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EXHIBIT 10.19.1
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this "Agreement") is entered into as of
July 1, 1998, by and between Novellus Systems, Inc., a California corporation
("Manufacturer"), and Seki Technotron Corporation ("Distributor").
RECITALS
A. Manufacturer and Distributor entered into that certain Distribution
Agreement dated January 1, 1996 (the "Distribution Agreement"), pursuant to
which Distributor agreed to distribute certain products of Manufacturer, upon
the terms and conditions set forth in the Distribution Agreement. All
capitalized terms used herein, but not defined, shall have the meanings ascribed
to such terms in the Distribution Agreement.
B. Pursuant to the Distribution Agreement, the term thereof is not
scheduled to expire prior to December 31, 1999. However, Distributor has
requested Manufacturer to agree to terminate the Distribution Agreement
effective July 1, 1998, and to transition the customer support obligations to
Manufacturer as set forth below.
C. Manufacturer has agreed to Distributor's request, conditioned on,
among other things, Distributor's execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Manufacturer and Distributor hereby agree as follows:
AGREEMENT
1. Termination of Distribution Agreement.
(a) Notwithstanding anything to the contrary set forth in the
Distribution Agreement, the Distribution Agreement shall terminate effective
July 1, 1998 (the "Termination Date"), and, except solely as provided herein,
neither party shall have any further rights, interests, liabilities,
responsibilities or obligations thereunder from and after the Termination Date.
Except as provided in Sections 1(b), 2 and 3 below, the Distribution Agreement
shall continue in full force and effect, unmodified hereby, until the
Termination Date.
(b) Notwithstanding Section 3.02 of the Distribution
Agreement, no later than the Termination Date, Distributor shall pay to
Manufacturer (i) all amounts owed by Distributor to Manufacturer pursuant to
Section 3.01 of the Distribution Agreement for all Products purchased by
Distributor on or prior to the Termination Date, and (ii) all
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other amounts owed by Distributor to Manufacturer pursuant to the Distribution
Agreement.
(c) On the Termination Date, Distributor shall immediately
deliver to Manufacturer all books, records, computer disks, manuals, logs,
notes, factory automation interface software, drawings, designs, intangible
property (including, without limitation, all trade secrets, know-how,
proprietary rights and processes and other intellectual property and all
documents, computer discs or other media relating to such intellectual
property), accounts, and other documents, data and information, of whatever
nature, (i) created or maintained by Distributor and relating to the Products
(including the sale or servicing thereof), or (ii) provided by Manufacturer to
Distributor, except to the extent such items have previously been delivered by
Distributor to Manufacturer pursuant to Section 2(a) below. Without limiting any
other provision of this Agreement, effective on the Termination Date,
Distributor shall have no further right to retain or use any of the foregoing
items, all of which are acknowledged and agreed to be Manufacturer's sole
property.
2. Transfer of Service Obligations.
(a) Notwithstanding anything to the contrary set forth in the
Distribution Agreement, all Product repair and service rights and obligations of
Distributor under the Distribution Agreement with respect to Products sold to
and installed for Fujitsu, as of the date hereof, terminated effective May 1,
1998 (the "Fujitsu Service Transfer Date"), and, from and after such date,
Distributor shall have no further obligation or right to perform such services,
all of which obligations and rights shall be assumed by Manufacturer effective
as of such date. Distributor represents and warrants that it has transferred to
Manufacturer all customer service accounts and other books and records related
to Product servicing maintained by Distributor with respect to Products sold to
Fujitsu by Distributor.
(b) Notwithstanding anything to the contrary set forth in the
Distribution Agreement, all Product repair and service rights and obligations of
Distributor under the Distribution Agreement (other than all such rights and
obligations described in Section 2(a) above) shall terminate effective July 1,
1998 (the "General Service Transfer Date"), and, from and after such date,
Distributor shall have no further obligation or right to perform such services,
all of which obligations and rights shall be assumed by Manufacturer effective
as of such date. Prior to the General Service Transfer Date, Distributor shall
transfer to Manufacturer all customer service accounts and other books and
records related to Product servicing maintained by Distributor (other than all
such accounts books and records previously transferred pursuant to Section 2(a)
above).
(c) The parties hereby agree that the aggregate outstanding
warranty and service obligations of Distributor being transferred to and assumed
by Manufacturer are valued at 216 million Japanese Yen, which amount shall be
payable to Manufacturer by Distributor on the date hereof (the "Warranty and
Service Obligation").
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3. Backlog.
(a) Notwithstanding Section 13.02 of the Distribution
Agreement or any other provision therein to the contrary, no commission, fee or
other payment shall be made by Manufacturer with respect to Distributor's
backlog as of the Termination Date, except as follows: (i) Manufacturer shall
pay to Distributor a sales commission of 5% of the Net Invoice Price (as
hereinafter defined), if, as and when received by Manufacturer, for each sale
originated by Distributor and in Distributor's backlog, provided that, as of the
Termination Date, Manufacturer has received a hard copy acceptable purchase
order (or a customer-issued, signed and priced acceptable letter of intent) for
such sale and has recorded such sale on its books (the receipt of such a
purchase order or such a letter of intent and the recordation of the applicable
sale on Manufacturer's books, "Booked"), provided that Manufacturer receives
payment in full for such Product no later than twelve (12) months after the
applicable Product is installed at the customer's site; and (ii) with respect to
the sale of each of the Products specified on Schedule 3 attached hereto to the
customers specified on Schedule 3, Manufacturer shall pay to Distributor a sales
commission equal to the percentage of the Net Invoice Price received by
Manufacturer for such Product (if, as and when received by Manufacturer)
calculated in accordance with Schedule 3, provided that Manufacturer shall have
no obligation to pay any commission to Distributor pursuant to this clause (ii)
with respect to (x) any such sale that is not Booked on or prior to December 31,
1998, and (y) any sale that is Booked on or prior to December 31, 1998, but with
respect to which Manufacturer does not receive full payment from the applicable
customer on or prior to the date that is twelve (12) months after the date the
applicable Product is installed at the customer's site. All commissions payable
by Manufacturer pursuant to this Section 3(a) shall be payable, if at all,
within thirty (30) days after the date on which Manufacturer receives full
payment for the Product sale in question. For the purposes hereof, the term "Net
Invoice Price" shall mean the total invoice price of the applicable item minus
(1) applicable customs duties, (2) transportation costs, and (3) value added
taxes.
(b) Distributor shall (i) during the remainder of 1998,
provide Manufacturer with reasonable sales support, consistent with the amount
of commissions anticipated to be received by Distributor pursuant to Section
3(a) above, for Manufacturer to sell Products to Distributor's existing Products
customer base, and (ii) without limiting Section 6 below, not take any action,
or permit to be taken any action within Distributor's reasonable control, the
effect of which xxxxx or impairs or could reasonably harm or impair
Manufacturer's marketing or sales activities in the Territory. Without limiting
the generality of clause (i) above, during the period from the Termination Date
through and including December 31, 1998, Distributor shall cause, at no cost to
Manufacturer (except solely for expense reimbursements to the extent provided
herein), X. Xxxxxxxx, Distributor's employee, to provide sales and marketing
assistance to Manufacturer in the Territory, as and when requested by
Manufacturer, provided that X. Xxxxxxxx'x obligation shall be limited to such
assistance full time (x) two (2) days per week during each week commencing with
the week in which the Termination Date occurs through and including the week in
which September 26, 1998 occurs, and (y) one day per week during each week
thereafter through and including the week in which December 31, 1998
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occurs; provided that, in the event that X. Xxxxxxxx or Distributor has a
conflicting obligation regarding X. Xxxxxxxx'x availability, Distributor retains
the right to allocate X. Xxxxxxxx'x services solely at Distributor's discretion
after August 31, 1998. In that event, Distributor will promptly provide
Manufacturer with a schedule of X. Xxxxxxxx'x availability. Manufacturer will
reimburse Distributor reasonable travel and actual expenses incurred by X.
Xxxxxxxx as a result of providing such sales and marketing assistance to
Manufacturer. Manufacturer acknowledges that Distributor does not represent or
warrant that the Services provided will be useful or effective in achieving
Manufacturer's goal. If Distributor materially breaches any of its covenants
pursuant to this Section 3(b), then, without limiting any other rights of
Manufacturer, under this Agreement, at law or in equity, Manufacturer's
obligations under Sections 3(a) and 4 shall immediately terminate and be of no
further force or effect.
(c) Until March 31, 2001, Distributor will have the right to engage, at
its own expense, an independent auditor reasonably acceptable to Manufacturer to
examine Manufacturer's records to verify (i) the amounts of commissions payable
to Distributor pursuant to Section 3(a) above, and (ii) the amount of any sums
payable to Distributor pursuant to Section 4 below. Such audits may be conducted
no more frequently than once in any fiscal year, and shall be performed during
Manufacturer's normal business hours on not less than three (3) days prior
written notice once. Any overpayments or underpayments revealed by any such
audit shall be paid, without interest, by the party responsible therefor within
thirty (30) days after receipt of such audit by such party.
4. Spare Parts Inventory; Demonstration Unit. On the Termination Date,
Manufacturer shall purchase all Distributors inventory of spare parts for
Products, all of which inventory is listed on Schedule 4 attached hereto, for an
aggregate purchase price of 216 million Japanese Yen (together with reasonable
out-of-pocket transportation costs incurred to transport such parts to
Manufacturer's facility), which purchase price shall be offset against the
Warranty and Service Obligation.
5. Facility Lease. Effective on the Termination Date, Distributor shall
assign to Manufacturer the lease pursuant to which Distributor occupies and uses
its field service office in Wakamatsu, Japan, provided that, if its consent is
required by the terms of such leases or other agreements, the lessor under such
lease consents to such assignment. Distributor shall use its reasonable
commercial efforts to obtain any such consent and Manufacturer shall reasonably
cooperate with such efforts. Manufacturer shall assume all obligations under
such lease accruing from facts or circumstances first occurring from and after
the date of such assignment (including, without limitation, all rent accrued and
payable with respect to periods from and after the date of such assignment).
Provided that such assignment occurs, Manufacturer shall promptly reimburse
Distributor for all rent, taxes and insurance premiums paid by Distributor under
such lease for all periods from and after the Termination Date. To the extent
that Manufacturer makes use of such premises prior to the Termination Date, the
parties shall agree on an equitable reimbursement amount for Manufacturer's use
of such facilities. Distributor and Manufacturer agree to execute any documents
necessary to facilitate such transfer. Manufacturer further agrees, to the
extent the lease requires that Distributor remain liable
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while Manufacturer utilizes such premises, Manufacturer shall defend, indemnify
and hold Distributor harmless from and against any liability, claim, suit, costs
or damages (including reasonable attorneys' fees) arising out of Manufacturer's
occupation of the premises or Manufacturer's acts or omissions therein.
6. Release. In consideration of Manufacturer's agreement to terminate
the Distribution Agreement prior to its scheduled expiration, Distributor hereby
irrevocably and forever releases Manufacturer (and its subsidiaries and
affiliates) from any and all claims, costs, liabilities, losses, damages,
responsibilities, obligations and expenses, liquidated or unliquidated, fixed or
contingent, foreseeable or unforeseeable, with respect to the Distribution
Agreement, or arising from or due to the performance (or failure of performance)
by Manufacturer or its subsidiaries of any provision of the Distribution
Agreement, accruing with respect to facts and circumstances first occurring
prior to the date hereof. With the exception of any costs, losses, expenses,
damages or liabilities incurred by Manufacturer due to or arising as a result of
(a) modifications made to Products by or on behalf of Distributor, including,
without limitation, CIM interface software made by, or under contract to
Distributor, or (b) commitments made, or obligations incurred, by Distributor to
customers which are outside of Manufacturer's standard terms and conditions,
Manufacturer hereby irrevocably and forever releases Distributor (and its
subsidiaries and affiliates) from any and all claims, costs, liabilities,
losses, damages, responsibilities, obligations and expenses, liquidated or
unliquidated, fixed or contingent, foreseeable or unforeseeable, with respect to
the Distribution Agreement, or arising from or due to the performance (or
failure of performance) by Distributor or its subsidiaries of any provision of
the Distribution Agreement, accruing with respect to facts and circumstances
first occurring prior to the date hereof.
7. Noncompete; Confidentiality.
(a) Prior to January 1, 2000, Distributor shall not, without
the prior written consent of Manufacturer (which consent Manufacturer may grant
or withhold in its sole discretion), (i) manufacture, sell, supply, distribute,
service, repair, upgrade or otherwise use, handle or deal with, in any manner,
products in Japan (or spare parts or components of products, other than such
spare parts or components manufactured by or on behalf of Manufacturer or its
subsidiaries or affiliates) which, in Manufacturer's reasonable judgment, are
similar to or competitive with any products of the Manufacturer or its
subsidiaries or affiliates, or (ii) agree to do any of the foregoing. For the
purposes of this paragraph, prohibited products include all Products, including
CVD equipment and processes, PVD equipment and processed, and copper
electroplating equipment and processes. Without limiting the foregoing, if, at
any time prior to such date, Distributor takes any of the actions described in
clauses (i) or (ii) above, then, without limiting any remedies available to
Manufacturer, under this Agreement, at law or in equity, for a breach by
Distributor of its obligations pursuant to the preceding sentence,
Manufacturer's obligations pursuant to Section 3(a) shall immediately terminate
and be of no further force or effect.
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(b) At all times from and after the Termination Date,
Distributor shall hold in strict confidence and not use or disclose to others,
any technical, business or financial information or data, manufacturing
technique, process, trade secret, know-how or other intellectual property or
proprietary rights of Manufacturer or its subsidiaries or affiliates, whether or
not any of such items have been identified as confidential by Manufacturer.
8. Notices. All notices and other communications in connection with
this Agreement shall be delivered in the form, in the manner and to the
addresses set forth in Section 22 of the Distribution Agreement.
9. Survival of Provisions; Incorporation by Reference. The following
provisions of the Distribution Agreement shall survive the termination thereof
on the Termination Date and are hereby incorporated herein by this reference:
Section 3.03 (Currency); Section 6 (Warranty) (other than the last sentence of
the first paragraph of such Section and the last paragraph of such Section);
Section 9 (Intellectual Property); Section 10 (Relationship of Parties); Section
16 (Export-Import Laws); Section 17 (Limitation on Liability); Section 18
(Governing Law); Section 19 (Arbitration); Section 20 (Severability of
Provisions); Section 21 (Waiver of Compliance). Section 7 (Products Liability)
is also hereby incorporated herein by this reference, provided that,
Manufacturer's obligations under such Section shall continue until the date that
is ten (10) years after the Termination Date. All references in such
incorporated provisions to the term "Agreement" shall mean this Agreement.
10. Entire Agreement; Assignment This Agreement and, solely to the
extent provided herein, the Distribution Agreement, constitutes the entire
agreement between the parties with respect to the matters discussed herein, and
supercedes and replaces all prior oral or written agreements, negotiations,
discussions or understandings. In the event of any conflict between the
provisions of this Agreement and the provisions of the Distribution Agreement
(including any provision thereof incorporated herein by reference pursuant to
Section 9 above), the provisions of this Agreement shall control. This Agreement
may not be assigned by Distributor (by operation of law or otherwise).
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, taken
together, constitute one and the same document.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
MANUFACTURER: NOVELLUS SYSTEM, INC.
By:
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Name:
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Title:
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DISTRIBUTOR: SEKI TECHNOTRON CORPORATION
By:
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Name:
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Title:
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SCHEDULE 3
COMPANY PRODUCT PRICE
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Hamahoto Photonics C-150 $1,210,000
FASL D-Altus $2,300,000
Fujitsu Mie Low K $2,875,000
Fujitsu Mie Ta(2)O(5) $2,200,000
Fujitsu Mie Speed M $1,100,000
Fujitsu Mie Speed/Seq $3,100,000
Fujitsu Mie D-Speed $2,800,000
Fujitsu Mie D-Speed $2,800,000
Fujitsu Mie D-Speed $2,800,000
Fujitsu Mie Sequel $1,704,000
Fujitsu Mie Sequel $1,704,000
Fujitsu Mie D-Altus $2,954,000
Fujitsu Mie D-Altus $2,954,000
Fujitsu Wakamatsu Speed M $1,100,000
Fujitsu Iwate C1-W $1,600,000
MEC Kyoto Speed $1,800,000
MEC Tonami D-Sequel $2,600,000
MEC Tonami D-Speed $3,022,000
MEC Tonami D-Speed $3,022,000
MEC Tonami D-Speed $3,022,000
MEC Tonami C3-DSP/Seq $4,400,000
MEC Tonami C3-Altus $2,400,000
MEC Tonami C3-DSP/Seq $4,400,000
MEC Tonami C3-Altus $2,400,000
MEC Tonami C3-Sequel $2,400,000
MEC Tonami C3-Sequel $2,400,000
MEC Tonami C3-Sequel $2,400,000
MEC Uozu C-150 $1,200,000
Rohm Kyoto C-150 $1,200,000
Rohm Apollo C1-200 $1,500,000
Rohm Apollo C1-200 $1,500,000
Rohm Apollo C1-W $1,500,000
Toko C1-150 $1,600,000
Yamaha D-Sequel $2,700,000
Yamaha D-Altus $2,600,000
Yamaha Speed $1,600,000
Commission Formula*
5% for sales Booked on or before June 26, 1998 (Novellus 2nd Quarter)
4% for sales Booked on or before September 26, 1998 (Novellus 3rd Quarter)
2% for sales Booked on or before December 31, 1998 (Novellus 4th Quarter)
*The applicable commission shall be reduced by 10% for each 1% decrease in the
price of the applicable Product below 90% of the price listed in column 3 above
with respect to that Product.
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