Research Agreement

RESEARCH AGREEMENT (And Amendments)


This Research Agreement ("Agreement") is entered into by and between AMTECH SYSTEMS INC. ("Sponsor") and THE REGENTS OF THE UNIVERSITY OF CALIFORNIA ("University"), a nonprofit educational institution incorporated under the laws of the State of California.


Witnesseth


WHEREAS, Sponsor possesses an ownership interest in United States Patent No. 5,215,588 entitled "Photo-CVD System" and issued on June 1, 1993 to Ji H. Rhieu of Mesa, Arizona; and


WHEREAS, Sponsor claims existing rights in intellectual property under continuation-in-part to U.S. Patent No. 5,215,588, Patent Application Serial No. 08/067,286, filed on May 25, 1993 (hereinafter referred to as Method A); and


WHEREAS, University claims existing rights in intellectual property whose conception occurred before the period covered by this Agreement, is included in disclosure UC Case No. 93-338-1, and is entitled "Parallel Purge Configuration for Photo-CVD Process (UCSC B)" (hereinafter referred to as Method B); and


WHEREAS, University claims existing rights in intellectual property whose conception occurred before the period covered by this Agreement, is included in disclosure UC Case No. 93-338-1, and is entitled "Perpendicular Purge Configuration for Photo-CVD Process (UCSC C)" (hereinafter referred to as Method C); and


WHEREAS, the research project contemplated by this Agreement is of mutual interest and benefit to University and to Sponsor, will further the instructional, scholarship and research objectives of University in a manner consistent with its status as a nonprofit, tax-exempt, educational institution, and is intended to further the business objectives of Sponsor and to provide benefits to Sponsor through the actual reduction to practice of Method A under this Agreement; and


WHEREAS, in this Agreement the term Improvement Invention shall mean any patentable invention owned by the University which includes or broadens one or more of the claims in Method A and which is conceived and first actually reduced to practice during the course of performing the research under this Agreement; and


WHEREAS, it is anticipated that University will, as a result of the research project, design and build a Photo-CVD (chemical vapor deposition) prototype and it is intended that Sponsor shall receive certain rights to such prototype in accordance with the terms of this Agreement; and


NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree to the following:


1. Research Work


1.1 University shall use reasonable efforts to perform
the Research described in Exhibit A hereto which is
incorporated herein, (hereinafter referred to as the
"RESEARCH"), under the direction of Roger W. Anderson
as "Principal Investigator," substantially in
accordance with the terms and conditions of this
Agreement. Anything in this Agreement to the contrary
notwithstanding, Sponsor and University may at any
time amend the RESEARCH by mutual written agreement.


1.2 In the event that the Principal Investigator becomes
unable or unwilling to continue the RESEARCH, and a
mutually acceptable substitute is not available,
University or Sponsor shall have the option to
terminate this Agreement.


1.3 University shall provide all necessary facilities to
properly and fully perform the RESEARCH and to
construct and test the Photo-CVD prototype.


2. Period of Performance


2.1 The period of performance of this Agreement is March
1, 1994 through April 30, 1995. This Agreement shall
become effective upon the date of last signature
hereto and shall continue in effect for the full
duration of the period of performance unless sooner
terminated in accordance with the provisions of
Article 9. Notwithstanding the effectiveness of the
Agreement as described herein paragraphs 4.3 and 6.1
shall continue in effect for the periods stated
herein.


3. Reports


3.1 University shall furnish Sponsor letter reports in
such frequency as mutually agreed to by the parties,
but no less than monthly, summarizing the work
conducted. In addition, on no less than a quarterly
basis, University and Principal Investigator shall
provide oral presentations in person as to the status
of the RESEARCH to Sponsor and Sponsor's guests at
the site of the RESEARCH or at Sponsor's offices at
Sponsor's request. A final report setting forth the
accomplishments and significant research findings,
equipment development and plans shall be prepared by
University and submitted to Sponsor within thirty
(30) days of the expiration of the Agreement.


4. Costs, Billings and Other Support


4.1 It is agreed to and understood by the parties hereto
that, subject to Article 2, total costs to the
Sponsor hereunder shall not exceed the amount of
$360,549. Payment shall be made by Sponsor on a
reasonable cost reimbursable basis monthly in arrears
upon submission of invoices by the University in
accordance with the schedules attached hereto as
Exhibit B. Invoices submitted by the University shall
not vary by more than five percent (5%) of the
attached schedules on a quarterly basis.


4.2 Checks shall be made payable to The Regents of the
University of California and sent to:


University of California, Santa Cruz
Cashier's Office
102 Hahn Student Services
Santa Cruz, CA 95064


4.3 In the research, development, planning and
construction of a photo enhanced CVD prototype used
in the processing and manufacturing of semiconductor
devices, and in other aspects of the RESEARCH, the
equipment and machinery utilized therein shall
primarily be provided by Sponsor through the funding
of the RESEARCH as described in paragraph 4.1 hereof.
In addition, University may be required to utilize
some equipment for certain of the components of the
prototype and in other aspects of the RESEARCH.
Although the University shall retain title to any
such equipment and the prototype, it shall be subject
to the rights of Sponsor to retain the intellectual
property rights derived from the RESEARCH and other
rights outlined in Articles 5 and 8 hereof.
University shall maintain in good working order and
condition the equipment and CVD prototype and shall
provide Sponsor with the right of access and
noncommercial use of the equipment and prototype on
at least a monthly basis for a two year period
commencing with the termination of this Agreement.
Sponsor shall reimburse University for the cost of
chemicals and supplies necessary to process samples
for the purpose of demonstrating the equipment and
prototype during the period of access by Sponsor.


4.4 In the event of termination of this Agreement by
Sponsor pursuant to Article 9 hereof, Sponsor shall
pay all costs accrued by University as of date of
termination, including noncancellable obligations.


5. Publicity and Business Development


5.1 University understands and agrees that Sponsor is a
public corporation and will inform its shareholders
and issue a news release that it has entered into
this Research Agreement with University for the
RESEARCH as described on Exhibit A and for the
development, design and construction of
photo-enhanced CVD equipment and machinery used in
the processing and manufacturing of semiconductor
devices. Sponsor shall have the right to visit the
site of the RESEARCH at the University and to
demonstrate any achieved results of the RESEARCH and
the development, construction and use of the
Photo-CVD equipment and machinery developed by
University. Principal Investigator will cooperate
with Sponsor in this endeavor. Sponsor shall agree
that such visits to the research site shall be on a
reasonable basis and will not exceed more than one
visit per month.


5.2 With the exception of informing shareholders and
issuing news releases as described in paragraph 5.1,
nothing in this Agreement shall entitle Amtech to use
the University's name, nor any employee of
University, in any publicity or advertising without
the prior written approval of University. University
will not use the name of Sponsor, nor any employee of
Sponsor, in any publicity without the prior written
approval of Sponsor.


6. Confidentiality


6.1 University agrees that information, techniques and
methods obtained in and through the RESEARCH and
related to the development, design and construction
of the Photo-CVD prototype shall be considered
Confidential Information. Such Confidential
Information whether provided by Sponsor or
independently developed by University which is not
specifically excepted in paragraph 6.2 hereof, shall
be held in strict confidence for the term of this
Agreement and for a period of three (3) years after
its termination. University agrees to safeguard such
Confidential Information against disclosure to others
with the same degree of care as it exercises with its
own information of a similar nature. University will
take all reasonable efforts to prevent disclosure to
third parties of such Confidential Information.


6.2 University shall not be required to keep confidential
the following: (1) information which is now common
knowledge or subsequently becomes such through no
breach of this Agreement; (2) information which
reveals the results of the RESEARCH without
disclosing the methods by which the results are
obtained; or (3) information which is required to be
disclosed by law.


7. Publications


7.1 University shall have the right to publish research
information of general scientific and academic
interest so long as said publications do not reveal
information University agrees to keep confidential
pursuant to Article 6. University shall furnish
Sponsor with a copy of any proposed publication at
least sixty (60) days prior to submission for
publication. Sponsor within thirty (30) days of
receipt of the proposed publication shall determine
if said proposed publication reveals Confidential
Information of Sponsor or would otherwise violate
this Agreement. In the event Sponsor determines that
its Confidential Information is disclosed in such
publication, it shall notify University and such
information will be removed from the publication.
Unless Sponsor notifies University within said thirty
(30) day period, University shall have the right to
submit said publication.


8. Intellectual Property Rights


8.1 Ownership of Inventions
-----------------------


Any patentable invention or discovery invented solely
by employees of University arising from research
conducted under this Agreement shall be the sole
property of University and shall be disposed of in
accordance with University's policies subject to the
terms of this Agreement. Any patentable invention or
discovery invented solely by employees of Sponsor
arising from research conducted under this Agreement
shall be the sole property of Sponsor and shall be
disposed of in accordance with Sponsor's policies
subject to the terms of this Agreement.


For any invention or discovery jointly invented by
University and Sponsor arising from research
conducted under this Agreement, each party shall, in
accordance with the patent laws of inventorship, own
an undivided interest in the invention. Any and all
joint inventions shall be fully and promptly
disclosed in writing and in confidence to the other
party. The parties agree to consult with one another
prior to taking any action to obtain patent
protection of such joint invention and shall attempt
to agree on patent applications to be filed and such
invention to be administered.


Inventorship shall be determined in accordance with
U.S. patent laws.


8.2 Licensing Rights to University Inventions
-----------------------------------------


Unless it is determined by a court of competent
jurisdiction that University is unable to do so and
provided that Sponsor pays the full costs of the
research project supported by this Agreement as set
forth in the schedules attached hereto as Exhibit B,
Sponsor shall be given a time-limited first right to
negotiate an exclusive, royalty-bearing license to
make, use and sell any patentable invention which is
either 1) both (a) included in Method B or Method C
and (b) first actually reduced to practice in the
performance of research under this Agreement
("Research Invention") or 2) conceived and first
actually reduced to practice in the performance of
research under this Agreement. This license right
shall exclude those using laser or rare gas halogen
excimer light sources. It is specifically understood
and agreed that Method A shall be the primary focus
of this RESEARCH.


University shall promptly disclose to Sponsor in
writing and in confidence any such invention or
discovery arising under this Agreement; Sponsor shall
notify University in writing within ninety (90) days
of disclosure to Sponsor whether or not it wishes to
secure a commercial license to such invention. If
Sponsor elects to secure a license, Sponsor shall
assume all costs associated with securing and
maintaining patent protection from the date of
disclosure through the term of the license for such
invention(s), whether or not Letter Patent issues.
The parties shall negotiate in good faith said
license, which shall include, but not be limited to:


o reasonable terms;
o diligence requirements which are no more
restrictive than performance by Sponsor to
market the product under such license in
countries including the United States within
twenty-four (24) months of the date of full
execution of such license and in quantities
sufficient to meet the market demands
therefor; and
o Sponsor's continuing obligation to pay patent
costs.


Sponsor shall have an additional one hundred twenty
(120) days from the date of election to conclude a
license agreement with University. If Sponsor does
not elect to secure such license or if such license
agreement is not concluded in said period, rights to
the inventions disclosed hereunder shall be disposed
of in accordance with University policies with no
further obligation to Sponsor.


Further, the earned royalty rate in any such license
to an invention which is an Improvement Invention
shall be one-half percent (0.5%) of Net Sales of all
products sold under the license. In addition, the
earned royalty rate in any such license to an
invention which is a Research Invention shall be not
less than two percent (2%) and not more than four
percent (4%). For Research Inventions which are
jointly owned, the specific royalty rate shall
reflect the relative contributions of the Sponsor and
the University to such joint inventions. Net Sales
shall mean the total of the gross invoice prices of
Licensed Product sold less the sum of the following
actual and customary deductions where applicable:
cash, trade, or quantity discounts, sales, use,
tariff, import/export duties or other excise taxes
imposed upon particular sales; transportation charges
and allowances or credits to customers because of
rejections or returns.


8.3 Nothing contained in this agreement shall be deemed
to grant either directly or by implication, estoppel,
or otherwise any rights under any patents, patent
applications or other proprietary interests, whether
dominant or subordinate, or any other invention,
discovery or improvement of either party, other than
the specific patent rights covering inventions
arising under this Agreement.


9. Termination


9.1 Either party may terminate this Agreement upon thirty
(30) days prior written notice to the other.


9.2 Termination of this Agreement by either party for any
reason shall not effect the rights and obligations of
the parties accrued prior to the effective date of
termination. No termination of this Agreement,
however effectuated, shall affect the University's or
Sponsor's rights and obligations under Article 8
thereof, or release the parties hereto from their
rights and obligations under Articles 4, 5, 6, 7, 8
and 10.


10. Independent Contractor


10.1 In the performance of all services hereunder:


10.1.1 University shall be deemed to be and shall
be an independent contractor and, as such,
University shall not be entitled to any
benefits applicable to employees of Sponsor.


10.1.2 Neither party is authorized or empowered to
act as agent for the other for any purpose
and shall not on behalf of the other enter
into ny contract, warranty, or
representation as to any matter. Neither
shall be bound by the acts or conduct of the
other.


11. Insurance and Indemnification


11.1 University warrants and represents that University
has adequate liability insurance, such protection
being applicable to officers, employees and agents
while acting within the scope of their employment by
University, and University has no liability insurance
policy as such that can extend protection to any
other person.


11.2 University shall defend, indemnify and hold Sponsor,
its officers, employees, or agents harmless from and
against any and all liability, loss, expense,
attorneys' fees or claims for injury or damages
arising out of the performance of this agreement, but
only in proportion to and to the extent such
liability, loss, expense, attorneys' fees, or claims
for injury or damages are caused by or result from
the negligent or intentional acts or omissions of
University, its officers, agents, or employees.


11.3 Sponsor shall defend, indemnify and hold University,
its officers, employees, or agents harmless from and
against any and all liability, loss, expense,
attorneys' fees or claims for injury or damages
arising out of the performance of this Agreement, but
only in proportion to and to the extent such
liability, loss, expense, attorneys' fees, or claims
for injury or damages are caused by or result from
the negligent or intentional acts or omissions of
Sponsor, its officers, agents, or employees.


12. Assignment


12.1 This Agreement shall not be assigned by either party
without prior wri ...