Membrane Manufacture And Supply Agreement

EXHIBIT 10.12


MEMBRANE MANUFACTURE AND SUPPLY AGREEMENT


This Membrane Manufacture and Supply Agreement (this "Agreement") is entered into as of March 31, 2001, between Millipore Corporation ("Millipore"), a Massachusetts corporation with its principal place of business at 80 Ashby Road, Bedford, MA 01730, andMykrolis Corporation ("Mykrolis"), a Delaware corporation with its principal place of business at Patriots Park, Bedford, MA 01730.


RECITALS


1. Millipore currently owns all of the issued and outstanding common stock of Mykrolis.


2. Millipore and Mykrolis have entered into a Master Separation and Distribution Agreement as of March 28, 2001 (the "Master Agreement") under which, among other things, the business of Millipore's Microelectronics Division is to be taken over by, and the assets and liabilities associated therewith are to be transferred to and assumed by, Mykrolis at the Separation Date (as defined in the Master Agreement).


3. After the Separation Date, in order to enable Millipore and Mykrolis to carry on their respective businesses as separate companies, Millipore and Mykrolis desire to provide for a manufacturing and supply arrangement relating to certain membranes that are used by and incorporated into products of both Millipore andMykrolis, so as to appropriately ensure both Millipore and Mykrolis a continuing supply of such membranes.


4. The Master Agreement provides for this Agreement to be entered into as of the Separation Date.


NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows:


1. Definitions


The following terms shall have the meanings assigned to them below whenever they are used in this Agreement. Capitalized terms used in this Agreement without definition and which are defined in the Master Agreement shall have the meanings assigned to them in the Master Agreement. Except where the context otherwise requires, words imparting the singular shall include the plural and vice versa, words denoting any gender shall include all genders and words denoting persons shall include bodies corporate and vice versa.


"Flat Sheet UPE Membranes" shall mean (i) rollstock UPE Membranes typically less than 300 microns in sheet thickness including both phobic and philic Membranes, and (ii) polypropylene sterilizing membrane (Solvex), each as produced by Millipore at the Premises immediately prior to the Separation Date, or as modified as provided in this Agreement.


"Hollow Fiber UPE Membranes" shall mean phobic, tubular UPE Membranes having an outer diameter typically in the range of 400 to 1500 microns and an inner diameter typically in the range of 200 to 500 microns. For purposes of illustration, Hollow Fiber UPE Membranes include, as of the date hereof, those Membranes listed under the heading "Hollow Fiber UPE Membranes" in Exhibit A hereto. Such listing shall not be deemed to preclude the addition of other Hollow Fiber UPE Membranes during the term of this Agreement as provided herein.


"JSA" shall mean a Joint Services Agreement that may be entered into between the parties and amended from time to time during the Term of this Agreement, which would provide specific mechanisms for carrying out forecasting, maintenance of inventory levels, quality parameters, on-time delivery measurement, and the like.


"Lease" shall mean the lease of the Premises as set forth in Section 2 hereof.


"Membranes" shall mean UPE Membranes and Other Membranes as well as any other membranes or materials that the parties may hereafter agree to add to this definition of Membranes.


"Millipore Equipment" shall have the meaning set forth in Section 2(e)(ii) hereof.


"Mykrolis Equipment" shall have the meaning set forth in Section 2(e)(i) hereof.


"Mykrolis Permitted Persons" shall mean those employees or consultants of Mykrolis that are involved regularly or from time to time in the manufacture of UPE Membranes and reasonably need access to the Premises for such purposes.


"Other Flat Sheet UPE Membranes" shall mean Flat Sheet UPE Membranes other than Treated Flat Sheet UPE Membranes. Other Flat Sheet UPE Membranes include, as of the date hereof, those Membranes listed under the heading "Other Flat Sheet UPE Membranes" in Exhibit A hereto.


"Other Membranes" shall mean those membranes listed under the heading "Other Membranes" in Exhibit A hereto, each as produced by Millipore immediately prior to the Separation Date, or as modified as provided in this Agreement.


"Other Membrane Products" shall mean devices or other products which include one or more Other Membranes as a material or component.


"Other UPE Membranes" shall mean all UPE Membranes other than Treated Flat Sheet UPE Membranes.


"Other UPE Products" shall mean devices or other products which include Other UPE Membranes as a material or component.


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"Premises" shall have the meaning set forth in Section 2(a) hereof.


"Releases" shall mean any purchase orders or other documents of purchase that Millipore may place with Mykrolis for UPE Membranes, or that Mykrolis may place with Millipore for Other Membranes.


"Supplied Party" shall mean a party to this Agreement that orders certain Membranes pursuant to this Agreement and to whom such Membranes are sold.


"Supplying Party" shall mean a party to this Agreement that manufactures certain Membranes ordered by the other party pursuant to this Agreement and that sells such Membranes to the other party.


"Term" or "Term of this Agreement" shall mean the effective period of this Agreement as set forth in Section 4 hereof.


"Treated Mykrolis Membranes" shall mean Treated Flat Sheet UPE Membranes and Treated Other Mykrolis Membranes.


"Treated Mykrolis Products" shall mean devices or other products which include Treated Mykrolis Membranes as a material or component.


"Treated Other Mykrolis Membranes" shall mean those Mykrolis membranes that are chemically treated using Millipore's VMF4 Line or using Millipore's patented VMF4 technology, including those membranes listed under the heading "Treated Other Mykrolis Membranes" in Exhibit A hereto, and such other membranes as may be added to such list and to this definition as provided in Section 2(o) hereof.


"Treated Flat Sheet UPE Membranes" shall mean Flat Sheet UPE Membranes that are chemically treated using Millipore's VMF4 Line or using Millipore's patented VMF4 technology, including, as of the date hereof, those Membranes listed under the heading "Treated Flat Sheet UPE Membranes" in Exhibit A hereto.


"UPE Membranes" shall mean microporous membranes produced from an ultrahigh molecular weight polyethylene material by a melt cast process, as produced by Millipore at the Premises immediately prior to the Separation Date, or as modified as provided in this Agreement.


"UPE Products" shall mean devices or other products which include UPE Membranes as a material or component.


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2. Space and Transition Services for UPE Membrane and Treated Other Mykrolis
Membrane Manufacture


In order to enable Mykrolis, during a limited transition period following the Separation, to manufacture UPE Membranes (including Hollow Fiber UPE Membranes, Treated Flat Sheet UPE Membranes and Other Flat Sheet UPE Membranes) and Treated Other Mykrolis Membranes in the same production areas and with the same processes as such UPE Membranes and Treated Other Mykrolis Membranes were manufactured prior to the Separation Date (both (i) for its own use and sale and for its sale of UPE Products, and (ii) for supply of Flat Sheet UPE Membranes to Millipore as provided in this Agreement), Millipore and Mykrolis agree to the following arrangements regarding Mykrolis' use of space and manufacturing equipment and regarding Millipore's services to Mykrolis in facilitating Mykrolis' manufacture of UPE Membranes and Treated Other Mykrolis Membranes.


(a) Millipore hereby leases to Mykrolis, and Mykrolis hereby leases from
Millipore, the areas within Buildings "C", "D" and "F" of Millipore's
facility at 80 Ashby Road, Bedford, MA, as more specifically
described and shown in Exhibit B hereto (the "Premises") for purposes
of manufacture of UPE Membranes and Treated Other Mykrolis Membranes
and warehousing of raw materials and components used in such
manufacture.


(b) The Lease shall commence as of the Separation Date and continue
through the end of the Term, provided however that Mykrolis shall
have the right to terminate such Lease prior to the end of the Term
upon 12 months prior written notice to Millipore.


(c) Mykrolis shall pay to Millipore rent for the Premises initially in
the amount set forth in Exhibit C hereto. For each year of the Lease
beginning on the first anniversary of the Separation Date, rent shall
be increased by 5% over the prior year's rent. The initial rent
payment shall be made within 15 days following the Separation Date on
a pro-rated basis for the period beginning with the Separation Date
and ending on the last day of the calendar quarter during which such
initial payment is made. Each subsequent payment shall be made on or
before the first day of each subsequent calendar quarter during the
period of the Lease.


(d) At all times during the period of the Lease, Mykrolis Permitted
Persons shall have access to the Premises for the purposes specified
in clause (a) of this Section 2, including reasonable ingress and
egress through other parts of Millipore's facility at 80 Ashby Road.
Without limiting the generality of the foregoing, Millipore shall
provide security badges to such Mykrolis Permitted Persons enabling
their entry to the Premises. Mykrolis agrees to provide an initial
list of such Mykrolis Permitted Persons to Millipore's facilities
personnel (as shall be identified to Mykrolis by Millipore) promptly
after the execution of


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this Agreement, and to promptly update such list from time to time as
necessary with any additions or deletions. In addition, Mykrolis
Permitted Persons shall be (i) provided, to the same extent provided
to Millipore employees, with access to the use of restrooms, the
"Building E" cafeteria and other common areas, and to conference
rooms as reasonably necessary for meetings relating to UPE Membranes
manufacture, and (ii) permitted to use mailroom services, telephone
and voicemail systems, information services, fax, copy machines,
cafeteria/refreshment services, and the like, at prices/rates
consistent with those charged to internal Millipore users of such
services and supplies. Without limiting the generality of the
parties' respective obligations of confidentiality and non-use as
described in Article VI of the Master Agreement, Mykrolis hereby
agrees that any information of Millipore that the Mykrolis Permitted
Persons gain access to as a result of their presence in Millipore's
facility shall be subject to strict obligations of confidentiality
and non-use as provided in, and subject to the limitations and other
provisions of, such Article VI.


(e) For purposes of clarification, the parties acknowledge that:


(i) the following equipment currently used in the manufacture of
UPE Membranes and/or Treated Other Mykrolis Membranes
(collectively, the "Mykrolis Equipment") is owned, as of and
following the Separation Date, by Mykrolis:


- Slurry Mixing Vessel
- Extrusion Line
- NZE (2 units)
- Testing: Flow, BP, Porisimetry, Dimensions (for
phobic Flat Sheet UPE Membranes and for Hollow Fiber
UPE Membranes)
- Monomer Chemical Mixing Vessel (for philic Flat
Sheet UPE Membranes)
- Batch Extractor (2 units) (for Hollow Fiber UPE
Membranes)
- Hollow Fiber Annealing Line


and


(ii) the following equipment currently used in the manufacture of
UPE Membranes and/or Treated Other Mykrolis Membranes
(collectively, the "Millipore Equipment") is owned, as of and
following the Separation Date, by Millipore:


- Slurry Mix Stations 1-3 Control Modules
- Film 1 Annealing Line
- VMF4 Line (for hydrophilization/chemical
modification)


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- Testing: Flow, Wet Time, Stability (for philic Flat Sheet
UPE Membranes).
- Monomer Chemical Mixing Stations 4 - 6


(f) At all times during the period of the Lease, Millipore shall provide
Mykrolis with access to and use of the Millipore Equipment, each as
necessary for use in the manufacture of UPE Membranes or Treated
Other Mykrolis Membranes. All such access to and use of such
Millipore Equipment shall be scheduled in advance, in accordance with
mechanisms for scheduling and for prioritizing time between Mykrolis
and Millipore needs as shall be provided in a JSA or otherwise
separately agreed by the parties on or before the Separation Date.
Mykrolis shall pay Millipore machine hour charges as set forth in
Exhibit C for use of the Millipore Equipment. Millipore shall invoice
Mykrolis for such amounts on a quarterly basis.


(g) At all times during the period of the Lease, Millipore will supervise
and provide operational assistance to Mykrolis in its use of the
Millipore Equipment, as may be requested by Mykrolis or as may be
determined advisable by Millipore in its sole judgment in order to
protect against damage to such Millipore Equipment or injury to its
operators in accordance with standards and procedures in effect prior
to the Separation Date. Notwithstanding the foregoing, Mykrolis is
responsible for using the Millipore Equipment in substantial
compliance with operating procedures in effect prior to the
Separation Date and in a safe manner, and shall assume all
responsibility and liability for any personal injury or damage to the
Millipore Equipment or other property damage resulting from Mykrolis'
use of such Millipore Equipment. Millipore will also provide a
reasonable level of general technical support for assistance in
resolving technical problems in UPE Membrane manufacture. All
Millipore supervisory, operational assistance, and technical support
time shall be charged to Mykrolis at the rates per person-hour as set
forth in Exhibit C.


(h) At all times during the period of the Lease,


(i) Subject to the provisions of clause (g) above, Millipore shall
be responsible for maintaining the Millipore Equipment in its
current operational capability, unless otherwise agreed, and


(ii) Mykrolis shall be responsible for maintaining the Mykrolis
Equipment in its current operational capability and condition,
unless otherwise agreed.


(i) Upon the request of either party, the parties agree to negotiate, in
good faith and consistent with the Millipore LRP model for capacity
and space expansion/renovation, one or more modifications of the
Premises or the Lease terms as may be necessary or appropriate to
meet increased demand of either the Supplying Party or the Supplied
Party for one or more Membranes supplied


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hereunder, or for other good reason, provided that Millipore shall
have no obligation hereunder to incur any expense in order to
increase UPE Membrane manufacturing capacity.


(j) Except as may be otherwise agreed, during the period of the Lease,
Mykrolis shall be fully responsible for regulatory, health, safety
and environmental compliance, as well as hazardous and solid waste
disposal, spill response and the like, generated by Mykrolis' use of
the Premises and Mykrolis' manufacture of UPE Membranes and Treated
Other Mykrolis Membranes. Mykrolis shall also be responsible for
completing the conversion from Genesolv to Vertrel as the UPE
Membranes extraction solvent , consistent with the conversion plan in
place as of the Separation Date, and for disposal of any remaining
Genesolv. Notwithstanding the foregoing, at all times during the
period of the Lease, Millipore reserves the right to enter the
Premises as it determines necessary or desirable for purposes of
health, safety and environmental compliance or other reasonable
purposes that relate to or impact any areas of its 80 Ashby Road
facility other than the Premises, provided that such access does not
unreasonably interfere with Mykrolis' use of the Premises.


(k) Millipore requires the full capabilities to manufacture (or have
manufactured) UPE Membranes for its and its Affiliated Companies' use
and sale, and for its and its Affiliated Companies' use in
manufacturing (or having manufactured) UPE Products for sale, in the
Millipore Core Business. Accordingly, to facilitate Millipore's
manufacture of UPE Membranes following the termination of the Lease,


(i) Mykrolis acknowledges that it plans, consistent with
Millipore's pre-Separation Date LRP, to increase its UPE
Membrane manufacturing capacity on or prior to the termination
of the Lease, and in connection therewith to acquire new
equipment in replacement of the existing Extrusion Line and one
NZE. If such plan is, in fact, implemented (or if Mykrolis
shall otherwise in its own discretion deem it appropriate),
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