's purchases fall below
such amount in any such two consecutive six month period commencing on January 1
and July 1, respectively, Cabot may sell for the remaining duration of this
Agreement any Fumed Silica to any person or entity for use in the production of
any goods or products that compete with CMP consumable goods and products
produced by CMC. Concurrent with this, if Cabot sells such Fumed Silica to any
person or entity at a price less than the Base Price at which CMC is purchasing
the Fumed Silica under this Agreement, Cabot shall contemporaneously offer to
sell Fumed Silica to CMC and CMC shall immediately become eligible to purchase
Fumed Silica under this Agreement at a "Most Favored Nations" price.
For purposes of the foregoing sentence, Most Favored Nations ("MFN") price shall
mean the lowest price Cabot charges its other CMP customers during the same time
for Fumed Silica that is of similar or greater quality and similar or greater
specifications of the Fumed Silica purchased by CMC hereunder (except for any
sales to the United States Government.)
(c) Notwithstanding Section 3.1(a) above, in the event CMC requests a
change to a Specification for the Fumed Silica, which change is necessary in
order to achieve a material performance difference in CMC's end product(s) and
Cabot is not able or is unwilling to modify such Specification, CMC shall have
the right to obtain such modified product from any third party, subject to any
intellectual property rights Cabot may have.
(d) Notwithstanding Section 3.1(a) above, in the event that Cabot fails
to supply CMC with its requirements for Fumed Silica for any reason, CMC shall
have the right to obtain such Fumed Silica from any third party, subject to any
intellectual property rights Cabot may have.
3.2 Resale Prohibition. The parties intend and agree that the Fumed
Silica being sold hereunder to CMC is being sold solely for the use by CMC and
its subsidiaries in manufacturing their products. Accordingly, CMC and its
subsidiaries are prohibited from reselling any Fumed Silica purchased hereunder.
However, in the event CMC determines, in good faith, that the Fumed
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Silica supplied hereunder, which otherwise meet the Specifications, but which
are not fit for CMC's use in the manufacture of CMP slurries, CMC shall have the
right to resell such Fumed Silica, provided, CMC first offers Cabot the option
to purchase such Fumed Silica back from CMC at a price which is the lower of (i)
the price paid by CMC to Cabot for such material, or (ii) the price at which CMC
will resell such material. Notwithstanding the foregoing, Cabot shall be
obligated to repurchase up to [ ] pounds of Fumed Silica at the Base Price
during each and every Term Year of this Agreement should CMC decide it desires
to sell such material for any reason.
3.3 Cabot's Non-Compete Agreement. During the Term of this Agreement,
Cabot agrees to not knowingly directly compete with CMC in the use, production
and/or sale of any product that contain any fumed silica products and that
competes with any chemical mechanical polishing consumable product produced by
CMC during the Term of this Agreement.
SECTION 4. MANUFACTURING STABILITY PROCESS
4.1 Establishment of Cabot's [ ]. Cabot shall establish a [ ] produced
for delivery to CMC under this Agreement and acting in good faith determine,
prior to shipping, [ ]
[ ]
4.2 [ ]
[ ]
SECTION 5. PRICING
5.1 Prices. Cabot shall sell the Fumed Silica to CMC in accordance with
the following prices (the "Prices"):
(a) Fumed Silica Price. Except as may be provided for under Section
3.1(b) above in the case of a Most Favored Nations price or under
Section 5.1(b) below in the case of an Inflation Adjustment, the
price for Fumed Silica, whether Maximum Volumes or Excess Volumes,
shall be equal to the Base Price as defined in Table 1 below for
each Term Year. The Base Price for Term Year 1 shall commence on
the Effective Date of this Agreement and the Base Price for each
Term Year subsequent to Term Year 1 shall be effective commencing
on the first day of each subsequent Term Year starting with
January 16, 2005. The price of Fumed Silica to be purchased shall
be determined by the date the order therefor is placed with Cabot,
with respect to all volumes specified therein to be delivered
within 90 days after the date such order is placed, and by the
date specified for delivery, with respect to all volumes specified
for delivery thereafter.
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TABLE 1
Term Year Price ($/lb)
--------- ------------
1 [ ]
2 [ ]
3 [ ]
4 [ ]
5 [ ]
6 [ ]
7 [ ]
(b) Inflation Adjustment. Starting with the second Term Year, and at
the commencement of each and every Term Year thereafter, if the
percentage increase in the annual Producer Price Index (PPI) for Total
Manufacturing Industries as reported by the Bureau of Labor and
Statistics for the preceding calendar year relative to the year prior
to the preceding calendar year (hereafter referred to as the "Inflation
Factor") exceeds [ ] ("Threshold Inflation Level"), the Base Price for
each such and subsequent Term Year will be increased by the following
formula (hereafter referred to as the "Inflation Adjustment"): [ ]
times (a) the Base Price for each such Term Year times the difference
between (a) the Inflation Factor and (b) [ ]; provided, however, that
in no event will an Inflation Adjustment be applied in any case of Most
Favored Nations pricing pursuant to Section 3.1(b) above.
5.2 Cost Savings. Cabot and CMC acknowledge that it is their intention
to decrease the costs associated with manufacturing the Fumed Silica, and to
share any cost savings resulting from joint efforts equally between them. Cabot
and CMC agree to discuss, from time to time, ways to jointly decrease such
costs. If a change is approved by CMC under Section 6 of the Specifications, and
such change results in cost savings to Cabot, the parties agree to share such
cost savings on a [ ], or as otherwise agreed in writing by the parties.
SECTION 6. ORDERS, SHIPPING, DELIVERY AND PAYMENT
6.1 Orders for Fumed Silica shall be issued by CMC from time to time.
Each order shall specify the date(s) the products are to be delivered, which
date(s) shall be not less than ten (10) business days after the date the order
is received by Cabot. For purposes of applying 2.3 and 2.4 only, each volume of
Fumed Silica shall be deemed to be in the month specified for its shipment in
CMC's order; and if no date is specified, then in the month following the month
in which the order therefor is issued by CMC.
6.2 All sales of Fumed Silica under this agreement are made F.O.B.
Cabot's point of shipment. CMC shall be responsible for all transportation costs
and title and risk of loss shall pass to CMC upon delivery to carrier.
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6.3 All Fumed Silica shall be prepared by Cabot for delivery to CMC, as
the case may be, including the necessary dunnage, to prevent damage during the
normal course of transportation.
6.4 Cabot shall invoice CMC for the Fumed Silica delivered to CMC
during each month by the fifteenth (15th) calendar day of the following month.
Cabot shall deliver such invoices to CMC by regular U.S. mail, or other methods
such as express U.S. mail, overnight courier or other means, if mutually
acceptable.
6.5 CMC shall pay each such invoice within fifteen (15) calendar days
of receipt thereof. Such payment shall be made by check or wire transfer in
readily available same day or next day funds denominated in United States
dollars. If payment is to be made by wire transfer, CMC shall request and Cabot
shall provide to CMC, wire transfer instructions.
SECTION 7. WARRANTIES AND REMEDIES
7.1 Warranty as to Fumed Silica. Cabot represents and warrants to CMC
that, when shipped to CMC, the Fumed Silica will conform in all respects to the
Specifications then in effect. CABOT MAKES NO OTHER REPRESENTATION OR WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER MATTER WITH RESPECT TO THE FUMED SILICA, WHETHER USED ALONE
OR IN COMBINATION WITH OTHER SUBSTANCES, EVEN IF THE PURPOSES OR USES OF SUCH
FUMED SILICA ARE KNOWN BY CABOT. MOREOVER, CABOT DOES NOT REPRESENT OR WARRANT
FITNESS FOR ANY PARTICULAR PURPOSE THE FUMED SILICA [ ]. Cabot also represents
and warrants that such Fumed Silica delivered pursuant to this Agreement is free
and clear of all liens, claims, and encumbrances and is conveyed with good title
to CMC.
7.2 Limitation on Remedies. EXCEPT IN RESPECT TO OBLIGATIONS UNDER
SECTION 12.11 HEREOF, IN NO EVENT SHALL CABOT BE RESPONSIBLE OR LIABLE FOR ANY
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING AS A RESULT OF ANY BREACH
OF WARRANTY IN RESPECT OF ANY FUMED SILICA UNDER THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
7.3 Remedies for Failure to Meet Specifications for Fumed Silica.
Subject to Section 7.2 and Section 7.4, if at the time CMC takes delivery of any
Fumed Silica which does not conform in all respects to the Specifications in
effect at the time of its manufacture, Cabot agrees to replace such Fumed Silica
with Fumed Silica that conforms to such Specifications. Cabot shall not be
obligated to replace any such non-conforming Fumed Silica if such nonconformance
was caused by CMC's failure to store such Fumed Silica in accordance with
Section 8.15 hereof. Subject to the following sentence, CMC shall not be
obligated to accept or pay for Fumed Silica that does not conform to the
Specifications in effect at the time of its manufacture but shall be deemed to
have irrevocably accepted such Fumed Silica if, after twelve months from the
date of its delivery, CMC has not notified Cabot that such Fumed Silica does not
meet the Specifications.
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7.4 Remedies for Failure to Meet [ ] Notwithstanding Section 7.3 or
anything else in this Agreement to the contrary, if any Fumed Silica was
produced without compliance to [ ], such non-compliance will be deemed an [ ]
(a) For all [ ]. Cabot shall not be obligated to [ ] if CMC failed to
store such Fumed Silica in accordance with Section 8.15 hereof.
(b) [ ].
(c) For each Term Year, the [ ]. In addition, in no event shall Cabot
have any obligation pursuant to Sections 7.4(a) and 7.4(b) for any Fumed Silica
identified more than twelve months after the date of delivery of such Fumed
Silica.
7.5 Limitations. EXCEPT IN RESPECT OF OBLIGATIONS UNDER SECTION 12.11
HEREOF, IN NO EVENT SHALL CMC BE RESPONSIBLE OR LIABLE FOR ANY SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8. MANUFACTURING REQUIREMENTS
8.1 General Quality System Requirements. Cabot shall maintain a Quality
Management System that is either registered to, or is compliant with, a known
quality standard, such as ISO-9001.
8.2 Corrective and Preventative Action Responsiveness. Cabot shall
apply corrective and preventive actions in accordance with Cabot's approved
quality system procedures. It is the expectation that Cabot will [ ].
(a) Closure of complaints as issued by CMC to Cabot shall be completed
upon review and joint agreement between CMC and Cabot of the proposed corrective
and preventive actions from Cabot.
(b) Cabot shall provide resources that it deems reasonably sufficient
to [ ], when appropriate.
(c) CMC will provide relevant information to Cabot (when available and
possible) to support Cabot's investigation of complaints issued by CMC.
(d) Cabot will respond to a complaint from CMC within the following
time frames:
(i) Cabot will acknowledge all complaints within [ ].
(ii) Cabot will put in place [ ]. If containment actions cannot be put
in place within [ ], Cabot will apply commercially reasonable efforts to
implement containment actions as soon as possible.
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(iii) [ ] - The [ ] shall be investigated by Cabot and commercially
reasonable efforts shall be made by Cabot to identify the [ ] within [ ]. A
report shall be provided to CMC summarizing the results of the investigation
(including a list of [ ]) within [ ]. Cabot is required to validate the [ ], but
this may come at a later date depending on [ ]. If the issue is a particularly
difficult one, and Cabot demonstrates appropriate action towards finding the [ ]
format, this deadline may be considered met without a [ ].
(iv) A [ ] shall be developed and followed by Cabot and communicated to
CMC within [ ]. [ ]. In most circumstances, [ ] should be in place by the end of
the [ ]. It is the responsibility of the CMC Quality Engineer/Commodity Managers
to determine if the difficulty of the problem is such to warrant implementation
[ ].
(v) In the event of a particularly difficult problem, the timelines
provided in (i)-(iv) above shall be extended to accommodate an appropriate [ ].
CMC will consider that Cabot has met the required timelines, if appropriate
written communication has been received in the required time window and that
written communication takes place on regular intervals until the [ ].
8.3 [ ]. The parties will meet [ ]. Cabot will devote the appropriate
level of resources and make good faith efforts required [ ] specifically related
to the manufacture of Fumed Silica for CMC.
8.4 Cabot [ ]
8.5 Quality Control Document. Cabot shall manufacture the Fumed Silica
according to a documented [ ], and any changes to it must be made using Cabot's
approved quality system change control process in accordance with the CMC
Management of Change requirements set forth in the Specifications hereto.
Appropriate Cabot personnel shall be trained in the requirements of the [ ] and
the associated procedures, work instructions and test methods. These personnel
shall also be re-certified on an established, periodic basis to ensure that [ ],
procedures, work instructions and test methods are followed correctly.
8.6 [ ] Cabot shall establish a plan to employ [ ] processes for all
Fumed Silica characteristics referenced on the [ ] processes, including [ ],
will be implemented and documented in [ ] for the Fumed Silica. Upon request by
CMC, Cabot will be responsible for sending to CMC on a [ ] for Fumed Silica
manufactured for CMC in production units qualified by CMC. These [ ] will
include [ ] for all Fumed Silica manufactured for CMC during the specified time
frame (including that Fumed Silica which is manufactured for but not shipped to
CMC).
8.7 Specification Revision.
(a) If either Cabot or CMC determines in good faith that a [ ] in the
manufacture of Fumed Silica which is in Cabot's [ ] [ ] the Fumed Silica
supplied to CMC (hereafter
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identified as a [ ] or [ ]), the [ ] will be added to the Specifications as a [
]; provided, however, that CMC agrees to pay any costs associated with such
changes which are [ ] pursuant to Section 8.3 above, except to the extent that
Cabot is responsible for such costs pursuant to Section 2.1(b) above. The
specification limits for the [ ] will be established based [ ]
(b) In addition, [ ]of each calendar year, starting on March 1, 2004,
based on (a) the [ ], with assignable [ ] removed if corrective actions in place
and validated or (b) [ ]. In the case of [ ] [ ]. In the case [ ] specifications
for these parameters will be set [ ] after implementation of [ ] for each
parameter for the preceding [ ]
8.8 [ ]. Cabot must calculate [ ] Calculations will be performed
following the procedures outlined in the Cabot document "Guidelines for
Statistical Data Analysis."
[ ] Cabot will share the [ ] upon request by CMC. In addition [ ] may
necessitate an increased frequency for review and revision of [ ]
8.9 Definition of [ ]. Cabot must calculate [ ] as described in Section
8.8 above. In the case of [ ] is defined using the following criteria:
(a) [ ]
(b) Unless otherwise agreed to by Cabot and CMC, Cabot shall apply [ ]
with CMC [ ].
[ ]
8.10 [ ] for all measurements on at least [ ] basis. The results of the
[ ] will be supplied to CMC. Cabot will make commercially reasonable efforts to
ensure that all test methods listed in Section 3.0 of the Specifications have [
]. For those test methods that do [ ] Cabot shall put in place an [ ]
8.11 [ ] Cabot shall establish a [ ] program which ensures that written
procedures are established for the [ ] and how to verify that the activity was
completed correctly. Cabot shall train and retrain [ ] personnel on such
procedures prior to performing such [ ] in accordance with Cabot's documented
Process Safety Management (PSM) guidelines, the OSHA 9000 Guidelines and/or ISO
9001/2000 requirements (depending on Cabot location). Cabot shall also ensure
that any and all [ ]
8.12 Quality Reporting Requirements. For every lot of material released
to CMC, [ ]
Cabot shall provide to CMC review at CMC's request [ ] Cabot shall
provide [ ] summaries to CMC and document all actions taken, including an [ ].
All proprietary and confidential information provided by Cabot to CMC
under this Section 8.12 shall be deemed to be Cabot Confidential Information and
subject to the provisions of Section
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12.11 hereof, whether so marked or not.
8.13 [ ] Requirements. Cabot shall keep [ ] manufactured for CMC in an
amount sufficient to [ ] commencing with the production of the [ ]
8.14 Record Retention. All records that describe the manufacture of, or
provide traceability for, the manufacture, testing, storage, shipping and
handling of Fumed Silica manufactured for CMC will be retained for a minimum [ ]
8.15 Storage, Handling, Shipping and Shelf Life Requirements. Prior to
shipment to CMC, Cabot must store the Fumed Silica under conditions that protect
it from damage and exposure to [ ]
Fumed Silica must have a [ ], provided CMC stores the Fumed Silica in
its [ ]
With respect to each lot of Fumed Silica delivered to CMC, Cabot shall
provide and append to the contractual documentation for such lot a Certificate
of Analysis (COA). [ ] Upon written request of CMC and to the extent reasonably
possible, Cabot will provide CMC with such information regarding [ ] used for
the production of the Fumed Silica.
8.16 CMC Access; CMC Audits. During the Term of this Agreement and
subject to the Confidentiality provisions of Section 12.11 hereof, Cabot agrees
to allow CMC personnel reasonable access to all technical, quality and
production information related to the manufacture of the Fumed Silica (whether
or not such Fumed Silica is delivered to CMC). Cabot agrees to allow an
independent certified public accounting firm reasonable access to its records
during normal business hours for the sole purpose of verification that Cabot is
meeting its obligations pursuant to Section 3.1 with respect to MFN pricing,
provided that such independent certified public accounting firm agrees to be
bound by certain confidentiality provisions Cabot shall require in doing such
verification. In addition, Cabot agrees to allow CMC personnel reasonable access
during normal business hours to those Cabot production units qualified by CMC
for supply of Fumed Silica.
CMC shall have the right on a periodic or case-by-case basis, during
usual business hours, to perform on-site audits of the quality management system
regarding the Fumed Silica and the associated quality system documents,
including but not limited to [ ], and personnel training documentation, with
appropriate notice and Cabot's approval. CMC will report the results of each
audit within one week of the audit completion. Any such on-site audit shall be
subject to such confidentiality standards and safeguards of know-how and other
intellectual property as Cabot may impose. CMC is willing to audit Cabot's
subcontractors at Cabot's request.
In the case of quality related incident (an excursion), CMC may require
to audit Cabot's facilities on short notice. Cabot will use commercially
reasonable efforts to accommodate CMC's requests in these cases.
8.17 [ ] Requirements. Cabot will make commercially reasonable efforts
to use [ ] If Cabot is required to use [ ] in the manufacture of Fumed Silica
for CMC, Cabot will provide
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CMC as much notice as possible and will identify to CMC those lots of Fumed
Silica that are manufactured with such MTCS.
SECTION 9. SAFETY REQUIREMENTS
9.1 Cabot agrees to label the Fumed Silica as provided by applicable
law and to provide CMC with current copies of Material Safety Data Sheets
("MSDS") for the Fumed Silica.
9.2 Cabot shall comply with all applicable federal, state and local
codes and regulations regarding packaging, labeling, transportation, storage and
handling of the Fumed Silica.
9.3 Cabot represents that the Fumed Silica are listed on the current
Toxic Substances Control Act (TSCA) inventory of the United States Environmental
Protection Agency.
SECTION 10. PATENT INDEMNITIES
10.1 Patent Infringement. (a) Subject to Section 7.2, Cabot shall
defend, indemnify and hold CMC, its officers, directors, employees, successors
and permitted assigns (collectively, the "CMC Indemnified Parties") harmless
from and against any damages, liabilities, fines, penalties, costs and expenses
(including reasonable attorneys' fees) incurred by the CMC Indemnified Parties
in the defense of any suit or legal proceeding against the CMC Indemnified
Parties, insofar as the same are based on a claim that the Fumed Silica
furnished under this Agreement, except as excluded below, in itself constitutes
an infringement of any United States or European patent, provided that the CMC
Indemnified Parties have given Cabot (A) prompt written notice of all facts
which it knows or should know that might be the basis of such an infringement
claim and (B) prompt written notice of any such infringement claim and the
institution of such suit or proceeding, and that the CMC Indemnified Parties
provide Cabot with all necessary authority, information, and reasonable
assistance to enable Cabot to control, settle or defend the same at Cabot's
option. In the event Cabot is so responsible under this Section 10.1(a), the
Parties agree that: (1) Cabot and CMC shall work together to discuss viable and
commercially reasonable alternatives for assuring continued supply to CMC of
Fumed Silica; and (2) Cabot and CMC shall mutually agree, at Cabot's expense, to
have Cabot take one or more (in parallel or sequentially) of the following
options: (x) procure for Cabot or CMC, as the case may be, the right to continue
using Fumed Silica (in the event that the Parties determine it is more practical
for CMC to obtain such right, at Cabot's expense, then CMC will cooperate in
doing so); (y) modify the same so that it becomes noninfringing; or (z) replace
it with noninfringing Fumed Silica. In the event that Cabot is unable to achieve
either alternative (x), (y) or (z), Cabot may terminate this Agreement without
further liability to CMC (in which case CMC shall not be liable for any costs or
amounts other than for payment for any Fumed Silica purchased by CMC through the
date of such termination). This Section 10.1 states Cabot's entire obligation
and liability with respect to intellectual property infringement claims.
Notwithstanding the foregoing, Cabot does not assume any obligation or liability
with respect to (i) any use of Fumed Silica by CMC or its affiliates or their
customers (or other CMC Indemnified Party), including without limitation use of
products alone or in combination with other substances or components or (ii)
products furnished, or methods used by Cabot, in accordance with specifications
or instructions furnished by or prescribed by CMC.
(b) If Cabot is enjoined from supplying Fumed Silica, or CMC is
enjoined from purchasing
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or using, or if Cabot determines in good faith that it is unable or unwilling to
supply Fumed Silica because such Fumed Silica or its use may infringe a patent
or constitute a misappropriation of a trade secret, then Cabot shall have the
right to suspend supplying the affected Fumed Silica to CMC without incurring
any liability under this Agreement. In the event that (i) such injunction
results from a claim for which Cabot is responsible under Section 10.1(a) or
(ii) such determination relates to an infringement or possible infringement for
which Cabot is responsible under Section 10.1(a), then the Parties agree that:
(1) Cabot and CMC shall work together to discuss viable and commercially
reasonable alternatives for assuring continued supply to CMC of Fumed Silica;
and (2) Cabot and CMC shall mutually agree, at Cabot's expense, to have Cabot
take one or more (in parallel or sequentially) of the following options: (x)
procure for Cabot or CMC, as the case may be, the right to continue using Fumed
Silica (in the event that the Parties determine it is more practical for CMC to
obtain such right, at Cabot's expense, then CMC will cooperate in doing so ; (y)
modify the same so that it becomes noninfringing; or (z) replace it with
noninfringing Fumed Silica. In the event that Cabot is unable to achieve either
alternative (x), (y) or (z), Cabot may suspend supplying Fumed Silica to CMC or
terminate this Agreement without further liability to CMC (in which case CMC
shall not be liable for any costs or amounts other than for payment for any
Fumed Silica purchased by CMC through the date of such termination).
(c) Subject to Section 7.2, CMC shall defend, indemnify and hold Cabot,
its officers, directors, employees, successors and permitted assigns
(collectively, the "Cabot Indemnified Parties") harmless from and against any
damages, liabilities, fines, penalties, costs and expenses (including reasonable
attorneys' fees) incurred by the Cabot Indemnified Parties in the defense of any
suit or legal proceeding against the Cabot Indemnified Parties insofar as the
same are based on claim of infringement or alleged infringement of any United
States or European Patent with respect to (i) any use of Fumed Silica by CMC or
its affiliates or their customers (or other CMC Indemnified Party), including
without limitation use of Fumed Silica alone or in combination with other
substances or components or (ii) Fumed Silica furnished, or methods used by
Cabot, in accordance with specifications or instructions furnished by or
prescribed by CMC, provided that the Cabot Indemnified Parties have given CMC
(A) prompt written notice of all facts which it knows or should know that might
be the basis of such an infringement claim and (B) prompt written notice of any
such infringement claim and the institution of such suit or proceeding, and that
the Cabot Indemnified Parties provide CMC with all necessary authority,
information, and reasonable assistance to enable CMC to control, settle or
defend the same at CMC's option. This Section 10.1 states CMC's entire
obligation and liability with respect to intellectual property infringement
claims.
SECTION 11. CONSENTS; NOTICES
Unless otherwise set forth herein, whenever any notice, consent or
approval is to be given in this Agreement, it must be in writing and delivered
in accordance with the provisions of this Section 11. Any such writing will be
duly given upon delivery, if delivered by hand, facsimile transmission or mail,
to the following addresses:
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If to Cabot: Cabot Corporation
Business and Technical Center
Xxxxxxxxx, XX 00000
Attn: Fumed Metal Oxide Product Line Manager
Telecopier: 000-000-0000
With a copy to: Cabot Corporation
Two Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Law Department
Telecopier: 000-000-0000
If to CMC: Cabot Microelectronics Corporation
000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Vice President of Operations
Telecopier: 000-000-0000
With a copy to: Cabot Microelectronics Corporation
000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: General Counsel
Telecopier: 000-000-0000
or to such other address as may be designated in writing by any of the parties
from time to time in accordance herewith.
SECTION 12. GENERAL
12.1 Severability. If any provision of this Agreement shall be found to
be invalid or unenforceable, then such provision or provisions shall not
invalidate or in any way affect the enforceability of the remainder of this
Agreement and such provision or provisions shall be curtailed and limited to the
extent necessary to bring the Agreement within any legal requirement and the
parties shall negotiate in good faith with respect to an equitable modification
of the provision or application thereof held to be invalid.
12.2 Modification; Waivers. Except as expressly provided herein, this
Agreement may be modified or amended only with the written consent of each party
hereto. Neither party hereto shall be released from its obligations hereunder
without the written consent of the other party. The observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce such
term, but any such waiver shall be effective only if in a writing signed by the
party against which such waiver is to be asserted. Except as otherwise
specifically provided herein, no delay on the part of either party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of either party hereto of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder nor shall any single or partial exercise
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of any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
12.3 Succession. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and other
legal representatives and, to the extent that any assignment hereof is permitted
hereunder, their assignees.
12.4 Counterparts. This Agreement may be executed in counterparts.
12.5 Further Assurances. Each party agrees to provide any additional
documents and take any such further action as may be reasonably requested by the
other party in order to carry out the purpose and intent of this Agreement.
12.6 Entire Agreement. This Agreement contains the full and complete
undertaking and agreement between the parties hereto with respect to the sale of
fumed silica by Cabot to CMC, and supersedes all other agreements between Cabot
and CMC, whether written or oral, except any confidentiality agreements between
the parties, which shall, to the extent such agreements do not contradict the
terms of this Agreement, continue in effect.
12.7 Headings. The headings of the sections and other subdivisions of
this Agreement are for convenient reference only. They shall not be used in any
way to govern, limit, modify, construe this Agreement or any part or provision
thereof nor otherwise be given any legal effect.
12.8 Assignees and Third Parties. This Agreement may not be assigned by
either party without the prior written consent of the other party and any
attempted assignment without such consent shall be null and void; provided,
however, that Cabot may assign this Agreement to a subsidiary or affiliated
company. A change of control of either Party will not be deemed to be an
assignment in violation of this Section 12.8. In addition, Cabot may make
arrangements for the production and sale of Fumed Silica required hereunder to
be manufactured and sold by a subsidiary or an affiliate, including but not
limited to Cabot Carbon Ltd. Such arrangements may take the form of an
assignment of certain rights and obligations hereunder or a subcontract of
certain obligations hereunder. Similarly, CMC may make arrangements for the
purchase of Fumed Silica hereunder to be made by a subsidiary, including but not
limited to Cabot Microelectronics International Corporation. Such arrangements
may take the form of an assignment of certain rights and obligations hereunder.
However, all sales of Fumed Silica pursuant to any such arrangement shall be
governed by the terms of this Agreement.
12.9 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of Delaware, without giving effect to
principles of conflicts or choice of laws of Delaware or of any other
jurisdiction.
12.10 Force Majeure. Each of the parties hereto shall be excused from
delays in performing or from failure to perform hereunder to the extent that
such delays or failures result from causes beyond the reasonable control of such
party, including, but not limited to, forces of nature, acts of God, strikes,
lockouts, wars, acts of terrorism, blockades, insurrections, riots, epidemics,
restraints or requirements of any government or government agency, civil
disturbances, explosions,
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breakage or accident to machinery or lines of pipe, unavailability of raw
material or supplies, strandings, perils of the sea, the binding order of any
court or governmental authority which has been resisted in good faith by all
reasonable means, and other cause, whether of the kind enumerated or otherwise,
not reasonably within the control of the party claiming suspension. Failure to
prevent or settle any strike shall not be considered to be a matter within the
control of the party claiming suspension. However, in order to be excused from
delay or failure to perform, such party must act diligently to remedy the cause
of such delay or failure.
12.11 Confidentiality. Each of Cabot and CMC agree to keep confidential
and not disclose, and shall cause their respective subsidiaries and affiliates
to keep confidential and not disclose, to any party or use for any purpose
(other than the performance of this Agreement or any other written agreement
between them), any proprietary or other confidential information of the other
party which is received pursuant to this Agreement ("Confidential Information").
Confidential Information shall be subject to the restrictions of this paragraph
only if it is marked as confidential or proprietary or, if not disclosed in
tangible form, the disclosing party notifies the recipient of its confidential
or proprietary nature prior to its disclosure, except for proprietary and
confidential information provided by Cabot to CMC pursuant to Section 8.12
hereof which proprietary and confidential information shall be deemed to be
Confidential Information for purposes of this Section whether or not such
information is so marked. For purposes of this Agreement, Confidential
Information of a party does not include, and a party and a party's subsidiaries
and affiliates will have no obligations under this provision with respect to,
any information of the other party or any subsidiary or affiliate of the other
party (the other party and subsidiaries and affiliates of the other party being
referred to as the "receiving party") which:
(a) is already known to the receiving party from a source
other than the disclosing party as evidenced by competent proof thereof; or
(b) is or becomes publicly known through no wrongful act of
the receiving party (in which event the receiving party's obligations under this
Agreement in respect thereto shall terminate on the date such information enters
the public domain); or
(c) is rightfully received by the receiving party from a third
party without violation of any obligations of confidentiality owed by the third
party to the disclosing party; or
(d) is disclosed by the disclosing party to a third party
without restrictions on the third party's right to use or disclose such
information; or
(e) is independently developed by employees or consultants of
the receiving party without use of or reference to the disclosing party's
Confidential Information; or
(f) is approved for release by written authorization of the
disclosing party
12.12 Independent Contractors. CMC and Cabot are each independent
contractors. Nothing herein contained shall be construed to place CMC and Cabot
in the relationship of principal and agent, master and servant, partners, or
joint venturers, and, except as otherwise set forth in this Agreement, neither
party shall have, expressly or by implication, the power to represent itself as
having any authority to make contracts in the name of or binding upon the other,
or to obligate or bind the other in any manner whatsoever.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
a sealed instrument and have delivered this Agreement as of the day and year
first above written.
CABOT CORPORATION
By: _____________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
CABOT MICROLELECTRONICS CORPORATION
By: _____________________________
Name: Xxxxxx X. Xxxx
Title: Vice President
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