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EXHIBIT 10-d
CONFIDENTIAL TREATMENT OF CERTAIN PORTIONS
OF THIS EXHIBIT HAVE BEEN GRANTED
TECHNICAL AGREEMENT - SILICON WAFER MANUFACTURING
THIS TECHNICAL AGREEMENT (hereinafter referred to as "Agreement") made and
entered into as of the 19th day of December, 1990, by and between:
MEMC Electronic Materials, Inc., a corporation of the State of Delaware, United
States of America, having an office at 000 Xxxxx Xxxxx, X'Xxxxxx, Xxxxxxxx, U S
A (hereinafter referred to as "MEMC")
and
POSCO XXXX Company Limited, a corporation organized under the laws of the
Republic of Korea, having an office at Pohang, the Republic of Korea
(hereinafter referred to as "PHC").
WITNESSETH:
WHEREAS, MEMC has developed over the years and possesses processes
involving technology, equipment design, and other intangible assets and property
rights of value, all of which are useful with respect to the manufacture of
Silicon Wafers (as hereinafter defined) and certain value added features such as
epitaxial layers; and
WHEREAS, MEMC is commercially practicing in the United States and elsewhere
the foregoing processes embodying the technology, equipment design, assets, and
property rights for the manufacture of the aforesaid Silicon Wafers; and
WHEREAS, PHC desires to have MEMC license the aforesaid intangible assets
and property rights and furnish Technical Information (as hereinafter defined)
to PHC to the extent provided in this Agreement, which will allow PHC to design,
construct, and operate manufacturing operations in Korea, and MEMC is willing to
license such intangible assets and property rights and to furnish such Technical
Information to PHC under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants set forth
herein and other valuable consideration, it is agreed by and between the parties
as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth in this Article I:
1.01 - "Silicon" means a semiconductor grade of elemental silicon of
sufficient purity and crystalline structure useful in the manufacture of
semiconductor devices.
1.02 - "Silicon Wafers" means [CONFIDENTIAL MATERIAL HAS BEEN DELETED
AND FILED SEPARATELY WITH THE SEC].
1.03 - "Prime Wafers" herein means Silicon Wafers which meet customer
specifications of prime wafer and are used by the customers as direct substrate
of semiconductor devices.
1.04 - "Test and/or Monitor Wafers" herein means Silicon Wafers which meet
customer specifications of test and/or monitor wafer and are used to test or
monitor their equipment or processes and not as a direct substrate of
semiconductor devices.
1.05 - "Field of this Agreement" means Silicon Wafers and processes,
apparatus, equipment, and materials useful in producing Silicon Wafers
consistent with the commercial requirements of PHC.
The Field of this Agreement shall not include processes, apparatus,
equipment, and materials useful in producing polycrystal Silicon.
1.06 - "Technical Information" means any and all information and know-how
commercially in use at MEMC's Plants, which from time to time may be in
existence, relating to processes, equipment, apparatus, materials, and market
technical service within the Field of this Agreement and shall include but shall
not be limited to engineering and manufacturing information, operating
procedures, design information on manufacturing plants and equipment,
specifications for raw materials, and analytical methods. "Technical
Information" shall not include data or other information relative to research,
pilot plant technology (except where the technology is required for the
construction or operation of PHC's facilities within the Field of this Agreement
or when PHC and MEMC specifically agree in writing to participate in joint
research projects), prices, profit margins, customers, customer relationships,
sales, market areas, or quantities of products produced by MEMC.
1.07 - "Date of this Agreement" means the date first set forth above.
1.08 - "Effective Date of this Agreement" means the date when any and all
of the conditions precedent set forth in ARTICLE VII of this Agreement have been
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fulfilled and the parties have so notified each other in writing.
1.09 - "Date of First Commercial Production" means the first date, as
agreed upon in writing between PHC and MEMC, on which Prime Wafers of commercial
quantity are commercially invoiced by PHC utilizing Technical Information
acquired under this Agreement.
1.10 - "SIE" means square inch equivalent which is a unit to measure the
surface area of Silicon Wafers.
1.11 - "Subsidiary" means a company or corporation, the majority of whose
stock eligible to be voted for the election of directors is owned or controlled
directly or indirectly through share ownership by another company or
corporation.
1.12 - "Parent" means the company or corporation directly or indirectly so
owning or controlling the stock of a Subsidiary.
1.13 - "Affiliates" means the Parent and all Subsidiaries of the Parent.
1.14 - "MEMC's Plants" shall mean MEMC's and its Affiliates' plants in the
US and other countries engaged in the commercial production of Silicon Wafers.
1.15 - "Net Sales Proceeds" means the total invoiced price of Silicon
Wafers sold or disposed of by PHC in a normal, bona-fide commercial transaction,
less the following items:
a. sales discounts (including sales rebate);
b. sales returns;
c. indirect taxes, insurance premiums, packing expenses, freight and
delivery expenses, sales commissions, advertising expenses and
installation expenses imposed or incurred with regard to the sale
of Silicon Wafers; and
d. CIF price of, import duties on, other duties and taxes on, and
fees on, single crystal ingots and its derivatives manufactured
by and purchased from MEMC or MEMC's Plants.
1.16 - "Joint Venture Agreement" shall mean the Joint Venture Agreement
dated as of the Aug. 29th day of 199___, by and between Pohang Iron and Steel
Company, Ltd., Samsung Electronics Company, Ltd. and MEMC.
1.17 - "Export Sales" means any sale or distribution whether direct or
indirect of Silicon Wafers manufactured by PHC, for first value added processing
outside the Republic of Korea.
ARTICLE II
TECHNICAL INFORMATION AND ASSISTANCE
2.01 - MEMC shall furnish to PHC sufficient Technical Information to enable
PHC to design, construct and operate in Korea a facility capable of producing
Silicon Wafers at a capability agreed upon by the parties, initially with a
production capacity of approximately 60 million SIE of Silicon Wafers per year
(hereinafter referred to as the "Initial Facility"). The process capability of
the Initial Facility shall be from crystal growing to polishing for 150mm and
200mm diameter wafers for use in advanced semiconductor processes. The Technical
Information shall also include, when required, information necessary to expand
the Initial Facility to include production of advanced wafers such as epitaxial
wafers. Technical Information to be provided by MEMC to PHC pursuant to this
Agreement shall contain the latest technical developments commercially in use by
MEMC at the time of providing such Technical Information.
2.02 - The Technical Information conveyed pursuant to this ARTICLE II shall
be such that the Initial Facility, if designed, constructed and operated in
accordance with good engineering practice and in accordance with information and
instructions furnished by MEMC, shall be capable of producing Silicon Wafers
with the same product quality and specifications and the same general efficiency
as is realized in the manufacture of corresponding types of Silicon Wafers in
MEMC's Plants on the Effective Date of this Agreement, but making due allowances
for the different sizes of the manufacturing facilities to be constructed by PHC
and for different local labor and manufacturing conditions including the type
and quality of raw materials used, and provided the design and installation of
the Initial Facility have been approved by MEMC and provided further that the
Initial Facility is operated in accordance with MEMC's operating instructions.
2.03 - As soon as possible and in no event later than six (6) months
following the Effective Date of this Agreement, MEMC shall make available to PHC
in O'Fallon, Missouri, the services of one or more technical representatives
familiar with all phases of manufacture of Silicon Wafers and who, at PHC's
request, will review with English-speaking representatives of PHC, the Korean
manufacturing conditions, the availability of raw materials, and proposed
manufacturing methods to be used in Korea for the purpose of establishing the
general design basis of the Initial Facility. Following such consultation, the
processing methods to be used in the Initial Facility, the raw material
specifications and the general design basis of the Initial Facility shall be
mutually agreed upon between MEMC and PHC and set forth in writing.
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2.04 - As soon as practical and in any event within six (6) months
subsequent to the date that PHC and MEMC agree in writing as to processing
methods to be used in the Initial Facility, the raw material specifications and
the general design basis as provided in Paragraph 2.03, MEMC shall furnish to
PHC two (2) copies of an engineering manual or equivalent information in a
format agreed to by the parties, in English, which shall be written in terms of
United States engineering practices and which shall contain the following
Technical Information relative to the design, construction, and operation of the
Initial Facility:
1. Process design data, including materials balance, utility
requirements, and a process flow sheet.
2. Equipment specifications and sketches, including recommended
manufacturers for such equipment, and such other information as in MEMC's
opinion will be useful to PHC in preparing procurement specifications and
detailed equipment drawings for fabricators in Korea, and in obtaining
quotations from equipment suppliers in Korea.
3. Recommended general layout drawings suitable for use as a pattern
for the placement of equipment, including preliminary plan and elevation
views.
4. Specifications for piping, control and electrical systems.
2.05 - PHC shall prepare all design and construction drawings for the
Initial Facility, but MEMC will assist and advise PHC in applying the most
modern engineering practices to the extent that MEMC has the information
available. PHC shall submit all such drawings to MEMC for review and approval,
and for purposes of such review and approval, such drawings shall be in English,
or alternatively, PHC shall make available to MEMC in the United States of
America an English-speaking Korean engineer to assist MEMC in interpreting
Korean drawings and engineering practices. MEMC's review and approval of the
construction aspects of such drawings shall include no more than a confirmation
that the construction details conform to process requirements, and shall not
include or be concerned with determining that the structures and equipment are
sound and/or conform to the requirements of applicable building or other codes.
After reviewing such drawings, MEMC shall either approve the drawings and return
them to PHC or return the drawings with necessary modifications indicated
thereon.
2.06 - Within four (4) months after all drawings for the Initial Facility
as specified in Paragraph 2.05 have been received by MEMC from PHC and have been
reviewed and approved by MEMC, there shall be supplied to PHC by MEMC two (2)
copies of a written manual of operating procedures, in English, for use in the
operation of the Initial Facility. This manual shall include a list of required
raw materials together with specifications therefor and complete information as
to the amounts required for each such raw material and, additionally, shall
contain detailed information relative to the operation of the Initial Facility,
including testing, control, start-up and normal operating procedures, and normal
and emergency shut-down instructions. The manual shall also contain information,
based on plant practices used in the manufacture of products covered by the
Field of this Agreement in MEMC's Plants relative to maintenance and repair of
manufacturing equipment, safety practices, including fire prevention, and
methods of handling raw materials, goods in process, and finished products.
2.07 - MEMC shall arrange for the technical training of approximately
twelve (12) technical personnel of PHC in one or several of MEMC's Plants. The
time and duration of such training shall be arranged by mutual consent of the
parties and is expected to total approximately seventy-two (72) man months. It
is understood and agreed that PHC will pay all traveling, living and other
expenses of its own personnel incurred during the training pursuant to this
paragraph 2.07.
2.08 - MEMC will supply, upon PHC's request, the services of one (1) or
more engineers to advise and consult with PHC during the final construction
stages and start-up period of the Initial Facility, such services to be supplied
until the Initial Facility has demonstrated its ability to produce Silicon
Wafers of a quality equivalent to those produced in MEMC's Plants. It is
expected that such consultation will be in the range of forty-eight (48) man
months.
2.09 - In addition to the services of MEMC engineers during the final
construction stages and start-up period of the Initial Facility as defined in
Section 2.08, MEMC shall make available to PHC during the term of this Agreement
the services of at least two (2) engineers and/or technical personnel (including
the Executive Vice President if the Executive Vice President is an engineer).
PHC may at its option from time to time request MEMC to provide additional
technical personnel to assist in the transfer of technology or training of PHC
personnel. Such additional personnel will be provided upon agreement of MEMC. It
is understood and agreed by the parties that the personnel described in this
Section 2.09 are supplied for the purpose of ensuring the effective initial and
on-going transfer of full and complete technical information from MEMC as
described in this agreement, the initial and on-going training of PHC employees,
and the close coordination and communication between MEMC and PHC. It is
understood and agreed that PHC will pay all salaries and other expenses of such
personnel during the entire duration of their employment on behalf of PHC. A
separate agreement between the individual or MEMC and PHC will cover the
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specific items to be included in salary and expenses of persons covered by this
Section 2.09.
ARTICLE III
TECHNICAL INFORMATION AND CONTINUING KNOW-HOW
3.01 - MEMC will, during the five (5) year period beginning with the Date
of First Commercial Production, make available to PHC all of MEMC's technical
improvements and developments within the Field of this Agreement which MEMC has
incorporated into any of MEMC's Plants for the commercial production of Silicon
Wafers to the extent PHC has requested such improvements and developments and
has a commercial requirement for the manufacture of such Silicon Wafers
commercially produced by MEMC.
3.02 - PHC will, during the five (5) year period beginning with the Date of
First Commercial Production, make available to MEMC all of PHC's technical
improvements and developments in the Field of this Agreement which PHC has
incorporated into any of its plants engaged in the commercial production of
Silicon Wafers.
3.03 - MEMC and PHC shall be obligated under this Agreement to supply only
such Technical Information as MEMC and PHC each has the legal right to supply to
the other party and only to the extent and manner set forth in this Agreement.
If at any time disclosure of any Technical Information by either party to the
other party would require any payments to third parties, excluding Affiliates,
by the party disclosing said Technical Information and the disclosing party
requests the other party to share in making such payments, such disclosure shall
be made only after the parties to this Agreement have agreed as to bearing the
cost of such payments. In the event such payments are required, PHC shall obtain
governmental approval, if required, for such payments.
3.04 - During the five (5) year period following the Date of First
Commercial Production, MEMC shall permit representatives of PHC, and PHC shall
permit representatives of MEMC to inspect, examine, and study, respectively,
MEMC's and PHC's machinery, equipment, including detailed engineering drawings
thereof, manufacturing processes, plants and related control laboratories,
wherever located, engaged in the commercial production of Silicon Wafers using
Technical Information furnished by MEMC. The number of PHC or MEMC
representatives and the time and duration of their visits to MEMC's Plants or
PHC's plants and laboratories shall be subject to MEMC's or PHC's approval,
respectively, it being understood that such inspection, examinations and studies
shall not interfere with MEMC's or PHC's operation, and such inspections shall
not be excessive. The visit of a representative of either party as provided for
in this paragraph shall not be disapproved or limited without good cause. It is
understood and agreed that the expenses of the visiting party shall be borne by
the visiting party.
3.05 - No later than four years after the Date of First Commercial
Production MEMC and PHC shall negotiate in good faith on another technical
agreement with the object of allowing PHC and MEMC to obtain continuing
technology from the other party at reasonable terms.
ARTICLE IV
RIGHTS AND LICENSES
As of the Effective Date of this Agreement the parties agree as follows:
4.01 - MEMC agrees to grant and hereby grants to PHC on a nontransferable
basis:
(1) the [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SEC] right and license to use all Technical
Information for the manufacture of Silicon Wafers in the
Republic of Korea; and
(2) a [CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED
SEPARATELY WITH THE SEC] right and license to use Technical
Information to promote and sell Silicon Wafers in and outside
the Republic of Korea.
As an exception to the foregoing, PHC shall not use, without MEMC's written
consent, such Technical Information to manufacture for Export Sales to
territories where:
(1) MEMC is engaged in regular sales activities for Silicon Wafers
when such Export Sales are made, or
(2) MEMC is restricted from exporting Silicon Wafers by U.S. laws and
regulations.
It is agreed between the parties that PHC's Export Sales of Silicon Wafers
into the territories as defined in (1) and (2) of the preceding sentence shall
be made exclusively through MEMC under an International Distributorship
Agreement to be agreed upon by the parties hereto prior to such Export Sales.
4.02 - MEMC agrees to grant and hereby grants to PHC [CONFIDENTIAL MATERIAL
HAS BEEN DELETED AND FILED SEPARATELY WITH THE SEC], non-transferable right and
license under and for the full terms of all patents within the Field of this
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Agreement currently or in the future owned or controlled (in the sense of having
the right to grant licenses thereunder) by MEMC in the Republic of Korea during
the term of this Agreement; further, MEMC agrees to grant, as necessary, to PHC
[CONFIDENTIAL MATERIAL HAS BEEN DELETED AND FILED SEPARATELY WITH THE SEC],
non-transferable right and license under and for the full terms of other patents
within the Field of this Agreement currently or in the future owned or
controlled (in the sense of having the right to grant licenses thereunder) by
MEMC during the term of this Agreement, to the extent necessary for PHC to use
all Technical Information for Export Sales to which MEMC has consented under
Section 4.01 above.
4.03 - PHC agrees to grant and hereby grants to MEMC a non-exclusive right
and license, with the right to sublicense Affiliates, to use all Technical
Information which PHC supplies to MEMC pursuant to this Agreement. MEMC shall
pay a reasonable royalty to be agreed upon by the parties.
4.04 - PHC agrees to grant and does hereby grant to MEMC a non-exclusive
license, with the right to sublicense Affiliates, under and for the full terms
of all future patents owned or controlled by PHC, to the extent, but only to the
extent, necessary for MEMC and/or any sublicensee of MEMC to use all Technical
Information which PHC supplies to MEMC pursuant to this Agreement. MEMC shall
pay a reasonable royalty to be agreed upon by the parties.
ARTICLE V
PAYMENTS
5.01 - PHC shall pay to MEMC, as compensation for the rights and licenses,
Technical Information and continuing know-how a technology fee of seven million
and eight hundred thousand US dollars (US $7,800,000). This payment shall be the
only payment to MEMC by PHC for the rights, licenses, and Technical Information
which MEMC shall provide for the five (5) year period of this Agreement or
extended term of this Agreement in accordance with Paragraph 3.05 except for the
running royalties and other payments set forth in this Article V and any
additional royalties to be agreed upon in accordance with Paragraph 3.05.
The technology fee shall be paid as follows:
(a) one twelfth of the aforementioned fee which is six hundred and
fifty thousand US dollars (US$650,000) by the end of the calendar
quarter following the calendar quarter during which this
Agreement will become effective; and one twelfth of the
aforementioned fee, US$650,000, each for eleven times by the end
of each calendar quarter following the aforementioned first
payment.
(b) No interest will be accrued during the aforementioned payment
period.
(c) The payments shall be made in US dollars in the United States of
America and shall not be reduced by any taxes, licenses, fees or
other withholdings levied upon such payments by the Korean
government or political subdivision or agency thereof. All taxes,
licenses, fees or other levy or duty imposed upon or which arise
because of payments by PHC to MEMC shall be paid and absorbed by
PHC.
5.02 - PHC shall reimburse MEMC's out-of-pocket expenses, which MEMC will
incur to supply PHC with technical assistance for the Initial Facility as
specified in Article II. MEMC shall provide reasonable evidence to substantiate
the amounts billed to PHC under this Section 5.02.
The out-of-pocket expenses shall include:
(a) Salaries and salary overhead of the MEMC engineers and associated
personnel who, upon MEMC's recommendation and PHC's approval,
will be assigned to provide the technical assistance. MEMC shall
invoice PHC with actual cost provided however, salaries and
salary overhead shall not exceed US$600 per day per person.
(b) Travel expenses in accordance with MEMC's travel policy to and
from their place of employment, local travel expenses of such
personnel and living expenses (adequate to provide accommodation
comparable to home country standards) during the time they are
away from their regular work place.
(c) The amounts billed to MEMC for services provided for by
independent contractors retained upon MEMC's recommendation and
PHC's approval as part of MEMC's technical assistance to PHC.
5.03 - In addition to the payments specified in Sections 5.01 and 5.02 and
elsewhere in the Agreement, PHC shall pay to MEMC a running royalty of three and
ninety-four one-hundredths percent (3.94%) of Net Sales Proceeds during the five
(5) year period beginning with the Date of First Commercial Production;
provided, however that no such running royalty shall be payable for Test and/or
Monitor Wafers for the period beginning with the Date of First Commercial
Production and ending on the first anniversary thereafter.
5.04 - PHC shall not pay any running royalty for Export Sales made through
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MEMC under the International Distributorship Agreement referred to in Section
4.01 above. Silicon Wafers bartered or sold by PHC for other than cash shall be
considered to be sold.
5.05 - The payments to be made by PHC to MEMC pursuant to this Agreement
shall not be reduced by any taxes, licenses, fees, or other withholdings levied
upon such payments by the Korean government or political subdivision or agency
thereof, unless all of the following requirements are met:
(a) The amount, if any, by which the payments are reduced, is a tax
imposed on MEMC's income and is not an excise, franchise,
privilege, turnover, sales, production or property tax, or any
other tax, levy, or duty;
(b) The tax is imposed on MEMC under the laws of Korea or a political
subdivision or agency thereof, and PHC is required by law to
withhold the tax from payments to MEMC and pay the tax withheld
to the Korean government, or political subdivision or agency
thereof; and
(c) PHC furnishes MEMC a tax receipt for the taxes withheld.
All taxes, licenses, fees or other levy or duty imposed upon or which arise
because of payments by PHC to MEMC under this Agreement, other than those which
meet the requirements of (a) through (c) of this Section 5.05 shall be paid and
absorbed by PHC.
5.06 - The royalties due MEMC pursuant to Section 5.03 of this Agreement
shall be computed quarterly and shall be paid to MEMC within sixty (60) days of
the last day of March, June, September, and December of each calendar year; each
such payment shall be accompanied by a written report setting forth the
quantities and descriptions of all Silicon Wafers sold by PHC during the period
for which payment is made. The amounts payable to MEMC shall be paid in United
States dollars or such other currency or currencies as MEMC shall elect, at New
York, NY, USA. PHC will prepare the quarterly computation promptly for submittal
and approval of the remittal of the payment with the Foreign Exchange
authorities.
5.07 - PHC shall keep such detailed records as may be necessary to
determine the payments due under this Agreement. At the request of MEMC, PHC
shall permit an independent public accountant selected by MEMC (except one to
whom PHC has some reasonable objection) or a MEMC internal auditor to have
access during ordinary business hours to such records as may be necessary to
determine in respect to any calendar quarter ending not more than two (2) years
prior to the time of such request, (a) the correctness of any report and/or
payment under this Agreement or (b) information as to any sum payable for such
period in case of PHC's failure to render reports for payment pursuant to this
Agreement.
ARTICLE VI
CONFIDENTIAL INFORMATION
6.01 - During the term of this Agreement and for ten (10) years thereafter
PHC shall keep confidential and restrict access to all Technical Information and
other secret or confidential information received from MEMC pursuant to this
Agreement to those directors, officers, employees, and representatives of PHC
who have a reasonable need for such information in carrying out their respective
duties on behalf of PHC. PHC's duty of confidentiality pursuant to the Article
shall not be applicable to information which:
(a) was in the public domain at the time of disclosure or comes into
the public domain; or
(b) Technical Information which the receiving party can show by
written or other tangible evidence was in its possession at the
time of the disclosure hereunder, and which the receiving party
without breach of any obligation is free to disclose to others;
(c) Technical Information which was received by the receiving party
from a third party who did not acquire it, directly or
indirectly, from the disclosing party under an obligation of
confidentiality and which the third party without breach of any
obligation is free to disclose to others;
(d) Technical Information which is required to be disclosed by the
laws of Korea in order to carry on the business of PHC provided
that all necessary steps are taken by PHC to the extent permitted
by law to maintain the information as confidential.
6.02 - PHC, prior to permitting them to receive or have access to any
Technical Information or other secret or confidential information received from
MEMC, shall cause its directors, officers, employees, and representatives to
enter into a written agreement requiring them to keep confidential and not to
use, except in connection with their assigned duties at PHC, during the term of
this Agreement and for ten (10) years thereafter, all such information which may
be communicated to or acquired by them. No representative of an entity engaged
in manufacture and/or research of Silicon Wafers may enter PHC's premises or be
exposed to Technical Information unless prior approval has been granted jointly
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by PHC's President and Executive Vice President.
6.03 - PHC may secure and use the services of engineering contractors in
the design, engineering, and erection of a facility for manufacturing Silicon
Wafers, but such engineering contractors must be approved in advance, in writing
by MEMC and such engineering contractors and their employees shall be required
to sign security agreements approved by MEMC wherein such engineering
contractors and their employees agree to keep confidential and to use only on
behalf of PHC any confidential information within the Field of this Agreement
received, directly or indirectly, from MEMC or PHC.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 - The rights and obligations set forth in this Agreement shall not
have any legal effect, and the Agreement shall not become binding upon either of
the parties hereto, unless and until all of the following conditions have been
fulfilled:
(a) both parties shall have executed the Agreement, with the further
requirement that the second party to execute the Agreement shall
have executed it within sixty (60) days after the execution by
the first party;
(b) all necessary official approvals of appropriate Korean and United
States governmental authorities shall have been obtained.
(c) the Joint Venture Agreement shall have become effective pursuant
to its Section 10 and shall not have been terminated pursuant to
its Section 11.
7.02 - The parties shall keep each other currently informed as to the
fulfillment of each of the conditions of Paragraph 7.01 of this ARTICLE VII;
upon fulfillment of all such conditions within the times specified, this
Agreement shall then become binding upon the parties and shall thereafter be
considered as made and entered into as of the Date of this Agreement.
ARTICLE VIII
MARKETING
8.01 - The parties agree that beginning with the Date of the First
Commercial Production of Silicon Wafers by PHC, PHC shall have the option to
choose among any and all commercial orders of Silicon Wafers to PHC and/or MEMC
(where permitted under such orders), from the electronics industry in the
Republic of Korea. Except for as defined in this Article 8.01, this Agreement
shall not be construed in any way as preventing, restricting, or limiting the
sales activities of PHC or MEMC in the Republic of Korea.
ARTICLE IX
ASSIGNABILITY
9.01 - Neither this Agreement nor any of the rights and obligations arising
thereunder may be assigned or transferred by either party, except that MEMC may
assign this Agreement and the rights and obligations arising thereunder to an
Affiliate or a company acquiring substantially all of the business and assets of
MEMC dealing with the Field of this Agreement.
9.02 - In case of any assignment as provided for in Section 9.01 of this
ARTICLE IX, the assignor shall guarantee compliance by the assignee with the
provisions of this Agreement.
ARTICLE X
FORCE MAJEURE
10.01 - Neither of the parties shall be liable for any default or delay
caused by any contingency beyond its control, including, without limitation,
war, restraints affecting shipping, strikes, lockouts, fires, accidents, floods,
droughts, natural calamities, short or reduced supply of fuel or of raw
materials, demand or requirements of the Korean or other government or of any
governmental subdivisions thereof, restraining orders or decrees of any court or
judge having jurisdiction in the premises; except for payments due under the
Agreement from PHC, but not made because of PHC's improfitability or lack of
cash.
ARTICLE XI
DAMAGES AND INDEMNIFICATION AND WARRANTIES
11.01 - Except as stated in Section 11.02, each party hereunder agrees that
the party disclosing Technical Information pursuant to this Agreement shall not
be liable to the other party for and that the other party shall defend,
indemnify and hold the disclosing party harmless from any loss, liability,
claim, damage or expense of whatever kind arising out of or as a consequence of,
as the case may be, the use by the receiving party of any Technical Information
or patents furnished or licensed to such receiving party pursuant to this
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Agreement or the use of any products produced with such Technical Information.
This Section 11.01 shall survive the termination or expiration of this
Agreement.
11.02 - MEMC hereby warrants that, to the best of its knowledge at the time
of execution of this Agreement, there is no claim, suit, lien or judgement made,
brought or obtained by any other predecessor or affiliated entity of MEMC or by
any third party, based on any actual or alleged infringement of any patent or
other proprietary right with respect to the Technical Information transferred
hereunder.
PHC will use best efforts to protect MEMC's confidential and proprietary
information and will defend any suits made against PHC for alleged infringement
of a patent or intellectual property rights.
Should any products manufactured by PHC strictly in accordance with the
Technical Information furnished by MEMC under this Agreement partially or
totally infringe a patent or intellectual property right belonging to a third
party who makes a claim against PHC for alleged infringement of such patent or
intellectual property right, MEMC shall give necessary assistance for the
effective defense of such suit; and the damages, penalties and all other
expenses, including attorney's fees, shall be divided between the parties in the
proportions to be agreed upon by the parties. If MEMC and PHC cannot agree upon
a proportion, the parties shall allocate fifty (50) percent of such expenses to
MEMC and fifty (50) percent to PHC. MEMC's liability under this Section 11.02
shall not be applicable with respect to allegations of or actual infringement
which:
a. relate to Technical Information not required to be transferred
pursuant to the second sentence of Section 2.01 of this
Agreement, and which
b. relate to Technical Information thereafter transferred and is
disclosed, as an existing or potential subject of infringement,
by MEMC to PHC at the time of its transfer in a good faith belief
by MEMC of potential liability.
MEMC's cumulative liability to PHC under this Section 11.02 shall not exceed
one-third of the sum of the running royalties and/or technology fees paid to
MEMC by PHC during the three year period preceding the date PHC first asserts in
writing a claim against MEMC under this Section 11.02.
MEMC's liability under this Section 11.02 shall terminate upon the termination
or expiration of this Agreement except with respect to usage of the Technical
Information by PHC prior thereto.
ARTICLE XII
NOTICE
12.01 - All notices or communications given or required to be given
hereunder shall be given by personal delivery or by registered airmail, cable,
telex or facsimile at the following addresses:
If to MEMC: MEMC Electronic Materials, Inc.
000 Xxxxx Xxxxx (City of X'Xxxxxx)
Xxxx Xxxxxx Xxx 0
Xx. Xxxxxx, Xxxxxxxx 00000
XXX
Attention: General Counsel
If to PHC: ____________________________________
____________________________________
12.02 - Notices and communications shall be deemed received by the
addresses on the date of delivery if delivered personally, on the date fourteen
(14) days after the date of posting if sent by registered airmail or when
received if sent by cable, telex or facsimile.
12.03 - The parties may change their addresses at any time by giving notice
thereof in the manner provided in this Article.
12.04 - Any payment required under this Agreement shall be considered made
only when received.
ARTICLE XIII
INTERPRETATION AND ARBITRATION
13.01 - All disputes, controversies, or differences which may arise between
the parties out of or in relation to or in connection with this contract, or for
the breach thereof, shall be finally settled by arbitration pursuant to the U.S.
- Korean Commercial Arbitration Agreement, dated December 1, 1974, by which each
party hereto is bound.
13.02 - The arbitration shall be held at Seoul, the Republic of Korea if
the case is brought against PHC and in St. Louis, Missouri, USA if the case is
brought against MEMC.
9
13.03 - This Agreement shall be construed in accordance with and governed
by the laws of the Republic of Korea.
ARTICLE XIV
TERMINATION AND DEFAULT
14.01 - In the event that PHC is in default with respect to any payments
required pursuant to this Agreement, MEMC may give written notice to PHC,
calling attention thereto. If PHC does not correct such default within sixty
(60) days after such notice, MEMC shall at any time thereafter have the right to
terminate, by giving written notice to that effect, all of its obligations to
supply further information or services pursuant to this Agreement, and all of
the rights and licenses granted to PHC pursuant to ARTICLE IV of this Agreement.
MEMC's right to terminate pursuant to this Section 14.01 shall be at the option
of MEMC and shall not constitute a waiver of its other rights or remedies with
respect to said default, and the failure to exercise any such right in the event
of any occurrence giving rise thereto, shall not constitute a waiver of the
right in the event of any subsequent occurrence.
In the event of termination of this Agreement by MEMC under this Section
14.01, then PHC agrees to return to MEMC originals and copies of all portions of
any notes, reports, photographs, manuals, memoranda, plans, drawings, flow
sheets, records or other documents containing any Technical Information
provided, directly or indirectly, by MEMC and in PHC's possession and further
agrees to destroy all portions of any copies of any materials prepared by PHC,
its employees, or representatives which contain Technical Information. Such
return and delivery and/or destruction shall be within sixty (60) days following
the date that MEMC notifies PHC of the termination of this Agreement.
14.02 - It is understood and agreed by the parties that MEMC may, subject
to the conditions set forth below, terminate this Agreement upon thirty (30)
days written notice, in the event that MEMC's ownership or control, either
directly or indirectly, of PHC stock eligible to vote in the election of
directors falls below forty percent (40%) of the total number of shares of such
PHC stock outstanding:
a) that the five (5) year period beginning with the Date of First
Commercial Production has expired; and
b) that MEMC shall not be in default under the Joint Venture
Agreement.
Termination by MEMC pursuant to the provisions of this Section 14.02 shall not
act to terminate rights and licenses already granted pursuant to this Agreement
prior to the effective date of such termination, provided however, such rights
and licenses shall be non-exclusive.
14.03 - It is understood that, in case of failure of the negotiations under
Section 3.05 of this Agreement, this Agreement shall expire five (5) years after
the Date of First Commercial Production, and such expiration shall not act to
terminate rights and licenses already granted pursuant to this Agreement,
provided however, such rights and licenses shall be non-exclusive.
14.04 - If either party shall be in default of any obligation hereunder of
a substantial nature and if such party shall fail to remedy such default within
sixty (60) days after written notice thereof, any non-defaulting party hereto
shall have the right to terminate this Agreement by written notice of
termination to the other party given at any time within ninety (90) days after
said sixty (60) days. Such termination shall be in addition to any other rights
or remedies which may exist on account of such default.
14.05 - Termination pursuant to this ARTICLE XIV and expiration pursuant to
Section 14.03 of the rights and obligations specified therein shall not
terminate any of the obligations of PHC, including the obligation to pay in full
any and all amounts of money having come due prior to the termination by MEMC or
the expiration of this Agreement and the obligation of PHC to observe the
confidentiality provisions set forth in ARTICLE VI of this Agreement. It is
expressly agreed that the provisions of Section 4.01 second and third sentences
of this Agreement shall survive termination pursuant to Section 14.02 or
expiration pursuant to Section 14.03 for a period of five (5) years, or the
duration of the Joint Venture Agreement whichever is longer.
ARTICLE XV
EXPORT OF TECHNICAL INFORMATION
15.01 - The parties are aware that the transfer of MEMC's Technical
Information with respect to 200mm Silicon Wafers prior to April 1, 1994 requires
approval or concurrence by the U.S. Committee on Foreign Investment in the US
(CFIUS), and MEMC shall have no obligations with respect to the transfer and
license of such information prior to April 1, 1994 unless the approval or
concurrence by CFIUS is obtained; provided, however, that MEMC shall use all
reasonable efforts to obtain such approval or concurrence prior to April 1,
1994.
15.02 - Notwithstanding other provisions of the Agreement, PHC agrees to
make no disclosure of or use any Technical Information furnished or made known
10
to PHC pursuant to this Agreement, except in compliance with the laws and
regulations of the United States of America, and in particular, PHC agrees not
to export, directly or indirectly, either the technical data (the term
"technical data" as used herein shall mean and include the Technical Information
furnished or made known to PHC pursuant to this Agreement) or the "direct
product" thereof to any country or countries for which a validated license is
required pursuant to the Export Regulations pertaining to the exportation of
technical data and the "direct product" thereof, promulgated by the Bureau of
Export Administration of the United States Department of Commerce. The term
"direct product" as used above is defined to mean the immediate product
(including processes and services) produced directly by the use of the technical
data.
ARTICLE XVI
TRADEMARKS AND TRADE NAMES
16.01 - No right, expressed, or implied, is granted by this Agreement to
PHC to use in any manner whatsoever the name "MEMC" or MEMC Electronic
Materials, Inc. or any other trade name or trademark of MEMC in connection with
the use or sale of any product produced by PHC. However, a separate trademark
license agreement, shall be entered into between MEMC and PHC dealing with the
use of the MEMC trademark "YIELD-GUARD".
ARTICLE XVII
MISCELLANEOUS
17.01 - The heading of the Articles have been inserted for convenience and
reference only and shall not affect the interpretation or the constructions of
the provisions of this Agreement.
17.02 - This Agreement constitutes the entire agreement and understanding
between the parties hereto, and supersedes and cancels all previous
negotiations, representations, undertakings and agreements heretofore made
between the parties hereto with respect to the subject matter hereof.
17.03 - This Agreement shall not be modified except by a written instrument
executed by duly authorized representatives of the parties hereto.
17.04 - In the event any term or provision of this Agreement shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision of the Agreement, and this Agreement shall be interpreted and
construed as if such term or provisions, to the extent it is invalid, illegal or
unenforceable, had never been contained in this Agreement, provided, however,
such invalidity, illegality or unenforceability shall not result in a material
change of this Agreement.
17.05 - Waiver of any right by a party hereto towards the other for breach
or a series of breaches thereof shall not affect the right of the waiving party
to execute any of its rights provided hereunder on account of any other breach
hereof or similar breach hereof or similar breach subsequent thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives as of the day and
year first above written.
MEMC Electronic Materials, Inc. POSCO XXXX Company Limited
By /s/ Xxxxx X. XxXxxxxx By /s/ In Xx Xxxx
--------------------------- ---------------------------
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
STATE OF MISSOURI )
) ss.
COUNTY OF ST. XXXXXXX )
On this 14th day of December, 1990, before me appeared Xxxxx X. XxXxxxxx,
to me personally known and known to be the person who executed the foregoing as
President and Chief Executive Officer of MEMC Electronic Materials, Inc., and
that he is authorized to execute said instrument on behalf of said corporation
by authority of its Board of Directors, and unto me acknowledged said instrument
to be his free act and deed and the free act and deed of said Corporation.
/s/ Xxxxxxxx X. Xxxxxxx
---------------------------------
Notary Public
My Commission Expires:
April 22, 1991
----------------------
