Development & Technology Agreement

EXHIBIT 10.112


ECD/SOUTHWALL

DEVELOPMENT & TECHNOLOGY AGREEMENT


DEVELOPMENT AND TECHNOLOGY

This " Agreement" is made this 11th of April, 1997 between Energy Conversion Devices, Inc., a Delaware corporation with a principal place of business at 1675 West Maple Road, Troy, Michigan 48084; (hereinafter referred to as " ECD" ); and Southwall Technologies, a corporation, with a principal place of business at 1029 Corporation Way, Palo Alto, California 94303 (hereinafter referred to as " Southwall" ) the parties agree;


WITNESSETH:

WHEREAS, ECD is presently engaged in the research, development and commercialization of proprietary technology relating to microwave plasma enhanced chemical vapor deposited (" MPECVD" ) multilayered optical coatings and the manufacturer of products that incorporate such coating " MPECVD TECHNOLOGY" and owns intellectual property rights, including patents, patent applications Trade Secrets and know-how relating thereto;


WHEREAS, Southwall is presently engaged in the research, development and manufacture of sputtered multilayered coatings on substrates (the " Field" ) and owns intellectual property rights, including patents and patent applications, trade secrets and know-how relating thereto; and


WHEREAS, Southwall desires to have ECD develop and possibly produce, using ECD' s MPECVD Technology, at least one layer of at least one type of multilayered coating (the " Product(s)" ) and Southwall desires to obtain rights under ECD' s proprietary MPECVD Technology in the Field on an exclusive basis in the Territory for the Exclusivity Period (as hereafter defined);


Article 1. GRANT OF LICENSE

1.1 ECD grants Southwall an exclusive (even to ECD) Royalty-bearing, Worldwide License, with the right to sub license, under ECD' s proprietary MPECVD Technology and Improvement Inventions to use the MPECVD Technology and Improvement Inventions and make, use and sell the Product(s) in the Field for the period of time covered by the Exclusivity Period (the " License" .) Southwall agrees to share equally any and all up-front licensing fees it receives from Southwall' s sublicenses of MPECVD Technology, if any.


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1.2 Southwall grants ECD a non exclusive royalty free world wide license, with the right to sub-license, under improvements Southwall may make during the term of agreement to ECD' s proprietary MPECVD Technology (for ECD' s use outside of the " Field" which is exclusive to Southwall), including all patents and patent applications, to make, have made, use, sell or otherwise dispose of product(s). If Southwall requires an expansion of Field applications, the parties will negotiate in good faith such expansion, giving due consideration to ECD' s current business plans and Southwall' s ability to exploit the expanded applications.


Article 2. DEFINITIONS


2.1 Products

Products shall mean any and all product(s) incorporating one or more multilayered optical coatings in which at least one layer of a multilayer stack is deposited by ECD' s MPECVD Technology.


2.2 Demonstration Product The Demonstration Product shall meet the performance and process requirements to be achieved in the Development Program as set forth in Appendix A attached hereto, " The Demonstration Product and ECD' s PECVD Process"


2.3 Field

Product(s) produced forsale as coatings in display applications (CRT' s, Flat Panel Displays, Digitizers, Touchpanels, etc) and coatings for flexible substrate applied to automotive and building glass and decorative and reflector applications, and for non low emissivity coatings on automotive and building glass, decorative and reflector glass applications.


2.4 Territory

Territory shall mean the world.


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2.5 Exclusivity

Exclusivity shall mean that ECD and any affiliates of ECD or sublicensees of ECD will not manufacture, market or sell the Product(s) nor license any third party to market or sell Products, in the Field in the Territory for the duration of the Exclusivity Period or any extension thereof. Southwall is obligated to use it' s reasonable best efforts to commercialize the product(s).


2.6 Exclusivity Period

Exclusivity Period shall begin upon the effective date of this Agreement and extend for a two (2) calendar year period which begins from the date that Southwall commercially introduces the first Product(s) incorporating at least one MPECVD layer utilizing ECD' s MPECVD Technology, and any extension thereof.


2.7 Technology

Technology shall mean ECD' s MPECVD Technology and any and all know-how utilized by ECD for the manufacture of Products including without limitation all specifications, process parameters, designs, drawings and all other documents and trade secrets relating or pertaining thereto, in existence during the effective term of (i) this agreement or (ii) the long term license agreement contemplated by the parties hereto (the " Long Term License Agreement" ) is in effect, whichever is longer.


2.8 Improvement Inventions

" Improvement Inventions" shall mean any and all improvements, enhancements, modifications, and additions to the Technology conceived pursuant to the joint development effort (the Development Program) during the term of this Agreement, specifically including (but not limited to) any patent applications and patents issuing therefrom.


2.9 Net Sales Price

The gross invoice price to third parties in armslength transactions in the ordinary course of business of Product(s) as packed for shipment less the following deductions:

a) Trade or quantity discounts as well as bonuses and incentive allowances and rebates granted to the customer, including the related advertising expenses and commissions.

b) Transportation, packing costs and insurance charges on shipments to customers.

c) Sales and use taxes paid by Southwall directly on such sale to the government.


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d) Credits for product(s) returned by the customer.


Article 3. JOINT DEVELOPMENT


3.1 Southwall and ECD shall jointly design and develop the manufacturing apparatus and processes during the Development Program which begins as soon as practicable following the execution of this Agreement. The Development Program will continue unless terminated according to the terms of this Agreement, at least until first generation Product(s) produced in ECU' s machine are qualified by Southwall. This Agreement shall extend at least until the contemplated Long Term Licensing Agreement is in effect, after which time ongoing development support may be required by Southwall, and at which time Southwall may wish to purchase a machine to manufacture Product(s) at its own facility, using the Technology.


If Southwall at its sole discretion, elects to purchase from ECD, ECD agrees to sell to Southwall, a full scale MPECVD production machine for placing a minimum of one or two layers of coating on a 1.2m wide roll of substrate. Southwall and its licensees will purchase all future production machines using the technology from ECD, provided that ECD is competitive in total cost, performance, and delivery of any such machines.


3.2 At present ECD' s machine is capable of producing a uniform .2 meter wide coating on .3 meter wide substrate web. During the development program ECD will refine and modify, at a cost not to exceed $20,000 its current MPECVD apparatus (which cost will be borne by Southwall) to produce the 0.27m SiO2 top layer in Southwall' s multilayered anti-reflective stack, on a 0.4 meter wide web of PET substrate material, to meet the SONY product specifications set forth in Exhibit A.


Concurrently therewith, ECD will, if requested by Southwall, design, deliver and help install, to the extent possible, MPECVD apparatus in Southwall' s existing lab sputtering machine LC1 for a price to be negotiated by ECD and Southwall. If Southwall requires only consultation with ECD personnel in order to install the MPECVD apparatus inside the LC1 lab machine, this consultation will be rendered during the term of this Agreement at no additional cost beyond the monthly fees described in Paragraph 3.4.


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Also if requested by Southwall, ECD will design, develop and make modifications to their existing .3 meter wide MPECVD machine to accommodate substrates of .54m width (two full " cuts" ) for production purposes, at a cost not to exceed $200,000 and a delivery time of about 6 months (1 month down time)


3.3 Southwall and ECD shall jointly own the Improvements Technology created by the joint development efforts. Improvement inventions and patents issuing therefrom shall be assigned jointly to Southwall and ECD with each party owning an undivided 50% interest thereto and shall be included within the subject matter of the license. ECD will take the lead in filing of process patents evolving from the Improvements Technology. Southwall will lead in filing of any product patents evolving from the Improvements Technology.


3.4 In consideration of the development activities set forth above, Southwall shall make payments to ECD pursuant to the following schedule:


$20K/month for the term of the Agreement. This payment will cover both ECD routine hardware costs ...