TECHNOLOGY REINVESTMENT PROJECT TECHNOLOGY DEVELOPMENT AGREEMENT

Exhibit 10.29


TECHNOLOGY REINVESTMENT PROJECT TECHNOLOGY DEVELOPMENT AGREEMENT


BETWEEN


PLASTIC PACKAGING CONSORTIUM c/o NATIONAL SEMICONDUCTOR CORPORATION 1120 KIFER ROAD SUNNYVALE, CA 94086-3737


AND


THE ADVANCED RESEARCH PROJECTS AGENCY 3701 NORTH FAIRFAX DRIVE ARLINGTON, VA 22203-1714


CONCERNING


LOW COST PLASTIC PACKAGING RESEARCH AND DEVELOPMENT


Agreement No.: MDA972-95-3-0024 ARPA Order No.: C326/00 Total Amount of the Agreement: $19,192,716 Total Estimated Government Funding of the Agreement: $9,578,005 Funds Obligated: $7,445,949 Authority: 10 U.S.C. (S) 2371 & (S) 2511


Line of Appropriation:


AA 9740-400 1320 C326 P4V10 2525 DPAC 4 5270 503733 $7,445,949


This Agreement is entered into between the United States of America, hereinafter called the Government represented by The Advanced Research Projects Agency (ARPA), and the Plastic Packaging Consortium pursuant to and under U.S. Federal law.


FOR PLASTIC PACKAGING CONSORTIUM FOR THE UNITED STATES OF AMERICA


NATIONAL SEMICONDUCTOR CORPORATION THE ADVANCED RESEARCH PROJECTS
AGENCY


/s/ Dennis W. Ralston /s/ Ron H. Register - - ---------------------------- ---------------------------- (Signature) (Signature)


Dennis W. Ralston Ron H. Register Manager, Business Operations 3/17/95 Deputy Director for Management 3/23/95 - - ------------------------------------ -------------------------------------- (Name, Title) (Date) (Name, Title) (Date)


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TABLE OF CONTENTS


ARTICLES PAGE ARTICLE I Scope of the Agreement 3 ARTICLE II Term 6 ARTICLE III Management of the Project 6 ARTICLE IV Agreement Administration 8 ARTICLE V Obligation and Payment 8 ARTICLE VI Disputes 10 ARTICLE VII Patent Rights 11 ARTICLE VIII Data Rights 14 ARTICLE IX Foreign Access to Technology 16 ARTICLE X Pre-Agreement Costs 17 ARTICLE XI Officials Not to Benefit 17 ARTICLE XII Civil Rights Act 17 ARTICLE XIII Order of Precedence 17 ARTICLE XIV Execution 17


ATTACHMENTS


ATTACHMENT 1 Statement of Work ATTACHMENT 2 Report Requirements ATTACHMENT 3 Schedule of Payments and Payable Milestones ATTACHMENT 4 Funding Schedule ATTACHMENT 5 List of Government and Consortium Representatives


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ARTICLE I: SCOPE OF THE AGREEMENT


A. BACKGROUND


1. This Agreement is a Defense Dual-Use Critical Technology Partnership awarded under the Congressionally funded Technology Reinvestment Project (TRP). The mission of the TRP is to stimulate the transition to a growing, integrated, national industry capability that provides the most advanced, affordable, military systems and the most competitive commercial products. Within the general Technology Development area of Low Cost Electronic Packaging, this Agreement focuses specifically on advancing the technology and enhancing the United States (U.S.) production capabilities of plastic packaging for integrated microcircuits with the goal of enhancing both commercial and military customers to employ plastic encapsulated integrated circuits (ICs) in a wide variety of applications.


2. National Semiconductor Corporation (National), Amoco Chemical Company (Amoco), Plaskon Electronic Materials, Inc. (Plaskon), The Dexter Corporation (Dexter), Olin Corporation (Olin), Leading Technologies, Inc. (Leading Technologies), Integrated Packaging Assembly Corporation (IPAC), Delco Electronics Corporation (Delco), Sheldahl Inc. (Sheldahl), and Sandia National Laboratories (Sandia), subcontractor to National have formed a partnership to establish the infrastructure and competencies to manufacture low-cost, high- density, and high-performance plastic packages on-shore. This initiative comes from a growing need to improve complexity, performance and reliability of plastic packages for military and commercial use while lowering the total cost to allow for full commercialization. At the end of the two (2)-year program, the on-shore infrastructure will be developed and plastic packaging technology will be revolutionized. All plastic ICs will migrate to this technology.


3. The basic material and construction technology used in the manufacture of plastic ICs has not changed in ten (10) years. During this time period IC complexity, power, and speed requirements have increased significantly. This trend in ICs characteristics and requirements will continue. In order to address the future package demands for density, performance, cost, and reliability, major changes in material and technology must be made.


4. The Plastic Packaging Consortium will develop the total supply chain from packaging materials supply to a final low-cost on-shore assembly source. The program will focus on three areas for improvements: plastic package ruggedization plastic package thermal dissipation enhancement, and development of high density plastic packages. Improvements will be achieved through enhancements of molding compounds, die attach materials, leadframe materials/design, and reliability characterization. The end result of this two (2)-year program will be to introduce plastic package processes and material which eliminate drybagging, eliminate popcorning, increase thermal conductivity, increase operating temperature, decrease manufacturing process time, introduce low-cost (stamped) fine-pitch leadframes, and introduce low-cost substrate/interposer processes to be used on high-density packaging. These improvements in environmental and quality levels will open up many new product opportunities such as high-density multi-chip modules (MCMs), high-power amplifiers, computer peripheral products and the military use of plastic ICs.


5. The Plastic Package Consortium team members were selected, with the above expected results in mind, based on assessment of needs and core competencies of candidates. A brief description of the capabilities of the team members is listed as follows:


(a) Amoco is an energy company with sales of $40 billion. Amoco will
develop and supply epoxy molding compound resins for the three focus areas
of the TRP;


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(b) Leading Technologies, Inc. is a U.S.-based leadframe supplier
with a combination of tooling, stamping, photo-etching and plating
capabilities. Leading Technologies will develop and supply fine pitch
leadframe designs, tooling and finished samples; heat sink designs, tooling
and finished samples; leadframe adhesives; and treatment processes for
unproved molding compound to frame adhesives;


(c) Delco is the largest manufacturer of automotive electronics in the
world. Delco will study and characterize epoxy molding compound properties
and die attach material and perform leadframe to epoxy adhesion analysis;


(d) Dexter is a $900 million polymer company which manufactures
polymer compounds, electronic materials and structural adhesives. Dexter
will develop and supply enhanced epoxy molding compounds for unproved
thermal performance, improved adhesion, reduced moisture absorption, and
lower stress. Dexter will also develop and supply enhanced die attach and
underfill materials;


(e) IPAC is a U.S.-based subcontracting assembly house. IPAC will
install 160 lead and 304 lead Plastic Quad Flat Pack (PQFP) and 625 lead
Ball Grid Array (BGA) manufacturing capability and provide test samples for
all focus areas;


(f) National is the second largest supplier of military ICs and the
fourth largest U.S. manufacturer of ICs. National will supply product
drivers for all three (3) focus areas and provide screening and an analysis
of EMC, die attach (D/A), leadframes materials, sample assembly and a final
technology demonstration;


(g) Olin is a manufacturer of chemical and metal products. Olin will
develop and supply new leadframe materials as well as an analysis of
adhesion characteristics to the Consortium;


(h) Plaskon will develop and supply epoxy molding compounds for
unproved stress and moisture performance, unproved adhesion and higher
thermal conductivity;


(i) Sheldahl is the largest U.S. supplier of flexible printed
circuits. Sheldahl will design and supply interposers and substrates for
PQFP and BGA packages; and


(j) Sandia will supply assembly test chips for all focus areas of the
TRP.


6. A critical aspect of this program will be the commercialization of the new technologies. Many companies, including NationaL supply dual-use products that could employ these technologies. Currently, many IC products are manufactured in unique, costly ceramic packages. As the size of the military market declines, the economics of producing these ceramic encapsulated ICs will become increasingly unfavorable. This program will enable improvements in plastic package quality and reliability to levels that meet military environmental and quality requirements. These improvements will make products available directly from commercial suppliers and eliminate the need for separate backend processing. National's strategy will be to introduce these technologies into semiconductor products which have dual-uses (e.g. military, commercial and avionics Other Equipment Manufacturers (OEMs)) first. This strategy will leverage the low military volume with high commercial volume. Examples of National's semiconductor products that could be selected include the Super I/O, Precision Amplifiers and CLAy products.


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7. These technological advances in plastic packaging will be applied to both military and commercial products. The future direction of the DoD is to use an installed IC manufacturing infrastructure for military system applications. This program will allow this to be achieved through the use of on-shore assembly infrastructure. IC companies will have the choice of using this infrastructure to produce products for the DoD without the threat of foreign intervention.


8. The Plastic Package Consortium will create capabilities for world- class manufacturing in the U.S. through the use of the Consortium's unique teaming arrangement. This arrangement will accelerate market introduction of distinctive packaging technologies and competencies and position the IC industry to conduct more package production of leading-edge products in the U.S.


9. The new ruggedized packages and technology developed under this program will create a new quality standard for all high-density plastic ICs. The total U.S. market for high-lead count applications addressed by these technologies is forcasted to be in excess of $7 billion by 1997 and growing according to Dataquest, Inc. Many of the developments expected from this program are also applicable to low-lead count applications, thereby increasing the potential market for these products by a factor of three. In addition to the existing commercial market, these technologies will serve military markets by replacing a portion of the existing military ceramic market with plastic packages, resulting in a reduction in cost on the order of three to five times the current military IC package cost.


B. DEFINITIONS


1. Consortium - The group of companies or individual companies collaborating to accomplish the objectives of this Agreement.


2. Consortium Member - A single company operating under the Articles of Collaboration referred to in this Agreement.


3. Party or Parties - As the context requires, either the Government, represented by ARPA, or the Consortium, or both.


4. Program - The effort described in the proposal submitted in response to Solicitation No. SOL94-27, Defense Technology Conversion, Reinvestment, and Assistance, entitled, "Low-Cost Plastic Packaging", and more particularly defined in the Statement of Work, Attachment 1 hereto.


C. SCOPE


1. The Consortium shall perform a coordinated research and development program (Program) designed to develop improved technology for plastic packages for ICs and to enhance the U.S. plastic packaging assembly capabilities. The research shall be carried out in accordance with the Statement of Work incorporated in this Agreement as Attachment 1. The Consortium shall submit or otherwise provide all documentation required by Attachment 2, Report Requirements.


2. The Consortium shall be paid for each Payable Milestone accomplished in accordance with the Schedule of Payments and Payable Milestones set forth in Attachment 3 and the procedures of Article V. Both the Schedule of Payments and the Funding Schedule set forth in Attachments 3 and 4 respectively may be revised or updated in accordance with Article III.


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3. The Government and the Consortium (Parties) estimate that the Statement of Work of this Agreement can only be accomplished with the Consortium aggregate resource contribution of $9,614,711 from the effective date of this Agreement through twenty-four (24) months thereafter. The Consortium intends and, by entering into this Agreement, undertakes to cause to be provided these funds. Consortium contributions will be provided as detailed in the Funding Schedule set forth in Attachment 4. If either ARPA or the Consortium is unable to provide its respective total contribution, the other party may reduce its project funding by a proportional amount.


D. GOALS/OBJECTIVES


1. The goal of this Agreement is to advance the development of low-cost advanced plastic packaging infrastructure and core competencies, which can be employed by U.S. IC manufacturers for both military and commercial uses.


2. The Government will have continuous involvement with the Consortium. The Government will also obtain access to research insults and certain rights in data and patents pursuant to Articles VII and VIII. ARPA and the Consortium are bound to each other by a duty of good faith and best reasonable research effort in achieving the goals of the Consortium. This Agreement reflects the collaborative document identified as "Articles of Collaboration for Plastic Packaging Consortium," which document binds Consortium Members.


3. This Agreement is an "other transaction" pursuant to 10 U.S.C. (S) 2371. The Parties agree that the principal purpose of this Agreement is for the Government to support and stimulate the Consortium to provide its best reasonable efforts in advanced research and technology development and not for the acquisition of property or services for the direct benefit or use of the Government. The Federal Acquisition Regulation (FAR) and Department of Defense FAR Supplement (DFARS) apply only as specifically referenced herein. This Agreement is not a procurement contract or grant agreement for purposes of FAR Subpart 31.205-18. This Agreement is not intended to be, nor shall it be construed as, by implication or otherwise, a partnership, a corporation, or other business organization.


ARTICLE II: TERM


A. THE TERM OF THIS AGREEMENT


The Program commences upon the date of the last signature hereon and continues for twenty-four (24) months. If all funds are expended prior to the twenty-four (24)-month duration, the Parties have no obligation to continue performance and may elect to cease development at that point. Provisions of this Agreement, which, by their express terms or by necessary implication, apply for periods of time other than specified herein, shall be given effect, notwithstanding this Article.


B. TERMINATION PROVISIONS


Subject to a reasonable determination that the program will not produce beneficial results commensurate with the expenditure of resources, either Party may terminate this Agreement by written notice to the other Party, provided that such written notice is preceded by consultation between the Parties. In the event of a termination of the Agreement, it is agreed that disposition of Data developed under this Agreement shall be in accordance with the provisions set forth in Article VIII, Data Rights. The Government, acting through the Agreements Administrator, and the Consortium, acting through its


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Consortium Management Committee, will negotiate in good faith a reasonable and timely adjustment of all outstanding issues between the Parties as a result of termination. Failure of the Parties to agree to a reasonable adjustment will be resolved pursuant to Article VI, Disputes. The Government has no obligation to reimburse the Consortium beyond the last completed and paid milestone if the Consortium, acting through its Consortium Management Committee, decides to terminate.


C. EXTENDING THE TERM


The Parties may extend by mutual written agreement the term of this Agreement if funding availability and research opportunities reasonably warrant. Any extension shall be formalized through modification of the Agreement by the Agreements Administrator and the Consortium Administrator.


ARTICLE III: MANAGEMENT OF THE PROJECT


A. CONSORTIUM MEMBERS


Consortium Members, as set forth in the Articles of Collaboration of the Consortium, are:


Amoco Chemical Company
Leading Technologies, Inc.
Delco Electronics Corporation
The Dexter Corporation
Integrated Packaging Assembly Corporation
National Semiconductor Corporation
Olin Corporation
Plaskon Electronic Materials, Inc.
Sheldahl, Inc.


B. CONSORTIUM MANAGEMENT COMMITTEE (CMC)


1. The CMC shall be comprised of one voting representative from each Consortium Member, and in accordance with the Consortium Articles of Collaboration, bind the Consortium Members. The following CMC decisions are subject to ARPA approval:


(a) Changes to the Articles of Collaboration if such changes
substantially alter the relationship of the Parties as originally agreed
upon when the Agreement was executed;


(b) Changes to, or elimination of, any ARPA funding allocation to any
Consortium Member as technically and/or financially justified;


(c) Technical and/or funding revisions to the Agreement; and


(d) Admission of additional or replacement Consortium Members.


2. The CMC, is responsible for establishing a schedule of regular technical meetings, to be held on a quarterly basis. The CMC shall notify all Consortium Members and the ARPA Program Manager of the established meeting schedule and, in the event of changes to this schedule, shall notify all


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Consortium Members and the ARPA Program Manager thirty (30) calendar days prior to the next scheduled meeting.


3. A simple majority of the Program Managers (or designees) representing the Consortium Members and the ARPA Program Manager (or designee) will constitute a quorum at quarterly technical meetings. All technical decisions shall be made by majority vote of the CMC and the ARPA Program Manager.


C. MANAGEMENT AND PROGRAM STRUCTURE


Technical and program management of the coordinated research program established under this Agreement shall be accomplished through the management structure and processes detailed in this Article.


1. Subject to the terms and conditions of the Articles of Collaboration of the Consortium, the CMC shall be responsible for the overall management of the Consortium including technical, programmatic, reporting, financial and administrative matters.


2. The ARPA Program Manager shall fully participate in all meetings of the CMC. Other Government personnel as deemed appropriate by the ARPA Program Manager may also participate in the technical portion of these meetings.


D. PROGRAM MANAGEMENT PLANNING PROCESS


The program management and planning process shall be subject to quarterly and annual reviews with inputs and review from the CMC and the ARPA Program Manager.


1. Initial Program Plan: The Consortium will follow the initial program plan that is contained in the Statement of Work (Attachment 1), and the Schedule of Payments and Payable Milestones (Attachment 3).


2. Overall Program Plan Annual Review


(a) The CMC, with ARPA Program Manager participation and review, will
prepare an overall Annual Program Plan in the first quarter of each
Agreement year. (For this purpose, each consecutive twelve (12) month
period from (and including) the month of execution of this Agreement during
which this Agreement shall remain in effect shall be considered an
"Agreement Year.") The Annual Program Plan will be presented and reviewed
at an annual site review concurrent with the appropriate quarterly meeting
of the CMC which will be attended by the Consortium Members, the ARPA
Program Manager, Senior ARPA management or other ARPA program managers and
personnel as appropriate. The CMC, with ARPA participation and review,
will prepare a final Annual Program Plan.


(b) The Annual Program Plan provides a detailed schedule of research
activities, commits the Consortium to use its best efforts to meet specific
performance objectives, includes forecasted expenditures and describes the
Payable Milestones. The Annual Program Plan will consolidate all prior
adjustments in the research schedule, including revisions/modifications to
payable milestones. Recommendations for changes, revisions or
modifications to the Agreement which result from the Annual Review shall be
made in accordance with the provisions of Article III, Section E.


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E. MODIFICATIONS


1. As a result of quarterly meetings, annual reviews, or at any time during the term of the Agreement, research progress or results may indicate that a change in the Statement of Work and/or the Payable Milestones, would be beneficial to program objectives. Recommendations for modifications, including justifications to support any changes to the Statement of Work and/or the Payable Milestones, will be documented in a letter and submitted by the CMC to the ARPA Program Manager with a copy to the ARPA Agreements Administrator. This documentation letter will detail the technical, chronological, and financial impact of the proposed modification to the research program. The CMC shall approve any Agreement modification. The Government is not obligated to pay for additional or revised Payable Milestones until the Payable Milestones Schedule (Attachment 3) is formally revised by the ARPA Agreements Administrator and made part of this Agreement.


2. The ARPA Program Manager shall be responsible for the review and verification of any recommendations to revise or otherwise modify the Agreement Statement of Work, Schedule of Payments or Payable Milestones, or other proposed changes to the terms and conditions of this Agreement.


3. For minor or administrative Agreement modifications (e.g. changes in the paying office or appropriation data, changes to Government or Consortium personnel identified in the Agreement, etc.) no signature is required by the Consortium.


ARTICLE IV. AGREEMENT ADMINISTRATION


Unless otherwise provided in this Agreement, approvals permitted or required to be made by ARPA may be made only by the ARPA Agreements Administrator. Administrative and contractual matters under this Agreement shall be referred to the following representatives of the parties:


ARPA: Scott R. Ulrey (Agreements Administrator) (703) 696-2434


CONSORTIUM: Dennis W. Ralston (Consortium Administrator) (408) 721-2812


Technical matters under this Agreement shall be referred to the following representatives:


ARPA: Nicholas J. Naclerio (Program Manager) (703) 696-2216


CONSORTIUM: Jim Dunham (Program Manager) (408) 721-6140


Each party may change its representatives named in this Article by written notification to the other party.


ARTICLE V: OBLIGATION AND PAYMENT


A. OBLIGATION


1. The Government's liability to make payments to the Consortium is limited to only those funds obligated under this Agreement or by amendment to the Agreement. ARPA may incrementally fund this Agreement.


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2. If modification becomes necessary in performance of this Agreement, pursuant to Article III, paragraph E, the ARPA Agreements Administrator and Consortium Administrator shall execute a revised Schedule of Payable Milestones consistent with the then current Program Plan.


B. PAYMENTS


1. In addition to any other financial reports provided or required, the CMC shall notify the ARPA Agreements Administrator immediately if any contribution from a Consortium Member is not made as required.


2. Prior to the submission of invoices to ARPA by the Consortium Administrator, the Consortium shall have and maintain an established accounting system which complies with Generally Accepted Accounting Principles, and with the requirements of this Agreement, and shall ensure that appropriate arrangements have been made for receiving, distributing and accounting for Federal funds. The Parties recognize that as a conduit, the Consortium does not ...