EXHIBIT 10.18
R&D AGREEMENT
THIS R&D AGREEMENT (this "Agreement") is entered into as of March 29,
1996 by and between Plasma & Materials Technologies, Inc., a California
corporation (the "Company"), and PMT CVD Partners, L.P., a California limited
partnership (the "Partnership").
R E C I T A L S:
- - - - - - - -
A. The Partnership was established to develop and refine chemical
vapor deposition ("CVD") technology for commercial use in connection with the
production of integrated circuits.
B. The Company has substantial technological expertise with respect
to the production of integrated circuits and presently employs personnel with
significant technical experience in such area, making the Company well
positioned to assist the Partnership with the development and refinement of CVD
technology and related commercial applications.
C. The Partnership wishes to engage the Company to perform CVD
research and development efforts for and on behalf of the Partnership, and the
Company wishes to accept such engagement on the terms and conditions set forth
herein.
A G R E E M E N T:
- - - - - - - - -
1. Engagement. The Partnership hereby engages the Company to use
----------
commercially reasonable best efforts to develop and refine CVD technology for
commercial use in connection with the production of integrated circuits (the
"Project"). The Company hereby accepts such engagement, as further set forth
herein.
2. Xxxxxxxx. The Company shall xxxx the Partnership for all costs
--------
and expenses directly and indirectly arising from or relating to CVD research
and development ("CVD Costs and Expenses"). The Company presently anticipates
that such costs and expenses shall be incurred during each calendar year
substantially in accordance with the Preliminary Budget set forth on Exhibit A
hereto. With respect to 1997 and each subsequent calendar year during the term
of this Agreement, the Company shall prepare and present to the Partnership, at
least thirty (30) days prior to the commencement of each such year, a revised
Preliminary Budget for each such year which shall set forth the costs and
expenses which the Company then anticipates to be incurred during each such
year. The Company shall promptly notify the Partnership during the term of this
Agreement if, at any time, the Company reasonably determines that CVD Costs and
Expenses will be incurred in an amount that exceeds by at least twenty percent
(20%) the amount set forth in the applicable Preliminary Budget (as so revised)
for any given calendar year, and such notice shall include a reasonably detailed
report describing the reasons for such contemplated deviation. All xxxxxxxx by
the Company shall be sent on a quarterly basis within fifteen (15) days after
the
close of each calendar quarter and shall cover all CVD Costs and Expenses
incurred during the calendar quarter then ended, and the Partnership will
reimburse the Company for the amount so billed within fifteen (15) days after
invoicing by the Company, provided that, on execution hereof, the Partnership
will immediately reimburse the Company for all CVD Costs and Expenses incurred
by the Company since January 1, 1996. Notwithstanding anything to the contrary
contained herein, in no event shall the aggregate CVD Costs and Expenses
reimbursable by the Partnership exceed Six Million Five Hundred Thousand Dollars
($6,500,000), unless otherwise agreed upon in writing by the Company and the
Partnership ($6,500,000, or such higher amount so agreed upon, being the
"Maximum Commitment Amount").
3. CVD Costs and Expenses. CVD Costs and Expenses shall include,
----------------------
without limitation, all direct and indirect costs associated with CVD research
and development, such as the base salaries of all PMT personnel engaged in CVD
research and the Company's average overhead rate with respect to such personnel,
which shall not exceed three and one-half times (3.5x) the aggregate of all such
base salaries.
4. Staffing. The Company shall staff the engagement described in
--------
Section 1 with Company personnel who are familiar with basic CVD technology and
who otherwise have training and experience relevant thereto. Additionally, the
Company will hire additional personnel, including without limitation, a
president and/or general manager, as may be requested from time to time by the
Partnership.
5. Development Plan. The Company shall use its commercially
----------------
reasonable best efforts to complete the Project and thereby develop, manufacture
and commercialize the Products in accordance with the Development Plan described
in Exhibit B, which Development Plan shall be revised and updated quarterly by
the Company, if and to the extent reasonably needed, to reflect the actual
progress of the Project and additional technical, industry and other data then
available to the Company which the Company reasonably believes necessitates such
revision. The Company shall provide the Partnership with a written report,
within thirty (30) days after the end of each calendar quarter with respect to
which xxxxxxxx for CVD Costs and Expenses are rendered hereunder, which shall
summarize the progress and/or issues encountered by the Company during the
calendar quarter then ended and shall set forth the Company's revisions, if any,
to the Development Plan pursuant to this Section 5.
6. Reimbursement of Acquisition Costs and Expenses. During the term
-----------------------------------------------
of this Agreement, the Company may determine that the development of CVD
technology requires the acquisition or licensing from unaffiliated third parties
of existing research, technology or intellectual property rights, including
patents and copyrights (collectively, "Third Party Rights"), provided that the
acquisition or licensing of such Third Party Rights must not be reasonably
anticipated by the Company to impair the Company's ability to complete the
Project within the Maximum Commitment Amount. If the Company deems it
2
appropriate to acquire or license such Third Party Rights, such acquisition or
licensing will be in the name of the Partnership and the Partnership will
reimburse the Company with respect to any and all costs and expenses incurred
directly or indirectly by the Company in connection with such acquisition or
licensing, including without limitation, the purchase price or license fees for
such Third Party Rights and all costs and expenses incidental to the acquisition
thereof. Additionally, such rights may be acquired subject to continuing
royalty obligations of the Partnership with respect to actual future sales, in
which case the Partnership shall execute all necessary documents.
7. Ownership of Work Product. The Partnership shall be the sole and
-------------------------
exclusive owner of all inventions, patents, copyrights, trade secrets and all
other intellectual property developed or invented by employees, consultants or
contractors of the Company pursuant to this Agreement or otherwise resulting
from the work performed on behalf of the Partnership by the Company pursuant to
this Agreement (all such inventions, patents, copyrights, trade secrets and
other intellectual property being herein referred to as the "Partnership
Intellectual Property"). If the Company engages any consultants or independent
contractors to perform any part of the development work subject to this
Agreement, the Company shall obtain such persons' written approval of this
provision in advance and will take all steps necessary to ensure that the
inventions and works of such consultant or contractor are owned by the
Partnership pursuant hereto. The Company shall, with respect to all Partnership
Intellectual Property developed on behalf of the Partnership pursuant hereto,
take all necessary action to make such applications and filings for, and during
the term hereof shall be responsible for maintaining, all patents, copyrights
and other rights of the Partnership in and to any and all patentable or
copyrightable material constituting part of the Partnership Intellectual
Property, to the extent such applications or filings are commercially reasonable
and subject to reimbursement of all out-of-pocket expenses incurred by the
Company, including without limitation, legal fees and expenses, in making or
maintaining such applications or filings.
8. License to Company. As further consideration to the Company
------------------
hereunder, the Partnership hereby grants to the Company, for a term commencing
upon the date hereof and continuing through but terminating on March 29, 2001,
an exclusive, non-transferable, worldwide and royalty-bearing license, under the
Partnership Intellectual Property, to design, develop, manufacture, have
manufactured, use, sell, lease or otherwise dispose of any and all CVD products
for the manufacture of semiconductors, or any part thereof or spare part
therefor. The Company shall pay the Partnership a royalty (the "Royalty") equal
to a percentage of the Net Sales Price, as defined below, of any product which
uses or incorporates any of the Partnership Intellectual Property for CVD
applications (a "Product"), which percentage shall be as follows: for Products
delivered to customers in Japan and other countries in Asia (excluding only
Korea), two percent (2%) commencing July 1, 1996 and throughout the term of this
license; and for Products delivered anywhere else in the world, five percent
(5%) for Products sold commencing July 1, 1996 and through December 31, 1997,
four and one-half percent (4.5%) for Products sold in calendar 1998,
3
four percent (4%) for Products sold in calendar 1999, and three and one-half
percent (3.5%) for Products sold thereafter. Notwithstanding anything contained
in this Section 8 to the contrary, no Royalty shall be payable upon the sale of
spare parts with respect to any Products then or previously sold. The foregoing
license may be sublicensed by the Company, provided that the Company shall be
responsible for including all sales of Products by sublicensees for purposes of
the reporting and royalty obligations of the Company hereunder (with the same
effect as if such sales were made by the Company).
9. Royalty Reports and Payments.
----------------------------
(a) Royalties shall be payable quarterly on or before the last day
of April, July, October and January of each year for Products sold during the
immediately-preceding calendar quarter ending March, June, September and
December, respectively. Each Royalty payment will be accompanied by a report
setting forth the calculations of the Royalties paid, including the date,
quantity and Net Sales Price of the Products sold. If the Company leases the
Products to a third party, then an appropriate Royalty payment shall be made in
connection with each receipt of a lease payment by the Company.
(b) For purposes of calculating the Royalty, a Product shall be
deemed sold at the time the Product is accepted by the customer after delivery
to the customer and final payment for the Product is due and payable. If any of
the Products are subsequently rejected by a customer, then Royalties paid for
such Products will be credited against future Royalties payable.
(c) If the Company fails to report or pay any Royalties due under
this Section 9, then, if such failure to report or pay is not cured within
thirty (30) days after demand therefor by the Partnership, the Partnership may,
at its election, upon delivering written notice thereof to the Company,
terminate the license granted hereby, in addition to any other remedies that may
be available to the Partnership.
(d) For purposes of the foregoing, the term "Net Sales Price"
shall mean the sales price of Products sold by the Company, excluding all sales
and value-added taxes and other similar taxes (other than taxes based upon the
income of the Company), insurance charges, customs duties, packaging or shipping
charges, cash and other discounts, commissions, specially itemized and non-
recurring engineering or similar charges for services performed by the Company,
and amounts refunded or credited on returned or rejected Products.
10. Audit. The Company agrees to keep complete and accurate records
-----
of all amounts payable by or due to the Partnership hereunder, including all CVD
Costs and Expenses and the amount of all Royalties due to the Partnership. The
Partnership shall have the right, at its expense and not more than once in each
calendar year, to have a certified public accountant of national prominence
reasonably acceptable to the Company examine
4
such books and records of the Company as are reasonably necessary for purposes
of verifying such amounts, and, among other things, to report compliance or
noncompliance with the Royalty obligations of the Company hereunder. If any
such audit determines that the Company has under-reported Royalties in any
report by more than five percent (5%), or overcharged the Partnership for CVD
Costs and Expenses by more than ten percent (10%), then the Company shall
reimburse the Partnership for the cost of such audit. Any information obtained
in the course of an audit under this Section 10 shall be maintained in
confidence by the Partnership and its agents as confidential and proprietary
information.
11. Assignment. This Agreement shall be binding upon the
----------
transferees, successors, assigns and legal representatives of the parties
hereof.
12. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California.
13. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed given if delivered personally
or if sent by a private courier service of national prominence, or by registered
or certified mail, postage prepaid, addressed as follows:
If to the Plasma & Materials Technologies, Inc.
Company, to: 0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx
With a Xxxxxxx & XxXxxxxx
copy to: 0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
If to the PMT CVD Partners, L.P.
Partnership, to: 0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xx Xxxxx
With a Xxxxxx Godward Xxxxxx Xxxxxxxxx &
copy to: Xxxxx
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
5
14. Counterparts. This Agreement may be executed in counterparts
------------
with the same force and effect as if each of the signatories had executed the
same instrument.
15. Term; Termination. This Agreement shall terminate on March 29,
-----------------
2001. This Agreement may be terminated earlier by either party after the
delivery of written notice to the other party of a material breach by the other
party of any material provision set forth herein, provided that the breaching
party shall have thirty (30) days following receipt of such notice to cure such
breach, to the reasonable satisfaction of the non-breaching party. No
termination of this Agreement shall affect the rights and obligations of the
parties arising as of such termination and, notwithstanding anything contained
herein to the contrary, (a) if this Agreement is terminated by the Company by
reason of the Partnership's breach as provided above, the rights of the Company
under Section 8, and its attendant obligations under Section 9, shall become
perpetual, and (b) the rights and obligations of the parties under Sections 7,
10 and 16 shall survive such termination.
16. Confidentiality. Each of the Company and the Partnership shall
---------------
hold and keep confidential all information, documents and data relating to CVD
technology which are received from the other party during the term of this
Agreement.
6
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
COMPANY: PLASMA & MATERIALS TECHNOLOGIES, INC.,
a California corporation
By: /s/ Xx. Xxxxxx X. Xxxxxxxx
---------------------------
Xx. Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
PARTNERSHIP: PMT CVD PARTNERS, L.P.,
a California limited partnership
By: CVD, Inc.,
General Partner
By: /s/ Xxxx X. Xx Xxxxx
---------------------
Xxxx X. Xx Xxxxx
Chief Financial Officer and Secretary
7
Exhibit A
PARTNERSHIP 1996 BUDGET
-----------------------
A-1
Exhibit B
DEVELOPMENT PLAN
----------------
CVD RESEARCH & DEVELOPMENT PROGRAM TASKS
1. January - July 1996: Scope/Project Parameters for Early Prototype
------------------------------------------------------------------
Development
-----------
Resolve issues and obtain data on the following variables:
A. Shorten Clean Process Time
B. Increase Speed of Xxxxx Declamping
C. Increase Speed of top coat deposition rate
D. Reduce Particle Count
2. July - October 1996: Early Stage Productization
------------------------------------------------
A. Integrate Prototype Development
B. Resolve Integration Issues
C. Build 2 tools, 1 for PMT and 1 for Anelva
3. July - December 1996: Strategic Marketing Development
------------------------------------------------------
A. Survey Customers for Needs
B. Develop Business and Marketing Plans
C. Line up JDP Partners
D. Execute Marketing and Business Plan
4. October - December 1996: IRONMAN and Beta Unit Production
----------------------------------------------------------
A. Complete IRONMAN testing
B. Build 1 to 2 Beta Units for JDP programs, to be ready for system
delivery in December 96/January 97
DEVELOPMENT RESOURCES REQUIRED
1. March - December 1996: Early Prototype Development
---------------------------------------------------
10 Engineers including process, CAD, software, technicians and
designers
1 General Manager/President to coordinate and manage work program
2. July - December 1996: Business/Marketing Plan
----------------------------------------------
1 Strategic Marketing Executive
3. July 1996 - March 1997: Mid Stage Productization
-------------------------------------------------
8-10 additional engineers for production/assembly and IRONMAN testing
B-1
Exhibit B (cont'd)
DEVELOPMENT PLAN
----------------
OTHER
Additional plan, personnel resources, capital equipment requirements will be
scoped and agreed upon at the 1996 mid-year status meeting.
B-2
