All text marked by [*] reflects portions which have been redacted and filed
separately with the Securities and Exchange Commission by Novellus Systems,
Inc., as part of a request for confidential treatment.
Exhibit 99.1
BINDING MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING (this "MOU") is entered into between
Novellus Systems, Inc. ("Novellus"), and Applied Materials, Inc. ("Applied"), as
of the Effective Date (as defined below), with reference to the following facts:
RECITALS
A. Novellus and Applied (each a "Party" and collectively, the "Parties")
are entering into this MOU for the major purposes of (i) resolving certain
litigation, (ii) covenanting not to sue each other for Patent Infringement (as
defined below) for specified periods and product categories, (iii) avoiding
unnecessary future litigation by mandating cure periods prior to either Party
instituting Patent Infringement actions against the other Party, and (iv)
protecting each Party's respective Customers, Suppliers and Distributors (each
as defined below) from certain future Patent disputes that may arise between the
Parties, as set forth below.
B. The Parties intend to enter into a definitive agreement implementing
this MOU (the "Definitive Agreement") as soon as practicable, and no later than
the close of business on September 24, 2004, unless an extension is agreed to by
both Parties in writing, with the understanding that if a Definitive Agreement
is not entered into by that date, this MOU shall be and remain legally binding
between the Parties. If a Definitive Agreement is reached, it shall extinguish
and supersede this MOU.
Accordingly, the Parties hereto agree as follows:
1. Definitions. In addition to other terms defined herein, the following
terms shall have the meanings set forth below:
"APPLIED CMP CLAIMS" means claims that any of Novellus, its
Subsidiaries, Suppliers or Distributors Infringe Applied's Patents directed
at CMP technology.
"CONSUMABLES" means materials and components that either are expected
to be consumed, in a period of less than one year, on a continual basis,
during the operation of a product (for example, without limitation, process
gasses) or are expected to be replaced periodically (but within a period of
less than one year) throughout the life of the product (for example,
without limitation, targets, xxxxxxx, and the like). Consumables do not
include Window Pads.
"CUSTOMER" is an end-user of a Party's Product, but only to the extent
of such use (for example, without limitation, if a company purchases
product X from a Party and product Y from a non-Party, then that company is
a Customer with respect to product X but not with respect to product Y).
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"DISTRIBUTOR" is an authorized distributor of a Party's Products to a
Party's Customers or Suppliers in countries where the Party does not sell
to Customers directly or through a Subsidiary, but only to the extent of
such distribution (for example, without limitation, Company A is a
distributor to a Customer of a Party; if Company A is also a distributor to
a different company that is not a Customer of a Party because it
distributes product B to such other company, then, with respect to product
B, Company A is not a Distributor). However, notwithstanding the provisions
of this definition, (i) authorized distributors of Novellus's CMP products
as of the Effective Date may include authorized distributors in countries
where Novellus sells to Customers directly or through a Subsidiary and (ii)
authorized distributors of entities acquired by a Party after the Effective
Date (which acquisition results in "control" over such entity, as defined
in the definition of Subsidiary) may include authorized distributors in
countries where the acquiring Party sells to Customers directly or though a
Subsidiary.
"EFFECTIVE DATE" means September 3, 2004.
"EXCLUDED PRODUCT AREAS" means specifically identifiable and
reasonably distinguishable product areas in which neither Party or only one
Party engages in business as of the Effective Date. A non-exclusive list of
Excluded Product Areas includes (1) stand-alone wet-cleaning, (2) ion
implant, (3) flat panel display processes and production equipment, (4)
stand-alone metrology and optical or e-beam inspection of wafers or masks,
(5) mask writing, (6) photoresist strip, (7) etch, (8) epitaxial deposition
and (9) RTP (Rapid thermal processing). For the avoidance of doubt, the
following areas, without limitation, shall conclusively be deemed to not be
Excluded Product Areas: (1) integrated anneal, (2) CVD (Chemical vapor
deposition), (3) PVD (Physical vapor deposition), (4) PECVD
(Plasma-enhanced chemical vapor deposition), (5) HDP-PECVD (High density
plasma-enhanced chemical vapor deposition), (6) ALD (Atomic layer
deposition), (7) ECD (Electrochemical deposition) and (8) CMP (Chemical
mechanical planarization) (except for Permitted Applied CMP Claims and
Permitted Novellus CMP Claims).
"EXCLUDED REPLACEMENT PARTS" means the following components, in
complete or essentially complete (i.e., incomplete in only a DE MINIMUS
respect) form: (1) xxxxxxxx, (2) mainframes, (3) platforms and (4) Window
Pads.
"EXCLUDED SUPPLIES" means the following components, in complete or
essentially complete (i.e., incomplete in only a DE MINIMUS respect) form:
(1) xxxxxxxx, (2) mainframes, (3) platforms and (4) Window Pads.
"EXISTING PRODUCT" means a product, process, Consumable, or tool (and
features incorporated in the foregoing) that, (A) with respect to hardware,
was sold or shipped as of the Effective Date, or one product per Party
subject to a purchase option in effect as of the Effective Date with a ship
date not later than
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December 31, 2004 (including, in each case, sales, shipments or options on
a trial or evaluation basis without consideration), by a Party to at least
one Customer or prospective Customer, whether in Alpha, Beta, or other
stage of development and (B) with respect to processes, was documented by a
Party in a formal document such as "Best Known Method," "Process of
Record," or other comparable formalization and had been provided to at
least one Customer of a Party as of the Effective Date. Without limitation,
a product, process, Consumable, or tool (and features incorporated in the
foregoing) shall presumptively be deemed to have been shipped, sold or
optioned, as applicable, on or prior to the Effective Date to the extent
that BONA FIDE ordinary course business documentation (purchase orders,
shipping documentation, confirmations and other business paper) so states.
For the avoidance of doubt, products, processes, Consumables, or tools (and
features incorporated in the foregoing) owned by Subsidiaries not
"controlled" (as defined in the definition of Subsidiary) by a Party as of
the Effective Date shall not be Existing Products.
"INFRINGE" or "INFRINGEMENT" means all forms of patent infringement,
including direct infringement, indirect infringement, contributory
infringement and inducing infringement.
"NEW PRODUCTS" are products, processes, Consumables, or tools (and
features incorporated in the foregoing) that are not Existing Products and
that: (1) have a form, fit or function different from Existing Products;
(2) are publicly announced to the industry; or (3) have had their name
changed in a substantial way after the Effective Date. For the avoidance of
doubt, New Products include products, processes, Consumables, or tools (and
features incorporated in the foregoing) of Subsidiaries acquired after the
Effective Date.
"NOVELLUS CMP CLAIMS" means claims that Applied, its Subsidiaries,
Suppliers or Distributors Infringe Novellus' Patents directed at CMP
technology.
"PARTY" and "PARTIES" includes a Party's respective Subsidiaries and
successors and assigns permitted by Section 1 of Exhibit A.
"PATENT" means all patents and patent applications, present or future,
issued in the United States or any foreign country, that are assigned to,
owned by, or exclusively licensed or exclusively sublicensed (with the
right to sublicense or grant a covenant not to sue) to a Party or its
Subsidiaries or any of their respective successors and assigns permitted by
Section 1 of Exhibit A.
"PRODUCT" is an Existing Product or New Product. For the avoidance of
doubt, any Party's product, process, Consumable, or tool (and features
incorporated in the foregoing) sold, shipped, optioned or provided to a
Customer (including, in each case, sales, shipments or options on a trial
or evaluation basis without consideration) must either be an Existing
Product or a New Product.
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"SUBSIDIARY" means, with respect to a Party or other entity, an entity
directly, or indirectly, that is, through one or more intermediaries,
controlled or under common control with, the Party or other entity (where
"control" shall mean ownership of greater than 50% of the voting power or
shares entitled to vote for the election of directors or greater than 50%
of the equity interest of the entity having the powers to direct management
policies; provided, however, that an entity shall be deemed to be a
"Subsidiary" for only so long as such ownership or control exists, and an
entity may become a "Subsidiary" after the Effective Date if such ownership
or control is thereafter obtained).
"SUPPLIER" is an authorized seller or provider of components or
materials for use with or in a Party's Products, other than "Excluded
Supplies", but only to the extent of such sale or provision and for such
use (e.g., Company W is a Supplier to a Party or a Party's Customers; if
Company W is also a supplier for a company that is not a Party or a Party's
Customers because it supplies product Z to such other company, then, with
respect to product Z, Company W is not a Supplier).
"WINDOW PADS" means (i) polishing systems or methods that use a
polishing pad or pads that have at least one solid light transmissive
portion, (ii) polishing pads that have at least one solid light
transmissive portion and (iii) methods for making polishing pads that have
at least one solid light transmissive portion, it being understood that,
without limitation, the insertion of an optical fiber or fibers through a
hole in a polishing pad does not constitute "at least one solid light
transmissive portion". However, the insertion of an optical fiber or fibers
through a hole in a polishing pad that otherwise contains a solid light
transmissive portion shall not exclude such a polishing pad from the scope
of this provision.
"WINDOW PAD CLAIMS" means claims that Novellus, its Subsidiaries,
Suppliers or Distibutors Infringe any of the claims in Applied's Patents
that require Window Pads. It is understood that a Window Pad claim cannot
lie against a product, system or method that lacks a Window Pad as defined
herein.
2. Dismissal of Litigation. The Parties agree to enter into a dismissal
with prejudice of the litigation entitled Novellus Systems, Inc. v.
Applied Materials, Inc., Civil Action No. C 97-20551 RMW, Applied
Materials, Inc. v. Novellus Systems, Inc., Civil Action No. C 97-20523
RMW, and any and all other pending Patent litigation between the
Parties (collectively, the "Civil Actions."). Such dismissal shall be
mutual and shall be filed no later than September 23, 2004. Each Party
shall bear its own costs of suit and attorneys fees incurred in
connection with the Civil Actions.
3. Payments. In partial consideration for the dismissal of claims, the
releases and the covenants granted or contemplated herein, Applied
shall pay to Novellus eight million dollars (U.S. $8,000,000.00) by
wire transfer no later
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than September 24, 2004, and hereby releases Novellus from all amounts
accrued, accruable, owed or claimed to be owed under the Settlement
Agreement between them dated May 4, 1997 (the "TEOS Agreement"), as of
the Effective Date, including Applied's claim that three million five
hundred thousand dollars (U.S. $3,500,000.00) is owed by Xxxxxxxx.
4. Amendment and Restatement of TEOS Agreement. As of the Effective Date,
the TEOS Agreement is hereby amended and restated to cause the license
of the `526 Patent (as defined in the TEOS Agreement) to Novellus, and
the cross license of Novellus CVD Patents and Applied CVD Patents
(each as defined in the TEOS Agreement), in each case to be
fully-paid, royalty free and (except as set in this Paragraph 4)
irrevocable (for the avoidance of doubt, it being understood that no
further payments for past or future licenses under the TEOS Agreement
are or will be owed). In addition, the following provisions of the
TEOS Agreement shall be terminated or modified as follows: the
agreement will be terminable only for material breach by, or
bankruptcy (or like events) of, a Party, subject to a thirty (30) day
cure period; all rights of Applied to terminate the license based upon
Novellus's merger or acquisition of or by other entities shall be
eliminated; the licenses shall not be assignable, other than in
connection with the acquisition of a Party by merger or comparable
corporate transaction; and the other provisions of the TEOS Agreement
are deemed modified as necessary to be consistent with this Paragraph
(including by deleting the following paragraphs of such agreement: 2,
3 (b, c, d, e, f, g), 8(a), and 8(c) and making conforming changes to
the definitions in paragraph 1 thereof).
5. Five-Year Covenant Not to Sue For Existing Products.
(a) Existing Products Covenant Not To Sue Period. The Parties hereby
covenant not to sue or threaten to sue (i) each other or (ii)
each other's Customers, Suppliers or Distributors for
Infringement of any of their respective Patents by any Existing
Products of the other Party for a period of five (5) years
commencing on the Effective Date (the "Existing Products Covenant
Not To Sue Period"). The claims so barred are referred to as
"Existing Product Claims".
(b) No Accrual of Damages. The Parties hereby waive any claim for
damages or other remedy that would otherwise accrue for
Infringement during the Existing Products Covenant Not To Sue
Period with respect to Existing Product Claims.
(c) Limitation on Existing Products Covenant. The covenants set forth
in Paragraphs 5(a) and 5(b) do not apply to the extent of (but
only to the extent of) (i) claims of Infringement of the
respective Patents of either Party by products that fall within
the
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definition of any Excluded Product Area (it being understood that
if only part of a product is within the definition of any
Excluded Product Area, only such part is excluded from the
operation of Paragraphs 5(a) and 5(b)), (ii) Window Pad Claims,
(iii) if and when legal action is commenced to assert any Window
Pad Claim, Novellus CMP Claims ("Permitted Novellus CMP Claims")
and (iv) if and when legal action is commenced to assert any
Permitted Novellus CMP Claims, Applied CMP Claims ("Permitted
Applied CMP Claims").
(d) Exchange of Existing Products Lists. No later than the close of
business on September 24, 2004, one or both of the Parties may,
but are not required to, provide the other Party or outside
attorneys for the other Party a list of its Existing Products. If
provided to outside attorneys, such attorneys shall hold such
list in confidence and not disclose it to third parties or to the
client of such attorney, without the prior written consent of the
Party providing the list.
6. Two-Year Covenant Not To Sue For New Products.
(a) New Products Covenant Not To Sue Period. The Parties hereby
covenant not to sue or threaten to sue (i) each other or (ii)
each other's Customers, Suppliers or Distributors for
Infringement of any of their respective Patents by any New
Products of the other Party for a period of two (2) years
commencing on the Effective Date (as may be extended as provided
below, the "New Products Covenant Not To Sue Period" and,
together with the Existing Products Covenant Not To Sue Period,
the "Covenant Not To Sue Periods"). The claims so barred are
referred to as "New Product Claims". However, after the
expiration of the New Products Covenant Not To Sue Period and any
extensions and cure periods thereto, until the expiration of the
Cure Period (as defined below, assuming for this purpose no
Extended Deferral Period) to the Existing Products Covenant Not
To Sue Period, any New Product Claim shall be limited to those
parts of the Product that are different in a material respect
from the accused Party's comparable Existing Products.
(b) No Accrual of Damages. The Parties agree to waive any claim for
damages or other remedy that would otherwise accrue for
Infringement (i) during the New Products Covenant Not To Sue
Period, with respect to New Product Claims, and (ii) during the
period in which the limit on claims referred to in the last
sentence of Paragraph 6(a) is in effect, with respect to any New
Product claims related to those parts of an accused Product that
are not different in a material respect from the accused Party's
comparable Existing Products.
(c) Limitation on New Products Covenant. The covenants set forth in
Paragraphs 6(a) and 6(b) do not apply to the extent of (but only
to the extent of) (i) claims of Infringement of the respective
Patents of either Party by products that fall within the
definition of any Excluded Product
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Area (it being understood that if only part of a product is
within the definition of any Excluded Product Area, only such
part is excluded from the operation of Paragraphs 6(a) and 6(b)),
(ii) Window Pad Claims, (iii) Permitted Novellus CMP Claims and
(iv) Permitted Applied CMP Claims.
(d) Extension of New Products Covenant Not To Sue Period. Provided
that during the New Products Covenant Not To Sue Period neither
Party gives more than one (1) written notice of Infringement to
the other Party with respect to any New Product Claim that
remains uncured or unresolved as of the expiration of such period
(the first written notice of Infringement, with respect to each
Party, a "Threshold Claim"), the New Products Covenant Not To Sue
Period shall automatically be extended for one (1) additional
year with respect to any New Product Claims other than the
Threshold Claims of either or both Parties. In the event that
during the New Products Covenant Not To Sue Period either Party
gives written notice of Infringement to the other Party with
respect to any New Product Claims that remains uncured or
unresolved as of the expiration of the New Products Covenant Not
To Sue Period other than (i.e., in addition to) the Threshold
Claim (each such claim other than the Threshold Claim, an "Over
Threshold Claim"), then the New Product Covenant Not To Sue
Period shall not be automatically extended as provided in the
preceding sentence with respect to any New Product Claims;
provided, however, that with respect to each Over Threshold Claim
and the Threshold Claim initiated by a Party against the other
(the "Initiating Party"), notwithstanding anything else herein to
the contrary, if the Initiating Party is not the prevailing Party
in any ensuing litigation or legal action regarding the Over
Threshold Claims or Threshold Claim, the Initiating Party shall,
in addition to any other remedies or damages awarded or imposed,
[*] Party, upon entry of final judgment, [*] in connection with
the ensuing litigation or legal action, it being understood that
nothing in this MOU shall be construed so as to create, restrict
or enlarge the right of the Initiating Party [*].
(e) [*] Meeting Regarding Further Extension. Whether or not the New
Product Covenant Not To Sue Period has been extended pursuant to
Paragraph 6(d), the [*] of both Parties shall, at least ninety
(90) days prior to the expiration of the original New Products
Covenant Not To Sue Period, and again, within at least ninety
(90) days prior to the expiration of any extensions of the New
Products Covenant Not To Sue Period, meet in person and discuss
in good faith an extension of the New Products Covenant Not To
Sue Period for an additional one (1) or two (2) years.
7. Cure Procedures.
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(a) Notice. For a period commencing on the Effective Date and ending
at midnight Pacific time on the tenth (10th) anniversary of the
Effective Date, if either Party desires to assert any claim for
Infringement against the other Party or its Customers, Suppliers
or Distributors, such Party shall follow the procedures set forth
in this Paragraph 7 and shall give the other Party written notice
of such claim (which must, to be valid, include, at a minimum (i)
an identification of the patent believed to have been Infringed
upon, (ii) an identification of the accused tool or process;
(iii) information sufficient for the Party accused (or the Party
whose Customers, Suppliers or Distributors are accused) of
Infringement to make a reasonable determination of the nature of
the accused Infringement; and (iv) an assertion as to whether the
accused Product(s) is an Existing Product or a New Product) (an
"Infringement Claim Notice"). An Infringement Claim Notice that
asserts both New Product Claims and Existing Product Claims shall
be treated as two separate notices, one pertaining to the New
Product Claims and the other to Existing Product Claims. If an
Infringement Claim Notice is given prior to the expiration of the
Covenant Not To Sue Period applicable to the claims asserted by
such notice, then such notice shall not become effective during
the applicable Covenant Not To Sue Period, but shall only become
effective after (but not before) the expiration of the applicable
Covenant Not To Sue Period, immediately after which expiration
such notice will become effective. If an Infringement Claim
Notice is given after the expiration of the Covenant Not To Sue
Period applicable to the claims asserted by such notice, then
such notice shall become effective upon receipt thereof.
(b) Deferral Period. If the alleged Infringement claim is not
resolved by the Parties within sixty (60) days after the
applicable Infringement Claim Notice becomes effective (during
which sixty (60) day period the [*] of each Party shall at least
once meet in person to discuss the matter), then, not earlier
than one (1) year after the expiration of such sixty (60) day
period (the one (1) year period following such sixty (60) day
period, the "Deferral Period"), the Party asserting the
Infringement claim may, subject to the other limitations
contained in this MOU, commence with legal action on the
Infringement claim.
(c) Extended Deferral Period for Consumables. In the event the
Infringement Claim Notice asserts a New Product Claim that
accuses a Supplier of Consumables of Infringing one or more of
the accusing Party's Patents that contains claims directed solely
to the Consumable (a "Consumables Claim"), then, subject to
timely payment of a Consumables Royalty (as defined in Paragraph
9) by the applicable Party, the Deferral Period shall be extended
by one additional year (such additional year, the "Extended
Deferral Period").
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(d) No Accrual of Damages. The Parties agree to waive any claim for
damages or other remedy that would otherwise accrue for
Infringement during the period commencing on the effective date
of the applicable Infringement Claim Notice and ending one (1)
year (or, with respect to any Consumables Claim as to which an
Extended Deferral Period applies, two (2) years) after the
expiration of the sixty (60) days referenced in Paragraph 7(b)
(such one or two year, as applicable, and sixty day period, the
"Cure Period") on account of New Product Claims (including
Consumables Claims) or Existing Product Claims; provided,
however, that the waiver of damages shall not impair any
obligation to pay a Consumables Royalty.
(e) [*] Meeting. At least ninety (90) days prior to the tenth (10th)
anniversary of the Effective Date, the [*] of each Party shall
meet in person and discuss in good faith an extension of the Cure
Period and the application of Paragraphs 7(a) through 7(f) for an
additional period of time to be determined.
(f) Limitations on Cure Period. The covenants contained in this
Paragraph 7 do not apply as to any claim permitted pursuant to
Paragraphs 5(c) or 6(c).
8. Customer Support. The Parties may, during and after the expiration of
all Covenant Not To Sue Periods and Cure Periods, continue to provide
support to Customers for all Products sold by them during any Covenant
Not To Sue Period or Cure Period, including, without limitation, by
providing their Customers with replacement parts for Products sold
during such periods (such replacement parts for Products sold during
such periods, other than Excluded Replacement Parts, hereinafter
"Replacement Parts") and, subject to the provisions of this MOU,
facilitating the provision by the Party or Suppliers of Consumables to
Customers. Neither Party shall seek an injunction or other equitable
relief against the other to prevent such Party from providing such
support to its Customers, or against the Customers or Suppliers of the
other Party to prevent or impede such Customers or Suppliers from
using or supplying Products, Replacement Parts or Consumables sold or
supplied to Customers for use during the Covenant Not To Sue Periods
or Cure Periods. Only after the expiration of the applicable Covenant
Not To Sue Period and any period in which damages are waived shall a
Party be entitled to make a claim that any Replacement Part itself
Infringes either Party's Patents (a "Replacement Part Infringement
Claim"), provided that the procedure specified in Paragraph 9 below
shall be followed. This Paragraph 8 does not apply to any claim
permitted by Paragraphs 5(c) or 6(c).
9. Arbitration for Consumables Claims and Replacement Parts Claims.
During (i) any Extended Deferral Period, as the exclusive remedy for
Consumables Claims, and (ii) after any applicable Covenant Not To Sue
Periods and any period in which damages are waived, as the exclusive
remedy for
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Replacement Part Infringement Claims (it being understood that during
any Covenants Not To Sue Periods or period in which damages are waived
no Replacement Part Infringement Claims may be asserted), the Parties
shall submit to binding arbitration by Judge Xxxxxx Xxxxx of Joint
Arbitration and Mediation Service ("JAMS") (or, if he for any reason
is not available, Judge Xxxxxx Xxxxxxx of JAMS, or, if he for any
reason is not available, each Party shall submit a list a five (5)
names of preferred JAMS arbitrators to an independent JAMS arbitrator,
who shall ascertain whether there are any common names on such lists;
if there are common names, the independent JAMS arbitrator shall
select any of such commonly named persons at random, and such person
shall be the substitute for Judge Xxxxx and/or Judge Xxxxxxx; if there
are no common names, the Parties shall repeat the foregoing procedure
at least two (2) additional times; if no substitute is chosen at such
point, each Party shall select one JAMS arbitrator unrelated to the
proceedings, and the two arbitrators so selected shall chose the
substitute) for the purposes of determining (a) whether any of the
applicable Replacement Parts and/or Consumables, as applicable,
Infringes either Party's Patents, (b) the validity of the Patent
claimed to be Infringed, (c) the enforceability of such Patent and (d)
if such Patent was Infringed and is both valid and enforceable, what
reasonable royalty shall be paid to the Party bringing the Replacement
Part Infringement Claim for the use of the Replacement Parts after the
Effective Date (but not during any period during which damages are
waived) and/or the Consumables Infringement Claim for the Extended
Deferral Period (a "Consumables Royalty"), as applicable, but for no
other purposes; it being understood that, with respect to any
Consumables Claims, the Party bringing such claim shall not be
required to comply with, nor shall Judge Xxxxx (or any substitute)
require that, the provisions of this Paragraph 9 and any Consumables
Royalty assessed as remedy pursuant thereto, be extended beyond the
Extended Deferral Period. This Paragraph 9 does not apply to any claim
permitted by Paragraphs 5(c) or 6(c).
10. Customer Protection. The Parties agree not to sue or threaten to sue
any Customer of the other for (i) Infringement of any of their Patents
by any of the other's Products sold or shipped to a Customer during
either Covenants Not To Sue Periods or a Cure Period or (ii) use of
such Products, and, in each case, to waive any damages or other
remedies that would otherwise accrue during such periods on account of
such claims. Such covenant shall apply both during all applicable
Covenants Not To Sue Periods and thereafter.
11. Window Pad Claims. If Applied brings any Window Pad Claims and is not
the prevailing Party in any ensuing litigation or legal action
regarding such Claims, it shall, in addition to any other remedies or
damages awarded or imposed, with respect to each such claim in which
it is not the prevailing party, [*] upon entry of final judgment, [*]
in such claim in connection with the ensuing litigation or legal
action.
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12. Scope of Covenants. The Parties agree that this MOU is also, and shall
cause it to be, binding on their respective Subsidiaries and permitted
successors and assigns, subject to any express limitations contained
in Section 1 of Exhibit A.
13. Release. Each Party (and its respective past, present, and future
officers, directors, shareholders, agents, employees, representatives,
accountants, and attorneys) hereby releases, waives, acquits and
forever discharges the other (and its respective past, present, and
future officers, directors, shareholders, agents, employees,
representatives, accountants, and attorneys), and its Customers,
Suppliers and Distributors, from any and all actions, claims,
contracts, liabilities, debts, demands, obligations, costs, fees
(attorney's and other) and damages of all kinds, whether known or
unknown, suspected or unsuspected, contingent or absolute, and whether
existing in the past or the present or the future, which arose under
or relate to in any way or to any extent an allegation of Infringement
by any of the other Party's Products (including, without limitation,
the Civil Actions), in each case based in whole or in part on any act,
event, occurrence, transaction, or omission which took place on or
before the Effective Date, but excluding from such releases: (W)
claims of Infringement of the respective Patents of either Party by
products that fall within the definition of any Excluded Product Area
(it being understood that if only part of a product is within the
definition of any Excluded Product Area, only such part is excluded
from the operation of this release), (X) Window Pad Claims, (Y) if and
when they arise, Permitted Novellus CMP Claims, or (Z) if and when
they arise, Permitted Applied CMP Claims, in the case of clauses (Y)
and (Z), including such claims that arose or relate to any act, event,
occurrence, transaction, or omission which took place on or before the
date such claims became Permitted Novellus CMP Claims or Permitted
Applied CMP Claims). The Parties expressly waive any right that they
may have under the laws or statutes of any jurisdiction which limits
the extension of a general release to certain types of claims, such as
California Civil Codess. 1542 which provides that: "A general release
does not extend to claims which the creditor does not know or suspect
to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor." For the avoidance of doubt, the fact that a particular
allegation of Infringement relates to acts, events, occurrences,
transactions, or omissions some of which took place on or before the
Effective Date and some of which took place after the Effective Date
shall not be construed as a release as to the acts, events,
occurrences, transactions, or omissions that took place after the
Effective Date.
14. Binding Contract. This MOU is a legally binding contract. The Parties
shall use their commercially reasonable best efforts to negotiate and
enter into the Definitive Agreement as promptly as practicable and no
later than the close of business on September 24, 2004, but failure to
do so shall not (i) result in any
11
liability to either Party or (ii) impair the binding and enforceable
character of this MOU.
15. Miscellaneous. EXHIBIT A is incorporated herein by this reference.
12
IN WITNESS WHEREOF, the Parties have executed this MOU as of the Effective Date.
NOVELLUS SYSTEMS, INC. APPLIED MATERIALS, INC.
By: /s/ Xxxxxxx xxx xxx Xxxx By: /s/ MR Splinter
--------------------------------- ---------------------------------
Its: CTO AND EVP Its: CEO
-------------------------------- ---------------------------------
(Title) (Title)
Date: September 19, 2004
APPROVED AS TO FORM:
/s/ Xxxxxxxx X. Xxxxxxxxx 9/20/04
----------------------------------
Xxxxxxxx Xxxxxxxxx, Esq.
/s/ Xxxxxxx Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx, Esq.
EXHIBIT A
MISCELLANEOUS PROVISIONS
Section 1.
(a) No Party may assign any of its rights under this MOU, or delegate any
performance of its obligations under this MOU, except with the prior written
consent of the other Party, which it may give or withhold in its sole discretion
(subject to the balance of this Section 1). All assignments of rights and
delegations of obligations are prohibited under this subsection, whether they
are voluntary or involuntary, by merger, consolidation, dissolution, operation
of law or any other manner. For purposes of this Section 1, a "change of
control" (as defined below) is deemed an assignment of rights and a delegation
of performance of obligations, and a "merger" refers to any merger in which a
Party participates, whether or not it is the surviving or disappearing
corporation. Any purported assignment of rights or delegation of performance in
violation of this Section 1 is void.
(b) Notwithstanding the foregoing Section 1(a), either Party hereto may
assign its rights and delegate its performance of obligations under this MOU,
without the prior written consent of the other Party, if such Party experiences
a "change of control" (as hereinafter defined) and the other conditions set
forth in this Section 1 are fulfilled. For purposes of this MOU, a change of
control of a Party shall be deemed to have occurred at such time as: (i) any
person or entity (or "group" of persons or entities, as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) shall have acquired
(whether by way of merger, consolidation, amalgamation, other corporate
transaction, purchase or in any other manner) beneficial ownership (within the
meaning of Rule 13(d)-3 under the Securities Exchange Act of 1934, as amended)
of securities of the applicable Party (or other securities convertible into such
securities) representing more than fifty percent (50%) of the combined voting
power of all outstanding securities of such Party entitled to vote in the
election of directors; or (ii) any person or entity (or "group" of persons or
entities, as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended) shall have acquired all or substantially all of the assets of a
Party.
(c) The "other conditions" referred to in Section 1(b) above are that: (a)
the acquiring person, entity or group in the change of control (the "Acquiror")
expressly agrees in writing to be bound by each and every term and condition of
this MOU, and be liable for each and every liability and obligation of the
acquired Party hereunder, and (b) the Acquiror provides written notice to the
other Party of the fact of the acquisition and the identity of the Acquiror
within five (5) business days of the closing of any such change of control. If
an assignment of rights is permitted and occurs pursuant to this Section 1, a
contemporaneous delegation is deemed to have occurred and the assignee is deemed
to have assumed the assignor's performance obligations in favor of the
nonassigning party, but without releasing the assigning party of any obligations
or liabilities hereunder.
14
(d) Notwithstanding the foregoing, the rights and obligations set forth in
this MOU will not be assignable by either Party as a debtor-in-possession, or by
a bankruptcy trustee or receiver, to any third party in connection with any
proceeding under applicable bankruptcy law.
(e) Assuming the "other conditions" referred to above are complied with,
if, in addition, an Acquiror expressly agrees in a writing delivered to all
Parties prior to the consummation of the change of control that that the
definition of the term "Patents" in this MOU shall include all of the Acquiror's
and its Subsidiaries' existing and future Patents (a "Patent Undertaking"),
then, upon the consummation of the change of control, the Acquiror shall be
entitled to assert the protections of this MOU, subject to all limitations
herein, as if it were the Party being acquired, other than Paragraph 5 ("5-Year
Covenant Not to Sue For Existing Products") and any associated Cure Period
provisions, it being understood that the products, processes, Consumables, or
tools (and features incorporated in the foregoing) of the Acquiror shall, in
this case, be deemed New Products. For example, in such case all of the
Acquiror's products shall be protected as if they were a Party's New Products,
subject to the terms, conditions and limitations herein. If the Acquiror does
not give a Patent Undertaking, then, assuming the "other conditions" referred to
above are complied with, upon the consummation of the change of control, the
definition of the terms "Patents", "Existing Products" and "New Products" shall
thereafter be deemed to include solely those Patents, Existing Products and New
Products which, immediately prior to the change of control, the Party acquired
by the Acquiror would then properly be bound by or could properly assert. For
example, although the Acquiror will be able to assert the benefits of this MOU
as to the Existing Products and New Products of the Party that it acquired, as
they existed immediately prior to the change of control, it shall not be
entitled to assert this MOU as to its own products; nor will it be obligated to
observe the restrictions herein as to its own Patents; provided, however, that
to the extent either Existing Products or New Products of the Party acquired, as
they existed immediately prior to the change of control, are re-sold, without
substantial modification, by the Acquiror (regardless of the name under which
they are sold), or are included, without substantial modification, into a
product suite of the Acquiror, then such Existing Products and New Products
shall continue to be entitled to the protections of this MOU. Nothing in this
Section 1(e) shall affect any disputes or legal actions in effect by a Party
against an Acquiror prior to the date of the change of control.
Section 2. The Parties, and each of them, represent and warrant to the
other that: they have the corporate power and authority to enter into this MOU;
this MOU has been duly authorized, executed and delivered by such Party,
including the releases and covenants contained herein, and that they and their
counsel have the authority to execute and file the stipulated dismissal referred
to in Paragraph 2 of this MOU; that the execution, delivery and performance of
this MOU does not and will not violate or breach (a) the article of
incorporation or bylaws of such Party, or (b) any contract, agreement, judgment,
order or decree applicable to, or which binds, such Party; that this MOU
constitutes the legal, valid, and binding obligation of each of them,
enforceable in accordance with its terms this MOU shall be binding upon, and
inure to the benefit of, the Parties and each of their respective Subsidiaries,
divisions, officers, directors, employees,
15
agents, attorneys, legal representatives, and (to the extent permitted by
Section 1) successors, and assigns; they have not transferred or assigned or
purported to transfer or assign any of the claims, causes of action, demands,
costs, obligations, damages, or liabilities being released under this MOU, and
each party agrees to indemnify the other from and against any claim based upon,
connected with, or arising out of any such assignment or transfer or purported
assignment or transfer.
Section 3. Except as otherwise provided herein, the terms and
provisions of this MOU and the negotiations and communications leading to it are
confidential and shall not be disclosed by any Party to anyone other than
counsel for such Party. The foregoing notwithstanding, each Party may (a)
disclose to third parties only the fact that the Parties have settled and
dismissed the above-referenced litigations with prejudice and that each Party is
to bear its own costs and fees; (b) disclose this MOU and its terms to a third
party in connection with a financing, merger or acquisition, or stock offering;
provided, that, except for portions of this MOU that have been disclosed
publicly in compliance with this Section 3, the Party seeking to disclose this
MOU shall use [*] MOU in connection with such transaction to agree to a
confidentiality agreement covering this MOU [*], it being understood that [*]
regarding any disclosure pursuant to this clause (b) or to provide copies of a
confidentiality agreement referred to herein, if one is entered into, nor will
the [*] for failure to obtain the aforementioned confidentiality agreement; (c)
make such disclosures of this MOU and its terms as are mutually agreed upon by
all Parties in writing; (d) make such disclosure of this MOU and its terms as
are required under Securities and Exchange Commission rules and regulations; (e)
issue a press release in form and substance agreeable to them mutually; and (f)
make such other disclosure of the MOU and its terms as are required by law,
provided that (A) with respect to clause (d), it is understood that each Party
[*] and that each Party shall [*] provided by the other Party [*] regarding the
content of the disclosure required and whether [*], it being understood that
neither Party is [*], and (B) respect solely to this clause (f), the Party
required to make the disclosure shall notify all other Party at least fourteen
(14) days in advance of any such disclosure, shall allow the other Party to
intervene in any proceeding (at such other Parties' own cost and expense, in a
reasonable manner, and in consultation with all Parties hereto) to protect the
confidentiality of this MOU and its terms, and shall undertake reasonable
efforts ([*] that would reasonably result in [*]) to require the continued
confidentiality of this MOU and its terms (for example, by requesting that [*].
Notwithstanding the foregoing, all portions of this MOU that have been publicly
disclosed in compliance with this Section 3 shall no longer be subject to the
limitations on disclosure in this Section 3.
16
Section 4. This MOU and the dismissals, as well as the fact that the
Parties have entered into this MOU and the dismissals, shall not be admissible
against either Party for any purpose in any future litigation between the
Parties except to enforce the terms of the MOU. Nothing herein shall be
construed as an admission of liability on the part of any Party hereto. In
addition, neither Party shall assert that compliance with this MOU or any
Definitive Agreement supports in any way a defense of estoppel, laches, or
similar defenses; provided, however, that nothing herein shall be deemed to toll
any Patent statute of limitations that is otherwise applicable. Any
determination of as to Infringement, validity or enforceability of a Patent
pursuant to the royalty arbitration provided for in Paragraph 9 of this MOU, and
any royalties paid pursuant thereto, shall not have legal effect (whether by way
of claim or issue preclusion or otherwise) in any court proceeding that may
arise in connection with the Patents at issue in the arbitration.
Section 5. Any legal action relating to or arising out of this MOU, and all
other Patent Infringement or other legal disputes or claims (whether or not
related to Patents or covered by this MOU) between the Parties shall be
commenced and maintained in the sole and exclusive IN PERSONAM jurisdiction of
the United States District Court for the Northern District of California, unless
subject matter jurisdiction does not lie in such court, in which case all such
legal actions, disputes or claims shall be commenced and maintained in the sole
and exclusive IN PERSONAM jurisdiction of the Santa Xxxxx County Superior Court,
San Jose, California. The parties hereto consent to the jurisdiction of said
court, as applicable, and to service of process outside of the State of
California pursuant to the requirement of such court in any matter subject to
it. This MOU shall be deemed to have been entered into in the State of
California and shall be interpreted and construed in accordance with the laws of
the State of California applicable to agreement executed and to be performed
therein by each party (and without giving effect to the conflict of laws
provisions of such state).
Section 6. Except as provided in Paragraph 11 of this MOU, in the event
that either Party is required to defend any claim brought by the other Party
that is released by this MOU or the subject of the covenants not to sue granted
herein, the prevailing Party shall be entitled [*] to enforce this MOU.
Section 7. The Parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this MOU were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, except where injunctive relief is expressly prohibited
by this MOU, the Parties shall be entitled to an injunction or injunctions to
prevent breaches of this MOU and to enforce specifically the terms and
provisions hereof in any court permitted by Section 5, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 8. Unless otherwise specified herein, all notices, requests,
demands, consents and other communications hereunder shall be transmitted in
writing and shall be deemed to have been duly given when hand delivered; upon
delivery when sent by express mail, courier, overnight mail or other recognized
overnight or next day delivery service, charges prepaid; three (3) days
following the date mailed when sent by registered
17
or certified United States mail, postage prepaid, return receipt requested; when
deposited with a public telegraph company for immediate transmittal, charges
prepaid; or when sent by telecopier, with a confirmation copy sent by recognized
overnight courier, next day delivery, charges prepaid, in each case addressed as
follows.
Notices to Novellus:
[*]
[*]
Novellus Systems, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to (which does not constitute notice):
Xxxxxx Xxx, Esq.
Xxxxxxxx Xxxxxxxxx, Esq.
IRELL & XXXXXXX LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Notices to Applied:
[*]
[*]
[*]
Applied Materials, Inc.
0000 Xxxxxx Xxxxxx, X/X 0000
Xxxxx Xxxxx, XX 00000
With a copy to (which does not constitute notice):
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx Xxxxxx, Esq.
XXXX XXXXXXX & XXXXXX LLP
000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
or such other address or facsimile number as may be designated by either party
hereto by written notice to the other in accordance with this Section 8.
Section 9. This MOU may not be amended, supplemented or modified, except in
a writing duly signed by duly authorized officers of all Parties hereto. Any
such amendment, supplement or modification shall not require additional
consideration to be effective.
Section 10. This MOU (including its exhibits, agreements and schedules
attached hereto or specifically called for herein) constitutes a single
integrated contract expressing the entire agreement of the Parties with respect
to the subject matter hereof, and supercedes all prior or contemporaneous oral
and written agreements and discussions
18
with respect to the subject matter hereof and, except as specifically set forth
herein, there are no other agreements, written or oral, express or implied,
between the Parties hereto with respect to the subject matter of this MOU.
Section 11. This MOU may be executed in multiple counterparts, each of
which, for all purposes, shall be deemed an original, but all of which taken
together shall constitute one single agreement between the Parties.
Section 12. If any provision of this MOU is held to be illegal, invalid or
unenforceable under any present or future law by a court of competent
jurisdiction, and if the rights or obligations of any Party hereto under this
MOU will not be materially and adversely affected thereby, (a) such provision
will be fully severable, (b) this MOU will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this MOU will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added as a part of this MOU a legal,
valid and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
Section 13. This MOU has been fully reviewed and negotiated by the Parties
hereto and their respective counsel under the aegis of Judge Xxxxxx Xxxxx of
JAMS. Accordingly, in interpreting this MOU, no weight shall be placed upon
which Party hereto or its counsel drafted the provision being interpreted and
prior drafts of this MOU shall be disregarded and inadmissible as proof or
indication of the intent of the Parties or for any other purpose in the event of
any other controversy regarding the meaning, construction or interpretation of
this MOU.
Section 14. Nothing in this MOU is intended or shall be deemed to confer
any rights or benefits upon any person or entity other than the Parties hereto
or to make or render any such other person or entity a third-party beneficiary
of this MOU.
Section 15. No release, discharge or waiver of any provision hereof shall
be enforceable against or binding upon either party hereto unless in writing and
executed by a duly authorized officer of each of the parties hereto. Neither the
failure to insist upon strict performance of any of the agreements, terms,
covenants or conditions hereof, nor the acceptance of monies due hereunder with
knowledge of a breach of this MOU, shall be deemed a waiver of any rights or
remedies that either party hereto may have or a waiver of any subsequent breach
or default in any of such agreements, terms, covenants and conditions.
Section 16. The recitals hereto are incorporated herein as if set forth in
this place.
Section 17. Except as may be expressly set forth herein, nothing in this
MOU shall be construed as:
(a) a transfer of any technology, trade secrets, know-how or show-how;
19
(b) a warranty, representation or promise by either Party relating to any
patents, including, without limitation, the validity, enforceability, scope or
suitability for any purpose of any patent or the non-Infringement of
intellectual property rights or other rights owned by third parties;
(c) an obligation by either Party to furnish any manufacturing or
technical information to the other Party;
(d) an obligation by either Party to bring or prosecute actions or suits
against third parties, or defend actions or suits brought against the other
Party, or to indemnify the other Party for any reason;
(e) imposing any liability on either Party, or conferring any right upon
the other Party to recover any damages, with respect to the manufacture, use,
importation or sale of products or services by the other Party or by third
parties;
(f) conferring upon either Party the right to use in advertising,
publicity, or otherwise any trademark, service mark, or trade name of the other
Party; or
(g) conferring upon either Party, by implication, estoppel or otherwise,
any right or license under any patents or other industrial or intellectual
property rights (including, without limitation, trademarks, service marks, trade
names, and copyrights) except for the rights expressly granted herein, or an
inducement by either Party to the other Party to use any patents or to make,
use, import or sell products covered by the other Party's patents, or an
inducement of a Party's customers to purchase or otherwise use products covered
by the patents of the other Party.
Section 18. Except as otherwise expressly provided in this MOU, the
following rules shall apply hereto: (i) the singular includes the plural and the
plural includes the singular; (ii) "or" is not exclusive and "include" and
"including" are not limiting; (iii) a reference to any agreement or other
contract includes any permitted modifications, supplements, amendments and
replacements; (iv) a reference in this MOU to a Paragraph, section or exhibit is
to the Paragraph, section of or exhibit to this MOU unless otherwise expressly
provided; (v) a reference to a section or Paragraph in this MOU shall, unless
the context clearly indicates to the contrary, refer to all sub-parts or
sub-components of any said section or Paragraph; (vi) words such as "hereunder,"
"hereto," "hereof," and "herein," and other words of like import shall, unless
the context clearly indicates to the contrary, refer to the whole of this MOU
and not to any particular clause hereof; and (vii) the headings of the various
Paragraphs, sections and subparagraphs and subsections of this MOU have been
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this MOU.
[End]
