EX-10.42 5 dex1042.htm SOLAR WAFER SUPPLY AGREEMENT CONFIDENTIAL TREATMENT SOLAR WAFER SUPPLY AGREEMENT
Exhibit 10.42
This Solar Wafer Supply Agreement is entered into as of October 25, 2007, by and between MEMC ELECTRONIC MATERIALS, INC., a Delaware corporation with its principal place of business at 000 Xxxxx Xxxxx (City of X’Xxxxxx), Xx. Xxxxxx, Xxxxxxxx 00000, Xxxxxx Xxxxxx of America, or its designated majority-owned subsidiary (“MEMC”), and CONERGY AG, a German corporation with its principal place of business at Xxxxxxxxxxxxxxxx 0, 00000 Xxxxxxx, Xxxxxxx (“Conergy”) or its designated majority-owned subsidiary. MEMC and Conergy together shall be referred to as the “Parties” and individually as a “Party”.
ARTICLE I
(a) “Additional Wafer Supply” shall have the meaning set forth in Section 2.14.
(b) “Agreement” shall mean this Solar Wafer Supply Agreement, including all Attachments and Exhibits hereto, as it may be amended, modified or supplemented from time to time in accordance with its terms.
(c) “Business Day” shall mean any day of the year other than (i) any Saturday or Sunday or (ii) any other day on which banks located in New York, New York generally are closed for business.
(d) “Contract Year” shall mean a twelve (12) month period commencing on July 1 of a particular year and ending on June 30 of the following year. For example, the first Contract Year under the Agreement shall be the twelve (12) month period from July 1, 2008 to June 30, 2009 and the tenth Contract Year under the Agreement shall be the twelve (12) month period from July 1, 2017 to June 30, 2018.
(e) “CSM” shall have the meaning set forth in Section 3.2.
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(f) “Dollar”, “Dollars” or numbers preceded by the symbol “$” shall mean amounts in United States Dollars.
(g) “Effective Date” shall mean July 1, 2008.
(h) “Force Majeure Event” shall have the meaning set forth in Section 2.11.
(i) “Governmental Authority” shall mean any federal, state, local or foreign government or subdivision thereof, or any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any federal, state, local or foreign government.
(j) “Incoterms 2000” shall have the meaning set forth in Section 2.5(a).
(k) “Indemnified Person” shall mean the Person or Persons entitled to, or claiming a right to, indemnification under Article V.
(l) “Indemnifying Person” shall mean the Person or Persons claimed by the Indemnified Person to be obligated to provide indemnification under Article V.
(m) “Initial Term” shall have the meaning set forth in Section 4.1.
(n) “Interest” shall have the meaning set forth in Section 3.2.
(o) “Law” shall mean any law, statute, regulation, ordinance, rule, order, decree or governmental requirement enacted, promulgated or imposed by any Governmental Authority.
(p) “LC Bank” shall have the meaning set forth in Section 3.1(c).
(q) “Letter of Credit Amount” shall have the meaning set forth in Section 3.1(c).
(r) “Loss” or “Losses” shall mean any and all damages, fines, fees, Taxes, penalties, deficiencies, losses (including lost profits or diminution in value) and expenses, including interest, reasonable expenses of investigation, court costs, reasonable fees and expenses of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment (such fees and expenses to include all fees and expenses, including fees and expenses of attorneys, incurred in connection with (i) the investigation or defense of any third party claims, (ii) asserting or disputing any rights under this Agreement against any Party hereto or otherwise, or (iii) settling any action or proceeding or threatened action or proceeding).
(s) “MEMC Competitor” shall mean any Person engaged in (i) the design, development, manufacture, marketing or sale of silicon wafers for use in semiconductors; or (ii) the design, development, manufacture, marketing or sale of Multi Wafers or Mono Wafers for use in solar cells or (iii) the production of polysilicon or polysilicon ingots.
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(t) “Missed Delivery” or “Missed Deliveries” shall have the meaning set forth in Section 2.2(f).
(u) “Mono Wafers” shall mean monocrystalline silicon wafers for use in solar cells.
(v) “Multi Wafers” shall mean multi-crystalline silicon wafers for use in solar cells.
(w) “Person” shall mean any natural person, corporation, proprietorship, firm, partnership, limited partnership, limited liability company or partnership, trust, joint venture, union, association, Governmental Authority or other entity.
(x) “Purchase Shortfall” shall have the meaning set forth in Section 2.2(a).
(y) “Refundable Capacity Reservation Deposit” shall have the meaning set forth in Section 3.1.
(z) “Restricted Conergy Business” shall mean (i) the design, development, manufacture, marketing or sale of Multi Wafers or Mono Wafers for use in solar cells or (ii) the production of solar grade polysilicon or solar ingots.
(aa) “Restricted MEMC Business” shall mean the design, development, manufacture, marketing or sale of photovoltaic cells and photovoltaic modules.
(bb) “Restrictive Conergy Covenants shall have the meaning set forth in Section 2.12(b).
(cc) “Restrictive MEMC Covenants shall have the meaning set forth in Section 2.13(b).
(dd) “Retained Refundable Capacity Reservation Deposit Amount” shall have the meaning set forth in Section 3.1.
(ee) “Subsidiaries” shall mean any Person subject to control by either Party, or any of their respective affiliates. The term “control” as used in the preceding sentence means, with respect to a corporation, the right to exercise, directly or indirectly, fifty percent (50%) or more of the voting rights attributable to the shares of such corporation, or with respect to any Person other than a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person.
(ff) “Tax” or “Taxes” means all (i) federal, state, local, foreign and other taxes, assessments, duties or similar charges of any kind whatsoever, including all corporate franchise, income, sales, use, ad valorem, receipts, value added, profits, license, withholding, payroll, employment, excise, property, net worth, capital gains, transfer, stamp, documentary, social security, payroll, environmental, alternative minimum, occupation, recapture and other taxes, and including any interest, penalties and additions imposed with respect to such amounts; and (ii) liability for the payment of any amounts as a result of an express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (i).
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(gg) “Wafering Assets” shall have the meaning set forth in Section 2.12(a).
(hh) “Wafers” shall mean Multi Wafers and/or Mono Wafers.
(ii) “Yearly Minimum Quantity(ies)” shall have the meaning set forth in Section 2.2(a).
(jj) “Yearly Target Quantity(ies)” shall have the meaning set forth in Section 2.2(a).
ARTICLE II
(a) Target Purchase Quantities and Minimum Purchase Quantities. Each Contract Year, as set forth below in this Section 2.2(a), Conergy agrees to purchase from MEMC, over the course of the Contract Year, a target quantity of Wafers (such yearly target purchase quantity commitments, measured in megawatts, the “Yearly Target Quantity”), at the prices set forth on Attachment B hereto. Each Contract Year, as set forth below in this Section 2.2(a), MEMC agrees to supply Conergy, over the course of the Contract Year, with the Yearly Target Quantity per Contract Year, at the prices set forth on Attachment B hereto, which Yearly Target Quantity will not fall below the Yearly Minimum Quantities (as such term is defined in Section 2.2(a)(i) below for Contract Years one through five and in Section 2.2(a)(ii) below for Contract Years six through ten).
(i) For Contract Years one through five, the minimum quantities to be purchased by Conergy (such quantities, the “Yearly Minimum Quantities”) shall be equal to the greater of (A) [***]% of the Yearly Target Quantities set forth on Attachment B hereto and (B) approximately [***]% of Conergy’s then current solar wafer demand (measured in Xxxxx), provided that MEMC can accommodate [***]% of Conergy’s actual then current solar wafer demand (as part of and pursuant to the rolling forecast process set forth in Section 2.2(e) hereof). For Contract Years one through five, MEMC shall be obligated to supply Conergy quantities only up to [***]% of the Yearly Target Quantities set forth on
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CONFIDENTIAL TREATMENT
Attachment B hereto for such Contract Years, unless MEMC has been given at least three (3) years advance notice of Conergy’s request for quantities in excess of [***]% of the Yearly Target Quantities in such years, and MEMC has agreed to supply such increased quantities. In addition, for calendar 2008 only, MEMC has agreed to consider providing potential upside volume to Conergy of [***], at the prices set forth on Attachment B. MEMC will communicate its ability to supply these potential upside volumes to Conergy on a quarterly basis during calendar 2008. These additional upside quantities are not included in the calculations set forth on Attachment B, but will be included should the additional upside quantities be committed by MEMC and Conergy agrees to accept such additional volume. In the event that MEMC indicates to Conergy that MEMC intends to supply such additional volume in 2008, and Conergy agrees to accept such volume, if Wafer delivery has not yet commenced under this Agreement, then all remaining unpaid Refundable Capacity Reservation Deposit amounts for the first Contract Year under Section 3.1(a) hereof shall be paid to MEMC no less than five (5) Business Days prior to the first shipment date for Wafers.
(ii) For Contract Years six through ten, no later than the first day of Contract Year three (July 1, 2010), the Parties agree to commence a review to determine the exact quantities to be purchased and supplied for Contract Years six through ten. Notwithstanding the foregoing, for Contract Years six through ten, the minimum quantities to be purchased by Conergy (again, for such Contract Years, such quantities, the “Yearly Minimum Quantities”) shall be equal to the greater of (A) [***]% of the Yearly Target Quantities set forth on Attachment B hereto and (B) approximately [***]% of Conergy’s then current solar wafer demand (measured in Xxxxx); provided that MEMC can accommodate [***]% of Conergy’s actual then current solar wafer demand (as part of and pursuant to the rolling forecast process set forth in Section 2.2(e) hereof). For Contract Years six through ten, Conergy shall be obligated to purchase the Yearly Minimum Quantities for such Contract Years with the following exceptions:
(A) With three (3) years advance notice, Conergy may reduce its purchase obligation to a quantity for any given Contract Year by up to [***] percent ([***]%) from the Yearly Minimum Quantity for that Contract Year;
(B) With two (2) years advance notice, Conergy may reduce its purchase obligation to a quantity for any given Contract Year by up to [***] percent ([***]%) from the Yearly Minimum Quantity for that Contract Year;
(C) Once a reduced purchase obligation for a Contract Year has been communicated to MEMC by Conergy, MEMC shall observe this reduced purchase obligation as the maximum quantity to be delivered by MEMC for that Contract Year, which maximum quantity cannot be exceeded without written consent from both Parties.
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(iii) If Conergy demonstrates that its cell efficiency exceeds the measured inherent efficiency of MEMC wafers on the same process by more than [***] percent ([***]%), then Conergy may reduce the Yearly Minimum Quantity for a particular Contract Year that Conergy is obligated to purchase under this Agreement by a quantity equal to the result of the following formula.
[***]
whereby:
A shall be [***],
B shall be [***] and
C shall be [***].
(iv) The Yearly Minimum Quantities may also be reduced, for any Contract Year, pursuant to and in accordance with the provisions of Section 2.2(f)(i)(A).
(b) Mix Between Multi Wafers and Mono Wafers. Attachment B sets forth the aggregate yearly quantities of Multi Wafers and Mono Wafers to be supplied in each Contract Year, and does not differentiate for the purpose of aggregate yearly quantities between Multi Wafers and Mono Wafers. In the first three Contract Years, the percentage mix between Multi Wafers and Mono Wafers supplied shall be at MEMC’s discretion; provided, however, that in such first three (3) Contract Years MEMC may choose not to supply any Mono Wafers. In Contract Years four through ten, MEMC shall change the percentage mix between Multi Wafers and Mono Wafers based on Conergy’s request; provided, however that (i) in no event will MEMC be obligated to supply up to [***] percent ([***]%) of Wafers in any Contract Year as Mono Wafers unless Conergy has given MEMC at least two (2) years advance notice of such requested change in percentage mix between Multi Wafers and Mono Wafers and MEMC can reasonably accommodate such requested change in percentage mix between Multi Wafers and Mono Wafers; and (ii) in no event will MEMC be obligated to supply up to [***] percent ([***]%) of Wafers in any Contract Year as Mono Wafers unless Conergy has given MEMC at least three (3) years advance notice of such requested change in percentage mix between Multi Wafers and Mono Wafers and MEMC can reasonably accommodate such requested change in percentage mix between Multi Wafers and Mono Wafers, unless a greater percentage of Mono Wafers is requested by Conergy and agreed to by MEMC. Once MEMC has committed to supply a specific percentage of Mono Wafers for a particular period, that percentage shall then be MEMC’s minimum supply obligation of Mono Wafers for that period. MEMC also agrees, if requested by Conergy, to provide Conergy with specifications for other types of wafers (e.g., [***]) that MEMC could deliver for a future Contract Year, in each case with prices to be negotiated by the Parties at such time.
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of the Yearly Minimum Quantity of Wafers, or in the fifth Contract Year [***] percent ([***]%) or more of the Yearly Minimum Quantity of Wafers, or in any of the sixth through tenth Contract Years [***] percent ([***]%) or more of the Yearly Minimum Quantity of Wafers, MEMC would be required to deliver pursuant to the provisions of Section 2.2(a) (a “Missed Delivery”), and such Missed Deliveries continue uncured by the end of such Contract Year, then the following provisions shall apply:
(i) MEMC shall have the right to try to “make up” Missed Deliveries for any Contract Year (the “Missed Delivery Year”) through the end of the Contract Year that immediately follows the Missed Delivery Year (the “Make up Year”). The Wafer price for such Missed Deliveries shall be the Wafer price at the time of shipment of such Missed Deliveries. If MEMC fails to make up the Missed Deliveries prior to the end of the Make Up Year, then:
(A) Conergy shall have the right, but not the obligation, which right must be exercised by Conergy, in writing (and if not so exercised, shall be automatically waived for such Contract Year, and only such Contract Year), no later than five (5) Business Days after the end of the Make Up Year, to reduce the Yearly Minimum Quantity for that actual Contract Year by an amount equal to one-half ( 1/2) of the Missed Deliveries of the Missed Delivery Year that were not made up for in the Make Up Year (taking into account the actual deliveries made by MEMC in the Make Up Year intended as make up deliveries for the relevant Missed Delivery Year); and
(B) If Conergy chooses to reduce its Yearly Minimum Quantity for such next following Contract Year pursuant to the provisions of Section 2.2(f)(i)(A), then a corresponding reduction in the Letter of Credit Amount shall be made pursuant to the provisions of Section 3.1(c).
(C) If Conergy chooses to reduce its Yearly Minimum Quantity for such next following Contract Year pursuant to the provisions of Section 2.2(f)(i)(A), then MEMC shall also be required to credit a pro-rata portion of the Retained Refundable Capacity Reservation Deposit Amount in the subsequent Contract Year.
(g) Missed Deliveries in Contract Years One through Three. In addition to the provisions of Section 2.2(f), only for Contract Years one, two and three, if MEMC is unable to deliver the Yearly Minimum Quantities pursuant to the provisions of Section 2.2(a), for those three (3) Contract Years the following provisions shall also apply. If in any of the first three Contract Years MEMC’s actual deliveries against committed purchase orders (pursuant to MEMC’s standard Order Acknowledgement procedures in accordance with Section 2.2(f)(i) hereof) are lower than such committed quantities (such delivery failure, a “Wafer Delivery Miss”), then MEMC shall be required to offer Conergy the option of purchasing polysilicon from MEMC in an amount up to the Wafer Delivery Miss (with amounts of Wafers (Xxxxx) converted to kilograms of polysilicon at MEMC’s
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CONFIDENTIAL TREATMENT
experienced conversion rate for the prior three (3) months) at the prices set forth on Attachment D. The offer of any polysilicon pursuant to these provisions shall be made no later than ten (10) days after the applicable measurement period, with a reasonable delivery schedule for polysilicon to be agreed to by the Parties within five (5) Business Days thereafter. MEMC agrees to use commercially reasonable best efforts to delivery polysilicon as quickly as possible in the event that MEMC is required to deliver polysilicon hereunder. If Conergy actually purchases polysilicon pursuant to the provisions of this Section 2.2(g), the decision to “count” such polysilicon sales against any requirement to deliver Wafers or to makeup missed Wafer sales for the Contract Year shall be at MEMC’s discretion. If MEMC decides that such delivered polysilicon will be counted for purposes of fulfilling MEMC’s Wafer delivery obligation under Section 2.2(a) hereof for the current Contract Year, then no changes will be made to the subsequent Contract Year’s Yearly Minimum Quantity, Letter of Credit or Refundable Capacity Reservation Deposit under Section 2.2(a) hereof.
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2.5 Terms of Sale; Shipment Terms.
(i) Unless agreed to by MEMC, the shipment date change request notice must be received by MEMC at least ninety (90) days prior to the scheduled shipment date; and
(ii) If the shipment date change request notice is a delay request (a push out of requested delivery date), Conergy must commit to nonetheless purchase the delayed Wafers no later than the end of the Contract Year in which such shipment was originally scheduled by MEMC; and
(iii) MEMC must agree to such request in writing; and
(iv) In the event of an accepted shipment date change request, Conergy shall accept delivery of and pay for Wafers already manufactured or in the process of manufacture for such accepted purchase order at the time the shipment date change request notice is received by MEMC.
(e) In no event shall delay of any shipment or any part thereof as requested by Conergy pursuant to Section 2.5(d) affect, in any way, Conergy’s obligation to purchase some or all of Conergy’s Yearly Minimum Quantity for any Contract Year, unless the provisions of Section 2.2(a) hereof would otherwise require a change to Conergy’s Yearly Minimum Quantities for that Contract Year or a subsequent Contract Year.
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CONFIDENTIAL TREATMENT
2.7 Payment Terms; Delivery Terms; Freight Terms.
(a) MEMC shall issue an invoice to Conergy for each shipment of Wafers. All invoices will be in Dollars. Payment of invoices by Conergy shall be in Dollars, by wire transfer, check or by other means mutually agreed on by the Parties. Payment is due thirty (30) days from the date of the invoice. MEMC reserves the right to assess a late payment charge of one and one-half percent (1.5%) per month on the unpaid balance of any past due amount, unless prohibited by Law. If Conergy fails to pay the purchase price when due for any shipment, MEMC may, but need not, require receipt of payment in full prior to manufacturing the balance of any outstanding or subsequent order. Payment of sums due from Conergy shall be made upon terms set forth above. MEMC may recover for each delivery hereunder as a separate transaction, without reference to any other delivery. If Conergy has been failing to pay the purchase price when due for one or more shipments, and MEMC reasonably concludes that Conergy is in unsound financial condition and has notified Conergy of such conclusion, and the Parties have then negotiated in good faith for at least ten (10) Business Days to remedy such conclusion, or if Conergy is in default with respect to any of the material terms and conditions of this or any other agreement with MEMC, MEMC shall forthwith have the right to demand cash payment in advance or additional financial assurance until such time as said credit has been reestablished or default cured to MEMC’s satisfaction. If Conergy fails to pay the purchase price when due for any shipment, MEMC may also, but need not, (i) immediately offset any late payments against the Refundable Capacity Reservation Deposit and/or the Letter of Credit required by Section 3.1(c) and (ii) prior to any further shipments of Wafers, require that Conergy replenish the Refundable Capacity Reservation Deposit and/or the Letter of Credit required by Section 3.1(c) in accordance with the terms of this Agreement.
(b) All prices are based on Ex Works MEMC’s designated location. Conergy shall pay all transportation charges on a freight collect basis. Any Taxes, levies or assessments (including related interest and penalties) imposed, levied, assessed or arising by virtue of this Agreement other than Taxes based upon the net income of MEMC shall be the liability and responsibility of Conergy. If any charges are exempt from sales or use Tax liability, Conergy must provide MEMC with evidence of tax exemption acceptable to the relevant taxing authority.
2.8 Annual Technology Reviews; Quality Considerations.
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for thinner Wafers). Similarly, Conergy may also request changes to Wafer specifications, such as Wafer dimensions, with appropriate notice. MEMC will make reasonable efforts to accommodate these requests.
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(a) MEMC shall not be liable for any delay or failure to perform due to any cause or condition beyond its reasonable control, whether foreseeable or not, including, without limitation, Acts of God, war, riot, fire, explosion, accident, flood or sabotage; lack of adequate fuel, power or raw materials, labor, containers or transportation facilities; compliance with governmental requests, Laws, regulations, orders, action or national defense requirements; embargoes or acts of civil or military authorities; theft, breakage or failure of machinery or apparatus; or in the event of labor trouble, strike, lockout or injunction (provided that MEMC shall not be required to settle a labor dispute against its own best judgment) (all of such events, a “Force Majeure Event”). MEMC shall give prompt written notice to Conergy of any such Force Majeure Event and any associated delivery changes.
(b) If a Force Majeure Event occurs, MEMC shall not be responsible for any damage, increased costs, or Losses which Conergy may sustain by reason of such failure of performance, but this Agreement shall not be regarded as terminated or frustrated as a result such failure of performance. If a Force Majeure Event occurs, MEMC shall take appropriate means to minimize or remove the effects of the Force Majeure Event and, within the shortest practicable time, attempt to resume performance of its obligations under this Agreement affected by the Force Majeure Event, except as may be permitted by Section 2.11(c).
(c) If MEMC has suffered a Force Majeure Event and is unable to perform substantially all of its obligations under this Agreement for eighteen (18) months or more after suspension of its performance after the occurrence of a Force Majeure Event, then Conergy and MEMC may mutually terminate this Agreement if the Parties mutually agree to terminate. Notwithstanding anything in this Agreement to the contrary, in no event shall the occurrence of a Force Majeure Event hereunder excuse either Party from its obligations to pay to the other Party any sums accrued or due hereunder to such other Party.
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2.12 Noncompete in Favor of MEMC.
(b) If, at the time of enforcement of the covenants contained in this Section 2.12 (the “Restrictive Conergy Covenants”), a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the Parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by Law. Upon advice of legal counsel, Conergy has determined and hereby acknowledges that the Restrictive Conergy Covenants are reasonable in terms of duration, scope and area restrictions. Conergy acknowledges that both MEMC and Conergy have been doing business throughout the world.
(c) If Conergy or any of its affiliates or Subsidiaries breaches, or threatens to commit a breach of, any of the Restrictive Conergy Covenants, MEMC shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to MEMC at law or in equity:
(i) the right and remedy to have the Restrictive Conergy Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Conergy Covenants would cause irreparable injury to MEMC and that money damages would not provide an adequate remedy to MEMC; and
(ii) the right and remedy to require such Person to account for and pay over to MEMC any profits, monies, accruals, increments or other benefits derived or received by such Person as the result of any transactions constituting a breach of the Restrictive Conergy Covenants; and
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CONFIDENTIAL TREATMENT
(iii) the right and remedy to cease deliveries of Wafers hereunder until the breach of any of the Restrictive Conergy Covenants is cured.
2.13 Noncompete in Favor of Conergy.
(b) If, at the time of enforcement of the covenants contained in this Section 2.13 (the “Restrictive MEMC Covenants”), a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the Parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by Law. Upon advice of legal counsel, MEMC has determined and hereby acknowledges that the Restrictive MEMC Covenants are reasonable in terms of duration, scope and area restrictions. MEMC acknowledges that both Conergy and MEMC have been doing business throughout the world.
(c) If MEMC or any of its affiliates or Subsidiaries breaches, or threatens to commit a breach of, any of the Restrictive MEMC Covenants, Conergy shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Conergy at law or in equity:
(i) the right and remedy to have the Restrictive MEMC Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive MEMC Covenants would cause irreparable injury to Conergy and that money damages would not provide an adequate remedy to Conergy and
(ii) the right and remedy to require such Person to account for and pay over to Conergy any profits, monies, accruals, increments or other benefits derived or received by such Person as the result of any transactions constituting a breach of the Restrictive MEMC Covenants.
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ARTICLE III
REFUNDABLE CAPACITY RESERVATION DEPOSIT AND LETTER OF CREDIT;
EXECUTION OF ADDITIONAL AGREEMENTS
3.1 Refundable Capacity Reservation Deposit. To induce MEMC to invest in additional polysilicon production and wafer manufacturing capacity, Conergy agrees to pay to MEMC, per the schedule set forth on Attachment C hereto, the amount of $1,005.5 million (the “Refundable Capacity Reservation Deposit”), as a means of securing Conergy’s obligations to MEMC, which Refundable Capacity Reservation Deposit shall be repaid by MEMC, without interest, up to the amount of $965.3 million (96% of the aggregate Refundable Capacity Reservation Deposit amount, such retained amount of $40.2 million, the “Retained Refundable Capacity Reservation Deposit Amount”), according to the repayment schedule set forth on Attachment C hereto, unless Conergy has not purchased the Yearly Minimum Quantities in any Contract Year under the “take or pay” provisions of Section 2.2(a) hereof, in which case MEMC may choose to offset pursuant to this Article III any payments required from Conergy under Section 2.2(a) hereof against MEMC’s obligation to repay the Refundable Capacity Reservation Deposit.
(a) In any Contract Year when Conergy is required to pay MEMC a portion of the Refundable Capacity Reservation Deposit per the schedule set forth on Attachment C, payment by Conergy to MEMC shall be made, in full, no later than the fifth Business Day of the applicable Contract Year; provided, however, that Conergy shall be entitled to request MEMC to calculate the difference between the amount of the Refundable Capacity Reservation Deposit repayable by MEMC pursuant to Section 3.1(b) and the amount of the Refundable Capacity Reservation Deposit payable by Conergy in any Contract Year, and Conergy shall pay such difference to MEMC no later than the fifth Business Day of the applicable Contract Year. In connection with the Refundable Capacity Reservation Deposit amount to be paid by Conergy to MEMC for the first Contract Year, twenty five
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CONFIDENTIAL TREATMENT
percent (25%) of the Refundable Capacity Reservation Deposit amount to be paid by Conergy to MEMC for that first Contract Year shall be paid to MEMC no later than six (6) months prior to first delivery of Wafers hereunder (which payment date is anticipated to be no later than January 2, 2008) and the remaining seventy five percent (75%) of the Refundable Capacity Reservation Deposit amount to be paid by Conergy to MEMC for that first Contract Year shall be paid to MEMC no later than five (5) Business Days prior to first delivery of Wafers hereunder.
(b) In any Contract Year when MEMC is required to repay a portion of the Refundable Capacity Reservation Deposit to Conergy per the schedule set forth on Attachment C, payment by MEMC to Conergy shall be made, in full, no later than the fifth Business Day of the applicable Contract Year; provided, however, that if in any Contract Year there is a Purchase Shortfall that has not been paid by Conergy via wire transfer to MEMC in accordance with the provisions of Section 2.2(d) hereof, MEMC shall not be required to repay that portion of the Refundable Capacity Reservation Deposit up to the Purchase Shortfall in the next Contract Year, but instead MEMC may retain the amount of the Refundable Capacity Reservation Deposit up to the Purchase Shortfall (including the amount of any interest accrued on the Purchase Shortfall in accordance with Section 2.2(d) hereof, until the date that MEMC actually transfers or retains such amount); and provided further, that if in any Contract Year there is a Purchase Shortfall (or an aggregate Purchase Shortfall from more than one Contract Year) that has not been paid by Conergy to MEMC in excess of the amount of any Refundable Capacity Reservation Deposit not yet repaid by MEMC, MEMC may withhold repayment in any future Contract Years of the Refundable Capacity Reservation Deposit up to the amount of the aggregate unpaid Purchase Shortfall. If the aggregate unpaid Purchase Shortfall(s) exceed the remaining Refundable Capacity Reservation Deposit not yet repaid by MEMC, MEMC shall have any and all remedies available to it to recover from Conergy immediately the amount of any aggregate unpaid Purchase Shortfall, including drawing on the Letter of Credit pursuant to the provisions of Section 3.1(c).
(c) The Parties have also agreed that the amount of the Refundable Capacity Reservation Deposit outstanding in any Contract Year is less than the appropriate amount of security to be held by MEMC in order to ensure payment for Conergy’s “take or pay” obligations under Section 2.2(a) hereof. Accordingly, the Parties have agreed that Conergy will be required to deliver to MEMC, no later than the seventh Business Day of each Contract Year, an irrevocable Letter of Credit drawn on a bank that is requested by Conergy and approved by MEMC (the “LC Bank”), in an amount equal to the Required Letter of Credit Amount for such Contract Year as is set forth on Attachment C (the “Letter of Credit Amount”), and that expires on the eighth Business Day of the subsequent Contract Year. Conergy may, in its discretion, use quarterly or half-year revolving Letters of Credit to cover the full Letter of Credit Amount during any respective Contract Year; provided, however, that in no event shall there ever be a gap in coverage (i.e., a Letter of Credit will not be permitted to expire before a replacement Letter of Credit is put in place). MEMC’s right to unilaterally draw on the Letter of Credit (after exhaustion of the Refundable Capacity Reservation Deposit amount then held by MEMC) shall be substantially similar to those rights set forth in Section 3.1(b) above. The Letter of Credit Amount set forth on Attachment C for each Contract Year was calculated as follows:
(i) In Contract Year one, the Letter of Credit Amount shall be equal to twelve (12) months of MEMC’s revenue under this Agreement, based on the Yearly Target Quantity of Wafers for that Contract Year at the pricing for that Contract Year (assuming all Multi Wafers), less the cumulative net amount of the Refundable Capacity Reservation Deposit then held by MEMC;
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(ii) In Contract Year two, the Letter of Credit Amount shall be equal to nine (9) months of MEMC’s revenue under this Agreement, based on the Yearly Target Quantity of Wafers for that Contract Year at the pricing for that Contract Year (assuming all Multi Wafers), less the cumulative net amount of the Refundable Capacity Reservation Deposit then held by MEMC; and
(iii) In Contract Year three through Contract Year ten, the Letter of Credit Amount shall be equal to six (6) months of MEMC’s revenue under this Agreement, based on the Yearly Target Quantity of Wafers for that Contract Year at the pricing for that Contract Year (assuming a split between Multi Wafers and Mono Wafers of [***]%/[***]%, respectively), less the cumulative net amount of the Refundable Capacity Reservation Deposit then held by MEMC.
(iv) In any Contract Year for which the Yearly Target Quantity is adjusted upward or downward pursuant to the provisions of Section 2.2(a) or Section 2.2(f)(i)(A), the Letter of Credit Amount will also be adjusted upward or downward consistent with the provisions of this Section 3.1(c).
3.2 Interest in Conergy Subsidiary. In connection with this Agreement, Conergy and MEMC agree that MEMC shall also be entitled to receive from Conergy, within thirty (30) Business Days after the date that is five (5) years after the Effective Date, a payment equal to five percent (5%) of the increase in value (starting as of the Effective Date and ending on the date that is five (5) years after the Effective Date) of Conergy Solarmodule GmbH & Co. KG (“CSM”) due to MEMC’s contributions under this Agreement (such interest, the “Interest”). The value of the Interest shall be paid to MEMC at such time by Conergy, in cash or in freely salable and tradable shares of stock of Conergy, at Conergy’s discretion. The valuation of the Interest shall be determined by an appraisal performed by an independent “Big Four” accounting firm (to be mutually agreed by the Parties at the time of the appraisal). The Parties shall negotiate and execute a detailed agreement outlining the valuation method and related matters within [***] of the date of this Agreement. In case the Parties cannot reach such a detailed agreement, one of the independent “Big Four” accounting firms that is not the auditor for either Party shall make the valuation determination.
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ARTICLE IV
(a) In the event that Conergy has failed to pay a Purchase Shortfall to MEMC within five (5) Business Days of being notified thereof, and the amount of the unpaid Purchase Shortfall is greater than the amount of the Refundable Capacity Reservation Deposit and Letter of Credit then held by MEMC, then MEMC shall have the right, upon at least ten (10) Business Days prior written notice to Conergy in accordance with the notice provisions of Section 7.4, to immediately terminate this Agreement if:
(i) Conergy has not paid to MEMC, in immediately available funds, the amount of the unpaid Purchase Shortfall (after MEMC shall have retained the Refundable Capacity Reservation Deposit and drawn on the Letter of Credit) no later than the ninth (9th) Business Day after receiving such written notice; and
(ii) Conergy has not replenished the Refundable Capacity Reservation Deposit to be held by MEMC (after MEMC has retained the Refundable Capacity Reservation Deposit) by wiring MEMC, in immediately available funds, the amount of the Refundable Capacity Reservation Deposit as would be required for such Contract Year by Attachment B (taking into account the provisions of Section 2.2(a), Section 2.2(f) and Section 3.1(c) hereof) and replaced the Letter of Credit with a new Letter of Credit in the amount of the Letter of Credit Amount required for such Contract Year by Attachment B (taking into account the provisions of Section 2.2(a), Section 2.2(f) and Section 3.1(c) hereof) no later than the ninth (9th) Business Day after receiving such written notice.
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(a) In the event that MEMC has failed to deliver the Yearly Minimum Quantities as would be required to be delivered pursuant to the provisions of Section 2.2(a) hereof (taking into account the provisions, including the recovery provisions, of Section 2.2(f)(i) hereof) for three (3) consecutive Contract Years, then, no later than thirty (30) days after the end of such third consecutive Contract Year, Conergy may provide written notice to MEMC that Conergy intends to immediately terminate this Agreement. Such termination will take effect five (5) Business Days thereafter if the breach is not cured (in which case delivery shall be made for such deliveries only DDP Incoterms 2000 Conergy’s designated location) by MEMC within such five (5) Business Day period; provided, however, that Conergy shall be required to accept delivery of and pay for Wafers already manufactured or in the process of manufacture for any accepted purchase orders at the time the termination notice pursuant to this Section 4.4(a) is received by MEMC in accordance with the notice provisions of Section 7.4.
(b) If Conergy would have the right to terminate this Agreement pursuant to Section 4.4(a), but Conergy does not provide written notice of such intent to terminate to MEMC within the prescribed time frames of Section 4.4(a), then Conergy may not terminate this Agreement pursuant to Section 4.4(a) for that entire Contract Year, and will be deemed to have waived such right to terminate this Agreement pursuant to Section 4.4(a) for that three (3) Contract Year period of missed deliveries. In such event, Conergy can still “count” the two most recent Contract Years of missed deliveries of Wafers (as would be required to be delivered by MEMC pursuant to the provisions of Section 2.2(a) hereof (taking into account the recovery provisions of Section 2.2(f)(i) hereof)) for the purposes of determining whether, at the end of the subsequent Contract Year, a new right to terminate this Agreement pursuant to Section 4.4(a) has been triggered. In such case, the provisions of both Section 4.4(a) and this Section 4.4(b) shall again apply.
ARTICLE V
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5.2 Resolution of Disputes; Litigation.
(b) If no agreement can be reached between the Parties after good faith negotiation above, either Conergy or MEMC may bring any legal action or proceeding, so long as such legal action or proceeding complies with the provisions of Section 7.12 hereof, unless the amount of the damage or loss is at issue in a pending action or proceeding involving a third party claim, in which event such action or proceeding shall not be commenced until such amount is ascertained or both Parties agree to the action or proceeding.
(c) In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing Party in such dispute shall be entitled to recover from the losing Party all fees, costs and expenses of enforcing any right of such prevailing Party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.
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5.4 General Indemnification Provisions.
(a) The Indemnifying Party shall pay the Indemnified Party immediately available funds on an as-incurred basis for any Losses for which the Indemnified Party is entitled to indemnification hereunder. Any such indemnification payments shall include interest at the rate of 5% per annum (computed on the basis of a 360-day year) from the date any such Losses are suffered or sustained by the Indemnified Party.
(b) If and to the extent that any provision of Section 5.1 is unenforceable for any reason, each Party hereto agrees to make the maximum contribution to the payment and satisfaction of any Losses as to which such Party would otherwise have been responsible for indemnification which is permissible under applicable Law.
(c) Each Indemnifying Party hereby waives (i) presentment, demand, protest, notice of protest, notice of dishonor and notice of nonpayment; (ii) the right, if any, to the benefit of, or to direct the application of, any security hypothecated to Indemnified Party (if any), until all indemnification liability of another Indemnifying Party to Indemnified Party, howsoever arising, shall have been satisfied; (iii) the right to require the Indemnified Party to proceed against another Indemnifying Party, or to pursue any other remedy in Indemnified Party’s power (if any); and agrees that Indemnified Party may proceed against Indemnifying Party directly and independently of any other Indemnifying Party, and that any extension, forbearance, amendment, or acceptance, release or substitution of security, or any impairment or suspension of Indemnified Party’s remedies or rights against another Indemnifying Party or the cessation of the liability for indemnification hereunder of another Indemnifying Party for any reason other than full satisfaction of the indemnification obligation at issue, shall not in anywise affect the liability of Indemnifying Party hereunder.
ARTICLE VI
6.1 Confidential Information; Public Disclosure.
(a) MEMC agrees that it will not disclose to any third party the existence of or the details of this Agreement and any trade secrets or other proprietary information it obtains with respect to Conergy during or after the term of this Agreement except as expressly permitted hereunder, and that it will treat all such information as confidential and will use such information only for carrying out the purposes of this Agreement; provided, however, that MEMC will not be obligated to treat as confidential any information acquired by it that is either known to the general public or to the industry, or known to, or in the possession of, MEMC prior to disclosure by Conergy, that is disclosed as required by Law, or that is independently developed by MEMC. The confidentiality obligations of MEMC hereunder shall continue during the term of this Agreement and for a period of ten (10) years after termination.
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(b) Conergy agrees that it will not disclose to any third party the existence of or the details of this Agreement and any trade secrets or other proprietary information it obtains with respect to MEMC during or after the term of this Agreement except as expressly permitted hereunder, and that it will treat all such information as confidential and will use such information only for carrying out the purposes of this Agreement; provided, however, that Conergy will not be obligated to treat as confidential any information acquired by it that is either known to the general public or to the industry, or known to, or in the possession of, Conergy prior to disclosure by MEMC, that is disclosed as required by Law, or that is independently developed by Conergy. The confidentiality obligations of Conergy hereunder shall continue during the term of this Agreement and for a period of ten (10) years after termination.
(c) The Parties to this Agreement shall consult with each other as to the form, substance and timing of any press release or other public disclosure related to this Agreement or the transactions contemplated hereby and no such press release or other public disclosure shall be made without the consent of the other Party hereto, which consent shall not be unreasonably withheld or delayed; provided, however, that the Parties may make such disclosure to the extent permitted above or to the extent required by applicable Law, including the requirements of the New York Stock Exchange or the United States Securities and Exchange Commission.
ARTICLE VII
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If to MEMC, addressed as follows:
MEMC Electronic Materials, Inc.
000 Xxxxx Xxxxx (City of X’Xxxxxx)
X.X. Xxx 0
Xx. Xxxxxx, XX 00000
Attention: Chief Executive Officer
Tele: 000-000-0000
Fax: 000-000-0000
cc: MEMC General Counsel
If to Conergy, addressed as follows:
Conergy XX
Xxxxxxxxxxxxxxxx 0
X 00000 Xxxxxxx, Xxxxxxx
Attention: Chief Executive Officer
Tele: +49 (0) 40 / 00 000-0000
Fax: +49 (0) 40 / 00 000-0000
or to such other individual or address as a Party hereto may designate for itself by notice given as herein provided.
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7.11 Applicable Law. This Agreement shall be governed by and construed and enforced in accordance with the internal Laws of the State of New York, without giving effect to the principles of conflicts of law thereof.
7.12 Jurisdiction for Disputes. Subject to the provisions of Section 5.2 which shall govern any claim for indemnification as discussed therein, each Party to this Agreement hereby (a) agrees that any proceeding in connection with or relating to this Agreement or any matters contemplated hereby may be brought by either Party in a court of competent jurisdiction located within New York City, New York, whether a state or federal court; (b) agrees that in connection with any such proceeding, such Party shall consent and submit to personal jurisdiction in any such court described in clause (a) of this Section 7.12 and to service of process upon it in accordance with the rules and statutes governing service of process; (c) agrees to waive to the full extent permitted by Law any objection that it may now or hereafter have to the venue of any such proceeding in any such court or that any such proceeding was brought in an inconvenient forum; (d) agrees to service of process in any such proceeding by mailing of copies thereof to such Party at its address set forth in Section 7.4; (e) agrees that any service made as provided herein shall be effective and binding service in every respect; and (f) agrees that nothing herein shall affect the rights of either Party to effect service of process in any other manner permitted by Law.
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CONFIDENTIAL TREATMENT
same effect as if the original signature had been delivered to the other part(ies). The original signature copy shall be delivered to the other part(ies) by express overnight delivery. The failure to deliver the original signature copy and/or the nonreceipt of the original signature copy shall have no effect upon the binding and enforceable nature of this Agreement.
[remainder of page intentionally left blank; signature page follows]
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CONFIDENTIAL TREATMENT
| MEMC ELECTRONIC MATERIALS, INC. | CONERGY AG | |||||||
| By: | /s/ Xxxxxx Xxxxxx | By: | /s/ Xxxx-Xxxxxx Xxxxx | |||||
| Xxxxxx Xxxxxx | Xxxx-Xxxxxx Xxxxx | |||||||
| President and Chief Executive Officer | Chief Executive Officer |
SIGNATURE PAGE TO
CONFIDENTIAL TREATMENT
Attachment A – Specifications
[****]
A-4
CONFIDENTIAL TREATMENT
Attachment B – Yearly Target Quantities
[****]
B-1
CONFIDENTIAL TREATMENT
Attachment B
[****]
B-2
CONFIDENTIAL TREATMENT
Attachment C – Refundable Capacity Reservation Deposit Amounts; Letter of Credit Amounts
[****]
C-1
CONFIDENTIAL TREATMENT
Attachment D
[****]
D-1