Exhibit 10.23
COOPERATION AGREEMENT
THIS COOPERATION AGREEMENT is made as of the 24th day of June, 2002, by
and between NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation, with
offices at 1319 Marquette Drive, Romeoville, Illinois 60446, ("Nanophase") and
RODEL, INC., a Delaware corporation, with offices at 451 Bellevue Road, Newark,
DE 19713 ("Rodel").
RECITALS:
WHEREAS, Nanophase manufactures and sells nanocrystalline cerium oxides
particles ("Ceria") and/or dispersions of Ceria using proprietary processes (the
"Particles") for potential use in products for chemical mechanical planarization
("CMP") for semiconductor wafers (such use being hereinafter referred to as the
"Field"); and
WHEREAS, Rodel supplies consumable products, including slurry products
to the CMP market; and
WHEREAS, Nanophase and Rodel believe that use of Nanophase's Particles
for applications in the Field with Rodel's slurry products will result in
superior products for sale to Rodel's CMP customers; and
WHEREAS, Rodel desires to purchase, and Nanophase desires to sell, the
Particles for applications in the Field in accordance with the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises hereinafter set forth, the parties agree as
follows:
1. Cooperation
(a) Nanophase and Rodel mutually agree to use all commercially reasonable
efforts to cooperate with one another to develop one or more
commercial slurry products incorporating the Particles for
applications in the Field (the "Development Product").
Unless otherwise agreed, each party shall be responsible for its own
expenses in connection with the development effort.
(b) Without limiting Rodel's general obligation of cooperation under subsection
(a), above, Rodel undertakes to (i) provide Nanophase with target
specifications, performance data and analytical assistance as may be agreed
to characterize Development Product performance, (ii) test and evaluate
Development Product samples provided by Nanophase and provide feedback as
to the results thereof to Nanophase in a timely manner, (iii) keep
Nanophase regularly advised of the general market situation applicable to
the Development Products, and (iv) include Nanophase business and technical
personnel in meetings with business and technical personnel at Rodel's
customers, as appropriate, to discuss and promote the Particles and the
Development Products.
(c) Without limiting Nanophase's general obligation of cooperation under
subsection (a), above, Nanophase undertakes to (i) provide Rodel with
reasonable research samples of the Development Product for testing and
evaluation as may be agreed, together with related physical, chemical and
other information, (ii) devote sufficient resources (including equipment
and personnel) as may be agreed to provide for the development effort, and
(iii) provide agreed technical support to Rodel and its customers as to the
use of the Particles and the Development Products.
(d) Any intellectual property created or invented after the date of this
Agreement in connection with the Development Product shall be owned as
follows, regardless of whether such intellectual property was created or
invented by personnel of Nanophase, Rodel or both of them: (i) Nanophase
shall own all such intellectual property to the extent related or
applicable to the manufacture of Particles for applications in the Field,
and (ii) Rodel shall own all such intellectual property to the extent
related or applicable to slurry formulation and manufacture for CMP
applications. Each party agrees to notify the other promptly of any
inventions pertaining to applications in the Field which are created by the
other or its personnel under this Section, and to cooperate with the other
and its counsel to take such action and execute such documents as may be
required or reasonably requested to effect the allocation of rights set
forth herein, including cooperating with the
other in the filing and prosecution of all patent applications resulting
from any inventions pertaining to applications in the Field in connection
with the Development Product.
2. Purchase and Sale
Subject to the terms and conditions of this Agreement, Nanophase will
sell, and Rodel will purchase, all of Rodel's worldwide requirements for
Ceria for applications in the Field.
3. Exclusivity
Subject to Rodel's complying with the purchase minimums stated in
Section 12(a), the purchase and sale obligations set forth in Section 2 shall
be mutually exclusive; i.e,, except as specifically otherwise provided
herein, for the term of this Agreement, Nanophase will not sell or sample
Ceria Particles for applications in the Field to any manufacturer, seller or
end user of CMP slurries other than Rodel, and Rodel will not purchase Ceria
Particles for CMP applications from any manufacturer or supplier other than
Nanophase. This Section shall not apply to Rodel's purchase of evaluation
samples in connection with Section 11(b), nor to Nanophase's sale of
evaluation samples to customers other than Rodel who have submitted purchase
orders for such samples to Nanophase before the date of this Agreement, but
not to exceed 1,000 kilograms for applications in the Field.
4. Forecasts and Orders
(a) Rodel will provide Nanophase with a rolling eighteen-month forecast of
the volume of its Particle requirements at the start of each calendar
quarter. The first three months of this forecast shall be firm and
accompanied by a purchase order for such forecast. Unless otherwise
agreed, Nanophase need not manufacture more than [ * * * ] of the
forecasted six-month volume in any single month period.
* * * Confidential Portions Omitted and Filed Separately with the Commission
(b) Rodel will give Nanophase six months prior written notice before
Nanophase will be obliged to either (i) have installed capacity or
manufacture over [ * * * ] of Particles per annum, or (ii) increase
production by more than [ * * * ] kilograms of Particles over the
production for the previous six-month period. Provided that Nanophase is
given such six-month notice, it will be obliged to manufacture up to
[ * * * ] kilograms of Particles in the first year of this Agreement.
(c) If Rodel requests that Nanophase commit to manufacture an amount of
Particles in excess of [ * * * ] kilograms per annum, the parties will
negotiate in good faith a mutually acceptable arrangement for payment of
the capital expenditures required in order for Nanophase to manufacture
such increased amount. Any failure of Rodel or Nanophase to agree upon
such a mutually acceptable arrangement following good faith negotiations
shall not constitute either (i) an unwillingness by Nanophase to supply
Rodel with Particles under Section 8(a) of this Agreement, or (ii) a
breach of any party's obligations under the Agreement.
(d) Rodel will submit written purchase orders to Nanophase giving reasonable
notice which may not be less than three weeks prior to the requested date
of shipment and specifying the required quantities, shipment dates,
destinations and other relevant information, and Nanophase will use
commercially reasonable efforts to fill the orders (including using
reasonable commercial efforts to fill orders for which Rodel may be
unable to provide a full three weeks' notice) so that Rodel may meet its
delivery commitments to its customers.
(e) Other provisions applicable to the purchase and sale of the Particles
shall be as provided in Rodel's standard terms and conditions of sale, to
the extent not inconsistent with this Agreement.
* * * Confidential Portions Omitted and Filed Separately with the Commission
5. Price and Payment
(a) Based on the minimum volumes required for Rodel to maintain exclusivity
under Section 12(a), the sales price for the Particles shall be
[ * * * ] If agreed indices for Ceria raw materials show that the costs
of these materials has significantly changed after 2002, the parties
will negotiate in good faith to determine the appropriate pricing
adjustments.
(b) Unless otherwise agreed by the parties with respect to any particular
order, all shipment of Particles shall be F.O.B. Nanophase's facility,
with title and risk of loss passing at the shipment point. Rodel will
make payment in full of all Particles conforming to the specifications
described in Exhibit A within thirty (30) days of receipt of invoice.
6. Warranties
(a) Nanophase warrants that (i) to the best of its knowledge, the
processes Nanophase applies in manufacturing and selling the Particles
do not infringe upon any patent or trade secret of any third party,
and (ii) all Particles shipped under this Agreement will conform to
the specifications agreed upon in writing, including those set forth
in Exhibit A, as the same may hereafter be amended by the parties (the
"Specifications"), and (iii) the Particles and their manufacture are
and shall be in compliance with all applicable laws, rules and
regulations, the noncompliance with which, if Nanophase is unable to
cure the noncompliance within 90 days of notification thereof, would
result in Nanophase's inability to meet its supply obligations under
this Agreement. If, notwithstanding Nanophase's compliance with its
warranty given in clause (i) hereof, Nanophase receives notice from a
third party alleging that its processes infringe a patent or trade
secret of such third party, then Nanophase and Rodel will consult one
another in good faith to discuss actions to resolve the claim,
including possible financial support by Rodel and consideration by
Nanophase in respect thereof. These warranties are in lieu of all
other warranties or conditions express or implied. TO THE EXTENT
ALLOWABLE BY LAW, THIS EXCLUSION OF ALL OTHER WARRANTIES OR CONDITIONS
* * * Confidential Portions Omitted and Filed Separately with the Commission
EXTENDS TO IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABLE QUALITY AND
FITNESS FOR A PARTICULAR PURPOSE, AND THOSE ARISING BY STATUTE OR
OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE.
(b) If any Particles fail to comply with the Specifications, Nanophase will,
at Rodel's option, promptly return or exchange the Particles with
conforming Particles, or issue a refund or credit of the purchase price.
7. Indemnity
Each party (the "indemnifying party") agrees to indemnify and
hold the other party, its parents, subsidiaries, affiliates and permitted
assigns, and the directors, employees and agents of each of the foregoing
entities (all, the "indemnified party"), harmless from and against all
liabilities, claims, damages and expenses (including, without limitation,
reasonable attorneys' fees) arising out of or in connection with (a) any
act or omission of the indemnifying party in breach of this Agreement, (b)
any injury or damage to the extent attributable to the fault or negligence
of the indemnifying party or (c) violation of any law, rule, regulation or
order by the indemnifying party related to this Agreement. This Section 7
shall not apply to relieve either party's liability to the other for breach
of such party's obligations to the other party under this Agreement.
8. License
(a) In the event (i) Nanophase provides written notice to Rodel that
Nanophase is unwilling to supply Rodel with conforming Particles for
applications in the Field conforming to the Specifications or (ii)
Nanophase acknowledges in writing that it is insolvent, or the board
of directors of Nanophase shall authorize any liquidation or winding
up of Nanophase, or a petition seeking a receivership or involuntary
bankruptcy is filed against Nanophase and such petition is not
dismissed within sixty days after service upon Nanophase, or (iii)
there is a change of control (as defined in Section 12(c)) of
Nanophase to a direct competitor of Rodel in the Field, then, in any
such case, Rodel shall have an exclusive, royalty bearing,
transferable license to make, have made, use and sell Ceria particles
for applications in the Field under any and all intellectual property
owned or controlled by
Nanophase or its principals. Such license shall be exercisable by Rodel
upon written notice and shall be self-executing. If requested by Rodel,
Nanophase will sell such equipment in its possession or control as
Nanophase may have available and Rodel may require for full exercise of
the license rights granted hereunder. The purchase price of any such
equipment shall [ * * * ]
(b) In addition to the foregoing, Nanophase agrees to make available the
reasonable services of personnel it deems appropriate to provide such
technical assistance as Rodel may reasonably request in connection with
the manufacture of the Particles for applications in the Field under the
licensed intellectual property. Nanophase will provide up [ * * * ]
(c) The license provided in this Section 8 shall bear a royalty payable by
Rodel to Nanophase [ * * * ]. Aggregate royalties hereunder shall be paid
on a quarterly basis and shall be accompanied by a written report of the
quantity of Particles used by Rodel on a monthly basis during the period
covered by the report. This Section 8 shall survive expiration or
termination of this Agreement in the event it is invoked by Rodel for a
reason specified in Sections 12(b)(ii) or 12(c), but not by reason of
Section 12(b)(i).
9. Confidentiality
In connection with this Agreement, the parties may from time to time
exchange certain information and data which the disclosing party deems to be
confidential information. As used herein, "confidential information" means
any information disclosed in tangible form which is labeled as
"confidential", "proprietary" or the like, or, if disclosed orally or
visually, is confirmed in writing as "confidential", "proprietary" or the
like within thirty (30) days of original disclosure. Confidential information
shall not include any information which (a) is or becomes part of the public
domain by reason other than the unauthorized disclosure of a party hereto,
(b) the receiving party can demonstrate was already in its possession prior
to receipt, or (c) was received in good faith from a third party having the
right to disclose the same, or (d) was independently developed by the
receiving party as evidenced by the receiving party's written records, or (e)
is required to be disclosed by law, regulation, judicial
* * * Confidential Portions Omitted and Filed Separately with the Commission
process or administrative order, provided that prompt notice and an
opportunity to seek a protective order is given to the other party before
the disclosure of confidential information. Each party agrees to keep in
confidence and not disclose any confidential information received from the
other, and further agrees not to use any such information for any purpose
except as permitted by, or in furtherance of, this Agreement. Nothing in
this Section 9 is intended to prevent or limit either party's disclosing
the relationship contemplated by this Agreement in filings with the U.S.
Securities and Exchange Commission, or other public disclosures, relating
to publicly traded securities of either party, or the filing of this
Agreement as a related exhibit, if such party's counsel reasonably
determines that such disclosure is appropriate, and provided that to the
extent permitted by law, (i) the party seeking to disclose provides the
other party with written notice and (ii) Nanophase uses reasonable efforts
to seek such redactions of confidential information contained herein as
Rodel may reasonably request.
10. Force Majeure
Neither party shall be liable on account of any failure to
fulfill its obligations hereunder if such fulfillment is delayed, hindered
or prevented by forces or events beyond its reasonable control, including
but not limited to fire, flood, labor difficulties, accident, explosion,
riots, war, acts of God, terrorist acts, threats of terrorism generally
affecting commerce, shortage of materials, transportation difficulties, and
other unforeseen supervening events; provided, that the party claiming any
such cause as an excuse for nonperformance has provided written notice
thereof to the other party within two weeks of the event that is the basis
of the failure to perform, together with the anticipated length of the
delay or failure.
11. Product Development and Improvement
(a) Throughout the term of this Agreement, Nanophase agrees to use
commercially reasonable efforts and devote reasonable resources to
maintain the Particles for applications in the Field as "state of the
art" or better, based on mutually agreed specifications. In addition,
pursuant to a protocol to be agreed upon between the parties,
Nanophase shall provide Rodel with at least seven (7) months' prior
written notice before implementing any manufacturing process change
potentially affecting compliance with the Specifications.
(b) Notwithstanding any other provision of this Agreement, if Rodel
determines that Nanophase's Particles do not meet the material
performance criteria of competitive Particles for a particular
application in the Field, Rodel shall promptly notify Nanophase in
writing and give it reasonably sufficient quantities of such
competitive Particles and documentation of the material deficiency in
the performance criteria of Nanophase's Particles, including all
available data substantiating the performance shortfall (the
"Performance Deficiency Notice"). Nanophase shall thereafter have six
months to meet or exceed the material performance criteria of the
competitive particles for the identified application. If Nanophase is
unable to meet or exceed such criteria, then Rodel shall be free to
purchase the competitive particle for the particular application. In
such case, the parties will promptly meet to discuss whether and upon
what terms to continue this Agreement on an exclusive basis as set
forth in Sections 2 and 3, hereof. If the parties cannot agree on a
course of action within 60 days of the commencement of such
discussions, then this Agreement shall continue on a nonexclusive
basis in accordance with its terms, and Sections 2, 3 and 12(a) shall
be deemed accordingly amended, and Section 8 shall be deleted.
12. Term and Termination
(a) This Agreement shall commence on the date first set forth above and
continue for an initial period of five years; provided, that if as of
December 31, 2003, [ * * * ], and Rodel has not purchased from
Nanophase at least [ * * * ] kilograms of Particles, the parties shall
meet in good faith to discuss the progress to date and possible
adjustment of any targets, goals or prices previously established with
respect to development and sale of Particles for applications in the
Field (the "Adjustment Discussions"). If within thirty (30) days after
either party has requested Adjustment Discussions, the parties have
not agreed on an acceptable path forward on an exclusive basis, then
either party may, by
* * * Confidential Portions Omitted and Filed Separately with the Commission
written notice delivered at the end of such thirty (30) day period,
declare this Agreement to be nonexclusive, whereupon the exclusivity
provisions of Sections 2 and 3 hereof shall be deemed void and this
Agreement shall continue on a nonexclusive basis for the remainder of
the initial term (the "Exclusivity Termination Procedure"). The
parties agree to hold similar Adjustment Discussions, and adhere to
the same Exclusivity Termination Procedure if (i) during 2004, Rodel
has not purchased from Nanophase at least [ * * * ] kilograms of
Particles for applications in the Field, or (ii) during 2005, Rodel
has not purchased from Nanophase at least [ * * * ] kilograms of
Particles for applications in the Field, or (iii) during subsequent
years of the initial term of this Agreement, Rodel has not purchased
from Nanophase agreed quantities of Particles for applications in the
Field. Subject to Rodel's complying with the purchase minimums stated
above (or such other quantities as the parties may agree pursuant to
the Adjustment Discussions), this Agreement will renew automatically
at the end of the initial term for consecutive additional periods of
five years each, unless terminated by either party upon written notice
delivered at least three (3) months prior to the end of any renewal
period.
(b) This Agreement may be terminated at any time prior to expiration upon
written notice by either party in the event of (i) a material breach
by the other which is not cured within thirty (30) days after delivery
of written notice by the nonbreaching party, or (ii) the other party
is placed in bankruptcy or receivership.
(c) This Agreement may also be terminated at any time prior to expiration
upon written notice by either party in the event of a change of
control of the other party to an unaffiliated third party. For
purposes hereof, a "change in control" means a change in the voting
control of the affected party or its direct or indirect parent. Except
to the extent a party's counsel reasonably determines that such
disclosure is prohibited by applicable statute or regulations of the
U.S. Securities and Exchange Commission, the party affected by a
change of control shall give the other at least thirty (30) days'
prior notice of the contemplated change. If the other party does not
elect to terminate this Agreement as provided by this subsection, this
Agreement shall continue in accordance with its terms as provided by
Section 13, below.
* * * Confidential Portions Omitted and Filed Separately with the Commission
13. Assignment and Succession
This Agreement shall not be assigned by either party to any third
party, except to an affiliate of such party (defined, for purposes of this
Agreement as a company or other legal entity which controls, is controlled
by, or is under common control with, Rodel or Nanophase, respectively),
without the other party's prior written consent, which consent shall not be
unreasonably withheld. This Agreement shall be binding upon, and inure to
the benefit of, the respective successors by merger or otherwise and
permitted assigns of each party.
14. Miscellaneous Provisions
(a) This Agreement embodies all the terms and conditions of the agreement
between the parties hereto with respect to the matters set forth
herein and supercedes and cancels all previous agreements and
understandings, whether oral or written, provided that nothing in this
Agreement shall be deemed to supersede or cancel that certain
Confidentiality And Non-Use Agreement between Rodel and Nanophase
dated November 27, 2001 with respect to information disclosed by
either party to the other prior to the date hereof.
(b) The terms of this Agreement may not be modified, waived or discharged
except by an express declaration in writing signed on behalf of the
parties hereto by their duly authorized officers and referring
specifically to this Agreement.
(c) The failure of Nanophase or Rodel at any time to require performance
by the other of any provision hereof shall in no way affect the full
right to require such performance at any time thereafter, nor shall
the waiver by Nanophase or Rodel of a breach of any provision hereof
be taken or held to be a waiver of any succeeding breach of such
provision or as a waiver of the provision itself.
(d) The termination or expiration of this Agreement for any reason shall
not affect any of the provisions of this Agreement which expressly
continue in force after its termination or expiration, including the
provisions of Sections 6, 7, 9 and 14, which the parties expressly
agree shall survive any expiration or termination hereof.
(e) Except as expressly provided herein, nothing in this Agreement shall
be construed to make any party hereto the representative or agent of
any other party and no party shall so hold itself out, nor shall any
party be liable for or bound by any act or omission of any other
party.
(f) This Agreement in all respects shall be governed by and interpreted in
accordance with the laws of the State of Delaware, U.S.A. without
giving effect to principles of conflict of laws. Rodel and Nanophase
hereby consent and submit to the jurisdiction of the state or federal
courts in Delaware and agree that any litigation arising out of or
relating to this Agreement shall be heard only in a state or federal
court located in such state.
(g) Rodel and Nanophase each agree that during the term of this Agreement,
and for eighteen months after the termination of the Agreement,
neither party will directly or indirectly hire or engage any current
or former employee or contractor of the other party, nor solicit or
try to induce any current employee or contractor of the other party,
to leave that party's employ or engagement.
(h) If any provision of this Agreement is held invalid by a court of
competent jurisdiction, such invalidity shall not affect the other
provisions of this Agreement.
(i) Any notice required or permitted to be given under this Agreement
shall be made by personal delivery, courier, or by telecopy or first
class mail to the party to whom delivery is intended at its address
set forth above, or to such other address as either party shall notify
to the other from time to time.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first set forth above.
NANOPHASE TECHNOLOGIES RODEL, INC.
CORPORATION
By: /s/ Joe Cross By: /s/ illegible
----------------------- ------------------------
Joe Cross, CEO
Exhibit A
Agreed Specifications
[ * * * ]
* * * Confidential Portions Omitted and Filed Separately with the Commission