Document:

Exhibit 10.3

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

[*] COLLABORATIVE DEVELOPMENT PROGRAM AGREEMENT

 

This [*]COLLABORATIVE DEVELOPMENT PROGRAM AGREEMENT (“Agreement”) is made as of March 15, 2010 (“Effective Date”) by and among TOSHIBA CORPORATION doing business at 1-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8001, Japan (together with its Affiliates, “Toshiba”), SANDISK CORPORATION doing business at 601 McCarthy Boulevard, Milpitas, CA 95035 USA (together with its Affiliates, “SanDisk”), and INTERMOLECULAR, INC.  doing business at 2865 Zanker Road, San Jose, CA 95134 USA (together with its Affiliates, “Intermolecular”).  Toshiba, SanDisk and Intermolecular shall be referred to herein individually as a party or collectively as the parties.

 

BACKGROUND

 

WHEREAS, Toshiba, SanDisk and Intermolecular desire to enter into a collaborative development program for the further development of certain [*] (“[*]”) technology as specified in this Agreement, and based on (a) the prior work between SanDisk and Intermolecular to develop [*] from [*], (b) subsequent [*] development work conducted independently by Intermolecular from [*], (c) work provided by Toshiba and SanDisk, and (d) the collaborative efforts of the parties under this Agreement;

 

NOW THEREFORE, in consideration of the mutual promises and covenants contains herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intending to be legally bound, the parties agree as follows:

 

1.                                      DEFINITIONS

 

1.1                               “Affiliate” shall mean any entity controlling, controlled by or under common control with, a party to this Agreement.  For purposes of this Agreement, the direct or indirect ownership of more than fifty percent (50%) of the outstanding securities of, or voting interest in, an entity shall be deemed to constitute control.

 

1.2                               “Category One IP” shall mean [*].

 

1.3                               “Category Two IP” shall mean [*].

 

1.4                               “Category Three IP” shall mean [*].

 

1.5                               “Category Four IP” shall mean [*].

 

1.6                               “Category Five IP” shall mean shall mean [*].

 

1.7                               “Category Six IP” shall mean [*].

 

1.8                               “Category Seven IP” shall mean [*].

 

1.9                               “Category Eight IP” shall mean shall mean [*].

 

Intermolecular Confidential

 

 

1.10                        “CDP IP” shall mean collectively or separately [*] and [*].

 

1.11                        “CDP Chip” shall mean [*].

 

1.12                        “Non-CDP Chip” shall mean one or more Die packaged or otherwise connected together, utilizing CDP IP outside the CDP Field.

 

1.13                        “Collaborative Development Program” or “CDP” shall mean the activities that are conducted by Toshiba, SanDisk and Intermolecular under this Agreement in accordance with the Development Plan.

 

1.14                        “CDP Field” shall mean [*] semiconductor integrated circuit [*] chips.

 

1.15                        “Confidential Information” shall mean any information disclosed by one party to any other party in connection with this Agreement, whether in electronic, written, graphic, oral, machine readable or other tangible or intangible form, that is marked or identified at the time of disclosure as “confidential” or “proprietary” or in some other manner so as to clearly indicate its confidential nature.  Except as specifically provided in Section 6 below, the terms and conditions of this Agreement shall constitute Confidential Information of each of the parties.

 

1.16                        “Development Plan” shall mean the written plan describing the activities to be conducted by each party and the target specifications to be met for deliverables during the CDP that is attached hereto as Exhibit B.

 

1.17                        “Die” shall mean a semiconductor integrated circuit in die form.

 

1.18                        “Foreground IP” shall mean the [*] and [*] developed under the CDP as [*] and [*]; provided however, that Foreground IP excludes HPC Technology, HPC Derivatives, Non [*] Foreground IP and [*] Design IP.  For purposes of categorization, conventional inventorship rules apply (except for [*] and [*], which shall be subject to Sections 3.2.2 and 3.2.3).

 

1.19                        “FTE” shall mean an Intermolecular employee assigned to the CDP, based on approximately one hundred sixty-six (166) hours of professional services performed by one qualified person during a one month period, or the same number of hours in aggregate performed by two or more qualified persons during a one month period

 

1.20                        “HPC Derivatives” shall mean all improvements, derivatives and modifications to any HPC Technology, developed by any party during the course of the CDP based on access to or use of Intermolecular-provided tools, software or information enabling the use of HPC Technology.

 

1.21                        “HPC Technology” shall mean all Technology, including the Workflow Infrastructure, and without reference to any Toshiba or SanDisk Confidential Information or any Toshiba and SanDisk Contributed Background IP, used for the simultaneous, parallel, or rapid serial:  (i) design, (ii) synthesis, (iii) processing, (iv) process sequencing, (v) process integration, (vi) device integration, (vii) analysis, or (viii) characterization of more than two (2) compounds, compositions, mixtures, processes, or synthesis conditions, or the structures derived from such on a single wafer.  It is understood that any such test vehicles include physical and/or electrical 

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

characterization devices such as test structures or chips used in the design, process development, manufacturing process qualification, and manufacturing process control of integrated circuit devices to the extent that such devices are used in simultaneous, parallel, and rapid serial processing.  Nothing in this Agreement shall limit the use of test wafers used in research and development using nominally uniform processing.  It is also understood that HPC Technology does not include the use of commercially available equipment in commercial manufacturing for nominally uniform processing of one or more identical integrated circuits on a single substrate, or the use of such equipment in research and development for nominally uniform processing of one or more integrated circuits on a single substrate.  Toshiba and/or SanDisk existing or practiced technology or methodologies, and/or publicly known tools and methods, are excluded from the definition of HPC Technology.  HPC Technology excludes [*] Design IP.

 

1.22                        “IM [*] Developed Technology” mean the [*] Technology developed independently by Intermolecular subsequent to [*] and prior to [*] that is attached hereto as Exhibit C.  Such exhibit shall not restrict or modify Toshiba’s and SanDisk’s rights with respect to their respective independent ownership rights of intellectual property rights and technology independently developed by them respectively.

 

1.23                        “Informatics Software” shall mean the Intermolecular-proprietary software platform enabling the operation of Dry and Wet Workflows and the gathering and sharing of CDP information through a web-based interface.

 

1.24                        “Initial Term” means the [*] year period from the Effective Date.

 

1.25                        “Intellectual Property Rights” shall mean all U.S.  and foreign rights in and to all (i) patents and patent applications, including all divisions, substitutions, continuations, continuation-in-part applications, and reissues, re-examinations and extensions thereof, (ii) copyrights and other rights in works of authorship, (iii) unpatented information, trade secrets, know-how, invention disclosures, engineering notebooks, confidential information, data, or materials, (iv) mask work rights, and (v) any other intellectual or other proprietary rights of any kind now known or hereafter recognized in any jurisdiction.

 

1.26                        “Intermolecular Background IP” shall mean (i) the Original CDP Developed Technology; (ii) the IM [*] Developed Technology; (iii) all Intellectual Property Rights in subsections (i) and (ii); and (iv) Technology and Intellectual Property Rights created, conceived or developed by or for Intermolecular outside of or independently from the Collaborative Development Program, provided that each of (i), (ii), (iii) and (iv) are to the extent unanimously preapproved in writing by the IP Committee for submission to the CDP.  If Toshiba and/or SanDisk do not approve for submission any Technology or Intellectual Property Rights proposed for inclusion by Intermolecular under categories (i), (ii) and (iii) above, such Technology or Intellectual Property Rights shall not be deemed licensed under Section 4 below and shall be excluded from the covenant set forth in Section [*] and, if a patent or patent application, shall not be subject to the provisions of Section [*].  Intermolecular Background IP excludes HPC Technology.

 

1.27                        “Intermolecular Customer” shall mean a Third Party that engages in a development program with Intermolecular where Intermolecular performs development services 

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

in the field of semiconductors, including but not limited to semiconductor materials, semiconductor device technology, and/or semiconductor manufacturing equipment, process and characterization technology on behalf of and/or in collaboration with such Third Party, in a manner similar to the development program described in this Agreement.

 

1.28                        “Licensed IP” shall mean [*] and [*].

 

1.29                        “[*]” shall mean [*].

 

1.30                        “[*] Foreground IP” shall mean the materials, process, structure and other Technology included in [*] developed pursuant to the CDP, but not [*] Design IP, and all Intellectual Property Rights therein or thereto.

 

1.31                        “Non [*] Foreground IP” shall mean the materials, process, structure and other Technology included in [*] that are not [*] based and all Intellectual Property Rights therein or thereto.  The parties agree that no such Non [*] Foreground IP are intended to be developed pursuant to the CDP.

 

1.32                        “[*] Technology” means [*] derived from CDP IP, that [*]  per physical [*]; provided that such [*] Technology-based devices (i) provide similar functional capabilities as the [*] -based [*] technology produced by SanDisk and Toshiba as of the Effective Date and (ii) are used for [*]  per physical [*] at the time of shipment by SanDisk or Toshiba.

 

1.33                        “New [*] Concepts” shall mean Intellectual Property Rights and Technology that is contributed by Toshiba and/or SanDisk that the parties agree to develop pursuant to the CDP that does not contain, and is not a derivative, modification, improvement and enhancement of, the Intermolecular Background IP or the Toshiba and SanDisk Contributed Background IP.

 

1.34                        “Original CDP Developed Technology” shall mean the [*] and [*] Documentation as agreed upon by SanDisk and Intermolecular on [*], and attached hereto as Exhibit D.  Such exhibit shall not restrict or modify Toshiba’s and SanDisk’s rights with respect to their respective independent ownership rights of intellectual property rights and technology independently developed by them respectively.

 

1.35                        “CDP Product” shall mean a product containing one or more CDP Chips manufactured and offered for sale by or for Toshiba or SanDisk.  CDP Products may be delivered to customers in any form including wafer form, packaged and unpackaged [*] Die, and finished goods.

 

1.36                        “Non-CDP Product” shall mean a product containing one or more Non-CDP Chips manufactured and offered for sale by or for Toshiba or SanDisk.  Non-CDP Products may be delivered to customers in any form including wafer form, packaged and unpackaged Die, and finished goods.

 

1.37                        “[*]” shall mean a [*], including the [*], and [*] if any are needed, and the [*].

 

1.38                        “[*] Design IP” shall mean any of the following arising or resulting from the Development Program, including any Intellectual Property Rights or Technology therein:  (i) [*] 

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Technology device designs; (ii) [*] Technology circuit designs; (iii) [*] Technology chip architectures; (iv) [*] process integration technology; (v) [*] steering elements (e.g.  [*]); (vi) device and chip operation and testing; and (vii) any and all [*].

 

1.39                        [intentionally left blank]

 

1.40                        “Technology” shall mean tangible embodiments of Intellectual Property Rights, whether in electronic, written or other media, including techniques, methodologies, processes, designs, test vehicles, synthetic procedures, systems, or any of combinations of the foregoing, as well as any directories, source code, object code, firmware, technical documentation, specifications, requirements, designs, design drawings, design files, and quality control data, schemes, schematics, diagrams, bills of material, netlists, build instructions, test reports, mask works, data sheets, reference designs, net lists, RTL, algorithms, formulae, photomasks, databases, lab notebooks, manuscripts, records, prototypes, samples, studies, and invention disclosure forms.

 

1.41                        “Term” shall mean the Initial Term and any renewals thereof pursuant to Section 11.1.

 

1.42                        “Toshiba and SanDisk Contributed Background IP” shall mean Intellectual Property Rights and Technology related [*] owned by Toshiba and/or SanDisk that is provided by Toshiba and/or SanDisk to Intermolecular at any time under the CDP.  All such Technology or Intellectual Property Rights shall be specified in the Development Plan or specified by Toshiba or SanDisk during the CDP under Section 2.2.

 

1.43                        “Third Party” shall mean any person or entity other than Toshiba, SanDisk and Intermolecular, and any permitted assigns.

 

1.44                        “Third Party Licensee” shall mean an entity other than Toshiba, any Toshiba Affiliate, SanDisk or any SanDisk Affiliate to whom a license to all or a portion of the Licensed IP or a license to any Joint IP, as applicable, is granted under Section 5.10.

 

1.45                        “Third Party CDP Product” shall mean a product (which is neither a CDP Product nor a Non-CDP Product) containing one or more CDP Chips manufactured and offered for sale by or for a Third Party Licensee to a customer other than SanDisk and/or Toshiba. [*].

 

1.46                        “Third Party Non-CDP Product” shall mean a product (which is neither a CDP Product nor a Non-CDP Product) containing one or more Non-CDP Chips manufactured and offered for sale by or for a Third Party Licensee to a customer other than SanDisk and/or Toshiba.  [*].

 

1.47                        “Workflow Infrastructure” shall mean the HPC processing tools implemented by Intermolecular ([*]), characterization infrastructure (including physical metrology and electrical test equipment), and the Informatics Software designed or optimized by Intermolecular and installed at Intermolecular’s facilities for use by the parties to perform the development activities specified in the Development Plan, as more fully described in Exhibit E attached hereto.

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

2.                                      COLLABORATIVE DEVELOPMENT PROGRAM

 

2.1                               CDP.

 

2.1.1                     Pre-CDP Workshop.  Immediately after the Effective Date of this Agreement, Intermolecular, Toshiba and SanDisk shall set up a technical workshop in a manner and schedule to be agreed by the parties for informing Toshiba and SanDisk of the Technology which are described in Exhibits C and D attached hereto.  Exhibits C and D are to be provided to Toshiba and SanDisk on the Effective Date.  Promptly but no later than [*] days following such technical workshop, the Operating Committee will determine which items will be listed on Exhibit H (which shall be the Intermolecular Background IP for the CDP).  The parties confirm and agree that items not initially included in Exhibit H (but listed in Exhibit C or D) may at any time prior to the licensing election described in Section 4.2.2, upon Toshiba’s and SanDisk’s approval, be added to and included in Exhibit H.  In addition, at any time prior to the licensing election described in Section 4.2.2, Exhibit H may be updated in accordance with Section 1.26(iv).

 

2.1.2                     Development Plan.  Subject to the terms and conditions set forth herein, Toshiba, SanDisk and Intermolecular will conduct this Collaborative Development Program in accordance with the Development Plan within the scope of the CDP Field.  The Development Plan shall contain the activities to be conducted by each party, the information sharing processes to be used during the CDP, the deliverables to be produced in the CDP, the target specifications to be met for such deliverables and metrics to be met by each party.  For the avoidance of doubt, no Toshiba and SanDisk Contributed Background IP shall be considered part of the CDP unless expressly identified as “Toshiba and SanDisk Contributed Background IP” in the Development Plan, or otherwise pre-approved by Toshiba and SanDisk in writing.

 

2.1.3                     Intermolecular.  Intermolecular agrees to provide [*] Intermolecular FTEs and use of its Workflow Infrastructure for Intermolecular to perform the specified activities at Intermolecular facilities under the Development Plan.  The fees to support these resources are set forth in Section 5.  In return for the services to be performed by Intermolecular and for the Workflow Infrastructure provided by Intermolecular for use in the CDP, Toshiba and SanDisk agree to pay the fees as set forth in Sections 5.1 and 5.2 in accordance with the terms of this Agreement.

 

2.1.4                     Change Orders.  Any of the parties may propose to the other parties from time to time to change the Development Plan, provided the change is within the CDP Field.  As part of such change process, Intermolecular, Toshiba and/or SanDisk may propose the introduction of new [*] concepts and materials that are not part of the initial Development Plan, including without limitation New [*] Concepts.  Any such party suggesting a change shall provide a written proposal to the other parties detailing the proposed change and the anticipated effect on scheduling and cost.  The parties agree to promptly discuss and decide upon any proposed changes to the Development Plan, including introduction of New [*] Concepts.  All changes to the Development Plan, including new forms of experiments, must be approved by Toshiba and SanDisk in writing; provided that Toshiba and SanDisk agree to consider Intermolecular’s requested changes in good faith.  Any such decision to amend the Development Plan shall include any changes to pricing, cost allocations, licensing terms, activities, responsibilities, development schedule or other provisions related to implementation of any such change.  If the proposed change by SanDisk and/or Toshiba requires additional capital 

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

expenditures or substantial additional resources by Intermolecular beyond the then-current CDP for the then-current Development Plan, the amended Development Plan will be subject to Intermolecular’s approval.  If Toshiba and SanDisk do not agree in writing to a change to the Development Plan, the Development Plan in existence prior to the proposed change shall continue in full force and effect.

 

2.2                               Committees.

 

2.2.1                     Operating Committee.  The parties will establish an operating committee (the “Operating Committee”) to oversee the performance of the Collaborative Development Program, monitor progress of the CDP, resolve any disputes or disagreements between the Project Managers (as defined below) and escalate any remaining disputes, as necessary, and ensure open communications among the parties.  The Operating Committee will initially be comprised of at least one (1) representative from each party, including the Project Manager of each party, or such other equal number of representatives as the parties may from time to time agree in writing, with each party’s representatives selected by that party, provided that the Project Manager of such party remains on the Operating Committee.  Any party may replace any of its Operating Committee members at any time, upon written notice to the other party.  The Operating Committee will meet on a quarterly basis or as otherwise agreed by the parties, at locations or in a manner agreed by the parties.  All decisions of the Operating Committee shall be made by SanDisk and Toshiba, subject to Section 2.1.4.

 

2.2.2                     IP Committee.  The parties will also establish a committee (the “IP Committee”), reporting to the Operating Committee, that will be responsible for reviewing invention disclosures, patent filing decisions and Intellectual Property Rights ownership decisions resulting from activities under the CDP, including without limitation, determination of the Intellectual Property Rights, if any, in all Technology developed in the CDP.  The IP Committee will meet on at least a calendar quarterly basis or as otherwise agreed to by the parties.  The IP Committee shall consist of two (2) members from each party, one from its technical employee and the other one from its patent attorney, agent or IP staff member.  All decisions of the IP Committee must be made by unanimous vote of the parties, with each party having a single vote.  If there is disagreement among the parties regarding the existence or ownership of Intellectual Property Rights or Technology, the parties will escalate the dispute as appropriate within their respective organizations as promptly as possible for resolution; provided, however, that no party shall publicly disclose or otherwise publish any information, or otherwise jeopardize the opportunity to file a patent application, regarding an invention claimed by another party hereunder resulting from or relating to CDP activities during any period where the ownership of such claimed invention has not yet been determined.  Each party agrees that it will not unreasonably delay or prolong resolution of any ownership, inventorship or other claim regarding the Technology or Intellectual Property Rights.

 

2.3                               Access to Information.  The parties acknowledge and agree that each party shall provide the other parties timely and sufficient access to information reasonably necessary to carry out their obligations under all phases of the Collaborative Development Program.  Further, Intermolecular agrees that it shall immediately provide both Toshiba and SanDisk with any information made available to it during the course of its activities in the CDP as set forth in 

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Section 2.1.2.  The parties agree to comply with all information sharing processes set forth in the Development Plan.

 

2.4                               Project Managers.  Each party hereby appoints the initial principal point of contact set forth in the Development Plan to be its project manager for the CDP, who shall coordinate and act as a liaison with the other parties with respect to the Development Plan (each a “Project Manager”).  A party may from time to time change its Project Manager upon written notice to the other parties.

 

2.5                               Development Records.  Each party agrees to maintain reasonable records of the activities it performs under the Development Plan, and cause such records to be maintained in sufficient detail and in good scientific manner as will properly reflect all material work done and results achieved, including information sufficient to establish dates of conception and reduction to practice of inventions.

 

3.                                      IP OWNERSHIP

 

3.1                               Prior and Independent Technology.  Each party shall retain all right, title and interest in and to all materials, Technology, concepts, know-how, inventions, discoveries, works of authorship, and all related Intellectual Property Rights created, conceived or developed by or for that party prior to the Effective Date.  For Toshiba and SanDisk, this includes all Toshiba and SanDisk Contributed Background IP, and for Intermolecular this includes all Intermolecular Background IP, including [*].  In addition, each party shall retain all right, title and interest in and to all materials, Technology, concepts, know-how, inventions, discoveries, works of authorship, and all related Intellectual Property Rights created, conceived or developed by or for that party outside of or independently from the Collaborative Development Program without use or incorporation of any Confidential Information, Technology or Intellectual Property Rights of or received from any other party pursuant to the Agreement.

 

3.2                               Foreground IP.

 

3.2.1                     Intermolecular Sole Ownership of Foreground IP.  Intermolecular shall be the sole owner of [*].

 

3.2.2                     Toshiba and SanDisk Sole Ownership of Foreground IP.  Toshiba and SanDisk shall be the sole owners of (a) all [*] and [*], and (b) all Technology and Intellectual Property Rights (other than patents and patent applications) in and to [*].  The actual division of ownership of such Technology and Intellectual Property Rights shall be determined between Toshiba and SanDisk based on separate agreements between Toshiba and SanDisk.

 

3.2.3                     Joint Ownership Among the Parties.  Intermolecular, Toshiba and SanDisk shall jointly own (a) all Technology and Intellectual Property Rights in [*] and (b) any patents and patent applications resulting solely from inventions under [*] (collectively, all of the foregoing constitute “Joint IP”).  Except as expressly provided elsewhere in this Agreement, each party has the right to use, fully exploit, disclose or otherwise dispose of such Joint IP for any purpose without consent of or accounting to the other party.

 

3.2.4                     [*] Design IP and [*]Foreground IP.  Notwithstanding anything to the contrary in this Agreement, as among the parties and regardless of creator, Toshiba and SanDisk based on existing agreements between Toshiba and SanDisk, shall own all right, title and 

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

interest, including Intellectual Property Rights, in and to the [*] Design IP and Non [*] Foreground IP and any derivatives, modifications, improvements to and enhancements thereto and any Intellectual Property Rights in any of the foregoing.  Intermolecular hereby assigns, and agrees to assign to Toshiba and SanDisk, as applicable, in the future when they are first fixed in a tangible medium or reduced to practice, as applicable, all Intellectual Property Rights in and to any [*] Design IP and [*] Foreground IP that Intermolecular may obtain as a result of Intermolecular’s activities under the CDP.

 

3.3                               HPC Technology and Derivatives.  Notwithstanding any other provision to the contrary, as among the parties and regardless of creator, Intermolecular shall own all right, title and interest, including Intellectual Property Rights, in and to HPC Technology and any HPC Derivatives, and all Intellectual Property Rights in any of the foregoing.  [*].

 

3.4                               Cooperation.  Each party agrees to execute all papers, including patent applications and invention assignments, and otherwise agrees to assist the other party, as reasonably required and at the other party’s reasonable expense, to perfect in the applicable party the rights, title and other interests in their respective inventions which this Agreement designates such party to own.  Without limiting the foregoing, the parties agree to use reasonable efforts to keep the other parties informed as to the status of patent matters with respect to any Joint IP, [*] and [*].

 

3.5                               Patent Prosecution.  Intermolecular shall have the first right to prepare, file, prosecute and maintain, at its own expense and in consultation with the other parties, any patent applications claiming inventions in the Foreground IP owned solely by Intermolecular.  The IP Committee will determine on a case-by-case basis which party shall be responsible for preparing, filing, prosecuting and maintaining, in consultation with the other parties, any patent applications claiming inventions in the Foreground IP that constitute Joint IP, and the cost allocation will be determined at such time by the parties.  In the event that Intermolecular makes a decision (and in such event Intermolecular shall promptly inform the applicable parties) that Intermolecular will not file, prosecute or maintain any such patent or patent application in a Joint IP, [*] or [*]  invention, or undertake such other activities described above, then the applicable party that jointly owns (or desires to further prosecute) such invention shall have the right to assume such activities at its own expense but without affecting the ownership and license provisions set forth in Sections 3 and 4 hereof.  Nothing in this Agreement shall limit or restrict a party’s rights to file or prosecute any solely-owned invention unless that party has agreed to assign such invention and Intellectual Property Rights therein to another party pursuant to the terms and conditions of this Agreement.

 

3.6                               Enforcement.

 

3.6.1                     Joint IP.  With prior consultation to Toshiba and SanDisk, Intermolecular shall have the initial right, but not the obligation, to take reasonable legal action to enforce Intellectual Property Rights in any Joint IP against commercially material infringements.  If Intermolecular does not take action sufficient to halt such infringement within [*] following receipt of notice of such infringement, then either Toshiba or SanDisk, as applicable, shall have the right, but not the obligation, to take action to stop such infringement at its sole expense.  

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Notwithstanding the foregoing, if Toshiba and SanDisk elect to receive [*] license under Section 4.2 below, then either Toshiba or SanDisk, as applicable based on inventorship or upon written agreement between Toshiba and SanDisk, shall have the initial right, but not the obligation, to take reasonable legal action to enforce any Intellectual Property Rights in Joint IP against commercially material infringements.

 

3.6.2                     [*] Licensed Intellectual Property Rights. During the Initial Term, and after the Initial Term if Toshiba and SanDisk both exercise their option to take [*] license in accordance with Section 4.2, Toshiba and/or SanDisk shall have the right, but not the obligation, to take reasonable legal action to enforce the Licensed IP without consultation with Intermolecular.  If one or both of such parties decides to take legal action to enforce such Licensed IP against a Third Party, then the enforcing party may request that Intermolecular participate (and Intermolecular shall participate) in such action as may be reasonably necessary to enforce such rights; provided, however, that Intermolecular’s participation shall be conditioned upon the enforcing party bearing Intermolecular’s reasonable costs to participate in such enforcement action and indemnifying Intermolecular against any liabilities, losses, damages, costs and expenses, including reasonable attorneys’ fees, incurred by Intermolecular as a result of participating in any such action.

 

3.6.3                     Cooperation; Costs. Each party agrees to render such reasonable assistance in connection with enforcement activities described in this Section 3.6 as the enforcing party may request.  Costs of maintaining any such action shall be paid by and shall be the responsibility of the party bringing the action.

 

3.6.4                     Recoveries. Subject to the payment obligations set forth in Section 5, any damages or settlement recovered from any action under this Section 3.6 shall belong to the party bringing the action.

 

4.                                      LICENSES

 

4.1                               Collaboration Licenses.

 

4.1.1                     Intermolecular License to Toshiba and SanDisk. Subject to the terms and conditions of this Agreement, including payment of applicable license fees, Intermolecular grants to Toshiba and SanDisk for the Term [*] license under and to the Intermolecular Background IP (including the [*]), HPC Technology, HPC Derivatives and any other Technology and/or Intellectual Property Rights Intermolecular contributes to the development efforts under the CDP (including the [*]), to engage in the CDP and perform the activities set forth in the Development Plan.  Notwithstanding the foregoing [*] license, Intermolecular reserves the right to use the Technology and Intellectual Property Rights licensed in this Section 4.1.1 solely for the purpose of Intermolecular performing its duties under the CDP, and not for the benefit of any Third Party.

 

4.1.2                     Toshiba and/or SanDisk License to Intermolecular. Subject to the terms and conditions of this Agreement, Toshiba and SanDisk each grant to Intermolecular for the Term [*] license under and to the Toshiba and SanDisk Contributed Background IP and to and any other Technology and/or Intellectual Property Rights either party contributes to the development efforts under the CDP, solely to engage in the CDP and perform the activities set forth in the Development Plan, and not for the benefit of any Third Party.

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

4.2                                 Technology License.

 

4.2.1                        Technology License.

 

A.           Within CDP Field. Subject to the terms and conditions of this Agreement, including but not limited to Section 4.2.2 and Section 6 below, Intermolecular grants Toshiba and SanDisk a worldwide, [*] (except as to Intermolecular for purposes of performing its activities related to this Agreement), [*], non-transferable license within the CDP Field, without right of sublicense, under and to Intermolecular Background IP, the Licensed IP and any other Technology and/or Intellectual Property Rights Intermolecular contributes to the development efforts under the CDP to (i) use and modify such Technology and/or applicable Intellectual Property Rights including know-how; and (ii) use, make, have made, import, offer to sell, sell, lease, copy, modify, distribute, and otherwise dispose of, and exploit, the CDP Products.

 

B.             Outside CDP Field. In addition to Section 4.2.1(A), and subject to the terms and conditions of this Agreement, including but not limited to Section 4.2.2 and Section 6 below, Toshiba’s and/or SanDisk’s license shall be extended at its respective discretion to activities outside the CDP Field, without right of sublicense, under this Section 4.2.1(B) for Non-CDP Products in fields to be agreed upon by Intermolecular and the applicable party in advance as set forth in this Section 4.2.1(B).  On a case-by-case basis, Toshiba and SanDisk shall (i) notify Intermolecular in writing in advance for each instance where Toshiba or SanDisk, as applicable, desires to extend the use of the Technology licensed under Section 4.2.1(A) into a new field of use on [*] basis and the license under Section 4.2.1(A) will be extended to that field and apply to the specified Non-CDP Products unless Intermolecular notifies Toshiba or SanDisk promptly in writing that such proposed Non-CDP Product or field of use is subject to a pre-existing obligation of Intermolecular to grant [*] license to such Non-CDP Product or field to a Third Party; and (ii) obtain Intermolecular’s prior written approval to extend the use of the Technology licensed under Section 4.2.1(A) into a new field of use or new Non-CDP Product on [*] basis, as applicable.  If extended, Toshiba and SanDisk shall be granted a [*] license under and to the applicable Intermolecular Background IP and to the Licensed IP Intermolecular contributes to the development efforts under the CDP to (i) use and modify such Technology; and (ii) use, make, have made, import, offer to sell, sell, lease, copy, modify, distribute, and otherwise dispose of, and exploit, the specified Non-CDP Products outside the CDP Field in the applicable field; provided however, that Non-CDP Product Fee

 

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[*] and [*] under this Section 4.2.1(B) shall be [*] of the [*] and [*] applicable to Section 4.2.1(A), and the fees payable to Intermolecular for Third Party CDP Products and Third Party Non-CDP Products for such extensions shall be subject to Section 5.10 below.  Such [*], and [*] applicable to this Section 4.2.1(B) shall be separately accounted from [*], and [*]  applicable within the CDP Field.

 

 

4.2.2                        License Election.  Each of Toshiba and SanDisk shall have the right to elect during or within [*] days after [*] to either:

 

A.           receive [*] license under Section 4.2.1 after the Term to (i) the Intermolecular Background IP, and (ii) the Licensed IP, and (iii) any other Technology and/or Intellectual Property Rights Intermolecular contributes to the development efforts under the CDP in accordance with Section 1.26(iv) above.  If Toshiba and/or SanDisk make an election under this subsection (a), then the license in Section 4.2.1 shall convert to [*] license at the end of the Term;

 

B.             terminate the license to the Licensed IP, provided that if such election is made, (a) SanDisk shall continue to have a license to the Original CDP Developed Technology under all the terms and conditions (including without limitation the economic terms) of the Collaborative Development and License Agreement by and between Intermolecular, Inc.  and SanDisk Corporation effective as of August 25, 2006 as amended (the “2006 Agreement”), and (b) Toshiba and SanDisk shall continue to have the right to license Joint IP to Third Party Licensees;

 

C.             retain [*] license under Section 4.2.1 in the CDP Field after the Term to (i) Intermolecular Background IP, and (ii) the Licensed IP and (iii) any other Technology and/or Intellectual Property Rights Intermolecular contributes to the development efforts under the CDP in accordance with Section 1.26(iv) above, in which case Intermolecular shall not exercise any ownership rights in any Joint IP in the CDP Field (including not granting licenses to any third parties under such Joint IP).  In the event only Toshiba or SanDisk but not both, make an election under this subsection (c), the party electing to retain the [*] license shall ensure that Intermolecular is properly compensated under Intermolecular’s rights as [*] licensor under this Agreement, to the same extent as if both Toshiba and SanDisk had elected to retain the [*] license and the party not electing to retain the exclusive license will retain [*] license; or

 

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D.                                    retain [*] license under Section 4.2.1 only to (i) the Intermolecular Background IP (other than the [*]) and (ii) the [*] and (iii) any other Technology and/or Intellectual Property Rights Intermolecular contributes to the development efforts under the CDP in accordance with Section 1.26(iv) above, and to have Intermolecular not exercise its ownership rights in Joint IP (including not granting licenses to any third parties under such Joint IP), but not take [*]  license under or to [*].  In the event Toshiba and SanDisk make an election under this subsection (D), then upon such election, Toshiba and SanDisk will retain [*] license to all Intellectual Property Rights licensed under Section 4.2.1 for which Toshiba and SanDisk did not elect to retain [*] license.

 

4.2.3                        Option.  Notwithstanding anything to the contrary in this Agreement, after Toshiba and/or SanDisk has elected a license pursuant to Section 4.2.2 and has identified whether such license is [*] or [*], Toshiba and SanDisk shall each have the one time option at any point after the Term, to [*], as long as (1) Toshiba and/or SanDisk continues to make any payments due and payable to Intermolecular under this Agreement, (2) the applicable [*] and [*] under Section 5.4 below associated with the license so elected by Toshiba and/or SanDisk, shall replace the [*] and [*] previously applicable prior to such election [*]; provided, that if SanDisk or Toshiba elect to [*] the [*] from [*] to [*], CDP Product Fees and Non-CDP Product Fees already due or paid to Intermolecular prior to the election to convert to [*] are non-refundable, even if such CDP Product Fees or Non-CDP Product Fees exceed the [*] or [*], as applicable; and (3) if an election is made by Toshiba and/or SanDisk from [*] to [*], the resulting [*] license shall be made subject to any licenses made by Intermolecular to a Third Party prior to such election.

 

4.2.4                        Third Party Licensees.  Licenses to Third Party Licensees shall be governed in accordance with Section 5.10 below.

 

4.2.5                        No Limitation to SanDisk/Toshiba Technology.  Nothing in this Section 4 shall limit in any manner the rights of Toshiba or SanDisk to use, transfer and otherwise exploit [*] patents and patent applications, [*],[*] Design IP, Non [*] Foreground IP and any other Intellectual Property Rights and Technology of either Toshiba or SanDisk, as applicable; provided, however, that this Section 4.2.5 shall not be deemed a license, either express or implied, to any Intermolecular Technology or Intellectual Property Rights.

 

4.2.6                        [*] License.  If Toshiba and SanDisk either (i) do not elect [*] license under Section 4.2.2 or (ii) elect to terminate the license in accordance with Section 4.2.2(B), Toshiba and SanDisk each acknowledge that Intermolecular may exercise its rights in any Joint IP, subject to payment of a mutually-agreed pass-through payment to Toshiba and SanDisk.

 

4.2.7                        No Sublicense Right of [*] to [*].  [*]not granted any sublicensing rights with respect to [*] under this Agreement.

 

4.3                                 Reservation of Rights.  Except for the rights expressly granted by each party to the other under this Agreement, all other rights are reserved.

 

4.4                                 Other Engagements.  The parties each agree that nothing in this Agreement, except for the exclusivity provisions of this Section 4, restrict any party from engaging in development or commercialization projects with Third Parties.

 

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4.5                                 Favorable per-CDP Product Terms.  If [*] grants a license to the Licensed IP to any Third Party for use in competing [*] applications and/or products with any program fees (including but not limited to fees associated with the CDP), product fees and/or per-chip royalties or their equivalent and/or other licensing fees and/or [*] on terms that are more favorable to the licensee than the terms contained in this Agreement, [*] shall immediately provide written notice to [*] setting forth the details of such more favorable terms, and shall offer to [*] to incorporate those terms in this Agreement on a going-forward basis into this Agreement effective as of such notification date.  [*].

 

4.6                                 Bankruptcy.  Intermolecular acknowledges that the Intermolecular Intellectual Property Rights licensed pursuant to this Agreement constitute “intellectual property” to the extent provided under the United States Bankruptcy Code (the “Bankruptcy Code”) or similar foreign laws, and it is the express intent of the parties to this Agreement that if Intermolecular is subject to a proceeding under the Bankruptcy Code or similar foreign laws and rejects this Agreement or any portion thereof, then SanDisk and Toshiba may elect to retain their respective rights to such Intermolecular Intellectual Property Rights under this Agreement to the maximum extent provided under Section 365(n) and other provisions of the Bankruptcy Code, other applicable U.S. and state laws and applicable foreign laws.  If Toshiba and/or SanDisk seek to register the licenses to be granted by Intermolecular under this Agreement with the Japan Patent Office, any foreign patent offices, governing agencies or authorities, Intermolecular shall cooperate with the party requesting such registration.  Such cooperation expenses shall be borne (a) by Intermolecular for any such U.S.  or Japanese registration, and (b) by Toshiba and/or SanDisk for any other such registrations.

 

5.                                      SUBSCRIPTION, SERVICE, LICENSE AND PRODUCT FEES

 

5.1                                 Service Fees.  Toshiba and SanDisk each will fund for the CDP under the Development Plan and agrees to pay Intermolecular [*] US Dollars (US$[*]) for a cumulative total of [*] US Dollars (US$[*]) for Intermolecular’s performance of the services described in the Development Plan.  Subject to Section 5.7, these amounts shall be paid by each of Toshiba and SanDisk in equal monthly payments of [*]  US Dollars (US$[*]) over the Initial Term starting upon the Effective Date.  Intermolecular shall ensure that these service fees fully cover and support the Development Plan to build an infrastructure and workflow as set forth in Exhibit E.  These service fees also include any expenses that Intermolecular incurs for a transfer of the process or technology to the development and production facilities of Toshiba and SanDisk (including associated travel and lodging costs except for extended stays in Japan over [*]  days).  In addition to the amounts set forth above, Toshiba and SanDisk agree to provide or pay, each on an equal basis with the other, for all of the following that is pre-approved by SanDisk and Toshiba in writing:  out-of-pocket expenses for consumables (e.g., wafers and mask sets), outsourced metrology (to the extent not part of the regular work flow), analytical services and characterization not supported internally by Intermolecular, and other mutually agreed out-of-pocket costs to support the CDP.  For costs associated with targets and materials required during the duration of the CDP, Intermolecular shall make commercially reasonable efforts to procure and/or obtain such targets and/or materials at costs which are as inexpensive as possible and shall bear [*] as part of the service fees under this Section 5.1, the first US$[*] per [*] (the first [*] being pro-rated), of such costs when verified.  Upon such verification, SanDisk and Toshiba shall bear in equal amounts, such costs arising during the [*] in question in excess of such US$[*] threshold.

 

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5.2                                 Workflow Infrastructure Subscription Fee.  Toshiba and SanDisk will fund for the CDP under the Development Plan and each agrees to pay Intermolecular [*] US Dollars (US$[*]) for a cumulative total of [*] US Dollars (US$[*]) for all access necessary for performing under the Development Plan to and Intermolecular’s use of the Workflow Infrastructure as part of the Collaborative Development Program as set forth below.  Subject to Section 5.7, these amounts shall be paid by each of Toshiba and SanDisk in equal [*] payments of [*] US Dollars (US$[*]) over the Initial Term starting upon the Effective Date.  These subscription fees also include all costs associated with or related to Workflow Infrastructure, including but not limited to any rent, storage, utility and like costs relating to the Workflow Infrastructure that Intermolecular incurs.  Notwithstanding anything to the contrary in this Agreement in the event that the CDP is renewed after the Initial Term and/or Toshiba and SanDisk maintain [*] license to Licensed IP under Section 4.2.1, SanDisk and Toshiba will have [*] for use of the [*] after the Initial Term if Toshiba and SanDisk have extended the CDP, or entered into a new collaborative development program with Intermolecular.  During the Term and subject to the full, timely payment of the above subscription fee by both Toshiba and SanDisk, Intermolecular will provide (i) access at all times to the Workflow Infrastructure to perform the activities contemplated by the Development Plan, (ii) [*], non-transferable license without right of sublicense for Toshiba and SanDisk to use at all times the HPC Technology and HPC Derivatives as incorporated in the Workflow Infrastructure in Intermolecular’s to carry out any of their activities pursuant to the Development Plan, and (iii) [*], non-transferable license, without right of sublicense, to access and use the Informatics Software via an Intermolecular-established secure portal solely for the purposes of performing activities pursuant to the Development Plan.  Intermolecular covenants that Intermolecular will not use the [*] dedicated specifically to the CDP for any purpose outside of the Development Plan and it will not allow any Third Party to use the dedicated [*] during the term of this Agreement without Toshiba and SanDisk’s prior written consent.  If Toshiba and SanDisk provide such consent for use during the Initial Term, the fees set forth in this Section 5.2 shall be reduced on a pro rata basis according to the number of days (or part thereof) that such Third Party uses the [*].  This license does not confer any ownership rights in the Workflow Infrastructure and Tempus AP-30.

 

5.3                                 Initial License Fees.  In addition to any other license fees payable by Toshiba and SanDisk under Section 5.4 of this Agreement, Toshiba and SanDisk each agree to pay Intermolecular [*] US Dollars (US$[*]) for a cumulative total of [*] US Dollars (US$[*]) for the Intermolecular Background IP license rights set forth in Section 4.1.1 as follows:  Intermolecular shall invoice each of Toshiba and SanDisk in the amount of [*] US Dollars (US$[*]) on (a) [*] days following the [*], and (b) [*] days following the [*] anniversary of the [*].  Toshiba and SanDisk each will pay Intermolecular based on such invoices, within [*] days from their respective receipt of such invoices.

 

5.4                                 CDP Product Fees; [*].

 

5.4.1                        Toshiba and SanDisk each acknowledges and agrees that in addition to Section 5.3 above,

 

A.           Toshiba will pay Intermolecular a per-CDP Product fee (a “CDP Product Fee”) based on Table 1 below on the sale of CDP Products by Toshiba or Toshiba Affiliates to third parties unrelated to either Toshiba, SanDisk or the joint ventures between Toshiba and SanDisk (“Unrelated

 

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Third Party”) except for any payment by an Unrelated Third Party to Intermolecular under another applicable provision of this Agreement, and

 

B.             SanDisk will pay Intermolecular a CDP Product Fee based on Table 1 below on the sale of CDP Products by SanDisk or SanDisk Affiliates to Unrelated Third Parties, except for any payment by an Unrelated Third Party to Intermolecular under another applicable provision of this Agreement.

 

	
 
    	
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C.             Toshiba and SanDisk acknowledge that if a CDP Product incorporates different categories of Technology or Intellectual Property Rights that are subject to different [*], then in each such instance the highest [*] applicable to such CDP Product shall apply as the sole [*], as applicable.  For the avoidance of doubt, the [*] totals in the first column in Table 1 above represent the [*] total of CDP Products sold by Toshiba or SanDisk respectively.  Toshiba and SanDisk further acknowledge that if a Non-CDP Product incorporates different categories of Technology or Intellectual Property Rights that are subject to different [*], then in each such instance the highest [*] applicable to such Non-CDP Product shall apply as the sole [*], as applicable.  For the avoidance of doubt, for purposes of calculating the amounts due for Non-CDP Products, the [*] totals in the first column in Table 1 above represent the [*] total of Non-CDP Products sold by Toshiba or SanDisk respectively (however, the [*] are [*] as per Section 4.2.1(B)).

 

D.            In the event that SanDisk and Toshiba elect [*] or [*] license under Section 4.2.2(A), 4.2.2(C) or 4.2.2(D), then each of them shall pay Intermolecular US$[*] as non-refundable prepaid CDP Product Fees, which shall be paid in [*].

 

5.4.2                        If Toshiba and SanDisk elect [*] license under Section 4.2.2(C) or 4.2.2(D), then [*].

 

	
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[*]:

 

A.           [*].

 

B.             [*].

 

C.             Payments for the sale of CDP Products by Affiliates are included in, and not in addition to, the [*] and amounts described in this Section 5.4.2.

 

5.4.3                        [*].

 

5.4.4                        [*] and [*] arising from SanDisk’s and/or Toshiba’s exercise of the license outside the CDP Field under Section 4.2.1(B) shall be [*] of the [*] and [*] set forth above.

 

5.4.5                        Payments for CDP Product Fee obligations under this Section 5.4 shall be made as follows.  Within [*]  days after [*], SanDisk and Toshiba each shall notify Intermolecular in writing of CDP Product Fee amounts due and payable under this Section 5.4 (taking into account the credit described in subsection 5.4.1(d) above).  Following receipt of such written notification, Intermolecular shall provide SanDisk and Toshiba each with a written invoice matching and identifying such written notification.  SanDisk and Toshiba shall pay Intermolecular the amount stated in such invoice within [*] days from the date of invoice receipt.

 

5.4.6                        Nothing in this Agreement, including the payment or nonpayment of royalties and/or fees by Toshiba or SanDisk, shall affect any obligations by or on behalf of Toshiba or SanDisk under their respective existing agreements with third parties and each other.

 

5.5                                 IP Buy-Out.  [*].

 

5.6                                 Third Party Royalties.  Each party shall be responsible for all of its own costs of commercializing CDP Products and Non-CDP Products or sub-licensing Intellectual Property Rights, including any payments to Third Parties for work done by such Third Parties or for licenses necessary for the manufacture, sale, or use of CDP Products or Non-CDP Products by a party or its Affiliates or sub-licensees.

 

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5.7                                 Payments. For the payments under Sections 5.1 and 5.2, at the conclusion of each calendar month, the Project Managers for SanDisk and Toshiba shall have up to [*] business days or otherwise mutually agreed upon period of time to review whether Intermolecular performed the work assigned by the Operating Committee in accordance with the Development Plan for such month .  Upon confirmation by SanDisk and Toshiba that such work has been performed (or upon the conclusion of the above-mentioned [*] business day period if neither Project Manager has issued a written notice of non-compliance), Intermolecular will invoice SanDisk and Toshiba.  If neither Project Manager has issued a written notice of non-compliance by the conclusion of such [*] business day period, the applicable work shall be deemed performed for purposes of this Section 5.7.  Disputes, if any, shall be referred to the dispute resolution process.  SanDisk and Toshiba shall pay Intermolecular the amount stated in such invoice within [*] days from the date of invoice receipt.  All payments hereunder shall be made in U.S.  dollars by Toshiba, SanDisk, or one of their U.S.  or Japanese Affiliates and are non-refundable.  All payments due to Intermolecular under this Agreement shall be made by bank wire transfer as follows:

 

	
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or another U.S.  bank account designated by Intermolecular in writing and provided to Toshiba and SanDisk.

 

5.8                                 Taxes.  The fees and license rates specified in this Agreement are exclusive of any sales, use, excise, value-added or similar taxes, and of any export and import duties, which may be levied upon or collectible by Intermolecular as a result of Intermolecular’s performance of its service activities or the grant of licenses under this Agreement.  Toshiba and SanDisk agree to pay and otherwise be fully responsible for any such taxes and duties.  In the case of Toshiba, Intermolecular shall provide Toshiba with necessary documents duly signed by Intermolecular or issued by U.S.  tax authorities, and otherwise fully cooperate with Toshiba in applying for exemption of withholding income tax under the tax convention between the U.S.  and Japan.  Should application for an exemption of withholding income tax be rejected by Japanese tax authorities in case of Toshiba, or should an applicable similar situation occur in the case of SanDisk, Toshiba and SanDisk shall withhold from amounts otherwise payable to Intermolecular, and pay on Intermolecular’s behalf, withholding taxes that may be required by applicable law to be withheld by Toshiba and SanDisk.  Toshiba and SanDisk, as applicable, shall provide Intermolecular with tax receipts to establish that all such taxes have been paid and are otherwise available to Intermolecular for credit for U.S.  income tax purposes or as otherwise available to Intermolecular.

 

5.9                                 Records; Inspection.  Toshiba and SanDisk shall keep complete, true and accurate books of account and records on its own behalf and on behalf of the Toshiba and SanDisk Affiliates for the purpose of determining the CDP Product Fee amounts, Non-CDP Product Fee amounts, and any amounts payable by Toshiba or SanDisk as applicable pursuant to Section 5.10, under this Agreement.  Such books and records shall be kept at Toshiba and SanDisk for at least [*] years following the end of the calendar quarter to which they pertain.

 

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Such records will be open for inspection during such [*] year period by an independent auditor who is reasonably acceptable to the parties and agrees to be bound to confidentiality protections of similar scope to those set out in Section 8 hereof, solely for the purpose of verifying statements related to amounts payable hereunder.  Such auditor shall be instructed to report only as to whether there is a discrepancy, and if so, the amount of such discrepancy.  With reasonable prior notice in writing, such inspections may be made no more than once each calendar year during regular business hours (other than during quarter-end or year-end financial closing periods), to the extent not unreasonably hindering any operations of Toshiba and SanDisk.  Inspections conducted under this Section shall be at the expense of Intermolecular, unless a variation or error producing an increase exceeding [*] percent ([*]%) of the royalties payable for any period covered by the inspection is established and confirmed in the course of any such inspection, whereupon all reasonable and documented costs relating to the inspection for such period and any unpaid amounts that are discovered will be paid promptly by Toshiba and/or SanDisk, as applicable.  Further, if the foregoing inspection indicates a need for a follow-up inspection, Intermolecular will have the right thereafter to conduct additional inspections from time to time within one year (in such case, the scope of the inspection shall be limited to those issues which Intermolecular needs to confirm the implementation of any corrective action therefor).  Each party agrees to hold in confidence pursuant to Section 8 all information concerning payments and associated reports, and all information learned in the course of any audit or inspection, except to the extent necessary for that party to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law.

 

5.10                           Third Party Licensees.

 

[*].

 

6.                                      COVENANTS

 

6.1                                 [*].

 

6.2                                 [*].

 

6.2.1                        [*].

 

6.2.2                        [*].

 

6.3                                 Enforcement.  [*]

 

6.4                                 Assignment.  Subject to the terms and conditions of this Agreement, the covenant in Section 6.1 shall be binding on any successors-in-interest, assigns, mergers, reorganizations, or any other change of control of [*], but only as to [*] obtained by [*] or knowledge to which [*] exposed, directly or indirectly, from [*] during the duration of or as a result of the CDP.  In addition, subject to the terms and conditions of this Agreement, the covenant in Section [*] shall be binding on any successors-in-interest, assigns, mergers, reorganizations, or any other change of control of [*], but only as applicable to the [*] owned by [*] on the day immediately prior to such change of control and not to any other [*] owned by the successor in interest or assignee.

 

6.5                                 [*].

 

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6.6                                 Application to Affiliates.  For purposes of this Section 6, Intermolecular shall mean Intermolecular and/or its Affiliates as appropriate.  Toshiba shall mean Toshiba Corporation and/or its Affiliates as appropriate.  SanDisk shall mean SanDisk Corporation and/or its Affiliates as appropriate.

 

6.7                                 Termination of Covenants.  If, at any time before [*] assertion of claims of [*] subject to covenants set forth in this Section 6 against a particular Protected Entity, such particular Protected Entity asserts claims of [*] against [*], or seek to [*] of [*] other than enforcement of or disagreement concerning the [*] provisions set forth in this agreement [*], the covenants set forth in this Section 6 shall immediately terminate with respect to such particular Protected Entity.  In addition, in the event of a change of control, merger, acquisition or sale of all or substantially all of the assets of [*], or of the sale of an Affiliate, subsidiary or product line of [*] the covenants granted in this Section 6 shall apply only to the products, processes, Technologies or services of [*], as of the date of such change of control, and shall not apply to any of the products, processes, Technologies, or services of the acquiring entity.

 

7.                                      WARRANT

 

7.1                                 Warrant.

 

7.1.1                        Upon execution of the Agreement, Intermolecular will issue to each of Toshiba and SanDisk a warrant (each a “Warrant” and together the “Warrants”) to purchase a number of shares equal to the Warrant Amount (as defined below).  Each Warrant shall have an exercise price of $3.04144 per share (the “Exercise Price”) and be exercisable only during the Exercise Period (as defined below).  Each of Toshiba and SanDisk must deliver an election notice of its intention to exercise the Warrant and the number of shares of Intermolecular common stock it wishes to purchase pursuant to the Warrant (an “Election Notice”) not later than the expiration of the Exercise Period.  The closing of the issuance of the shares to be issued pursuant to the Warrants shall occur not more than 30 days after the expiration of the Exercise Period.  At the closing Intermolecular shall at its sole expense issue all necessary and appropriate documents evidencing the issuance of the Shares.  Intermolecular represents that the Exercise Price is the lowest price at which shares were purchased by investors in Intermolecular’s Series D financing round in December 2008.  Intermolecular agrees to provide SanDisk and Toshiba upon request at the time of the License Election an investor information packet containing information which is no less than the information provided by Intermolecular or on Intermolecular’s behalf to investors in any investment round preceding the conclusion of the Exercise Period to purchasers of common stock and, in addition, shall also include a written summary of (i) the then-current capitalization table stating shares by class (including shares reserved for issuance under outstanding instruments (e.g., options, other convertible securities)) and (ii) the then-total dollar amount of outstanding liquidation preferences.

 

7.1.2                        “Exercise Date” shall mean the date SanDisk and/or Toshiba makes an effective election under Section 4.2.2(A), Section 4.2.2(C) or Section 4.2.2(D) (a “License Election”).

 

7.1.3                        The “Exercise Period” shall be a period from and after the Exercise Date and ending upon the date one hundred and twenty (120) days from the end of the CDP.

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

7.1.4                        The “Warrant Amount” with respect to each Warrant shall be an amount equal to (1) 1,644,736 less (2) the number of shares of Common Stock elected to be purchased in the Notice of Exercise with respect to the other Warrant being issued on the date hereof; provided, however, that (a) if both Toshiba and SanDisk elect to purchase more than 822,368 shares of Common Stock, then the Warrant Amount shall be an amount equal to 822,368; and (b) if either Toshiba or San Disk elects to purchase less than 822,368 shares then the Warrant Amount, in which case such lesser amount shall be the Warrant Amount for such party and the other party shall have the right but not the obligation to purchase the balance up to an aggregate of 1,644,736 shares.  In no event shall the aggregate Warrant Amount purchasable by SanDisk and Toshiba collectively hereunder exceed 1,644,736.

 

7.1.5                        The form of warrant is attached hereto as Exhibit G.

 

8.                                      CONFIDENTIALITY

 

8.1                                 Confidentiality.  Except as otherwise expressly provided in this Agreement, the parties agree that each receiving party of another party’s Confidential Information shall not, except as expressly provided in this Section 8, disclose to any Third Party, or use for any purpose, any such Confidential Information furnished to it by a disclosing party pursuant to this Agreement, except in each case to the extent that it can be established by the receiving party by competent proof that such information:

 

(a)                                  was already known to the receiving party, other than under an obligation of confidentiality, at the time of disclosure;

 

(b)                                 was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving party;

 

(c)                                  became generally available to the public or otherwise part of the public domain after disclosure and other than through any act or omission of the receiving party in breach of this agreement;

 

(d)                                 was independently developed by the receiving party without use of, or reference to, the other party’s confidential information, as demonstrated by documented evidence prepared contemporaneously with such independent development; or

 

(e)                                  was disclosed to the receiving party, other than under an obligation of confidentiality, by a Third Party authorized and entitled to disclose such information to others.

 

8.2                                 Permitted Use and Disclosures.  Notwithstanding the restrictions of Section 8.1, each party hereto may (a) use Confidential Information disclosed to it by another party to the extent necessary for that party to perform its obligations or undertake the activities set forth in the Development Plan and (b) use or disclose Confidential Information disclosed to it by such other party to the extent such use or disclosure is reasonably necessary in (i) exercising the rights and licenses granted hereunder, (ii) prosecuting or defending litigation, (iii) complying with applicable laws, governmental regulations or court orders or submitting information to tax or other governmental authorities (including the Securities and Exchange Commission), or (iv) preparing, filing and prosecuting patent applications; in each case, provided that if a party is

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

required to make any such disclosure, other than pursuant to a confidentiality agreement, it will give reasonable advance notice to the disclosing party of such disclosure and will use reasonable efforts to secure confidential treatment of such information (whether through protective order or otherwise), except to the extent inappropriate with respect to patent applications.  It is understood that any party may also disclose the Confidential Information of a disclosing party upon receipt of the written consent to such disclosure by a duly authorized representative of the disclosing party.  For purposes of this Section 8, SanDisk and Toshiba may (subject to the limitations of use applicable to employees of SanDisk, Toshiba or their Affiliates) use third party contractors retained by SanDisk, Toshiba or their Affiliates as applicable, that have entered into appropriate non-disclosure agreements with SanDisk, Toshiba or their Affiliates, as applicable, and with Intermolecular where such third party contractors have direct access to the CDP or have been provided to the Intermolecular Confidential Information.  SanDisk and Toshiba shall be responsible for their respective breaches of this Section 8 by such third party contractors to the same extent as for SanDisk, Toshiba and their Affiliates respective employees.

 

8.3                                 Nondisclosure of Terms.  Each of the parties hereto agrees not to disclose the terms of this Agreement to any Third Party without the prior written consent of the other party hereto, except to such party’s attorneys, accountants, advisors, investors and financing sources and their advisors and others on a need to know basis under circumstances that reasonably ensure the confidentiality thereof, to the extent required by law, in connection with the enforcement of this Agreement or rights under this Agreement or in connection with a merger, acquisition, financing transaction or proposed merger, acquisition or financing transaction.

 

9.                                      LIMITED REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION

 

9.1                                 By Intermolecular.  Intermolecular represents and warrants that:  (a) it has the right and authority to enter into this Agreement, and to fully perform its obligations hereunder; (b) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms; (c) Intermolecular owns, or possesses a valid and enforceable license to use, and has full power and authority to license or sublicense, as the case may be, all Intermolecular’s Intellectual Property Rights licensed or sublicensed to Toshiba and SanDisk pursuant to this Agreement; (d) Intermolecular’s compliance with its obligations under this Agreement will not violate third party agreements nor give rise to financial obligations on the part of Toshiba, Toshiba Affiliates, SanDisk or SanDisk Affiliates under any Third Party agreements; and (e) it will perform the services contemplated by this Agreement in a professional and workmanlike manner and in accordance with relevant industry standards applicable to the services.

 

9.2                                 By Toshiba and SanDisk.  Toshiba and SanDisk each individually represent and warrant that:  (a) it has the right and authority to enter into this Agreement, and to fully perform its obligations hereunder; (b) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms; and (c) each owns, or possesses a valid and enforceable license to use, and has full power and authority to license or sublicense, as the case may be, all Intellectual Property Rights which are or may be licensed to Intermolecular under this Agreement.

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

9.3                                 Disclaimer.  Toshiba and SanDisk each acknowledge that the CDP is by its nature a technology development project and there is no guarantee that the project will be successful, in whole or in part or will meet Toshiba’s or SanDisk’s anticipated needs.  Each party further acknowledges that the failure of the parties to successfully develop and commercialize [*] Technology, CDP Products or Non-CDP Products as the result of the CDP shall not constitute a breach of any representation or warranty or other obligation under this Agreement.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, TOSHIBA, SANDISK, AND INTERMOLECULAR MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, AND EXPRESSLY DISCLAIM ALL OTHER REPRESENTATIONS, WARRANTIES AND CONDITIONS, WHETHER EXPRESS, IMPLIED, OR STATUTORY, WITH RESPECT TO BACKGROUND IP, FOREGROUND IP, HPC TECHNOLOGY OR ANY INFORMATION OR TECHNOLOGY DISCLOSED OR PROVIDED UNDER THIS AGREEMENT, INCLUDING ANY DELIVERABLES PROVIDED HEREUNDER.  WITHOUT LIMITING THE FOREGOING, EACH PARTY HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF TITLE, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY OF ANY BACKGROUND IP, FOREGROUND IP, OR HPC TECHNOLOGY, PATENTED OR UNPATENTED, OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

9.4                                 Indemnification.  Intermolecular shall indemnify, defend and hold harmless Toshiba, Toshiba Affiliates, SanDisk and SanDisk Affiliates against any Third Party suits, actions, claims or proceedings alleging that (a) the HPC Technology, HPC Derivatives, or any Licensed IP provided or licensed by Intermolecular under this Agreement infringes or misappropriates such Third Party’s Intellectual Property Rights and/or (b) Intermolecular has caused property damage to a Toshiba or SanDisk facility, and Intermolecular agrees to reimburse Toshiba, Toshiba Affiliates, SanDisk and SanDisk Affiliates for all damages, liabilities, costs and expenses, including reasonable attorneys’ fees, finally awarded against Toshiba, Toshiba Affiliates, SanDisk and SanDisk Affiliates by a court of competent jurisdiction that may result from any such Third Party claim or property damage or any settlement amount, as applicable; provided that (i) SanDisk and/or Toshiba (as applicable) notifies Intermolecular promptly in writing of the claim; and (ii) SanDisk and/or Toshiba (as applicable) assist and cooperates reasonably with Intermolecular, at Intermolecular’s expense, in defending and settling such claim.  Intermolecular shall have sole control of the defense and all related potential settlement negotiations, provided that Intermolecular shall not enter into any settlement which would adversely affect Toshiba, Toshiba Affiliates, SanDisk or SanDisk Affiliates without such party’s prior written consent.  In addition, each of SanDisk and Toshiba shall be entitled to be represented by its own respective counsel at its own respective expense.  Intermolecular shall maintain appropriate insurance to permit Intermolecular to reasonably carry out its indemnity obligations under this Agreement.

 

10.                               LIMITATION OF LIABILITY

 

10.1                           Intermolecular.

 

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT FOR INTERMOLECULAR’S OBLIGATIONS UNDER SECTIONS 6 AND 9.4 OF THIS

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

AGREEMENT, A BREACH BY INTERMOLECULAR OF ITS CONFIDENTIALITY OBLIGATIONS UNDER SECTION 8, OR A BREACH OF ANY LICENSE RESTRICTIONS APPLICABLE TO INTERMOLECULAR:  (I) UNDER NO CIRCUMSTANCES WILL INTERMOLECULAR BE LIABLE TO ANY PARTY UNDER ANY LEGAL OR EQUITABLE THEORY, INCLUDING UNDER CONTRACT, STRICT LIABILITY OR OTHERWISE, FOR ANY LOST PROFITS, LOST DATA, LOST BUSINESS OPPORTUNITY, INJURY TO BUSINESS REPUTATION OR EQUIPMENT DOWNTIME, OR FOR ANY CONSEQUENTIAL, PUNITIVE INCIDENTAL, INDIRECT OR SPECIAL DAMAGES OF ANY KIND IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND (II) IN NO EVENT WILL INTERMOLECULAR’S AGGREGATE LIABILITY TO ANY PARTY EXCEED THE GREATER OF (A) US$[*], AND (B) CUMULATIVE AMOUNTS PAID OR PAYABLE BY TOSHIBA AND SANDISK (OR BY THIRD PARTIES BASED ON LICENSES MADE PURSUANT TO THIS AGREEMENT) TO INTERMOLECULAR IN THE [*] MONTHS PRECEDING THE CLAIM.

 

10.2                           SanDisk and Toshiba.

 

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT FOR A BREACH BY SANDISK OR TOSHIBA OF THEIR RESPECTIVE CONFIDENTIALITY OBLIGATIONS UNDER SECTION 8, OR A BREACH OF ANY LICENSE RESTRICTIONS:  (I) UNDER NO CIRCUMSTANCES WILL SANDISK AND/OR TOSHIBA BE LIABLE TO ANY PARTY UNDER ANY LEGAL OR EQUITABLE THEORY, INCLUDING UNDER CONTRACT, STRICT LIABILITY OR OTHERWISE, FOR ANY LOST PROFITS, LOST DATA, LOST BUSINESS OPPORTUNITY, INJURY TO BUSINESS REPUTATION OR EQUIPMENT DOWNTIME, OR FOR ANY CONSEQUENTIAL, PUNITIVE, INCIDENTAL, INDIRECT OR SPECIAL DAMAGES OF ANY KIND IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND (II) IN NO EVENT WILL SANDISK’S OR TOSHIBA’S AGGREGATE LIABILITY TO ANY PARTY EXCEED THE AMOUNTS DUE AND PAYABLE BY SANDISK AND TOSHIBA TO INTERMOLECULAR.

 

10.3                           Basis of Agreement.  EACH PARTY ACKNOWLEDGES AND AGREES THAT THE FOREGOING LIMITATIONS OF LIABILITY ARE AN ESSENTIAL ELEMENT OF THE BASIS OF THE BARGAIN AMONG THE PARTIES AND THAT IN THE ABSENCE OF SUCH LIMITATIONS, THE ECONOMIC AND OTHER TERMS OF THIS AGREEMENT WOULD BE SUBSTANTIALLY DIFFERENT.

 

11.                               TERM; TERMINATION

 

11.1                           Term of Agreement.  The Agreement, unless terminated or canceled as provided in this Section 11, shall remain in full force and effect for the full Initial Term, and may be extended for up to [*] year periods by Toshiba and SanDisk providing notice to Intermolecular of their intention to renew the Agreement providing [*] days advance written notice to Intermolecular before the expiration of the Initial Term or any extension thereof.  SanDisk and Toshiba shall receive at least as favorable commercial terms from Intermolecular if they elect to extend the Term beyond the Initial Term, as those commercial terms governing the Initial Term.

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

If SanDisk and/or Toshiba request to extend the Term for less than [*] year and/or wish to have lower rates in return for extending the Term, the parties shall discuss and work together in good faith to agree to such request (Intermolecular shall not unreasonably withhold agreement to a request to extend the duration of the Term).

 

11.2                           Termination for Convenience.  Either Toshiba or SanDisk may terminate this Agreement for convenience without penalties of any kind, in the event of an acquisition, merger, assignment, reorganization or other change of control of Intermolecular, by providing [*] days advance written notice to Intermolecular.  “Change of control” under this Section 11.2 excludes (a) an IPO by Intermolecular, and (b) the acquisition of Intermolecular by either a financial entity, a semiconductor equipment manufacturer or a semiconductor materials manufacturer, provided that any of these entities referred to in this (b) are not affiliated with an entity that designs and/or manufactures semiconductor integrated circuits, and that any party in (b) within [*] days notifies and confirms in writing to SanDisk and Toshiba that such party shall assume all of Intermolecular’s obligations under this Agreement and SanDisk and Toshiba shall have the right to terminate this Agreement unless such party meets requirements in (b).

 

11.3                           Termination for Breach.  Either Toshiba or SanDisk may terminate this Agreement in the event that Intermolecular has materially breached or defaulted in the performance of any of its material obligations hereunder, and such default has continued for [*]days after written notice thereof was provided to Intermolecular by a non-breaching party; or in the event of insolvency or bankruptcy.  Intermolecular may terminate this Agreement in the event that either Toshiba or SanDisk has materially breached or defaulted in the performance of its material obligations hereunder, and such default has continued for [*]days after written notice thereof was provided to the breaching party by Intermolecular.  Any termination shall become effective at the end of such [*]day period unless the breaching party (or any other party on its behalf) has cured any such breach or default prior to the expiration of the [*] day period.

 

11.4                           Effect of Termination.

 

11.4.1                  Accrued Rights and Obligations.  Termination of this Agreement for any reason shall not release any party hereto from any liability or obligation that, at the time of such termination, has already accrued to the other parties or that is attributable to a period prior to such termination, nor shall it preclude any party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement.

 

11.4.2                  Return of Confidential Information.  Upon any termination of this Agreement, Toshiba, SanDisk and Intermolecular, as applicable, shall promptly destroy or return to the other all Confidential Information received from any other party other than as required to enforce or defend any continuing or surviving rights and pursuant to this Agreement obligations under this Agreement.

 

11.5                           Survival.  If this Agreement terminates for any reason or expires, then Sections [*] and [*] of this Agreement shall survive such termination or expiration.

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

12.                               MISCELLANEOUS

 

12.1                           Governing Laws and Dispute Resolution.  This Agreement shall be governed by and construed in accordance with the laws of the state of California in the United States, without regard to its choice of law rules.  All disputes between the parties in connection with or arising out of this Agreement shall first be discussed in good faith between the parties in order to try to find an amicable solution.  If no solution can be found to settle the dispute, then such dispute shall be finally settled by arbitration in accordance with the default rules and procedures of American Arbitration Association sitting in Hawaii and conducted in English.  Within [*] days of notice that a party wants to submit a dispute to arbitration, the parties will attempt to mutually agree upon an independent arbitrator with expertise in the semiconductor industry.  If the parties are unable to agree on an independent arbitrator within [*] days, AAA will select an arbitrator within [*] days.  The arbitrator shall determine what discovery will be permitted consistent with the goal of limiting the costs and time for such a proceeding.  The parties and arbitrator shall use all reasonable efforts to complete any arbitration subject to this Section 12.1 within [*] from the selection of the arbitrator.  The parties agree that any award of damages shall not include punitive, special, consequential, or indirect damages except as specifically allowed in this Agreement and shall comply with the limitation of liability provisions set forth herein.  The arbitrator’s decision shall be in a detailed writing setting forth the reasons for their decision and shall be provided concurrently to each party.  The arbitration award shall be final and binding on the parties.  Unless otherwise agreed to by the parties, each party shall pay one-third of the arbitration fees and expenses and shall bear all of its own expenses in connection with the arbitration.  Notwithstanding any of the foregoing, any party shall have the right to seek, at its own cost and expenses, preliminary and temporary injunctive relief pending resolution of the dispute via arbitration.  The parties expressly disclaim the application of the United Nations Convention on the International Sale of Goods to this Agreement.

 

12.2                           Assignment.  No party may assign or transfer this Agreement either voluntarily or by operation of law, in whole or in part, without the prior written consent of the other parties, such consent not to be unreasonably conditioned, delayed or withheld, and any attempt to do so will be null and void.  Notwithstanding the foregoing, any party may assign this Agreement without such consent to a parent, subsidiary, or Affiliate, or assign this Agreement without consent to a successor in interest to its business (whether by merger, acquisition, consolidation, change of control, reorganization or sale of substantially all of its assets), provided that if Intermolecular assigns this Agreement to a successor in interest, such successor in interest within [*] days notifies and confirms in writing to SanDisk and Toshiba that such successor in interest shall assume all of Intermolecular’s obligations under this Agreement and SanDisk and Toshiba shall have the right to defer any payment under this Agreement until SanDisk and Toshiba have confirmed, in writing, such purported assignment.  The parties acknowledge and agree that if this Agreement is assigned by Toshiba or SanDisk to a successor in interest as a result of a merger, acquisition, consolidation, change of control, reorganization or sale of substantially all of their assets, then (a) the caps set forth in Section 5.4.2 shall terminate and the Fees payable shall be uncapped thereafter; and (b) the covenants set forth in Section [*] shall not apply to the successor in interest or to any products or services of such successor in interest other than the specific, then-current version of the CDP Products and Non-CDP Products in commercial production at the closing of the transaction resulting in the change of control.  The parties further acknowledge and agree that if this Agreement is assigned by Intermolecular to a successor in interest as a result of a merger, acquisition, consolidation, change of control, reorganization or sale of substantially all of its assets, then the covenants set forth in Section [*]shall not apply to

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]independently owned or controlled by the successor in interest on the date immediately prior to the closing of the transaction resulting in the change of control, nor shall the covenants set forth in Section [*] apply to any [*]created or acquired by such successor in interest after the closing of the transaction resulting in the change of control unless the identity of the former Intermolecular as a functional unit remains identifiable in which case the covenants shall continue to apply but only as to [*]created by the said identifiable functional unit during the [*].  Notwithstanding the foregoing, the covenants set forth in Section [*] still apply to any [*] filed by such successor and claiming priority to any earlier [*]obtained or developed by [*]before or during the [*].  Subject to the foregoing provisions, this Agreement will be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

 

12.3                           Drafting.  In interpreting and applying the terms and provisions of this Agreement, the parties agree that no presumption shall exist or be implied against the party that drafted such terms and provisions.

 

12.4                           Waiver.  It is agreed that no waiver by any party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver or an expectation of non-enforcement as to any subsequent and/or similar breach or default.

 

12.5                           Non-Solicitation.  During the Initial Term of this Agreement no party may individually, or in concert with or through any other person, actively recruit or solicit employment of any scientific or technical personnel of any other party.  The foregoing restriction shall not apply to, or be breached by:  (i) advertising open positions, participating in job fairs, and conducting comparable activities to recruit skilled or unskilled help from the general public, or responding to individuals contacted through such methods, (ii) responding to unsolicited inquiries about employment opportunities or possibilities from job placement agencies or other agents acting for unidentified principals, or (iii) responding to unsolicited inquiries about employment opportunities from any individual.

 

12.6                           Severability.  In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect to the fullest extent permitted by law without said provision, and the parties shall amend the Agreement to the extent feasible to lawfully include the substance of the excluded term to as fully as possible realize the intent of the parties and their commercial bargain.

 

12.7                           Independent Contractors.  The relationship of the parties hereto is that of independent contractors.  Each party shall not be deemed to be an agent, partner, joint venture or legal representative of the other for any purpose as a result of this Agreement or the transactions contemplated thereby.

 

12.8                           Press Releases or Public Statements.  No Party shall issue any press release, publicity statement, communication with stockholders, public notice or other public disclosure relating directly to this Agreement or the transactions contemplated hereby without prior notice to, consultation with and the prior written consent of the other parties.

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

12.9                           Compliance with Law.  In exercising their rights and undertaking their obligations under the Agreement, each party shall fully comply in all material respects with the requirements of any and all applicable laws, regulations, rules and orders of any governmental body having jurisdiction over the exercise of rights under this Agreement.  Without limiting the foregoing, each party agrees to comply with all applicable export and re-export control laws and regulations maintained by the United States or Japanese governments.

 

12.10                     Notices.  All notices, requests and other communications hereunder shall be in writing and shall be hand delivered, or sent by express delivery service with confirmation of receipt, or sent by registered or certified mail, return receipt requested, postage prepaid, or by electronic transmission (with written confirmation copy by registered first-class mail), in each case to the attention of the chief legal officer at the respective address indicated above.  Any such notice shall be deemed to have been given when received.  Any party may change its address by giving the other party written notice, delivered in accordance with this Section.

 

12.11                     Force Majeure.  No party shall lose any rights hereunder or be liable to any other party for damages or losses (except for payment obligations then owing) on account of failure of performance by the defaulting party if the failure is occasioned by war, strike, fire, earthquake, flood, lockout, embargo, act of terrorism, governmental acts, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the non-performing party and such party has exerted all reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall a party be required to settle any labor dispute or disturbance.

 

12.12                     Headings; Construction.  The captions to the several Sections hereof are not part of this Agreement, but are included merely for convenience of reference and shall not affect its meaning or interpretation.  As used in this Agreement, the word “including” means “including without limitation.”

 

12.13                     Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

 

12.14                     Complete Agreement.  This Agreement, together with its Exhibits and their attachments, constitutes the entire agreement, both written and oral, among the parties with respect to the subject matter hereof, and all prior agreements respecting the subject matter hereof, either written or oral, express or implied, shall be superseded by this Agreement.  Without limitation to the foregoing, except as provided in Section 4.2.2(B), the 2006 Agreement is hereby superseded and replaced by this Agreement, except for Intermolecular’s and SanDisk’s surviving confidentiality obligations set forth in the 2006 Agreement.  If there is any conflict between the confidentiality provisions in this Agreement and in the 2006 Agreement, the confidentiality provisions in this Agreement shall control.  No amendment or change hereof or addition hereto shall be effective or binding on either of the parties hereto unless reduced to writing and executed by the respective duly authorized representatives of Toshiba, SanDisk and Intermolecular.  The parties further agree that any additional or inconsistent terms and conditions of any purchase order, invoice or like document issued in connection with this Agreement shall be superseded in full by the terms and conditions of this Agreement and any Exhibit hereunder,

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

and any such additional or inconsistent terms, unless specifically agreed to in writing by the parties at the time, are hereby rejected.

 

12.15                     Third Party Beneficiaries.  Except as expressly provided in this Agreement, there are no Third Party beneficiaries expressly or impliedly intended under this Agreement.

 

In Witness Whereof, the parties hereto have executed this document as the Effective Date above, or if no date is set forth, the last date set forth below.

 

	
Toshiba   Corporation
    	
 
    	
SanDisk   Corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Hiroto Nakai
    	
 
    	
By:
    	
/s/   Ben Tessone
    
	
Name:
    	
Hiroto   Nakai
    	
 
    	
Name:
    	
Ben   Tessone
    
	
Title:
    	
SM,   Flash Business Strategy Development
    	
 
    	
Title:
    	
VP,   Worldwide Procurement
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Intermolecular, Inc.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   David Lazovsky
    	
 
    	
 
    
	
Name:
    	
David   Lazovsky
    	
 
    	
 
    
	
Title:
    	
President &   CEO
    	
 
    	
 
    

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Exhibit A—[*]IP (Non-Exhaustive List of Patents as of Effective Date)

Exhibit B—Development Plan

Exhibit C—IM [*]Developed Technology

Exhibit D—Original CDP Developed Technology

Exhibit E—Workflow Infrastructure

Exhibit F—Exclusions from Section 6.2

Exhibit G—Form of Warrant

Exhibit H—Intermolecular Background IP for the CDP

 

Intermolecular Confidential

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

EXHIBIT A

 

CATEGORY ONE IP

 

(Non-Exhaustive List of Patents as of Effective Date)

 

[Intermolecular to provide non-confidential summary to SanDisk and Toshiba prior to
 Effective Date, and final version to be provided immediately after Effective Date]

 

Non-confidential summary:

 

US Applications:

 

	
#
    	
 
    	
Title
    	
 
    	
Short Description
    	
 
    	
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IM Ref. No.
    	
 
    
	
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PCT Applications:

 

	
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   Number
    	
 
    	
IM Ref. No.
    	
 
    
	
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Foreign Applications:

 

	
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   Number
    	
 
    	
IM Ref. No.
    	
 
    
	
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Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

EXHIBIT B

 

DEVELOPMENT PLAN - PHASE I

 

(Version [*])

 

[*]

 

Common criteria for all [*]:

 

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Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

	
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Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

EXHIBIT C

 

IM [*] Developed Technology

 

US Applications:

 

	
#
    	
 
    	
Title
    	
 
    	
Short Description
    	
 
    	
App. No.
    	
 
    	
IM Ref. No.
    	
 
    
	
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Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

EXHIBIT D

 

Original CDP Developed Technology

 

[*] (“[*]”) and

[*] (“[*]”) DOCUMENTATION

 

[*]

 

Exhibit A—[*]

 

Exhibit B—[*] Pivot Table

 

Exhibit C—Invention Disclosures

 

Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

EXHIBIT A (1 OF 2)

 

 [*]

 

	
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[*]

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Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

EXHIBIT A (2 OF 2)

 

BKM Condition

 

	
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Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

[*]

 

Intermolecular Confidential

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Exhibit B — [*] Pivot Table

 

	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Exhibit B - TFS Pivot Table

 

	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Confidential

 

 

Exhibit B - TFS Pivot Table

 

	
 
    	
 
    	
 
    	
 
    	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Confidential

 

 

Exhibit B - TFS Pivot Table

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Confidential

 

 

EXHIBIT C—Invention Disclosures

 

	
Docket
   #
    	
 
    	
Title
    	
 
    	
Short Description
    	
 
    	
Exemplary Claim
    	
 
    
	
[*]
    	
 
    	
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[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    

 

Intermolecular and SanDisk

Confidential Information

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Exhibit C-1

 

	
FILE NO. [*]
    	
 
    	
INTERMOLECULAR, INC. - CONFIDENTIAL
    

 

INTERMOLECULAR, INC.
 INVENTION DOCUMENTATION FORM

 

1. [*]

 

2. [*]

3. [*]

 

4. [*]

 

4(a) [*]

4(b) [*]

 

4(c) [*]

 

5. [*]

 

5(a) [*]

5(b) [*]

 

6.

 

7. [*]

 

7(a) [*]

7(b) [*]

 

8.

 

Contains Intermolecular Confidential and

Attorney Client Privileged Information

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

1

 

	
FILE NO. [*]
    	
 
    	
INTERMOLECULAR, INC.   -CONFIDENTIAL
    

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
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Contains Intermolecular Confidential and

Attorney Client Privileged Information

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

2

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*].

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

	
 
    	
 
    	
 
    	
 
    	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

	
 
    	
 
    	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

	
 
    	
 
    	
[*]
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

INTERMOLECULAR, INC.
 INVENTION DOCUMENTATION FORM

 

1. [*]

 

2. [*]

3. [*]

 

4. [*]

 

4(a) [*]

4(b) [*]

 

4(c) [*]

 

5. [*]

 

5(a) [*]

5(b) [*]

 

6.

 

7. [*]

 

7(a) [*]

7(b) [*]

 

8.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Exhibit C-3

 

	
FILE NO. [*]
    	
 
    	
INTERMOLECULAR, INC. — CONFIDENTIAL
    

 

INTERMOLECULAR, INC.
 INVENTION DOCUMENTATION FORM

 

1. [*]

 

2. [*]

3. [*]

 

4. [*]

 

4(a) [*]

4(b) [*]

 

4(c) [*]

 

5. [*]

 

5(a) [*]

5(b) [*]

 

6.

 

7. [*]

 

7(a) [*]

7(b) [*]

 

8.

 

Contains Intermolecular Confidential and
 Attorney Client Privileged Information

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

1

 

	
FILE NO. [*]
    	
 
    	
INTERMOLECULAR, INC. — CONFIDENTIAL
    

 

[*]

 

[*]

 

Contains Intermolecular Confidential and
 Attorney Client Privileged Information

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

2

 

	
 
    	
 
    	
 
    

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

3

 

	
 
    	
 
    	
 
    

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

4

 

	
 
    	
 
    	
 
    

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

5

 

	
 
    	
 
    	
 
    

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

6

 

	
 
    	
 
    	
 
    

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

7

 

	
 
    	
 
    	
 
    

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

8

 

	
 
    	
 
    	
 
    

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

9

 

	
 
    	
 
    	
 
    

 

Exhibit C-4

 

	
Lead   Inventor:
    	
 
    	
[*]
    	
 
    	
Supervisor:
    	
 
    	
[*]
    
	
Docket   No.:
    	
 
    	
[*]
    	
 
    	
 
    	
 
    	
 
    
	
TITLE   OF INVENTION:
    	
 
    	
[*]
    	
 
    	
 
    	
 
    	
 
    

 

Problem Addressed by Invention:

	
[*]
    

 

Previous Approaches to Solving Problem:

	
[*]
    

 

Brief Description of Invention:  (Attach all relevant drawings, specs, flowcharts, design review or notebook entries)

	
[*]
    

 

Enabling and Best Mode disclosure:

	
[*]
    
	
 
    
	
 
    	
[*]
    	
 
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

10

 

	
 
    	
 
    	
 
    

 

	
[*]
    
	
 
    
	
 
    	
[*]
    	
 
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

11

 

	
 
    	
 
    	
 
    

 

Alternative structures/steps:

	
 
    

 

Key Words:

	
[*]
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

12

	
 
    	
 
    	
 
    

EXHIBIT E

 

Workflow Infrastructure

 

	
Dedicated
   Equipment
    	
 
    	
Description
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    

 

	
Other
   Equipment
    	
 
    	
Description
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
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[*]
    	
 
    	
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[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    

 

Physical Metrology & E-Test Tools

 

	
[*]
    	
 
    
	
[*]
    	
 
    
	
[*]   
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    
	
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[*]
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    
	
[*]
    	
 
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

13

	
 
    	
 
    	
 
    

EXHIBIT F

 

Exclusions from Section 6.2

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

14

	
 
    	
 
    	
 
    

EXHIBIT G

 

Form of Warrant

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

15

	
 
    	
 
    	
 
    

EXHIBIT H

 

Exhibit H as of May 10, 2010

 

	
Items
   #
    	
 
    	
Docket
   #
    	
 
    	
Title
    	
 
    	
Serial No.
    	
 
    	
Filing Date
    	
 
    
	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    	
 
    

 

[*]

[*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

16Exhibit 10.4

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

ALLIANCE AGREEMENT
 ADVANCED TECHNOLOGY MATERIALS, INC. AND INTERMOLECULAR, INC.

 

This ALLIANCE AGREEMENT (the “Agreement”), effective as of November 17, 2006 (the “Effective Date”), is made by and between Advanced Technology Materials, Inc., with a principal place of business at 7 Commerce Drive, Danbury, CT 06810 (“ATMI”), and Intermolecular, Inc., with a principal place of business at 2865 Zanker Road, San Jose, California 95134 (“IM”).  ATMI and IM are sometimes referred to herein individually as a “party” and collectively as the “parties.”

 

BACKGROUND

 

A.                                   ATMI is developing and commercializing semiconductor materials products and technologies, and possesses certain novel, proprietary materials, processes and technologies, in the Field (as defined below);

 

B.                                     IM possesses certain novel, proprietary materials, methods, processes, and technologies for the combinatorial preparation and screening of novel materials, novel process integration, and novel device integration;

 

C.                                     IM and ATMI desire to enter into a definitive agreement to collaborate on the application and commercialization of certain products, methods, technologies and expertise of both parties in the Field, including all products, methods and technologies for specific applications in the Field developed pursuant to this Agreement, on the terms and conditions set forth below.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

1.1          “Active Component” means a component whose functional characteristics are determined by the modulation of one or more [*], or [*] inputs. Examples of Active Components include: [*], including [*] components, including [*] and [*] components, including [*] devices; and [*] components, including [*] devices.

 

1.2          “Agreement Compound” means any Lead Compound or Derivative Compound.

 

1.3          “Affiliate” means any entity directly or indirectly controlling, controlled by or under common control with, a party to this Agreement.  For purposes of this Agreement, only the direct or indirect ownership of fifty percent (50%) or more of the voting securities of an entity shall be deemed to constitute control.

 

1

 

1.4          “Alliance Patents” means: (i) all patent applications prepared or filed by ATMI or IM in the course of and in connection with the Alliance Plan, (ii) all divisions, substitutions, continuations, continuations-in-part, reissues, re-examinations, and extensions of (i) above, (iii) all foreign counterparts of any of the preceding, and (iv) all patents issuing on any of the preceding.

 

1.5          “Alliance Know-How” means any unpatented information, trade secrets, data, or materials developed in connection with the Alliance Plan; provided, however, that Alliance Know-How shall not include Alliance Patents.

 

1.6          “Alliance Technology” means any and all technology, materials, compounds, sequences of compounds, processes, documentation and all related Intellectual Property Rights, including Alliance Patents and Alliance Know-How, developed pursuant to the Alliance Plan, including the Products, Agreement Compounds, Materials Manufacturing Technology, and any HPC Technology and HPC-Derived Technology that is developed during the course of a CDP.

 

1.7          “ATMI Independent Technology” means technology, patents and patent applications (other than Alliance Patents), know-how, trade secrets, and technical information (other than Alliance Technology) that is (i) owned, licensed or otherwise controlled by ATMI on or prior to the Effective Date; or (ii) created, conceived or reduced to practice by ATMI employees, contractors or agents without reliance, use or benefit of (a) the HPC Technology, (b) the HPC-Derived Technology licensed or developed hereunder, (c) IM Independent IP, or (d) any technology, know-how or technical information provided by or obtained from an IM employee, contractor or agent, directly and or indirectly.  The ATMI Independent Technology expected to be used in connection with any CDP may be listed in such CDP.

 

1.8          “CDP” or “Collaborative Development Program” means a specific development project agreed upon in writing by ATMI and IM that describes a defined set of activities conducted collaboratively by the parties for defined development and commercialization purposes in a defined CDP Field, pursuant to the terms of this Alliance Agreement.  Each CDP defines a unique set of technical and business objectives, development and commercialization plans, and economic, Intellectual Property Rights ownership and licensing terms between the parties, and when executed will be deemed incorporated into Exhibit A of this Agreement.  The written plan for a CDP may also be referred to as a CDP or “CDP Plan” under this Agreement.

 

1.9          “CDP Field” means a unique field defined in a CDP included in Exhibit A of this Agreement.

 

1.10        “Confidential Information” means any information disclosed by one party to the other in connection with this Agreement, whether in electronic, written, graphic, oral, machine readable or other tangible or intangible form, that is (i) marked or identified at the time of disclosure as “Confidential” or “Proprietary” or in some other manner so as to clearly indicate its confidential nature, or (ii) if disclosed orally should reasonably be considered confidential by the receiving party given the nature of the information or the circumstances of its disclosure.

 

1.11        “Critical Parameter Set” or “CPS” means a specified technology development deliverable for a CDP, consisting of a defined combination of unique elements, which, when so 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

2

 

applied, (a) define or identify a Product or are useful for the synthesis and manufacture of a Product or (b) describe the use of a Product for a specifically identified purpose in a specific CDP Field, and which may include by way of example any of the following: compounds, sequences of compounds, materials, unique processes,  unique processing parameters, conditions and sequences,  unique process integration conditions and sequences, or unique device integration conditions and sequences.  The CPS for each CDP will be specifically enumerated in the Development Plan for each CDP.

 

1.12        “Derivative Compound” means any compound or mixture for application in the CDP Field that is made or derived from a Lead Compound and that is within the parameters or specifications defined in a specific Technology Firewall Set by the parties pursuant to their respective development efforts under a CDP, or as permitted to be made or derived by ATMI or under authority of ATMI or its Affiliates or Sublicensees in accordance with the licenses granted to ATMI under that CDP.  As used in this Agreement, a compound or mixture shall be deemed to have been “derived from” a Lead Compound if it results from a CDP based on a Lead Compound or from the use of HPC Technology, Alliance Technology, or IM Independent IP, or is otherwise related to a Lead Compound.  For the purpose of this definition, “otherwise related” shall mean any further modifications to a Lead Compound or Derivative Compound outside of this Agreement, but not modifications to ATMI Independent Technology created independently of any use of HPC Technology, Alliance Technology or IM Independent IP, including any compound based on structure and/or performance data relating to one or more Lead Compounds. Derivative Compounds shall also include a compound that is synthesized, based on, or derived from another Derivative Compound pursuant to a CDP as described above.  “Derivative Compound” shall not include any compound or mixture developed independently by ATMI or its Affiliates or sublicensees without reliance on Alliance Technology or IM Independent IP, and that does not infringe or misappropriate the Alliance Technology or IM Independent IP.

 

1.13        “Field”  means the “Field” defined in that certain Alliance Agreement, effective as of December 19, 2005, between IM and Symyx Technologies, Inc., as such definition in such agreement may be expanded from time to time.  The CDP Field for each CDP will be defined in the applicable CDP document.

 

1.14        “FTE” means a full-time employee or contractor dedicated to the conduct of an Alliance CDP or, in the case of less than full-time dedication, a full-time equivalent person-year, based on approximately [*] hours per year of work on or related to a CDP.

 

1.15        “HPC Technology” means all techniques, methodologies, processes, test vehicles, synthetic procedures, technology, systems, or combination thereof (collectively, “Techniques”) (a) subject to or covered by any Intellectual Property Right owned by IM or licensed to IM, (b) used by IM in performance of a CDP or provided by IM to ATMI pursuant to a CDP, and (c) used for the simultaneous parallel or rapid serial: (i) design, (ii) synthesis, (iii) processing, (iv) process sequencing, (v) process integration, (vi) device integration, (vii) analysis, or (viii) characterization of more than two (2) compounds, compositions, mixtures, processes, or synthesis conditions, or the structures derived from such. HPC Technology does not include any of the foregoing Techniques to the extent they were (A) used by ATMI prior to the Effective Date, (B) created, conceived or reduced to practice by ATMI independent of this Agreement without reliance on or use or benefit of Alliance Technology, IM Independent IP, or 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

3

 

any technology, know-how or information provided by or obtained from an IM employee, contractor or agent, directly and or indirectly.  It is understood that test vehicles include physical and or electrical characterization devices such as test structures or chips, used in the design, process development, manufacturing process qualification, and manufacturing process control of Integrated Circuit devices. It is also understood that HPC Technology does not include the use of commercially available equipment in commercial manufacturing for nominally uniform processing of one or more identical Integrated Circuits on a single substrate, or the use of such equipment in research and development for nominally uniform processing of one or more Integrated Circuits on a single substrate.

 

1.16        “HPC-Derived Technology” means any data, know-how, materials, compounds, sequences of compounds, methods, processes, or other technology derived through the use of HPC Technology, including but not limited to unit processes, process integration, processing equipment, Critical Parameter Sets, Technology Firewall Sets, device architecture and device integration in the Field.

 

1.17        “IM HPC Systems” means any IM tool, hardware, or associated technology, including software provided for use therewith, that enables a user to practice HPC Technology.

 

1.18        “IM Independent IP” means all Intellectual Property Rights that are (i) owned, licensed or otherwise solely controlled by IM as of the Effective Date; or (ii) created, conceived or reduced to practice by IM employees, contractors or agents without reliance, use or benefit of (a) ATMI Independent Technology or (b) technology, know-how or technical information provided by or obtained from an ATMI employee, contractor or agent, directly and or indirectly; and including the HPC Technology.  The IM Independent IP expected to be used in connection with any CDP may be listed in such CDP.

 

1.19        “Integrated Circuit” means any miniaturized structure integrated within a single body containing a number of circuit components, including at least one Active Component and at least one Passive Component, which circuit components are arranged and constructed through a sequence of compatible processes and material interfaces (including such for the substrate and for the packaging of the structure) so as to allow (i) upon the application of power, the performance within the miniaturized structure of a function similar to the function performed by an equivalent number of separate circuit components; and (ii) component density within the miniaturized structure that is at least one order of magnitude larger than the assembly of an equivalent number of separate circuit components. The term “Integrated Circuit” includes any devices described in the paragraph immediately above that are based on technologies in commercial practice as of the Effective Date that contain more than [*] Active Components, and any such devices based on technologies not in commercial practice as of the Effective Date (“Novel Technologies”) that contain more than one (1) Active Component, provided it is intended that such device, after commercial adoption, will contain more than [*] Active Components. The term Integrated Circuit does not include primary batteries, secondary batteries, fuel cells, solar cells, chemical or physical property sensors, or MEMs devices where the output of such MEMs devices is mechanical. Examples of Integrated Circuits include: (i) microprocessor chips and  memory chips, including volatile and nonvolatile memory chips (examples of digital Integrated Circuits); (ii) RF chips (an example of an Integrated Circuit with digital and analog components); (iii) thin film transistors and flat panel displays (examples of 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

4

 

Integrated Circuits with digital, analog and photonic components); and (iv) data storage devices (an example of an Integrated Circuit with digital, analog and magnetic components).  Examples of Integrated Circuits based on Novel Technologies include molecular electronics products or plastic electronics products, and products derived from a combination of molecular electronics and other Active Components or Passive Components.

 

1.20        “Intellectual Property Rights” means rights in and to any and all (i) U.S. and foreign patents and patent applications claiming any inventions or discoveries made, developed, conceived, or reduced to practice, including all divisions, substitutions, continuations, continuation-in-part applications, and reissues, re-examinations and extensions thereof, (ii) copyrights, (iii) unpatented information, trade secrets, data, or materials, (iv) trademarks, service marks, trade names, trade dress, domain names and similar rights, (v) mask work rights, and (vi) any other intellectual or other proprietary rights of any kind now known or hereafter recognized in any jurisdiction.

 

1.21        “Lead Compound” means a compound or material identified, synthesized or discovered pursuant to a CDP that meets agreed upon performance criteria set forth in a Critical Parameter Set for that CDP.

 

1.22        “Material” means a specific compound or composition of materials.

 

1.23        “Materials Manufacturing Technology” means any data, know-how, techniques, methods, processes, or other technologies for the synthesis, production, packaging, shipping or distribution of commercial quantities of one or more Products, excluding HPC Technology, and that may be specifically listed as “Materials Manufacturing Technology” in the applicable CDP.

 

1.24        “Passive Component” means a component whose functional characteristics are not determined by the modulation of one or more [*], or [*] inputs, but which are instead determined uniquely by the element’s properties (e.g. materials, size, configuration). Examples of Passive Components include [*] and [*].

 

1.25        “Product” means a Material that is based on a CPS or incorporates an Agreement Compound or utilizes an Agreement Compound in its manufacture and/or otherwise incorporates Alliance Technology in its method of use or its method of manufacture and is authorized to be manufactured and sold pursuant to a CDP or is otherwise identified in a CDP.

 

1.26        “Technology Firewall Set” or “TFS” shall mean a defined set of Agreement Compounds and process integration sequences identified within a CDP that are minor variations on a specific CPS that accomplish the same application in the CDP Field as that specific CPS in substantially the same manner. The set of specific CPS(s) and associated TFS(s) are to be mutually agreed and documented at completion of the initial development phase of the CDP, together with supporting data setting forth the feasibility of each TFS instance for use in high volume Integrated Circuit manufacturing of the application in the CDP Field, all as further described in the Development Plan for each CDP.

 

1.27        “Third Party” shall mean any person or entity other than ATMI and its Affiliates, IM and its Affiliates, and their permitted assigns.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

5

 

1.28        “Workflow” means any combination of IM HPC Systems and other systems for use in a specific application, e.g. for use in a CDP.

 

ARTICLE 2
 ALLIANCE ACTIVITIES

 

2.1          Alliance Term.  The parties will engage in development and commercialization activities pursuant to this Agreement, commencing on the Effective Date and, unless earlier terminated as set forth in Article 11, continuing for a period of [*] years thereafter (the “Initial Term”).  The parties will agree to extensions and/or expansions of this Agreement, if any, no later than [*] prior to the end of the Initial Term.  The Initial Term and any extensions thereof are defined as the “Alliance Term.”

 

2.2          Alliance Scope.  The scope of development and commercialization activities to be undertaken together by the parties will be defined solely by the scope of the individual CDPs agreed upon in writing by the parties and incorporated into the Agreement.

 

2.2.1       Scope Description.  For each such CDP, the parties will mutually agree in advance regarding any particular applications within the Field that the parties will address collaboratively in connection with that CDP (the “CDP Field”), the elements of the CPS for that CDP (including the target Lead Compounds and potential Derivative Compounds), the TFS for the CDP Field, each party’s respective technology contributions to the CDP and ownership of Intellectual Property Rights in such contributions, the license terms applicable to each party’s respective Intellectual Property Rights necessary to engage in the activities specified in the CDP, any other research and development requirements for the CDP, any cost sharing for research and development activities undertaken as part of the CDP, the schedule and term for the CDP, and the commercialization plans (including whether commercialization will be exclusive or non-exclusive, in what respects and on what terms) and revenue sharing or royalties for any results of each CDP.

 

2.2.2       Initial Scope.  At the start of this Agreement the parties intend to collaborate on and incorporate into this Agreement one CDP:  [*].  Additional CDPs may be incorporated later on the basis of decisions made by the Operating Committee.

 

2.2.3       Term.  Each CDP shall have a minimum term of [*].

 

2.3          Alliance Activities.  During the Alliance Term, the parties shall conduct CDPs solely in accordance with the terms of each CDP Plan.  The collection of all CDP Plans shall constitute the “Alliance Plan”, as initially documented in Exhibit A. New mutually-agreed CDP Plans, or CDP Plans revised pursuant to a Change Order, shall be incorporated into a revised Alliance Plan.  Such revised Alliance Plan shall be incorporated into this Agreement and shall supersede or supplement the previous Alliance Plan.

 

2.4          Alliance HPC Systems.  For the purpose of executing certain phases of certain CDPs in the Alliance Plan, the parties may agree from time to time that certain mutually-agreed IM HPC Systems may be transferred to ATMI facilities under the terms of a mutually-agreed subscription agreement.  Under such agreement, for certain IM HPC Systems, ATMI would pay IM a monthly subscription fee to be determined based on a mutually agreed definition of the 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

6

 

transferred Workflow.  Operating labor and consumables for the transferred Workflow will be provided by ATMI.  Ongoing program management labor, and training for ATMI, on the transferred Workflow will be provided by IM.  If ATMI terminates the Agreement, or any applicable CDP, then ATMI will pay any shipping costs to return to IM any IM HPC Systems or components previously provided to ATMI.  All shipping of IM HPC Systems will be done in accordance with IM policies.

 

2.5          Preferred Suppliers.  During the term of this Agreement, ATMI will be the preferred supplier of Materials solutions related to the CDP Fields, and IM will be the preferred supplier of all HPC Technology solutions related to the CDP Fields, in each instance unless a customer of either party specifically requests a different partner.  If a customer requests a different partner, the Operating Committee will determine an appropriate course of action, pursuant to Section 3.1, provided, however, that neither party shall be required to forego a business opportunity because the other party has not been included in the project, so long as the party not included participates in any revenue share or royalty arrangements agreed upon by the parties and set forth in the Alliance Plan.

 

2.6          Resources.  ATMI and IM will each provide the number of FTEs set forth in the Alliance Plan to conduct their respective obligations, such FTEs to be allocated over the course of the Alliance Term as set forth for each CDP in the Alliance Plan.  The parties may, from time to time and by mutual written agreement, allocate certain resources to more than one CDP concurrently, for a defined period of time. Notwithstanding any other provision of this Agreement, neither party will be required to perform development activities other than in accordance with the Alliance Plan, or utilize a total number of FTEs in excess of the number of FTEs described in the Alliance Plan or this Agreement, without its prior written consent.

 

2.7          Change Order Process.  If, during the course of the Alliance Plan, either party wishes to change the Alliance Plan, it shall give the other party written notice of such request.  The other party will respond to such request within a reasonable period of time and the parties will negotiate in good faith for a written change to the Alliance Plan incorporating the changes required by such request and which are approved and accepted in writing by each party (“Change Order”).  In no event will IM or ATMI be bound by any proposed change unless and until it has agreed in writing to a Change Order for such change, and the then-current Alliance Plan will remain in full force and effect, without modification, until such Change Order has been mutually agreed in writing. Once a Change Order has been mutually agreed to in writing, such Change Order will become part of the Alliance Plan.

 

2.8          Development Records.  ATMI and IM will maintain records of activities for all CDPs (or cause such records to be maintained) in sufficient detail and in good scientific manner as will properly reflect all work done and results achieved in the performance of all CDPs (including information sufficient to establish dates of conception and reduction to practice of inventions). The parties will maintain copies of such records for five (5) years after the term of this Agreement.

 

2.9          Employees.  IM agrees to inform ATMI of any proposal to involve any [*] employees or any non-IM employees in the performance of any activities under any CDP or in development of any Alliance Technology.  Unless otherwise expressly agreed to in writing by 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

7

 

ATMI, IM agrees that no [*] employees or any non-IM employees are to be involved in the performance of any activities under any CDP or in development of any Alliance Technology.  ATMI agrees to inform IM of any proposal to involve any non-ATMI employees in the performance of any activities under any CDP or in development of any Alliance Technology.  Unless otherwise expressly agreed to in writing by IM, ATMI agrees that no such non-ATMI employees are to be involved in the performance of any activities under any CDP or in development of any Alliance Technology.

 

ARTICLE 3
 MANAGEMENT

 

3.1          Alliance Operating Committee

 

3.1.1       Establishment of Operating Committee.  ATMI and IM will establish a committee (the “Operating Committee”) to oversee the conduct of the Alliance Plan, monitor progress, resolve any disputes or disagreements between the Project Managers (as defined below) on any particular CDP, and ensure free and open communications between the parties.

 

3.1.2       Membership of Operating Committee.  The Operating Committee will initially be comprised of [*] representatives from each party, or such other equal number of representatives as the parties may from time to time agree in writing, with each party’s representatives selected by that party.  Either party may replace any of the Operating Committee members it has appointed at any time, upon written notice to the other party.

 

3.1.3       Meetings. During the Alliance Term, the Operating Committee will meet at least on a quarterly basis or as otherwise agreed by the parties, at locations agreed by the parties.  Upon consent of the parties, other representatives of ATMI or IM may attend Operating Committee meetings as nonvoting observers.  Operating Committee members may participate in any meeting in person, by telephone, teleconference or any other means of two-way communication mutually acceptable to the parties.  IM will prepare minutes of each Operating Committee meeting, which minutes will be reviewed, approved and signed by Operating Committee representatives of each party.

 

3.1.4       Decision Making.  At least one representative of each party must be present to establish a quorum for each Operating Committee meeting.  All decisions of the Operating Committee must be made by a majority vote of the representatives of each party present, with each party’s representatives voting as a separate class.  In the event the Operating Committee is unable to resolve an issue, it may be referred by either party to the chief executive officers of ATMI and IM, who shall discuss the matter within thirty (30) days of the referral.  Matters that are not resolved by the chief executive officers of ATMI and IM within sixty (60) days of the referral may be submitted to binding arbitration by either party as set forth in Section 11.16.

 

3.2          CDP Project Management

 

3.2.1       Establishment of Project Managers.  Each party will appoint a principal point of contact to be its project manager (“Project Manager”) for each CDP.  The Project Managers will coordinate activities between the parties and act as a liaison with the other party 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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with respect to such CDP.  Either party may change its Project Manager from time to time upon written notice to the other party.  Each Project Manager will also oversee and supervise its party’s fulfillment of its obligations under the CDP, discuss the progress of the CDP, and identify barriers to success, key issues and issues-resolution options with the other party’s Project Manager.

 

3.2.2       Project Manager Meetings. During the Alliance Term, the Project Managers will meet regularly, as needed, but no less than [*] times per [*] at locations and times mutually agreed upon by the parties.  Project Managers may participate in any such meeting in person, by telephone, or by teleconference.  IM will prepare minutes of each Project Management meeting, which minutes will be reviewed, approved and signed by the Project Manager of each party. In the event the Project Managers are unable to resolve an issue, such issue may be referred by either party to the Operating Committee.

 

ARTICLE 4
 OWNERSHIP; LICENSES

 

4.1          Ownership.  As between the parties, ATMI shall own all right, title and interest in and to the ATMI Independent Technology.  As between the parties, IM shall own all right, title and interest in and to any IM Independent IP and, except as otherwise set forth in the applicable CDP, shall also own all right, title and interest in and to Alliance Technology and the HPC Technology.  ATMI agrees to assign to IM in the future all of its right, title and interest in and to any Alliance Technology except as otherwise set forth in the applicable CDP.  All rights not expressly granted pursuant to this Agreement and the applicable CDP Plan are reserved.

 

4.2          License to ATMI.  Specific license and sublicense grants regarding use of IM Independent IP and Alliance Technology will be set forth in the applicable CDP Plan.  Nothing herein grants ATMI a license to use Alliance Technology or IM Independent IP for any purpose except pursuant to a specific CDP Plan agreed upon in writing by the parties.

 

4.3          License to IM.  Specific license and sublicense grants regarding use of ATMI Independent Technology will be set forth in the applicable CDP Plan. Nothing herein grants IM a license to use Products or ATMI Independent Technology for any purpose except pursuant to a specific CDP Plan agreed upon in writing by the parties.

 

4.4          Additional or Independent Development Activities.

 

4.4.1       IM Third Party Activities.  ATMI acknowledges and agrees that nothing in this Agreement restricts IM from engaging in development or commercialization projects with Third Parties outside a CDP Field, except as may be set forth in each CDP Plan.  IM has no right to use any ATMI Independent Technology for any project with any Third Party absent separate written agreement with ATMI, except as may be set forth in each CDP Plan.

 

4.4.2       New Applications Resulting from CDP Activities.  Unless a different procedure is specified in a CDP, should one or both parties determine that a Product developed pursuant to a CDP may have application to another commercialization opportunity in the Field, the parties agree to promptly notify each other and work together either to execute a mutually agreed Change Order to that existing CDP or to execute a new mutually agreed CDP to 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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commercialize the new application.  The parties agree to negotiate in good faith and that ATMI shall have the right of first offer for [*] to conduct the commercialization of that Product for the new application.

 

4.5          Limited Use.  Except as the parties may otherwise expressly agree in writing, neither party shall use or sell, or authorize the use or sale of, any Agreement Compound or Product in the applicable CDP Field except in relation to the development, manufacture, use, or sale of Agreement Compounds or Products or the licensing of Intellectual Property Rights in accordance with the licenses granted pursuant to Sections 4.2 and 4.3 and the applicable CDP.

 

ARTICLE 5
 REVENUE SHARE OR ROYALTIES AND OTHER COMPENSATION

 

5.1          Payments. ATMI will pay certain IM development fees and other fees as will be set forth in each CDP.  Such payments shall be made on the [*] day of each month (or the next business day after the [*] if the [*] falls on a weekend or holiday) and shall be nonrefundable and non-creditable.

 

5.2          Revenue Share or Royalties.  Each party will pay the other party any revenue share payments or royalties due, as set forth in each CDP, on a calendar [*] basis for any agreed upon commercialization licenses.  The revenue share calculations or royalties will be set forth in the applicable CDP.

 

5.3          Third Party Royalties.  Each party shall be responsible for all of its own costs of commercializing Products or licensing Intellectual Property Rights, including any payments to third parties for work done by such third parties or for licenses necessary for the manufacture, sale, or use of Products by a party or its Affiliates or Sublicensees.

 

5.4          Payment Method.  All payments due under this Agreement shall be made by bank wire transfer or ACH transaction in immediately available funds to a bank account designated by each party.  All payments hereunder shall be from a U.S. entity and made in U.S. dollars.  Any payments that are not paid within [*] days of the date such payments are due under this Agreement shall bear interest at the lesser of (i) [*] per month or (ii) the maximum rate permitted by law.  Nothing in this Section 5.4 shall prejudice any other rights or remedies available to either party hereunder or at law or equity.

 

5.5          Reports and Payments.  After the first commercial sale of a Product or licensing of Alliance Technology on which royalties are payable by either party to the other, each party shall make [*] written reports to the other party within [*] after the end of each calendar [*], stating in each such report, separately for itself and each Affiliate and each Sublicensee, the number, description, and total sales of each Product sold, and a calculation of the revenue share or royalties due as a result of license grants to customers pursuant to this Agreement and the applicable CDP, the manner of calculation of each to be specified in the applicable CDP, during the calendar [*] upon which an amount is payable under Section 5.2.  Concurrently with the making of such reports, each party shall pay the other party all amounts due as set forth in the report.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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5.6                               Currency Conversions.  If any currency conversion shall be required in connection with the calculation of royalties hereunder, such conversion shall be made using the selling exchange rate for conversion of the foreign currency into U.S. Dollars, quoted for current transactions reported in The Wall Street Journal for the last business day of the calendar [*] to which such payment pertains.

 

5.7                               Records; Inspection.  Each party and its Affiliates shall keep complete, true and accurate books of account and records for the purpose of determining the royalty amounts payable under this Agreement.  Such books and records shall be kept at the principal place of business of such party, as the case may be, for at least [*] years following the end of the calendar [*] to which they pertain. Such records will be open for inspection during such [*] year period by an independent auditor reasonably acceptable to the audited party, solely for the purpose of verifying royalty statements hereunder.  Such inspections may be made no more than once each calendar year, at reasonable times and on reasonable notice.  Inspections conducted under this Section 5.7 shall be at the expense of the auditing party, unless a variation or error producing an increase of at least [*] Dollars ($[*]) and exceeding [*] percent ([*]%) of the amount stated for any period covered by the inspection is established in the course of any such inspection, whereupon all reasonable costs relating to the inspection for such period and any unpaid amounts that are discovered will be paid promptly by the audited party together with interest thereon for late payments as set forth above.  Each party agrees to hold in confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent necessary for each party to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law.

 

5.8                               Tax Matters.  Unless otherwise required under applicable law binding upon a payor party, all royalty amounts and other payments required to be paid by each party pursuant to this Agreement shall be paid without deduction for withholding for or on account of any taxes (other than taxes imposed on or measured by net income) or similar governmental charge imposed by a jurisdiction other than the United States.

 

ARTICLE 6
 INTELLECTUAL PROPERTY PROCUREMENT AND ENFORCEMENT

 

6.1                               Procurement.  It is recognized and agreed that both Parties have an interest in ensuring that the Alliance Technology is properly and adequately protected through the procurement of Intellectual Property Rights.  To facilitate this goal and to give each Party the opportunity to have input into the process of obtaining Intellectual Property Rights, Intermolecular agrees to use commercially reasonable efforts to consult with ATMI on matters relating to Intellectual Property Rights procurement strategy for the Alliance Technology owned by IM, including but not limited to (a) providing ATMI with the opportunity to participate in the preparation and prosecution of patent applications and (b) selecting jurisdictions in which to pursue Intellectual Property Rights protection, which will ultimately be determined by IM in its sole discretion.

 

6.1.1                     For any patent application prepared and filed on behalf of IM relating to Agreement Compounds, the manufacture of Agreement Compounds, or the use of Agreement Compounds in Products in a CDP Field in accordance with a CDP, in the event that IM decides

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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not to extend the patent application into a different jurisdiction where ATMI believes in its reasonable, good faith judgment a foreign counterpart should be filed, ATMI shall have the opportunity, at its own expense, to take appropriate actions to extend the patent application into such additional jurisdiction (including filing and prosecuting patent applications in the jurisdiction and maintaining any resulting patents).  All patent applications and patents, resulting from ATMI’s election pursuant to this section in that jurisdiction shall be solely owned by ATMI as ATMI Independent Technology, subject to a non-exclusive, royalty-free, perpetual and irrevocable grant-back license to IM under the resulting patent(s) to make, have made, use, offer to sell, sell and import products; provided, however, that any such grant back license shall be subject to any applicable exclusivity, revenue share and royalty provisions agreed upon by the parties for that CDP Field (i.e., if ATMI has an exclusive commercialization license in the CDP Field pursuant to the applicable CDP, then IM shall have no commercialization rights under the ATMI patent(s) obtained pursuant to this subsection in the CDP Field during the exclusivity period).  IM agrees to promptly provide notice to ATMI of any decision not to extend a patent application into a particular jurisdiction and in any event not less than [*] before any deadline by which such applications must be filed to avoid loss of Intellectual Property Rights, provided, however, that a failure to do so shall not be deemed a material breach of this Agreement.

 

6.1.2                     In the event that IM decides not to pursue patent protection or trade secret protection relating to Products or features of Products, and notifies ATMI via the Operating Committee that it will not seek patent protection or trade secret protection for a particular Product, ATMI shall have the opportunity, at its own expense, to pursue and maintain patent protection, including the right to file and prosecute patent applications covering such Products or features of Products, and to maintain any patents resulting therefrom.  All patent applications, patents, and Intellectual Property Rights resulting from ATMI’s election under this provision shall be solely owned by ATMI as ATMI Independent Technology, subject to a non-exclusive, royalty-free, perpetual and irrevocable grant-back license to IM, without right of sublicense, to IM under the resulting patent(s) to make, have made, use, offer to sell, sell and import Products; provided, however, that any such grant back license shall be subject to any exclusivity, revenue share and royalty provisions agreed upon by the parties for that CDP Field.  IM agrees to promptly provide notice to ATMI of any decision not to pursue trade secret protection or patent protection relating to Products or features of Products or as required under Section 7.4.  ATMI agrees that, before proceeding with filing or prosecuting patents for any such inventions, at the next possible Operating Committee meeting the parties shall discuss and use all reasonable efforts to agree on a course of action for protection of the inventions.

 

6.2                               Enforcement.

 

6.2.1                     Notice.  Each party shall promptly notify the other of its knowledge of any actual or potential commercially material infringement of the Alliance Technology by a third party.

 

6.2.2                     Products in the CDP Field.  Where ATMI has been granted and maintains an exclusive license, or where ATMI owns the Alliance Technology, ATMI shall have the initial right, but not the obligation, to take reasonable legal action to enforce rights contained that license against commercially material infringements that involve the manufacture, use, sale, offer for sale or import of Products in the CDP Field for such CDP.  If ATMI does not take reasonable

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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action to halt such infringement within one year following its discovery of infringement or receipt of notice of such infringement from IM, IM shall, in its sole discretion, have the right, but not the obligation to take action to stop such infringement at its sole expense.

 

6.2.3                     Outside of the Field. IM shall have the right, but not the obligation, to take reasonable legal action to enforce rights contained in any portion of the Field where ATMI does not have exclusivity.

 

6.2.4                     HPC Technology and HPC-Derived Technology. IM shall have the right, but not the obligation, to take reasonable legal action to enforce rights contained in the HPC Technology and HPC-Derived Technology, excluding Products to the extent covered by Section 6.2.2 above.

 

6.2.5                     Cooperation; Costs and Recoveries.  Each party agrees to render such reasonable assistance in connection with enforcement activities described in this Section 6.2 as the enforcing party may request.  Costs of maintaining any such action shall be paid by and belong to the party bringing the action. Any damages recovered from any such action (after the deduction of the costs of the action) shall be allocated as agreed upon in advance in writing by the parties.

 

6.2.6                     Third Party Claims of Infringement.  If the manufacture, use or sale of any Product, or the licensing of Intellectual Property Rights, pursuant to this Agreement, because of the practice of the Alliance Technology results in any claim, suit or proceeding alleging patent infringement against IM or ATMI (or their Affiliates or Sublicensees), such party shall promptly notify the other party hereto in writing setting forth the facts of such claims in reasonable detail.  The defendant shall have the exclusive right and obligation to defend and control the defense of any such claim, at its own expense, using counsel of its own choice; provided, however, it shall not enter into any settlement which admits or concedes that any aspect of the Alliance Technology is invalid or unenforceable, without the prior written consent of the other party. The defendant shall keep the other party hereto reasonably informed of all material developments in connection with any such claim, suit or proceeding.

 

ARTICLE 7
 CONFIDENTIALITY

 

7.1                               Confidentiality.  Except as otherwise expressly provided in the Mutual Non-Disclosure Agreement signed by the parties on December 6, 2005 for Confidential Information exchanged between the parties prior to the Effective Date, or as otherwise expressly provided herein, the parties agree that the receiving party shall not, except as expressly provided in this Article 7, disclose to any third party, or use for any purpose, any Confidential Information furnished to it by the disclosing party pursuant to this Agreement, except in each case to the extent that it can be established by the receiving party by competent proof that such information:

 

(a)                                  was already known to the receiving party, other than under an obligation of confidentiality to the disclosing party, at the time of disclosure;

 

(b)                                 was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving party;

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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(c)                                  became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving party in breach of this agreement;

 

(d)                                 was independently developed by the receiving party without use of, or reference to, the other party’s confidential information, as demonstrated by documented evidence prepared contemporaneously with such independent development; or

 

(e)                                  was disclosed to the receiving party, other than under an obligation of confidentiality to the disclosing party, by a Third Party authorized and entitled to disclose such information to others.

 

Confidential Information shall not be considered within the above exceptions merely because the Confidential Information is embraced by more general information within the exceptions.  Any combination of features of Confidential Information shall not be considered within the above exceptions merely because individual features, as opposed to the combination itself and its principles of operation, are within the exception.

 

7.2                               Permitted Use and Disclosures.  Notwithstanding the restrictions of Section 7.1, each party hereto may (a) use Confidential Information disclosed to it by the other to the extent necessary for that party to perform its obligations set forth in the Alliance Plan and (b) use or disclose Confidential Information disclosed to it by the other party to the extent such use or disclosure is reasonably necessary in (i) exercising the rights and licenses granted hereunder, (ii) prosecuting or defending litigation pursuant to Section 6.2, (iii) complying with applicable laws, governmental regulations or court orders or submitting information to tax or other governmental authorities (including the Securities and Exchange Commission), (iv) preparing, filing and prosecuting patent applications pursuant to this Agreement, or (v) making a permitted sublicense or otherwise exercising license rights expressly granted pursuant to this Agreement; in each case, provided that if a party is required to make any such disclosure, other than pursuant to a confidentiality agreement, it will give reasonable advance notice to the other party of such disclosure and will use reasonable efforts to secure confidential treatment of such information (whether through protective order or otherwise), except to the extent inappropriate with respect to patent applications.  It is understood that either party may also disclose the Confidential Information of the other party upon receipt of the written consent to such disclosure by a duly authorized representative of the other party.  It is also understood that notwithstanding other provisions of this paragraph, neither party shall disclose trade secrets of the other party without first obtaining the written consent of the party owning such trade secrets and securing an agreement with the party to whom such disclosure will be made that such trade secrets will be treated as confidential for as long as such trade secrets qualify for protection as trade secrets.  It is further understood that such trade secrets are not to be included in any patent, patent application, or other document that is accessible by individuals not subject to an agreement requiring that the individuals maintain such document in confidence.

 

7.3                               Nondisclosure of Terms.  Subject to Section 7.5, each of the parties hereto agrees not to disclose the terms of this Agreement to any third party without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld, except to such party’s attorneys, accountants, advisors, investors and financing sources and their advisors

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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and others on a need to know basis under circumstances that reasonably ensure the confidentiality thereof, to the extent required by law, in connection with the enforcement of this Agreement or rights under this Agreement or in connection with a merger, acquisition, financing transaction or proposed merger, acquisition or financing transaction, or the like.

 

7.4                               Publication of Results.  Any manuscript or other public disclosure by ATMI or IM describing the scientific results of the Alliance to be published within the term of the Alliance Term, or within eighteen (18) months after the end of the Alliance Term, shall be provided to the other party for review at least ninety (90) calendar days prior to its submission.  Further, to avoid the loss of patent rights as a result of premature public disclosure of patentable information, the reviewing party may, within thirty (30) calendar days of receiving such a proposed disclosure, notify the publishing party in writing that the reviewing party desires to file a patent application on any invention disclosed in such scientific results, in which case the publishing party shall withhold publication or disclosure of such scientific results until the earlier of (i) the time the patent application is filed thereon, (ii) the time the parties both determine, after consultation, that no patentable invention exists, or (iii) ninety (90) calendar days after the publishing party received notice of the reviewing party’s desire to file such patent application.  Further, if such scientific results contain Confidential Information of the reviewing party that is subject to the use and nondisclosure restrictions under this Article 7, the publishing party agrees to remove such Confidential Information from the proposed publication or disclosure or obtain the reviewing party’s prior consent for such disclosure.  The provisions of this section are subject to Section 7.5.

 

7.5                               Compliance with Public Company Disclosure Obligations.  Notwithstanding the provisions of Sections 7.3 and 7.4, if a party is a Public Company (as defined below), such party may disclose from time to time such information regarding the terms of this Agreement and the scientific and other results of the Alliance as such party may reasonably deem to be necessary to comply with its disclosure obligations under applicable U.S. securities law or applicable stock market or NASDAQ Stock Market listing rules; provided, however, that each party shall use commercially reasonable efforts to (i) nevertheless comply with its obligations as set forth in Sections 7.3 and 7.4, or in the event such compliance is not possible, (ii) provide the other party with a draft of the disclosure intended to be made not less than twenty-four (24) hours prior to the intended first public release or filing of such disclosure.  For purposes of this section, “Public Company” shall mean a company that is subject to the reporting requirements of either Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended.

 

ARTICLE 8
 REPRESENTATIONS AND WARRANTIES

 

8.1                               By ATMI.  ATMI represents and warrants that: (i) it has the right and authority to enter into this Agreement, and to fully perform its obligations hereunder; and (ii) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms.

 

8.2                               By IM.  IM hereby makes the following representations and warranties:

 

8.2.1                     Authority.  IM has the right and authority to enter into this Agreement, and to fully perform its obligations hereunder.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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8.2.2                     Legal, Valid and Binding Obligation.  This Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms.

 

8.2.3                     Intellectual Property Rights.  IM owns, or possesses a valid and enforceable license to use, all Intellectual Property Rights licensed to ATMI pursuant to this Agreement (excluding Alliance Technology other than HPC Technology) (for purposes of this Section 8.2.3, “IM Licensed IP”).  IM has full power and authority to license or sublicense, as the case may be, such Intellectual Property Rights to ATMI upon the terms set forth herein, and to IM’s knowledge, the use and practice of such Intellectual Property Rights by the parties in the Field pursuant to and in accordance with the terms of this Agreement will not infringe the Intellectual Property Rights of any Third Party.  IM agrees to defend and hold ATMI harmless from and against all claims, losses, damages, judgments, awards, settlements, costs and expenses (including reasonable attorneys’ fees)  of, arising out of or resulting from  any litigation or proceeding brought by a Third Party alleging infringement of a Third Party’s Intellectual Property Rights relating to the HPC Technology or HPC-Derived Technology; provided that (i) ATMI notifies IM promptly in writing of the claim (provided, however, that the failure to promptly provide notice to IM will not affect IM’s duties or obligations under this Article 8 except to the extent IM is prejudiced thereby); and (ii) ATMI assists and cooperates reasonably with IM, at IM expense, in defending or settling such claim.  IM shall have sole control of the defense and all related potential settlement negotiations, provided that IM shall not enter into any settlement which would materially adversely affect the rights granted to ATMI under this Agreement without ATMI’s express prior written consent.  Notwithstanding the foregoing, IM shall have no liability for any claim of infringement based on or arising from the Alliance Technology, the Agreement Compounds or the use, sale, offer for sale, import or manufacture of Products.  In addition, ATMI shall be entitled to be represented by ATMI’s own counsel at ATMI’s expense.  In the event the IM Licensed IP is held to, or IM believes is likely to be held to, infringe or misappropriate any Intellectual Property Rights of a Third Party, IM shall have the right at its sole option and expense to (i) modify the IM Licensed IP so that it is non-infringing and meets the criteria pre-approved by ATMI; and/or (ii) obtain a license to continue to use IM Licensed IP as licensed hereunder without additional charge to ATMI. The foregoing indemnity states the sole obligations and exclusive liability of IM, and ATMI’s sole recourse and exclusive remedy for any Third Party claim of infringement or misappropriation of an Intellectual Property Right by IM under this Agreement.

 

8.3                               Disclaimer.  ATMI and IM specifically disclaim any representation, warranty or guarantee that the Alliance Plan or individual CDPs therein, will be successful, in whole or in part.  It is understood that the failure of the parties to successfully develop and commercialize the any technology related to this Agreement shall not constitute a breach of any representation or warranty or other obligation under this Agreement.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, IM AND ATMI MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE TECHNOLOGIES DESCRIBED HEREIN OR INFORMATION DISCLOSED HEREUNDER, AND HEREBY EXPRESSLY DISCLAIM ANY WARRANTIES OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY OF ANY TECHNOLOGY, PATENTED OR UNPATENTED, OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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ARTICLE 9
 LIMITATION OF LIABILITY

 

EXCEPT FOR A BREACH BY EITHER PARTY OF ITS CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 7 AND EXCEPT FOR BREACHES OF ANY LICENSE RESTRICTIONS, OR ANY PAYMENT OBLIGATIONS RESULTING FROM AN INDEMNIFICATION OBLIGATION HEREUNDER, UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER, UNDER CONTRACT, STRICT LIABILITY, NEGLIGENCE OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY LOST REVENUE, LOST PROFITS, EQUIPMENT DOWN-TIME, OR FOR ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  EXCEPT FOR A BREACH BY EITHER PARTY OF ITS CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 7 AND EXCEPT FOR BREACHES OF ANY LICENSE RESTRICTIONS, OR ANY PAYMENT OBLIGATIONS RESULTING FROM AN INDEMNIFICATION OBLIGATION HEREUNDER, IN NO EVENT WILL EITHER PARTY’S LIABILITY TO THE OTHER UNDER THIS AGREEMENT EXCEED THE GREATER OF [*] DOLLARS ($[*]) OR THE AMOUNTS PAID OR PAYABLE BY SUCH PARTY TO THE OTHER PARTY IN THE TWELVE (12) MONTHS PRECEDING THE CLAIM.

 

ARTICLE 10
 TERMINATION

 

10.1                        Term of Agreement.  The term of this Agreement shall commence on the Effective Date, and, unless terminated earlier as provided in this Article 10, shall continue in full force and effect for the Alliance Term, or until the completion of the last active CDP in the Alliance Plan, whichever is latest.

 

10.2                        Termination for Breach.  Either party to this Agreement may terminate this Agreement or a specific CDP in the event the other party shall have breached or defaulted in the performance of any of its material obligations hereunder, including a CDP, and such default shall have continued for [*] after written notice thereof was provided to the breaching party by the non-breaching party. Any termination shall become effective at the end of such [*] period unless the breaching party (or any other party on its behalf) has cured any such breach or default prior to the expiration of such [*] period.

 

10.3                        Effect of Termination.  Except as provided in a CDP, upon any termination of this Agreement or a specific CDP, all licenses under the Agreement or the terminated CDP, as applicable, shall terminate, and IM and ATMI shall promptly return to the other all Confidential Information received from the other party related to this Agreement or the terminated CDP except (i) one copy of which may be retained for archival purposes, or (ii) to the extent that such Confidential Information is necessary to practice a continuing license or to which the other party obtained an ownership interest pursuant to Article 4; provided, however that the applicable party  may, at its option, destroy any Confidential Information it is otherwise obligated to return and certify such destruction to the other party.  Except as expressly provided herein, Articles 5, 7, 8, 9 and 11 and Sections 2.8, 4.1, 6.2, and 10.3, shall survive the expiration or termination of this

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

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Agreement for any reason.  Upon any termination or expiration of this Agreement, the parties, through the Operating Committee, shall meet within one month following determination and finally determine what, if any, potentially patentable inventions may be pursued by ATMI resulting from development then being conducted under an active CDP pursuant to Section 6.1 above.

 

ARTICLE 11
 MISCELLANEOUS

 

11.1                        Governing Laws.  This Agreement and any dispute arising from the construction, performance or breach hereof shall be governed by and construed and enforced in accordance with the laws of the State of New York without regard to conflict-of-law principles that would result in the application of the law of any other jurisdiction.

 

11.2                        Assignment.  Neither party shall assign this Agreement, in whole or in part, without the prior written consent of the other party, which consent shall not be unreasonably conditioned, delayed or withheld; provided, however, that either party may assign this Agreement without such consent, to an Affiliate, or to a successor in interest to its business (whether by merger, acquisition, consolidation, change of control, reorganization or sale of substantially all of its assets) and the terms of the Agreement shall continue in effect without modification after such assignment, including without limitation the royalty provisions herein which shall be binding upon any permitted assignee. Any purported assignment without such consent shall be void and of no effect.  Subject to the foregoing sentence, this Agreement will be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

 

11.3                        No Implied Licenses.  Only the licenses granted pursuant to the express terms of this Agreement shall be of any legal force or effect.  No other license rights shall be created by implication, estoppel or otherwise.  Each party reserves all rights not expressly granted to the other party under this Agreement.

 

11.4                        Representation by Legal Counsel.  Each party hereto represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof.  In interpreting and applying the terms and provisions of this Agreement, the parties agree that no presumption shall exist or be implied against the party that drafted such terms and provisions.

 

11.5                        Waiver.  It is agreed that no waiver by either party hereto of any breach or default of any of the covenants or agreements herein set forth shall be deemed a waiver as to any subsequent and/or similar breach or default.

 

11.6                        Non-Solicitation.  During the Alliance Term and for [*] thereafter, neither IM nor ATMI will individually, or in concert with or through any other person, actively recruit or solicit employment of any scientific or technical personnel of the other party. The foregoing restriction shall not apply to, or be breached by: (i) advertising open positions, participating in job fairs, and conducting comparable activities to recruit skilled or unskilled help from the general public, or responding to individuals contacted through such methods, (ii) responding to unsolicited

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

18

 

inquiries about employment opportunities or possibilities from job placement agencies or other agents acting for unidentified principals, or (iii) responding to unsolicited inquiries about employment opportunities from any individual.

 

11.7                        Severability.  In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect to the fullest extent permitted by law without said provision, and the parties shall amend the Agreement to the extent feasible to lawfully include the substance of the excluded term to as fully as possible realize the intent of the parties and their commercial bargain.

 

11.8                        Independent Contractors.  The relationship of the parties hereto is that of independent contractors.  The parties hereto are not deemed to be agents, partners or joint ventures of the others for any purpose as a result of this Agreement or the transactions contemplated thereby.

 

11.9                        Compliance with Laws.  In exercising its rights under the licenses granted hereunder, and in undertaking the activities outlined in this Agreement, each party shall fully comply in all material respects with the requirements of any and all applicable laws, regulations, rules and orders of any governmental body having jurisdiction over the exercise of rights under this Agreement including those applicable to the discovery, development, manufacture, distribution, import and export and sale of products based on technology developed pursuant to this Agreement.

 

11.10                 Export Control Regulations.  Without limiting the parties’ obligations under Section 11.9 above, the rights and obligations of the parties under this Agreement, shall be subject in all respects to United States laws and regulations as shall from time to time govern the license and delivery of technology abroad.  Without in any way limiting the provisions of this Agreement, IM and ATMI agree that each will not export, reexport, or transship, directly or indirectly, to any country, any of the technical data disclosed to it by the other party hereto if such export would violate the laws of the United States or the regulations of any department or agency of the United States Government.

 

11.11                 Patent Marking.  Each party agrees to mark and have their Affiliates and licensees mark all products sold or licensed pursuant to this Agreement in accordance with the applicable statute or regulations relating to patent marking in the country or countries of manufacture and sale thereof, and to notify the other party if it becomes aware that the marking of any such product is required.

 

11.12                 Notices.  All notices, requests and other communications hereunder shall be in writing and shall be hand delivered, or sent by express delivery service with confirmation of receipt, or sent by registered or certified mail, return receipt requested, postage prepaid, or by facsimile transmission (with written confirmation copy by registered first-class mail), in each case to the respective address or facsimile number indicated below.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

19

 

	
 
    	
IM:
   2865 Zanker Road
   San Jose, CA 95134
    	
  ATMI:
     7 Commerce Drive
     Danbury, CT 06810
    
	
 
    	
Attn:
    	
Chief   Executive Officer
    	
  Attn:
    	
Chief   Legal Officer
    
	
 
    	
Fax:   
    	
(408)   416-2301
    	
  Fax:
    	
(203)   797-2544
    
	
 
    	
 
    	
 
    
	
 
    	
with   copy to:
   Anthony Klein
   Latham and Watkins, LLP
   140 Scott Drive
   Menlo Park, CA 94025
    	
with   copy to:
    

 

Any such notice shall be deemed to have been given when received.  Either party may change its address or facsimile number by giving the other party written notice, delivered in accordance with this section.

 

11.13                 Force Majeure.  Neither party shall lose any rights hereunder or be liable to the other party for damages or losses (except for payment obligations) on account of failure of performance by the defaulting party if the failure is occasioned by war, strike, fire, act of God, earthquake, flood, lockout, embargo, act of terrorism, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the non-performing party and such party has exerted all reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall a party be required to settle any labor dispute or disturbance.

 

11.14                 Headings; Construction.  The captions to the several articles and sections hereof are not part of this Agreement, but are included merely for convenience of reference and shall not affect its meaning or interpretation.  As used in this Agreement, the word “including” means “including without limitation.”

 

11.15                 Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

 

11.16                 Dispute Resolution.  Unless otherwise specified in a CDP, if a dispute arises between the parties relating to the interpretation or performance of this Agreement, representatives of the parties with decision-making authority shall meet to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies.  If such a meeting is requested, it must be held, unless the parties otherwise agree, within [*] calendar days from receipt of such request (the “Request”). If within [*] calendar days after such meeting the parties have not resolved such dispute, the Chief Executive Officers of both parties shall meet within [*] calendar days after the end of such [*] day period to discuss and attempt to resolve the dispute. If the parties have not resolved the dispute within [*] calendar days after the Request, either party may submit such dispute to final and binding arbitration, before a single, mutually-acceptable arbitrator, conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”).  If the parties are unable to select a mutually

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

20

 

acceptable arbitrator, AAA shall appoint an arbitrator or provide a method for selection.  Any arbitration proceedings shall be conducted in San Jose, California.  The arbitrator shall determine what discovery will be permitted, consistent with the goal of limiting the cost and time that the parties must expend for discovery.  Each party shall bear its own expenses, including attorneys’ fees, and the parties will share equally the costs and fees of the arbitrator.  The parties shall use all reasonable efforts to complete any arbitration subject to this section within [*] months from the filing of notice of a request for such arbitration.  The parties agree that any award shall not include punitive damages and shall be consistent with the limitation of liability provisions set forth in this Agreement.  The arbitrator shall not have the power to add terms not contained in this Agreement or to refuse to enforce any term.  Judgment upon any decision rendered by the arbitrator may be entered by any court having jurisdiction. The parties undertake and agree that all arbitral proceedings and all information, documentation, materials in whatever form disclosed in the course of such arbitral proceeding shall be deemed Confidential Information hereunder.  Notwithstanding any of the foregoing, either party shall have the right to seek, at its own cost and expense, preliminary and temporary injunctive relief pending resolution of the dispute.

 

11.17                 Complete Agreement.  This Agreement with its Exhibits, and the Mutual Non-Disclosure Agreement dated as of December 6, 2005 as set forth in Section 7.1, constitute the entire agreement, both written and oral, between the parties with respect to the subject matter hereof, and all prior agreements respecting the subject matter hereof, either written or oral, express or implied, shall be abrogated, canceled, and are null and void and of no effect.  No amendment or change hereof or addition hereto shall be effective or binding on either of the parties hereto unless reduced to writing and executed by the respective duly authorized representatives of ATMI and IM.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives and delivered in duplicate originals as of the Effective Date.

 

	
INTERMOLECULAR, INC.
    	
 
    	
ADVANCED TECHNOLOGY MATERIALS, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/
    	
 
    	
By:
    	
/s/
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
President & CEO
    	
 
    	
Title:
    	
President & C.E.O.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
11/17/06
    	
 
    	
Date: 
    	
November 20, 2006
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

21

 

EXHIBIT A
  ALLIANCE PLAN

 

The Alliance Plan includes the following attached CDPs:

 

Exhibit A1                  [*]

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

22

 

EXHIBIT A1
  [*]

 

This Collaborative Development Plan  is made as of this 17th day of November, 2006, (“Effective Date”) by and between Advanced Technology Materials, Inc. (“ATMI”) and Intermolecular, Inc. (“IM”) and is subject to and hereby incorporated in the Alliance Agreement between ATMI and IM dated November 17, 2006 (the “Agreement”).  All capitalized terms not expressly defined in this document shall have the meaning set forth in the Agreement.  ATMI and IM are sometimes referred to herein individually as a “party” and collectively as the “parties.”

 

1.              CDP Field

 

[*] of semiconductor Integrated Circuits.

 

2.                                      Business purpose

 

To collaborate using the HPC Technology, the HPC-Derived Technology, the IM Independent IP and the ATMI Independent Technology to develop specific materials and methods of using such materials, and systems and methods for rapid qualification of materials, as will be further specified in the Development Plan, to increase ATMI’s market share in [*].

 

The parties intend to perform a comprehensive assessment of the performance of existing ATMI [*] technologies, and up to [*] competing technologies, against [*] requirements for current and future high volume manufacturing of semiconductor Integrated Circuits. As a result of such assessment the parties may identify new or improved means of using or manufacturing the existing ATMI [*] technologies, or develop new [*] Agreement Compounds, Products and or Critical Parameter Sets.

 

The parties intend that as a result of the above collaboration, IM will license ATMI to make, sell and otherwise commercialize certain Products that ATMI may offer for sale to semiconductor Integrated Circuit Manufacturers (“IC Manufacturers”); that said incremental sales may provide ATMI improved market position, and financial returns; and that ATMI will provide IM a revenue share or royalty on said incremental sales.

 

The parties also intend that IM may sell services to and license Original Equipment Manufacturers (“OEMs”) or IC Manufacturers to enable either or both to modify or implement systems or methods to use the Products solely as licensed by IM to ATMI pursuant to this CDP; and that IM will provide ATMI either a share of revenue, or a royalty on, any royalties that may be obtained by IM on said licenses.

 

3.              Objectives

 

Develop [*] Workflow (“Workflow”) in CDP Phase I, and use the Workflow in Phases I and II for the purposes described in Section 2.  The parties intend that the Workflow may also be used in an approximately concurrent [*] CDP to be agreed upon separately in writing by the parties, provided however that neither party shall have an obligation to 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 1

 

pursue a [*] CDP if the parties do not execute such a CDP within 60 days of the Effective Date.

 

The specific deliverables resulting from this CDP, including the CPS, TFS and the specifications for any Products, will be listed in the Development Plan.  The Development Plan will also list the anticipated Lead Compounds and any related potential Derivative Compounds that will be commercialized pursuant to this CDP.

 

4.                                      Estimated CDP Duration

 

	
 
    	
Total   Duration:
    	
[*]
    
	
 
    	
 
    	
 
    
	
 
    	
CDP   Phase I:
    	
[*]
    
	
 
    	
 
    	
 
    
	
 
    	
CDP   Phase II:
    	
The   remainder of the [*] period, extendable by mutual agreement, subject to   Section 13 below.
    

 

5.                                      Activities

 

5.1.                              Research & Development.

 

	
 
    	
CDP   Phase I:
    	
Develop   and harden a Workflow for application in CDP Field
    
	
 
    	
 
    	
 
    
	
 
    	
CDP   Phase II:
    	
Use   Workflow in the CDP Field to meet commercial objectives.
    

 

5.2.                              Sales & Marketing.

 

	
 
    	
CDP   Phase I:
    	
Market   Share growth study and plan
    
	
 
    	
 
    	
 
    
	
 
    	
CDP   Phase II:
    	
Execute   Market Share growth plan
    

 

6.                                      Collaborative Development Program

 

Subject to the terms and conditions set forth herein, ATMI and IM will conduct the Collaborative Development Program in accordance with an agreed upon written plan describing the development activities to be conducted by each party and the anticipated characteristics and properties of the developed technologies (the “Development Plan”).  A draft version of the Development Plan is attached hereto as Annex 2; the ATMI and IM Project Managers shall collaboratively and by mutual agreement develop and document the complete initial Development Plan within [*] of the Effective Date of this CDP. The Development Plan may be updated from time to time, subject to mutual written agreement of the parties and when agreed upon will be incorporated into this CDP, superseding or supplementing the previous Development Plan.  For clarity, IM HPC Systems will only be used per the Development Plan pursuant to this CDP, or as may otherwise be agreed by the parties in subsequent revisions of the Development Plan, or by written agreement, e.g. subsequent CDPs in other Fields.  Each party will commit the necessary resources in equipment, facilities and personnel to complete its respective tasks in accordance with the Development Plan, including the resources listed in Annex 2.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 2

 

Except as stated in Annex 2 and as set forth below, IM and ATMI will each bear their respective costs associated with the Collaborative Development Program.  The parties are committed to Phase I of the Collaborative Development Program without right of termination, except for breach as consistent with Section 10.2 of the Agreement.

 

7.                                      Management

 

ATMI Project Manager:          [*]

 

IM Project Manager:               [*]

 

Either Party may change its project manager with prior notice to the other Party.

 

8.                                      CDP Fees

 

8.1.                              FTEs.

 

ATMI will pay IM for each IM FTE to perform work on the Collaborative Development Program.  The minimum dedicated FTE unit will equal one month, at a rate of [*] dollars ($[*]) per month.

 

.

 

8.2.                              Workflow Infrastructure Development Costs.

 

IM will bear [*]% of the Direct Program Cost incurred in developing a Workflow pursuant to the CDP.  ATMI will bear [*]% of such costs, which will not exceed $[*] for this CDP.  For the purposes of this CDP “Direct Program Cost” shall mean all non-labor costs incurred in the execution of this CDP, including but not limited to engineering materials, Workflow components such as IM HPC Systems and subsystems (including but not limited to processing, characterization and informatics components), and outsourced or contracted services (including but not limited to third party metrology or characterization services).  In addition, ATMI will supply all materials at no cost to IM that are required for execution of the CDP, including but not limited to ATMI Products, Agreement Compounds and other materials and wafers.

 

8.3.                              Workflow Fees.

 

Annex 1 contains a preliminary description of the proposed Workflow, which will be developed or integrated for the purposes of this CDP and which may also be used for an approximately concurrent [*] CDP, per Section 3.  Within [*] of the conclusion of Phase I, the parties shall discuss the need, timing and terms of use for the transfer of certain IM primary and secondary HPC screening subsystems to an ATMI facility, under a subscription agreement. Under such a mutually agreed subscription agreement (i) the Workflow at ATMI may include existing ATMI equipment, as may be determined by mutual agreement of the parties; (ii) the cost of manufacturing the IM primary and secondary HPC screening subsystems that would be transferred to ATMI would be paid solely by IM; (iii) the fee payable by ATMI to IM for both IM primary and secondary 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 3

 

HPC screening subsystems, as proposed, would not exceed $[*] for the [*] of the subscription agreement; (iv) said monthly fee does not include a fee for IM FTEs, which would be charged separately, at least two of which would be required to be on-site at ATMI for the duration of the subscription agreement, as a condition of that subscription agreement; (v) the subscription agreement would be extendable by mutual agreement after the [*].

 

8.4.                              Estimated CDP Phase I Cost.

 

	
 
    	
IM   FTEs required:
    	
[*]   FTEs, which FTEs may also be applied to an approximately concurrent [*] CDP   per Section 3; FTEs to be located at IM
    
	
 
    	
 
    	
 
    
	
 
    	
ATMI   FTEs required:
    	
[*]   FTEs; to be located primarily at ATMI.
    
	
 
    	
 
    	
 
    
	
 
    	
Duration:
    	
Between   [*] and [*]
    
	
 
    	
 
    	
 
    
	
 
    	
IM   FTE Fee:
    	
Between   $[*] and $[*]
    
	
 
    	
 
    	
 
    
	
 
    	
Direct   Program Cost:
    	
Not   to exceed $[*], which amount may also be applied to an approximately   concurrent [*] CDP, per Section 3.
    
	
 
    	
 
    	
 
    
	
 
    	
Total   Phase I Cost:
    	
Between   $[*] and $[*]
    

 

8.5.                              Estimated CDP Phase II Cost.

 

	
 
    	
IM   FTEs required:
    	
[*]   FTEs, which FTEs may also be applied to an approximately concurrent [*] CDP   per Section 3; FTEs to be located primarily at IM, and or at ATMI if the   parties agree to the transfer of certain IM primary and secondary HPC   screening subsystems under the terms of a subscription agreement.
    
	
 
    	
 
    	
 
    
	
 
    	
ATMI   FTEs required:
    	
[*]   FTEs; to be located primarily at ATMI, if the parties agree to the transfer   of certain IM primary and secondary HPC screening subsystems under the terms   of a subscription agreement, or if the parties agree, at IM.
    
	
 
    	
 
    	
 
    
	
 
    	
Duration:
    	
Remainder   of the [*] term; extendable by mutual agreement
    
	
 
    	
 
    	
 
    
	
 
    	
IM   FTE Fee:
    	
Between   $[*] and $[*]
    
	
 
    	
 
    	
 
    
	
 
    	
Subscription   Fee:
    	
If   the parties agree to the transfer of certain IM primary and secondary HPC   screening subsystems under the terms of a subscription agreement, the fee for   the Workflow HPC subsystems as proposed would be between $[*] and $[*]. Such   subscription fee may also be applied to and approximately concurrent [*] CDP,   per Section 3.
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 4

 

	
 
    	
Total   Phase II Cost:
    	
Between   $[*] and $[*]
    
	
 
    	
 
    	
 
    
	
 
    	
Following   CDP Phase II, and if the parties have previously agreed to the transfer of   certain IM primary and secondary HPC screening subsystems under the terms of   a subscription agreement, the parties will discuss whether ATMI will need   continued use of IM HPC Systems for continued commercialization purposes   pursuant to this CDP; and if so, the parties may extend Phase II pursuant to   Section 3 above.
    

 

9.                                      Workflow Description

 

See Annex 1

 

10.                               Technology Provided

 

10.1.                        By ATMI.

 

ATMI Independent Technology and Intellectual Property Rights related to ATMI’s products in the CDP Field, as further set forth in the Development Plan.  ATMI shall provide, for example, Products, base components of the existing [*] products, methods for the use of those products or their base components, and any other technology background necessary for someone skilled in the art to understand and assess the formulations and their use by IC manufacturers for [*].  ATMI may also provide certain existing ATMI metrology capabilities in support of the CDP including, for example, inspection of CDP wafers using AIT inspection systems at ATMI’s [*] facility.

 

10.2.                        By IM.

 

IM Independent IP related to HPC Technology and HPC-Derived Technology, as well as to Integrated Circuit materials, processes, equipment and device technology, as further set forth in the Development Plan.  IM shall provide, for example, an HPC Workflow consisting of processing, characterization and informatics elements suitable for the purposes of this CDP; license to certain combinatorial technologies pursuant to the agreement between IM and [*]; and license to test plans and algorithms provided by [*], for use with the test wafers sold by [*].  For clarity, the parties agree that test wafers obtained from [*] shall be the only commercial test wafers to be used for development in this CDP, and that the electrical tests to be done with such wafers in the course of the CDP shall be limited to [*] and [*].

 

11.                               Ownership and Licenses

 

11.1.                        Ownership

 

As between the parties, ATMI shall own all right, title and interest in and to the ATMI Independent Technology provided for the purposes of this CDP, and to any Materials Manufacturing Technology developed in this CDP.  IM agrees to assign to ATMI in the future all of its right, title and interest in and to any Materials Manufacturing Technology developed in this CDP. As between the parties, IM shall own all right, title and interest in and to any IM Independent IP provided for the purposes of this CDP, and shall also own 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 5

 

all right, title and interest in and to Alliance Technology, excluding any Materials Manufacturing Technology developed in this CDP.  ATMI agrees to assign to IM in the future all of its right, title and interest in and to any Alliance Technology, excluding Materials Manufacturing Technology.  All rights not expressly granted pursuant to this CDP are reserved.

 

11.2.                        License Grants to ATMI

 

Subject to the terms and conditions of the Agreement and this CDP, IM grants ATMI a worldwide, non-transferable, royalty-bearing, exclusive license, with right of sublicense as set forth below, in the CDP Field set forth herein, under and to the applicable Alliance Technology, but excluding HPC Technology, necessary to develop, make, have made, import, export, sell, offer for sale, and/or otherwise commercialize the [*] Products that result from execution of the Development Plan of Section 6 of this CDP or developed pursuant to Section 18 of this CDP.  Subject to the terms and conditions of the Agreement and this CDP, ATMI may grant and authorize sublicenses under the rights granted above to Third Parties and to its Affiliates.

 

11.3.                        Sublicensing

 

Notwithstanding the exclusivity of the license granted above, IM may continue to engage in any activities required to achieve the intent of this CDP.  In addition, as a further exception to exclusivity, IM may grant and authorize sublicenses in the CDP Field to Alliance Technology, excluding Materials Manufacturing Technology, to IC Manufacturers and OEMs solely for the purpose of enabling either or both to use ATMI [*] Products licensed by IM to ATMI in the CDP Field for purposes of achieving the commercialization objectives for IM set forth in this CDP; provided that the terms of each such sublicense shall be consistent with the terms of this CDP.  Any sublicenses granted by IM pursuant to this Section 11.3 shall be subject to the revenue sharing and royalty provisions set forth in this CDP.  Each party shall remain responsible to the other party for all applicable financial and other obligations under this Agreement and the applicable CDP for each such sublicensee, including without limitation royalty payments due to the other party hereunder with respect to sales of Products, or the licensing of Intellectual Property, by any such sublicensee.

 

11.4.                        Respective Rights.

 

For clarity, the parties intend that as between the parties, IM will be the sole licensor to any IC Manufacturers and OEMs of any Alliance Technology other than Products and or Materials Manufacturing Technology developed pursuant to this CDP, and ATMI will be the sole licensor in the CDP Field to any IC Manufacturers, OEMS or to any stand-alone third-party materials manufacturers, of any Products developed and licensed by IM to ATMI pursuant to this CDP and or Materials Manufacturing Technology.

 

11.5.                        License Grants to IM

 

Subject to the terms and conditions of the Agreement and this CDP, ATMI grants IM (a) a worldwide, non-exclusive, non-transferable, royalty-free license under and to the ATMI 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 6

 

Independent Technology solely to the extent necessary for IM to carry out its obligations under all phases of this CDP, and (b), to the extent that the Alliance Technology infringes any Intellectual Property Rights retained by ATMI in the ATMI Independent Technology or in the Materials Manufacturing Technology, a worldwide, non-exclusive, non-transferable, perpetual, irrevocable license to license and provide Alliance Technology (excluding Products and or Materials Manufacturing Technology) to any IC Manufacturers and OEMs solely to the extent necessary for IM to carry out its commercialization objectives as set forth in this CDP.  This license will be royalty free for use of the infringing Alliance Technology outside the CDP Field for continued internal research and development purposes by IM, and fee-bearing at rates or revenue share percentages to be agreed for commercialization licenses of infringing Alliance Technology outside the CDP Field.

 

12.                               Products and Commercialization Rights

 

Pursuant to this CDP and in this CDP Field only, ATMI may sell licensed [*] Products to IC Manufacturers, or sublicense semiconductor IC Manufacturers to make and use licensed [*] Products and or use Materials Manufacturing Technology, or license third parties to make and or distribute licensed ATMI [*] Products and or use Materials Manufacturing Technology.

 

Pursuant to this CDP, IM may sell services and or licenses to OEMs and IC Manufacturers for the purpose of enabling either or both to use ATMI [*] Products licensed by IM to ATMI.  In the case that an IC Manufacturer does not wish to procure from ATMI the [*] Products licensed by IM to ATMI, then the parties may elect to follow the procedure in Section 2.5 of the Agreement.  IM agrees that it would only license the [*] Products directly to any such IC Manufacturer with ATMI’s prior approval.

 

13.                               Exclusivity

 

13.1.                        Minimum Volumes.

 

There will be no requirement for Minimum Volume under this CDP to maintain exclusivity.

 

13.2.                        IM Activities outside of this CDP.

 

13.2.1. Exclusivity within CDP Field

 

During the time that ATMI has exclusivity pursuant to this CDP, IM shall not contract with an ATMI direct materials competitor in the CDP Field, absent separate written agreement with ATMI.

 

13.2.2. Third Party Activities

 

IM, in a development program with a Third Party  outside of the CDP Field, may determine that a specific Product, or an Agreement Compound within a TFS, created

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 7

 

pursuant to this CDP may have efficacy for an application outside the CDP Field (“Third Party Opportunity”).  IM will promptly notify ATMI and the Operating Committee of any such Third Party Opportunity and, if ATMI so chooses, IM will use all reasonable efforts to engage ATMI as the materials vendor for that program.  IM agrees that it will not use the said Product or Agreement Compound outside the CDP Field with a materials vendor who is a direct competitor of ATMI, or otherwise, without agreeing to pay ATMI reasonable compensation for IM’s use of the Product and or Agreement Compound outside the CDP Field.  The Operating Committee shall meet promptly after notification by IM to determine, for the specific IM development program with a Third Party, reasonable compensation by IM to ATMI.  Disagreement of the Operating Committee regarding such compensation may be submitted for escalation to the chief executive officers of the parties pursuant to the Agreement.  If such escalation does not result in a mutually agreed compensation plan, then the revenue share or royalty amounts may be decided by an arbitrator as expressly set forth in this CDP.

 

14.                               Revenue Share or Royalties

 

14.1.                        Royalties on ATMI Product Sales.

 

ATMI, ATMI Affiliates and ATMI Licensees will Pay IM royalties or a revenue share for all ATMI Product sales and or royalties or a revenue share from ATMI licenses for the making, using and selling of Products within the CDP Field, as authorized by this CDP, according to ATMI’s royalty rate defined in Section 14.3.  For clarification, ATMI licenses shall exclude service fees, equipment sales, software sales, and other non-royalty fees from licenses, paid by third parties to ATMI in the CDP Field.  In addition, grants or development fees from government agencies will also be excluded from royalties on ATMI licenses.

 

14.2.                        Royalties on IM Licenses.

 

IM will pay ATMI royalties for all IM Licenses within the CDP Field which incorporate Alliance Technology developed pursuant to this CDP, according to IM’s royalty rate defined in Section 14.3.  For clarification, IM Licenses shall exclude CDP fees, HPC subscription fees, equipment sales, software sales, and other non-royalty fees from licenses, paid by third parties to IM in the applicable CDP Field(s).  In addition, grants or development fees from government agencies will also be excluded from royalties on IM Licenses.

 

14.3.                        Royalty rates.

 

Each party agrees to pay the other party [*] percent ([*]%) of the CDP Direct Gross Margin it receives from the sale or license of Products under this CDP in accordance with the provisions of Section 5 of the Agreement.  This amount may be recalculated on an annual basis pursuant to Annex 3 of this CDP.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 8

 

14.4.                     Reporting of monthly activities.

 

Within four days of the end of each month, both parties will report Direct Revenue recognized during the prior month, multiplied by the agreed upon royalty rate defined in Section 14.3, and the resulting payment due.  On a [*] basis, the cumulative amounts due will be netted, and the resulting balance due will be paid from one party to the other within 30 days of the end of the [*].

 

14.5.                     Pricing.

 

Each party will have sole discretion to set the price of its own products.

 

14.6.                     Royalty obligations limited.

 

Termination of either the Agreement or a CDP for confirmed material breach by either party shall result in immediate termination of the licenses and subsequent royalty obligations defined in this CDP.

 

15.                               Sales & Marketing

 

The parties agree to develop and maintain a jointly defined and mutually agreed Sales & Marketing Plan which will guide how parties will collaborate to develop a Sales & Marketing Strategy for the developed technology, and how parties will collaborate to perform certain Sales and Marketing activities.

 

15.1.                     Existing Customers.

 

ATMI will define, develop and maintain the Product Sales & Marketing Plan for the sale or licensing of Products to ATMI’s existing [*] customers, after reviewing and consulting on such a plan with IM on a mutually agreeable schedule.

 

15.2.                     New Customers.

 

ATMI and IM shall jointly define, develop and maintain the Product Sales & Marketing Plan for the sale of Products and the licensing of Alliance Technology, excluding HPC Technology and Materials Manufacturing Technology, to each new [*] customer, on a case by case basis. The parties understand and acknowledge that careful and timely development and execution of such a Plan for new customers is critical to the commercial success of both parties under this CDP.

 

16.                               Payment

 

ATMI will pay the specific costs for the work set forth in Annex 2, Development Plan. Additional specific costs may be set forth in the Development Plan for any successive phases of the CDP prior to the completion of the previous phase.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 9

 

17.                               Third Party Intellectual Property.

 

If either party intends to use third party technology or sublicense third-party Intellectual Property Rights, then it will list such third party technology or Intellectual Property Rights below or in the Development Plan.

 

ATMI:  Some of the [*] technology and [*] technology may include technology that is proprietary to and licensed from [*].

 

IM:  Some of the HPC Technology is proprietary to and licensed from [*].  Some of the electrical test technology is proprietary to and licensed from [*].

 

18.                               New Developments.

 

18.1.                    Opportunities in a New Field.

 

Each party affirms and commits that the first priority for investigation and development under this CDP shall be to meet its obligations described above.  However, the parties acknowledge that during Phase I or Phase II, but not to exceed [*] after the completion of Phase I development under this CDP, the parties may become aware of one or more development possibilities relating to the proposed Products, Agreement Compounds or Alliance Technology, excluding HPC Technology and or Materials Manufacturing Technology, for application in a field outside the CDP Field (“New Field”).  To best take advantage of these potential technology development or commercialization opportunities (“Opportunities”), the parties agree to adopt the following process for analyzing and dispositioning these Opportunities:

 

18.1.1.           Proposals.

 

In addition to the Change Order process set forth in the Agreement, during and up to the end of Phase I or during and up to the end of Phase II, but not to exceed [*] after the completion of Phase I, either or both parties may propose to the Operating Committee new or additional Opportunities conceived during the initial phase of this CDP that may be used for additional applications in a New Field (“Proposal”).  Any proposals for additional applications in the existing CDP Field will be determined pursuant to the Change Order process set forth in Section 2.7 of the Agreement.  Each Proposal must be in writing and must include at least the following: (i) the proposed Critical Parameter Set for the Agreement Compounds or Products and the use of such Agreement Compounds or Products in a specific field or application, (ii) objective data to quantify the feasibility of development and commercialization of the Agreement Compounds or Products underlying the proposed CPS in the application field, (iii) a quantifiable, objective preliminary assessment of the market opportunity for the proposed development or commercialization effort outlined in the proposed CPS in the proposed application field; and (iv) a preliminary cost and time estimate for development and commercialization.  For purposes of clarity, the specific cut-off date for the submission of proposals pursuant to this Section 18 shall be [*] after the end of Phase I or Phase II, but not to exceed [*] after the completion of Phase I, and after such date neither party may make new Section 18.1 proposals; nevertheless, in the course of the review process provided for in Section 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 10

 

18.1.1, the terms of any Proposal (as defined below) may be modified or supplemented and any such modified or supplemented proposal shall be considered to be timely delivered hereunder.

 

18.1.2.           Review Process.

 

The Operating Committee will meet and review all such Proposals within [*] after the end of Phase I or Phase II, but not to exceed [*] after the completion of Phase I development under this CDP.  Proposals which by mutual agreement meet the criteria defined in Section 18.1.1 will be identified as “Valid Proposals.”

 

(a)                                 Valid Proposals shall be reviewed, discussed and decided upon as a whole by the Operating Committee within [*] after the end of Phase I, or of Phase II, but not to exceed [*] after the completion of Phase I development under this CDP.  Determination by the Operating Committee and by the parties of whether a proposal constitutes a Valid Proposal will be made in good faith based on the technical and commercial feasibility of the proposal.  An affirmative decision of the Operating Committee regarding specific Valid Proposals may result in an extension of the existing CDP, the creation of additional CDPs, or the agreement that a party may proceed independently of the alliance to develop the application; with new CDP Field definitions, development resource and timeline commitments, subscriptions for use of IM HPC Systems (if applicable), CDP fees, revenue sharing terms or royalties, and other terms to be agreed upon in writing by the parties. Disagreements of the Operating Committee regarding Valid Proposals may be submitted for escalation to the chief executive officers of the parties pursuant to the Agreement.  If after escalation from the Operating Committee to senior management of the parties pursuant to the Agreement, the parties cannot in good faith agree on whether a specific proposal constitutes a Valid Proposal, either party may submit the determination of whether a proposal constitutes a Valid Proposal to arbitration as set forth in the Agreement.  If the parties agree that a Valid Proposal has been presented, but do not agree on cooperating for that Valid Proposal and do not agree on royalty or revenue share terms for one party to proceed independently, then a determination of the revenue share or royalty amounts may be decided by an arbitrator as expressly set forth in the arbitration provision set forth in Section 21 below.

 

(b)                                 proposal that is not a Valid Proposal, once so identified, shall not be further considered in the Review Process for this CDP, and no default licenses will be granted and no default revenue sharing or royalty terms will apply for such Proposals.

 

18.1.3.           Agreement Compounds or Products in a New Field.

 

For Valid Proposals for the application of Agreement Compounds or Products in a New Field, the parties agree to use all reasonable efforts to negotiate an agreement for the development and commercialization of those Opportunities.  If the parties cannot agree on a particular Valid Proposal, then the provisions of Section 18.1.5 shall apply.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 11

 

18.1.4.           Agreement Compounds or Products inseparably tied to other Alliance Technology.

 

For Valid Proposals which consist of Agreement Compounds or Products inseparably tied to other Alliance Technology, excluding HPC Technology and or Materials Manufacturing Technology, for application in a New Field, IM shall propose to ATMI one or more CDPs to develop and commercialize those Opportunities.  If the parties cannot agree on the terms of the one or more new CDPs following reasonable, good faith negotiations, then the provisions of Section 18.1.5 shall apply.

 

18.1.5.           Provisions on Disagreement between the Parties Regarding Valid Proposals.

 

If the parties cannot agree on a particular Valid Proposal and the terms associated with that proposal pursuant to the review process set forth above, the following terms shall apply to such Valid Proposals:

 

(a)                                 ownership of any inventions, discoveries, data, know-how, materials, compounds, sequences of compounds, methods, processes, or technology shall be determined as set forth in this CDP;

 

(b)                                 ATMI shall have a non-exclusive, non-transferable, fee-bearing license to commercialize any Agreement Compounds or Products specified in an ATMI Valid Proposal, limited to the New Field specified in the applicable proposal, and for such an ATMI Valid Proposal (i) IM shall not actively and intentionally seek to sell CDP agreements to ATMI’s direct materials competitors for the same applications in the same New Field, and (ii) ATMI may at a later time purchase exclusivity for this license from IM as set forth in Section 18.2.2 below;

 

(c)                                  no use of HPC Technology, IM Independent IP or Alliance Technology (other than any Alliance Technology, excluding HPC Technology, specified in the Valid Proposal and or specific Alliance  Technology mutually agreed upon by the parties at a later date necessary to commercialize the licensed Agreement Compounds or Products in a manner consistent with the Valid Proposal) may be made by ATMI to develop or commercialize the Valid Proposal without the prior written approval of IM and payment of any applicable subscription or other fees; ATMI will receive no right to use IM’s HPC Systems for any development or commercialization of a Valid Proposal absent separate written agreement with IM;

 

(d)                                 royalties shall be as described in Section 14 of this CDP;

 

(e)                                  ATMI shall offer IM a limited right of first negotiation for no more than [*] days following receipt of a customer opportunity to provide process or materials integration or HPC Technology services to potential customers of the Products developed by ATMI regarding the Materials specified in the Valid Proposal;

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 12

 

(f)                                   IM shall offer ATMI a limited right of first negotiation for no more than [*] following receipt of a customer opportunity to provide Materials to potential IM customers regarding the processes or other Alliance Technology specified in the Valid Proposal; and

 

(g)                                  Unless IM grants ATMI rights pursuant to subsection (b) and (c) above, IM shall have exclusive rights to commercialize any Alliance Technology, excluding Materials Manufacturing Technology, that is specified in the Valid Proposal, limited to the field specified in the applicable proposal.

 

18.2.                    Exclusivity for New Developments

 

18.2.1.           General.

 

If ATMI makes a Valid Proposal for additional development and commercialization pursuant to this Section 18, and the parties do not agree on a development and commercialization plan based on that proposal, and ATMI elects to pursue the development and commercialization independently as set forth herein, then ATMI may elect to purchase exclusivity for the license and use of Agreement Compounds or Products for that Valid Proposal.  The price for exclusivity will be agreed upon by the parties on a case-by-case basis depending, among other considerations, on the duration of exclusivity desired by ATMI, proposed application, and ATMI’s independent development and commercialization efforts.

 

18.2.2.           Subsequent purchase of exclusivity for a new CDP field.

 

If in the case described by 18.1.5(b), and through no active and intentional effort of IM, a direct materials competitor of ATMI requests IM to collaborate on a CDP which conflicts with an ATMI Valid Proposal, IM shall promptly notify ATMI in writing of such request.  ATMI shall then, within [*] days following receipt of the notice, have the right but not the obligation to negotiate with IM to convert the non-exclusive license to an exclusive license for a new CDP field.  The price for exclusivity will be agreed upon by the parties on a case-by-case basis depending, among other considerations, on the duration of exclusivity desired by ATMI, proposed application, and ATMI’s independent development and commercialization efforts.  If the parties cannot agree on the terms for such a conversion, and if IM subsequently engages in that CDP with ATMI’s direct materials competitor, then the parties agree as follows:

 

(a)                                 ATMI shall continue to have a non-exclusive, non-transferable, fee-bearing license to commercialize any Products and or Agreement Compounds, or derivatives specified in the applicable ATMI Valid Proposal, limited as before to the New Field specified in the applicable proposal;

 

(b)                                 IM shall have no right to use the Products and or Agreement Compounds, or derivatives, specified in the applicable ATMI Valid Proposal, in that CDP with ATMI’s direct materials competitor, absent separate written agreement with ATMI;

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 13

 

(c)                                  the royalty rates in Section 18.1.5 (d) will cease to apply to the applicable Valid Proposal;  absent agreement on the terms for such an exclusivity conversion [*] days following notification by IM to ATMI, the parties agree as follows:

 

The royalty rate paid by ATMI to IM henceforth will be [*]% of ATMI’s associated Direct Revenues.

 

The royalty rate paid by IM to ATMI henceforth will be [*]% of IM’s associated Direct Revenues.

 

For the purposes of this CDP, the following definitions will apply:

 

“Direct Revenues” means revenue directly resulting from the Sale of Products, as defined under US GAAP for shipped goods, or licensing rights related to the use of Products developed under this CDP.

 

“Sale of Products” means Product sales or license revenues from sublicenses of Products developed under this CDP resulting from use of Alliance Technology developed under this CDP and as defined under US GAAP for revenue recognition.

 

18.3.                     Additional Development Proposals.

 

Either party may at any time make proposals for additional development and commercialization opportunities outside of the process described in this Section 18, but if the parties do not agree, then no default licenses will be granted and no default revenue sharing or royalty terms will apply.

 

18.4.                     Additional Commercialization Proposals.

 

Either party may at any time make proposals for additional commercialization of opportunities which use an Agreement Compound or Product developed pursuant to this CDP, but which do not require further development using HPC Technology, outside of the process described above in this Section 18.  If the parties do not agree, then (i) IM shall grant ATMI a worldwide, non-transferable, royalty-bearing, non-exclusive license, with right of sublicense as set forth below, in any field within the Field described in the Agreement, under and to the applicable Alliance Technology, but excluding HPC Technology, necessary to develop, make, have made, import, export, sell, offer for sale, and/or otherwise commercialize the Agreement Compounds or Products developed in this CDP, (ii) ATMI shall grant IM a worldwide, non-transferable, royalty-bearing, non-exclusive license, with right of sublicense as set forth below, in any field within the Field, under and to the applicable ATMI Independent IP and  Materials Manufacturing Technology developed during the course of this CDP and necessary to license and provide Alliance Technology (excluding Agreement Compounds or  Products, and in the CDP Field, Materials Manufacturing Technology) to any IC Manufacturers and OEMs and (iii) each party agrees to pay the other party [*] percent ([*]%) of the Direct Revenues it receives from the sale or license of such Agreement Compounds or Products.  

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 14

 

Subject to the terms and conditions of the Agreement and this CDP, ATMI may grant and authorize sublicenses under the rights granted above to Third Parties and to its Affiliates.

 

19.                               Intellectual Property Procurement and Enforcement

 

Notwithstanding Section 6.1.2 of the Agreement, in the event that IM decides not to pursue patent protection for Products or features of Products, and notifies ATMI via the Operating Committee that it will not seek patent protection for a particular Product, ATMI shall have the opportunity, at its own expense, to pursue and maintain such patent protection based on detailed written submissions to the Operating Committee, including the right to file and prosecute patent applications covering such Products or features of Products, and to maintain any patents resulting therefrom.  All patent applications, patents, and Intellectual Property Rights resulting from ATMI’s election under this provision shall be solely owned by ATMI as ATMI Independent Technology, subject to a non-exclusive, royalty-free, perpetual and irrevocable grant-back license to IM, without right of sublicense, to IM under the resulting patent(s) to make, have made, use, offer to sell, sell and import products; provided, however, that any such grant back license shall be subject to any exclusivity, revenue share and royalty provisions agreed upon by the parties for that CDP Field.  IM agrees to promptly provide notice to ATMI of any decision not to pursue patent protection for Products or features of Products or as required under Section 7.4 of the Agreement.  ATMI agrees that, before proceeding with filing or prosecuting patents for any such inventions, at the next possible Operating Committee meeting the parties shall discuss and use all reasonable efforts to agree on a course of action for protection of the inventions, including trade secret protection.

 

20.                               Effect of Termination

 

Pursuant to Section 10.3 of the Agreement, Section 11.1 and any existing payment obligations shall survive the expiration or termination of this CDP for any reason.  The licenses granted under the Agreement applicable to this CDP and granted in this CDP, including limited use restrictions pursuant to Section 4.5 of the Agreement, will be extended past the expiration of this CDP and the Agreement on the same royalty and revenue share terms, provided that there has been no material breach of this CDP or the Agreement resulting in the termination of this CDP or the Agreement.

 

21.                               “Baseball” Arbitration

 

Notwithstanding Section 11.16 of the Agreement, in the event that the parties cannot agree after escalation to their respective chief executive officers to a default royalty or revenue share amount for a Section 18.1 proposal within the ranges specified in this CDP, then the dispute shall promptly be submitted to final and binding arbitration, before a single, mutually-acceptable arbitrator, conducted in accordance with the Commercial Arbitration Rules of AAA, solely for determination of the default royalty or revenue share amount.  If the parties are unable to select a mutually acceptable arbitrator, AAA shall appoint an arbitrator or provide a method for selection.  Any arbitration proceedings shall be conducted in San Jose, California. Each party shall bear its own expenses, including attorneys’ fees, and the parties will share equally the costs and fees of the 

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 15

 

arbitrator.  Prior to the actual arbitration hearing, each party shall provide the arbitrator a written proposal of a revenue share or royalty percentage, whether within the range set forth in this CDP or otherwise, that such party believes to be fair to both parties in the circumstances.  The arbitrator must render a written decision within ten (10) days of the hearing in favor of one party’s proposal or the other, without modification.  The arbitrator must determine the prevailing party by assessing the proposal, its conformance with the requirements of Section 18, and its fairness in light of the relevant Intellectual Property Rights, technology contributions, and development and commercialization costs and expenses of each party, as well as the potential markets for the proposed application and whether third party Intellectual Property Rights, development efforts, commercialization efforts or investment is required to commercialize the proposed application.  The parties shall use all reasonable efforts to complete any arbitration subject to this section within three (3) months from the filing of notice of a request for such arbitration. Judgment upon any decision rendered by the arbitrators may be entered by any court having jurisdiction. The parties undertake and agree that all arbitral proceedings shall be kept confidential, and all information, documentation, materials in whatever form disclosed in the course of such arbitral proceeding shall be used solely for the purpose of those proceedings.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their authorized representatives and delivered in duplicate originals as of the Effective Date.

 

 

	
INTERMOLECULAR, INC.
    	
 
    	
ADVANCED TECHNOLOGY MATERIALS, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/
    	
 
    	
By:
    	
/s/
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
President & CEO
    	
 
    	
Title:
    	
President & C.E.O.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
11/17/06
    	
 
    	
Date:
    	
November 20, 2006
    

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 16

 

ANNEX 1 TO EXHIBIT A1

 

DESCRIPTION OF PROPOSED WORKFLOW

[*] Collaborative Development Program (and Optional [*] CDP)

 

	
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[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

Annex 1 to Exhibit A1 Page 1

 

ANNEX 2 TO EXHIBIT A1
  DEVELOPMENT PLAN

 

(To be finalized by Parties)

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

ANNEX 3 TO EXHIBIT A1
  CALCULATION OF CDP DIRECT GROSS MARGINS

 

On [*] basis, but no less than [*] prior to the end of the calendar [*], the parties agree to (a) jointly forecast, for the remainder of the Alliance Term (or other term as the parties may mutually agree, but in no case less than [*]) CDP Direct Gross Margin and any other CDP-related revenues described below; (b) use the joint forecast to calculate and mutually agree on royalty percentages for the subsequent calendar [*] to achieve an equal share of the CDP Direct Gross Margin; (c) apply such royalty percentages during the subsequent year as calculated by the agreed upon CDP Direct Gross Margin and stated as a percentage of direct revenues.

 

For purposes of this CDP, the following terms will have the meanings set forth below:

 

CDP Direct Gross Margin — The CDP Direct Gross Margin will be the result of the Direct Revenues less Direct Costs derived from Alliance Technology, excluding HPC Technology and Materials Manufacturing Technology, pursuant to a CDP.

 

Direct Revenues - Revenue directly resulting from Alliance Technology, excluding HPC Technology and Materials Manufacturing Technology, developed under a CDP and as defined under US GAAP for shipped goods.

 

Sale of Products — Product sales resulting from use of Alliance Technology, excluding HPC Technology and Materials Manufacturing Technology, developed under a CDP and as defined under US GAAP for revenue recognition.

 

Licensing of Alliance Technology — License revenue resulting from Alliance Technology, excluding HPC Technology and Materials Manufacturing Technology, developed under a CDP and as defined under US GAAP for revenue recognition.

 

Direct Costs

 

Direct costs to produce products sold — the variable and incremental cost of the product sold, reported in cost of goods sold, as defined under US GAAP (ATMI Comment:  the parties should do whatever is within US GAAP.  This could include material cost, variable manufacturing cost, and third-party contract manufacturing cost.  Any allocation of variable costs will be determined on a reasonable basis and agreed to by both parties in writing.  In general, indirect or fixed costs, including general overhead, provisions and reserves will be excluded from direct costs, unless agreed to by both parties in writing.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

 

 

Direct distribution costs of products sold — the cost of the distribution of product sold, reported in costs of goods sold, as defined under US GAAP.  This may include shipping, shipping material, duty, and other direct logistics costs.  Any allocation of variable costs will be determined on a reasonable basis and agreed to by both parties in writing.  In general, indirect or fixed costs, including general overhead, provisions and reserves will be excluded from direct costs, unless agreed to by both parties in writing.

 

Direct third party royalty / license costs - the variable cost of amounts due to a third party for licensed technology or intellectual property included in or infringed by the Alliance Technology and / or related to products sold, as defined under US GAAP.  In general, indirect or fixed costs, including general overhead, provisions and reserves will be excluded from direct costs, unless agreed to by both parties in writing.

 

Other direct costs - other direct costs as the parties may mutually agree.

 

All other costs are excluded.

 

[*] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission.  Confidential treatment has been requested with respect to the omitted portions.

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