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Exhibit 2.7
CROSS-LICENSE AGREEMENT
BETWEEN
VARIAN ASSOCIATES, INC.
("VARIAN")
AND
NOVELLUS SYSTEMS, INC.
("NOVELLUS")
2
TABLE OF CONTENTS
RECITALS.............................................................. Page 1
1 Definitions.................................................. Page 2
2 License Grants............................................... Page 3
2.1 Varian To Novellus................................... Page 3
2.2 Novellus To Varian................................... Page 3
3 Ownership, Transfer of Know How.............................. Page 4
4 Enforcement of Rights........................................ Page 4
5 Confidentiality.............................................. Page 5
6 Term and Termination......................................... Page 5
7 Assignment of License........................................ Page 6
8 Extent of Certain Obligations................................ Page 6
9 Miscellaneous Provisions..................................... Page 6
9.1 Notices.............................................. Page 6
9.2 Section 365(n) of the U.S. Bankruptcy Code........... Page 7
9.3 Interpretation....................................... Page 7
9.4 Severability......................................... Page 7
9.5 No Third-Party Beneficiaries......................... Page 8
9.6 Amendment............................................ Page 8
9.7 Further Assurances................................... Page 8
9.8 Mutual Drafting...................................... Page 8
9.9 Governing Law........................................ Page 8
9.10 Dispute Resolution................................... Page 8
9.11 Counterparts......................................... Page 8
9.12 Entire Agreement..................................... Page 8
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CROSS-LICENSE AGREEMENT BETWEEN VARIAN AND NOVELLUS
CROSS-LICENSE AGREEMENT (together with Exhibit A hereto, the "Cross
License Agreement") dated as of May 7, 1997, by and between Varian Associates,
Inc., a Delaware corporation ("Varian"), and Novellus Systems, Inc., a
California corporation ("Novellus"). This Cross License Agreement shall be
effective as of the Closing Date of the Asset Purchase Agreement referenced
below (the "Effective Date").
RECITALS
A. Varian, directly and indirectly through various foreign and domestic
affiliates of Varian, is engaged in the business of developing, manufacturing
and distributing PVD and CVD thin film deposition equipment, through its Thin
Film System Business ("TFS") (at times herein referred to as the "TFS
Business");
B. Varian, directly and indirectly through various foreign and domestic
affiliates of Varian, is also engaged in the business of developing,
manufacturing and distributing ion implant equipment through its Ion Implant
System Business ("IIS") (at times herein referred to as the "IIS Business");
C. Pursuant to the Asset Purchase Agreement, dated as of May 7, 1997
(the "Asset Purchase Agreement"), by and between Varian and Novellus, Varian has
agreed to sell and cause to be transferred to Novellus, and Novellus has agreed
to purchase and accept the transfer from Varian and Varian's affiliates, certain
of the assets and properties used primarily in the TFS Business.
D. Varian desires to retain ownership of certain intellectual property
rights involved in the development, manufacture, testing and sale of the
products of both the TFS Business and the IIS Business, and is willing to grant
Novellus a license under these intellectual property rights.
E. Varian desires to retain ownership of certain intellectual property
rights previously licensed to others and subject to payment of royalties to
Varian, involved in the development, manufacture, testing and sale of the
products of the TFS Business, and is willing to grant Novellus a license under
these intellectual property rights.
F. Varian desires to receive, and Novellus, is willing to grant, a
license under the intellectual property transferred to Novellus pursuant to the
terms of the Asset Purchase Agreement.
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G. Novellas desires to receive, and Varian is willing to grant, a
license under Varian intellectual property which was not transferred to Novellas
pursuant to the terms of the Asset Purchase Agreement.
THEREFORE, in consideration of these premises and the respective
representations, warranties and agreements contained herein, the parties agree
as follows:
1 DEFINITIONS
1.1 "TFS Intellectual Property" has the same meaning as TFS Intellectual
Property as defined in the Asset Purchase Agreement.
1.2 "TFS Products" means the products or components thereof manufactured by
the TFS Business as a current part of its business operation as of the
Effective Date, and products currently in development by the TFS
Business and derivative products thereof and improvement products
thereof.
1.3 "IIS Products" means the products or components thereof manufactured by
the IIS Business as a current part of its business operation as of the
Effective Date, and products currently in development by the IIS
Business and derivative products thereof and improvement products
thereof.
1.4 "Products of Varian" means products or components sold by Varian
businesses as of the Effective Date, and products currently in
development by Varian businesses and derivatives thereof and
improvements thereof.
1.5 "Retained Intellectual Property" means (i) those patents listed on
Exhibit A to this Cross License Agreement; (ii) patent applications and
invention disclosures set forth in a letter, dated the date hereof,
concurrently delivered by Varian to Novellas; and (iii) intellectual
property, other than patents and patent applications, owned or
controlled by Varian as of the Effective Date of this Cross License
Agreement, and used in the TFS Business as of the Effective Date and
which constitutes Excluded Assets as provided in Section 2.2 of the
Asset Purchase Agreement.
1.6 "Term" means the period starting with the Effective Date and continuing
until the termination or expiration of this Cross License Agreement, as
provided in Section 6.1.
1.7 "Varian Field of Use" means: products other than TFS Products.
1.8 "Novellus Field of Use" means: PVD and CVD thin film deposition
products.
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1.9 "Novellus Licensed Products" means any semiconductor manufacturing
equipment in the equipment in the Novellus Field of Use that are
developed, manufactured, sold or used by Novellus and its Subsidiaries
and shall include without limitation, the TFS Products.
1.10 "Subsidiary" means, with respect to a specified company, an entity
controlled, directly or indirectly by such company, including. without
limitation, by such company's beneficial ownership of 50% or more of
such entity's outstanding voting stock or other equity interests.
2 LICENSE GRANTS
2.1 VARIAN TO NOVELLUS: Varian hereby grants to Novellus, upon the terms
and conditions herein specified, a royalty free, nonexclusive,
irrevocable, world wide, perpetual license under the Retained
Intellectual Property to make, have made, use and sell Novellus
Licensed Products.
2.1.1 Subject to Section 2.4.1 of the Asset Purchase Agreement, Varian grants
to Novellus a sublicense, without the right to grant Anther
sublicenses, of all sublicensable rights granted to Varian in licenses
from third parties that are Excluded Assets, but which relate to the
ownership or use of the TFS Intellectual Property and the Retained
Intellectual Property, that are required to permit Novellus to conduct
business in the Novellus Field of Use.
2.1.2 Novellus shall not have the right to grant sublicenses to third parties
under the Retained Intellectual Property, except with Varian's prior
written permission.
2.2 NOVELLUS TO VARIAN: Novellus hereby grants to Varian, upon the term and
conditions herein specified, a royalty free nonexclusive, irrevocable,
world wide, perpetual license under the TFS Intellectual Property to
make, have made, use and sell Products of Varian outside the Novellus
Field of Use.
2.2.1 Subject to Section 2.4.1 of the Asset Purchase Agreement, Novellus
grants to Varian a sublicense, without the right to grant further
sublicenses, of all sublicensable rights granted to Varian in licenses
from third parties that arc Assets transferred to Novellus, but which
relate to the ownership or use of the Retained Intellectual Property
and are required to permit Varian to conduct business in the Varian
Field of Use.
2.2.2 Varian shall not have the right to grant sublicenses to third parties
under the TFS Intellectual Property, except with Novellus's prior
written permission.
2.3 SUBSIDIARIES. The license rights granted hereunder to each of Varian
and Novellus shall extend to and may be exercised by Subsidiaries of
either party. References herein to a party in this Section 2 and
Section 5 below shall be deemed to refer to such party and each of its
Subsidiaries. Each party shall be liable and responsible for full
compliance with this Cross License Agreement by each of its
Subsidiaries.
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2.4 FUTURE NOVELLUS PRODUCTS. Upon request by Novellus, Varian shall grant
Novellus a nonexclusive, royalty bearing license under the Retained
Intellectual Property to make, have made, use and sell semiconductor
manufacturing equipment outside the Novellus Field of Use, but Varian
shall not be required to grant any license to make, have made, use and
sell IIS Products. The royalty for such a license shall be a reasonable
royalty, provided that the royalty rate shall be no higher than the
lowest royalty rate in any license granted by Varian to another party
under the same intellectual property rights for the same or
substantially similar equipment for which Novellus requests a license.
2.5 FUTURE VARIAN PRODUCTS. Upon request by Varian, Novellus shall grant
Varian a nonexclusive, royalty bearing license under the TFS
Intellectual Property to make, have made, use and sell semiconductor
manufacturing equipment, other than IIS Products, in the Novellus Field
of Use, but Novellus shall not be required to grant any license to
make, have made, use and sell TFS Products. The royalty for such a
license shall be a reasonable royalty, provided that the royalty rate
shall be no higher than the lowest royalty rate in any license granted
by Novellus to another party under the same intellectual property
rights for the same or substantially similar equipment for which Varian
requests a license.
3 OWNERSHIP, TRANSFER OF KNOW HOW
3.1 Varian shall retain ownership of the Retained Intellectual Property
subject to the licenses granted in Section 2 of this Cross License
Agreement. This Cross License Agreement shall not transfer any
ownership rights to Novellus in the Retained Intellectual Property, and
shall not transfer any ownership rights to Varian in the TFS
Intellectual Property.
3.2 The licenses granted hereunder shall not extend to any improvements,
enhancements, modifications or inventions developed or created by a
party after the Effective Date, and the party developing or creating
such improvements, enhancements or inventions after the Effective Date
shall be the sole and exclusive owner thereof.
4 ENFORCEMENT OF RIGHTS
4.1 Varian may, at its sole option and expense, take action against any
infringement or misappropriation of the Retained Intellectual Property.
Any recovery by Varian as a result of such action shall belong
exclusively to Varian.
4.2 Novellus may, at its sole option and expense, take action against any
infringement or misappropriation of the TFS Intellectual Property. Any
recovery by Novellus as a result of such action shall belong
exclusively to Novellus.
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5 CONFIDENTIALITY
5.1 Novellus shall throughout the Term of this Cross License Agreement hold
all confidential information relating to Retained Intellectual Property
received from Varian in confidence, and shall preserve such
confidential information against any disclosure to third parties except
as otherwise expressly provided herein, using the same degree of care
it exercises with its own proprietary information of a like nature;
provided, however, that confidentiality shall not apply to information
which is or becomes published or publicly known through no fault of
Novellus; or which is rightfully received by Novellas from a third
party without an obligation of secrecy; and, provided, further, that
Novellus shall not be obliged to keep in confidence any information
that is inherently disclosed by the sale of Products of Varian or of
Novellus Licensed Products.
5.2 Varian shall throughout the Term of this Cross License Agreement hold
all confidential information relating to TFS Intellectual Property in
confidence, and shall preserve such confidential information against
any disclosure to third parties, except as otherwise expressly provided
herein, using the same degree of care it exercises with its own
proprietary information of a like nature; provided, however, that
confidentiality shall not apply to any information which is or becomes
published or publicly known through no fault of Varian; or which is
rightfully received by Varian from a third party without an obligation
of secrecy; and, provided, further, that Varian shall not be obliged to
keep in confidence any such information that is inherently disclosed by
the sale of Novellus Licensed Products or of Products of Varian.
5.3 Notwithstanding the foregoing, Varian shall have the right to disclose
the confidential information relating to the TFS Intellectual Property
and Novellus shall have the right to disclose the confidential
information relating to the Retained Intellectual Property as is
reasonably required in the exercise of its license rights hereunder
provided the recipient of such information agrees in writing to be
bound by confidentiality provisions no less restrictive than this
Section 5 with respect to any such confidential information so
disclosed.
6 TERM AND TERMINATION
6.1 The Term of this Cross License Agreement shall begin on the Effective
Date, and shall continue until the expiration of the last to expire
patent included in the TFS Intellectual Property or in the Retained
Intellectual Property, provided, however, that if the Asset Purchase
Agreement shall terminate pursuant to Section 12 thereof, this Cross
License Agreement shall terminate concurrently with the termination of
the Asset Purchase Agreement.
6.2 Upon the expiration of this Cross License Agreement, the field of use
restriction shall be removed from the license of any remaining
intellectual property rights, and both parties shall have the right to
make, use or sell products in any field of use.
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7 ASSIGNMENT OF LICENSE
7.1 Novellus may assign its rights and obligations under this Cross License
Agreement to a successor in ownership of all or substantially all the
assets of the TFS Business or sublicense its rights and obligations
under this Cross License Agreement to a successor in ownership of
substantially all the assets relating to a TFS Product, on the
condition that such successor shall assume the performance of all the
terms and conditions of this Cross License Agreement to be performed by
Novellus as if the successor were named herein in the place of
Novellus.
7.2 Varian may assign its rights and obligations under this Cross License
Agreement to a successor in ownership of all or substantially all the
assets of the IIS Business or sublicense its rights and obligations
under this Cross License Agreement to a successor in ownership of
substantially all the assets relating to a Varian product, on the
condition that such successor shall assume the performance of all the
terms and conditions of this Cross License Agreement to be performed by
Varian as if the successor were named herein in the place of Varian.
8 EXTENT OF CERTAIN OBLIGATIONS
8.1 Nothing in this Cross License Agreement shall be construed as
conferring upon Varian or Novellus any license or any other right
unless expressly granted by the terms of this Cross License Agreement.
8.2 Varian represents that it has the full right and power to enter into
this Cross License Agreement and to perform its obligations pursuant to
the terms hereof, Novellus represents that it has the Ml right and
power to enter into this Cross License Agreement and to perform its
obligations pursuant to the terms hereof, provided that Novellus shall
have no responsibility for any breach of the foregoing representation
that is primarily the result of a breach by Varian of any term or
condition of the Asset Purchase Agreement.
9 MISCELLANEOUS PROVISIONS
9.1 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duty given
or made as of the, date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested), or sent by facsimile transmission (confirmation received)
to the parties at the following addresses and facsimile transmission
numbers (or at such other address or number for a party as shall be
specified by like notice), except that notices after the giving of
which there is a designated period within which to perform an act and
notices of changes of address or number shall be effective only upon
receipt:
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IF TO VARIAN: with a copy to:
Varian Associates, Inc. Varian Associates, Inc.
3050 Hansen Way 3050 Hansen Way
Palo Alto, California 94304-1000 Palo Alto, California 94304-1000
Attention: Chief Financial Officer Attention: General Counsel
Telecopy No.: (415) 424-5754 Telecopy No.: (415) 858-2018
Telephone No.: (415) 424-5320 Telephone No.: (415) 424-5352
IF TO NOVELLUS: with a copy to:
Novellus Systems, Inc. Morrison & Foerster LLP
3970 North First Street 755 Page Mill Road
San Jose, CA 95134 Palo Alto, CA 94304
Attention: Chief Financial Officer Attention: Michael C. Phillips, Esq.
Telecopy No.: (408) 858-2018 Telecopy No.: (415) 494-0792
Telephone No.: (408) 943-9700 Telephone No. (415) 813-5600
9.2 SECTION 365(n) OF THE U.S. BANKRUPTCY CODE. All rights and licenses
granted pursuant to this Agreement by a licensor to a licensee are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101 of the Bankruptcy Code. The parties agree
that a licensee, as a licensee of such rights under this Agreement,
shall remain and may fully exercise all of its rights and elections
under the Bankruptcy Code. The parties further agree that, in the event
of a commencement of a bankruptcy proceeding by or against a licensor
under the Bankruptcy Code, the licensee shall be entitled to a complete
duplicate of any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession shall
be promptly delivered to the licensee upon the licensee's written
request (i) upon any such commencement of a bankruptcy proceeding,
unless the licensor elects to continue to perform all of its
obligations under this Agreement, or (ii) if not delivered under (I)
above, upon the rejection of this Agreement by or on behalf of the
licensor
9.3 INTERPRETATION. When a reference is made, in this Cross License
Agreement to paragraphs or Exhibits, such reference shall be to a
paragraph or Exhibit to this Cross License Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and the headings contained
in this Cross License Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Cross
License Agreement.
9.4 SEVERABILITY. If any term or other provision of this Cross License
Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Cross License Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the
transactions
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contemplated hereby is not affected in any manner adverse to any Party.
Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Cross License Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.
9.5 NO THIRD-PARTY BENEFICIARIES. This Cross License Agreement is for the
sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give
to any Person, other than the parties hereto and such assigns, any
legal or equitable rights hereunder.
9.6 AMENDMENT. This Cross License Agreement may not be amended or modified
except by an instrument in writing signed by Varian and Novellus.
9.7 FURTHER ASSURANCES. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be
reasonably requested by any other party to evidence and reflect the
transactions described herein and contemplated hereby and to carry into
effect the intents and purposes of this Cross License Agreement.
9.8 MUTUAL DRAFTING. This Cross License Agreement is the joint product of
Novellus and Varian and each provision hereof has been subject to the
mutual consultation, negotiation and agreement of Novellus and Varian
and shall not be construed for or against any party hereto.
9.9 GOVERNING LAW. This Cross License Agreement shall be governed by, and
construed in accordance with, the laws of the State of California
(without giving effect to its choice of law principles).
9.10 DISPUTE RESOLUTION. Any dispute, controversy or claim between the
parties relating to, arising out of or in connection with this Cross
License Agreement (or any subsequent agreements or amendments thereto).
including as to its existence, enforceability, validity,
interpretation, performance, breach or damages, including claims in
tort, whether arising before or after the termination of this Cross
License Agreement, shall be settled in accordance with the procedures
set forth in Section 13.8 of the Asset Purchase Agreement.
9.11 COUNTERPARTS. This Cross License Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the
same agreement.
9.12 ENTIRE AGREEMENT. This Cross License Agreement, together with Exhibits
hereto, and the documents and instruments and other agreements among
the parties delivered pursuant
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hereto, constitute the entire agreement and supersede all prior
agreements and undertakings, both written and oral, other than the
Asset Purchase Agreement and the Confidentiality Agreement dated
February 28, 1997, between Varian and Novellus with respect to the
subject matter hereof and are not intended to confer upon any other
person or entity any rights or remedies hereunder, except as otherwise
expressly provided herein. This Cross License Agreement is subject to
the terms of those agreements, including the noncompete covenant in
Section 7.6 of the Asset Purchase Agreement.
IN WITNESS WHEREOF, Varian and Novellus have caused this Cross License
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
VARIAN ASSOCIATES, INC.,
a Delaware corporation
By____________________________________
Name:
Title:
NOVELLUS SYSTEMS, INC.
a California corporation
By____________________________________
Name:
Title:
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Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibit to this
Cross-License Agreement Between Varian Associates, Inc. and Novellus Systems,
Inc. has been omitted. Such exhibit will be submitted to the Securities and
Exchange Commission upon request.
Exhibit A: A list of the patents, pursuant to which the Registrant is granted by
Varian a nonexclusive license pursuant to the terms of the Cross-License
Agreement.