Exhibit 10.40
IBIS TECHNOLOGY CORPORATION HAS OMITTED FROM THIS EXHIBIT 10.40 PORTIONS OF
THE EXHIBIT FOR WHICH IT HAS REQUESTED CONFIDENTIAL TREATMENT FROM THE
SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE AGREEMENT FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED [ ] AND SUCH
CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION.
Task Order #1
to
Equipment Purchase Master Agreement
No. 07482
This Task Order Agreement sets forth the terms and conditions of an individual
Equipment Purchase. All of the terms and conditions of the Equipment Purchase
Master Agreement No. 07482 between the parties ("EPMA") shall apply unless
superseded herein.
1.0 STATEMENT OF WORK
IBIS shall build, test, deliver, install and sell to IBM, and IBM shall buy,
two (2) IBIS-1000 oxygen implantation systems (hereinafter referred to as
"Equipment" arid "System #1" (with respect to the first system purchased and
sold) and "System #2" (with respect to the second system purchased and sold).
System #1 will initially be put into service at IBIS' facility in Danvers, MA
as specified below. System #2 will be delivered to IBM'S East Fishkill, New
York facility as specified below or other IBM facility as specified by IBM.
The term "Equipment" shall also include all Deliverables specified in the
Section entitled DELIVERABLES in the Equipment Purchase Master Agreement. IBM
may, from time to time and in its sole discretion, order additional IBIS-1000
or other model oxygen implantation systems under the terms of this Task
Order. Nothing in this Agreement shall obligate IBM to purchase additional
systems from IBIS.
23
The Equipment is to be provided in accordance with the provisions of the
Equipment Purchase Master Agreement, this Task Order Agreement, Attachments
and Appendices, as well as any IBM Purchase Orders issued hereunder.
IBIS agrees that the price for the Equipment is that specified in the Section
entitled PRICING below.
2.0 PRICING
- Price for System #1 - [ ]
- Price for System #2 [ ]
2.1 IBM shall pay IBIS a transfer fee of [ ] in the event that IBM moves
System #1 from IBIS' facility to IBM's facility or accepts a replacement
system pursuant to Section 11.2.
3.0 IBIS SYSTEMS DELIVERY DATES
System #1 will be tested and put into service at IBIS' facility in Danvers, MA
as specified in Section 4 below.
IBIS will use best efforts to meet the schedule in Section 4.2 below, but in no
event shall System #2 be delivered to IBM later than [ ]. Time is of the
essence.
4.0 COMPLETION SCHEDULE
24
Major milestones for performing this Agreement and corresponding completion
dates are set out in the following schedule.
A technical review shall be conducted at each scheduled Milestone unless
otherwise agreed to by IBM and IBIS. Additional reviews may be conducted if
deemed necessary by IBM and IBIS. The agenda for the reviews shall include a
status of the work specified to be performed to date, significant problems
encountered, proposed and actual solution, as well as anticipated problems.
4.1 Schedule for System #1
Preliminary Test [ ]
Final Test [ ]
4.2 Schedule for System #2
Design Review [ ]
Equipment assembly [ ]
Preliminary Test (IBIS M1000 Specification) [ ]
Equipment Shipment to IBM [ ]
Equipment Installation at IBM [ ]
Final Test (Test to meet specifications as agreed upon between
IBIS & IBM) [ ]
25
5.0 PURCHASE ORDERS/INVOICES
5.1 Upon execution of this Task Order for Equipment, Purchase Order Nos. 990NU3K
and 990NV7C will be delivered to IBIS authorizing the work on System #1 and
System #2, respectively. Each Purchase Order shall reference the Equipment
Purchase Master Agreement, this Task Order Agreement, and General Procurement
specifications for Process Equipment.
5.2 IBIS hereby grants to IBM the options to purchase up to [ ] additional new
fully functional SIMOX systems from IBIS' then-current product line (the
model(s) to be selected by IBM) under this Task Order Agreement and the
Equipment Purchase Master Agreement during the period beginning with the
Effective Date and ending on [ ]; such Option to be exercised by the sending of
IBM purchase order(s) to IBIS for such system(s); each such system to be
delivered no later than [ ]after delivery of the applicable purchase order by
IBM; and at a price that is the lower of (a) [ ] and (b) a price determined by
Section 10.2 of the EPMA. IBM and IBIS will negotiate if more than [ ]identical
SIMOX systems are required in a twelve (12) month period.
5.3 IBIS hereby agrees that IBM and/or its AFFILIATES shall have no obligation
whatsoever (i) to purchase any goods (other than Systems #1 and #2) or services
from IBIS or (ii) to exercise the option in Section 5.2.
5.4 IBIS shall send all invoices to the following address:
26
IBM Corporation
Accounts Payable Dept.
P.O. Box 8098
Endicott, NY 13761-8098
6.0 EXECUTION
This Task Order shall commence as of the Date of Execution below and shall
expire on December 31, 2003, unless extended by a formally executed written
amendment or unless terminated pursuant to Section entitled TERMINATION of the
Equipment Purchase Master Agreement.
7.0 COORDINATORS
7.1 All communications and notices between the parties shall be made or given to
the party's Purchasing Coordinator assigned as stated below:
In the case of IBM:
Vic Cole
In the case of the IBIS:
Al Alioto
7.2 The Technical Coordinator's assigned by each party are:
For IBM: Devendra Sedana, Scott Price
For IBIS: Al Alioto
27
8.0 Deliberately left blank
9.0 INTELLECTUAL PROPERTY RIGHTS INDEMNIFICATION
- See License Agreement/EPMA
10.0 INTELLECTUAL PROPERTY RIGHTS
10.1.1 - IBIS agrees to deliver all of the data specified for delivery to IBM in
Section 5.0 entitled "DELIVERABLES" of the Equipment Purchase Master Agreement
and any additional data agreed by the parties to be delivered to IBM.
11.0 CONSIGNMENT
11.1 System #1 is hereby consigned by IBM to IBIS, subject to the terms of this
Agreement, including Appendix A.
11.2 IBIS grants IBM the option, to be exercised, if at all, in IBM's sole
discretion: i) to have IBIS transfer SIMOX System #1 to IBM's facility upon one
hundred and fifty (150) days' notice to IBIS; or ii) to transfer title to SIMOX
System #1 to IBIS and in exchange to receive and have delivered to IBM's
facility a new SIMOX system of a model then-offered by IBIS (to be selected by
IBM) upon payment of the amount set forth in Section 2.1, as the total
consideration) by giving five
28
(5) months notice of its election to IBIS. The terms of such transfer of title
of IBM'S consigned SIMOX System #1 to IBIS shall be as specified in Appendix B.
12.0 SURVIVAL
To extent a particular right or obligation herein does not have a specifically
identified survival period, all rights and obligations which by their nature
survive the expiration or termination of this Task Order will remain in effect
beyond any expiration or termination for the period reasonably necessary to
accomplish their purpose and shall bind and inure to the benefit of the parties,
their legal representatives, successors and assigns.
13.0 CHANGES OR AMENDMENTS
The Task Order may not be changed or amended except by the signed written
agreement of the authorized representatives of both parties.
Accepted and Agreed to:
INTERNATIONAL BUSINESS IBIS TECHNOLOGY
MACHINES CORPORATION CORPORATION
By: /s/ Michael J. Flaherty By: /s/ Al Alioto
---------------------------------- ------------------------------
Print Name: Michael J. Flaherty Print Name: Al Alioto
-------------------------- -----------------------
29
Title: Mgr. Capital Equipment Procurement Title: Vice President of Sales and
Marketing
Date: 5/14/98 Date: April 11, 1998
30
APPENDIX A
SUPPLEMENTAL TERMS AND CONDITIONS FOR
CONSIGNMENT OF IBM'S SYSTEM #1
The following provisions of this Appendix A to Task Order #1 supersede the
terms in Appendix C of Equipment Purchase Master Agreement No. 07482 only for
the SIMOX System #1 consigned to IBIS by IBM and activities performed under
the terms of Task Order #1.
Pursuant to Section 11.1 of Task Order #1, IBM shall consign IBM's System
#1 to IBIS subject to the following terms and conditions:
1.0 - System #1 shall remain the property of IBM. IBIS shall not pledge,
mortgage, encumber, or assign System #1 in any manner, or transfer System #1
to a third party, or exercise any right of ownership in System #1 or perform
any act inconsistent with IBM'S ownership thereof, without IBM'S written
approval.
2.0 - IBIS may use System #1 for the performance of implantation for other
customers, provided that orders issued by IBM for implantation of wafers
shall have absolute priority over orders from other customers of IBIS, and
IBIS shall immediately process such IBM wafers.
31
3.0 - IBM shall have the right to inspect periodically System #1. Such
inspections shall be conducted during normal business hours, subject to
reasonable notice.
4.0 IBIS shall maintain records of all transactions involving the System #1
and keep these records on 51. for a minimum of three (3) years from the date
the work or services being performed have Inn completed. During such three
(3) year period, IBM may audit these records during reasonable business
hours, subject to reasonable notice.
5.0 - IBIS shall transfer System #1 to IBM's facility in accordance with 11.2
of Task Order or within 60 days of termination of EPMA.
6.0 IBIS shall be responsible for any damage to System #1 while it is
consigned to IBIS. System #1 shall be delivered to IBM in working order and
in as good condition as when first put into service at IBIS facility
(pursuant to Section 5.0) reasonable wear and tear accepted, and IBIS shall
make any repairs or refurbishing required. The warranty period for System #1
shall extend for the entire period during which System #1 remains at IBIS'
facility and for an additional period of six (6) months after System #1 is
installed at IBM's facility and accepted by IBM.
6.1 Delivery of System #1 to IBM hereunder shall be to IBM'S dock at East
Fishkill, New York or to any other location IBM may direct. Crating,
transportation, and insurance shall be at IBIS' expense.
32
7.0 IBIS agrees to indemnify, defend, and hold harmless, IBM, its officers,
directors, agents, and employees, from any and all liability, losses, damages
or expenses associated with claims, suits, or actions brought by or on behalf
of any third party of any nature, including, but not limited to, personal
injury (including death), environmental liability, or property damage arising
from, or alleged to arise from IBIS' negligence or other wrongful acts or
omissions resulting from or in any way related to this Agreement. For the
avoidance of doubt, the obligations of this paragraph also apply to all
claims, suits or actions based on the design or operation of System #1.
7.1 IBIS agrees to indemnify, defend, and hold harmless, IBM, its officers,
directors, agents, and employees, from any and all liability, losses, damages
or expenses associated with claims, suits, or actions brought by or on behalf
of any third party of any nature, including, but not limited to, personal
injury (including death), environmental liability, or property damage arising
from, or alleged to arise from, IBIS' negligence or other wrongful acts or
omissions and/or IBM's negligence or other wrongful acts or omissions
resulting from or in any way related to work performed by IBIS on System #1
for any person or entity other than IBM. For the avoidance of doubt, the
obligations of this paragraph also apply to all claims, suits, or actions
based on the design or operation of System #1.
33
8.0 INSURANCE
8.1 IBIS shall purchase, at its own expense, and during the term of this
Agreement (unless a longer term is specified) maintain in full force and effect
at least the following kinds and minimum amounts of insurance with reputable
insurance carriers:
a. Workers' compensation insurance in accordance with statutory
requirements.
b. Comprehensive General Liability insurance, covering any liability
for bodily injury, personal injury (including death), and property
damage arising from IBIS' operations, its products and services
provided hereunder, its assumed liabilities under this Agreement
(including contractual indemnities), and its use and operation of its
facilities, for limits of not less than $2,000,000.00 per occurrence
combined single limit bodily injury and property damage. IBM shall be
listed as an additional insured on the policy.
IBIS shall maintain the foregoing coverage in full force and effect for
at least three years following the expiration of this Agreement.
c. Property Damage Insurance covering the IBM SIMOX System #1 located
at IBIS' facilities. Such insurance shall be written on an "all risk"
of physical loss or damage basis, for the full replacement cost of the
covered items and in amounts that meet any coinsurance clause of the
policies of insurance. IBM shall be listed as an additional insured and
loss payee on the policy.
d. Comprehensive Automobile Liability Insurance - third party, bodily
injury, property damage with limits of $2,000,000.00 per occurrence for
owned, non-owned, and hired vehicles used by IBIS while performing
services in connection with this Agreement. IBM shall be listed as an
additional insured on the policy.
e. Employers Liability coverage with a limit of $1,000,000.00 per
occurrence. IBIS shall not commence work until it has furnished IBM
with certificates of insurance evidencing the coverage required by this
Section. Such certificates must provide that the insurer will give IBM
at least thirty (30) days prior written notice of material change in or
cancellation of such insurance. IBIS shall indemnify, defend, and hold
harmless IBM for all damages sustained by IBM resulting from IBIS'
failure to have and maintain the insurance required in this Section.
f. Maintenance of the Insurance required in this Section shall in no
way be interpreted as relieving IBIS of any responsibility whatsoever
under this Agreement. IBIS may secure, at its own expense, such
additional insurance as it deems necessary.
34
9.0 If IBIS is unable to deliver System #1 to IBM when requested due to loss or
theft, IBIS shall pay IBM the actual cash value of System #1 and explain in
detail the circumstances surrounding such failure to deliver. If IBIS is able
but, for any reason, fails to deliver upon IBM's request, IBM shall have the
right to enter IBIS' premises to remove System #1, and IBIS expressly waives any
rights or remedies IBIS has with regard to System #1 including, but not limited
to, any right IBIS has to notice and a hearing or to a bond, undertaking, or
surely before a writ of replevin, order of seizure, or similar writ or order.
IBM shall have all other remedies, at law or in equity.
35
APPENDIX B
The following terms and conditions shall govern the exercise of the option in
Section 11.2(ii) of Task Order #1.
PROPERTY - Any reference to "Property" or "property" herein shall be construed
to mean the used SIMOX System #1 located at IBIS' facility.
ACCEPTANCE -- The terms and conditions contained herein are the complete and
exclusive statement of the terms of any sale to IBIS. IBIS' signature below
confirms IBIS' assent to these terms and conditions. No addition to or
modification of any of these terms and conditions will be effective unless
agreed to in writing by IBM. Any terms and conditions submitted on documents
supplied by IBIS shall be deemed non-conforming.
WARRANTIES -- ALL PROPERTY IS SOLD ON AN "AS IS" BASIS WITH ALL FAULTS, LATENT
AND PATENTS. IBM MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE NATURE,
QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT, OR OTHERWISE. IBM shall have no responsibility for shipping,
installation, warranty, maintenance, engineering changes or technical support of
the property purchased hereunder.
36
PERMITS AND AUTHORIZATIONS REQUIRED BY LAW -- IBIS represent that IBIS possess
all the necessary permits and authorizations required to disassemble, remove,
transport, resell or otherwise properly dispose of the property being acquired.
IBIS agree to comply with all applicable Federal, State and local laws,
regulations and ordinances, including but not limited to the regulations of
ordinances, including but not limited to the regulations of the United States
Department of Commerce relating to the Export of Technical Data, insofar as they
relate to IBIS' performance.
INDEMNIFICATION -- IBIS agree to indemnify IBM against any and all claims for
damages, including costs and attorney's fees, for personal injury (including
death), and loss of or destruction or damage to real or tangible personal
property arising from IBIS' acts, omissions or misrepresentation, regardless of
the form of action brought against IBM.
INFRINGEMENT OF PATENTS -- The purchase of property does not convey by
implication or otherwise any licenses under any patent, domestic or foreign. IBM
makes no representation or warranty that the use of any material, equipment or
technical information furnished hereunder will not infringe any patent,
trademark, copyright, trade secret, or other proprietary interests of any third
party, and it shall be IBIS' sole responsibility to make such determination as
is necessary with respect to other rights of third parties. IBM shall not be
held to any liability with respect to any claim made by any third party on
account of, or arising from, the use of such material, equipment, or technical
information. IBIS agree to indemnify and save harmless IBM from any and all
costs, expenses, liabilities, and claims for infringement of any patents or
similar instruments or any
37
trademarks, copyrights, trade secrets, or other proprietary interests in any
foreign country or in the U.S.A. (subject to maximum cap as specified in the
license and development Section 11.1)
LIMITATION OF IBM'S LIABILITY -- IBM'S entire liability and IBIS' exclusive
remedy are set forth in this section. Under no circumstances shall IBM be liable
to IBIS for any lost revenue, consequential damages, incidental damages, lost
profits or possibility of such damages. In addition, in no event will IBM be
liable on any third party claim or for damages caused by IBIS' failure to
perform IBIS' responsibilities. In no event, except for claims by IBIS for
bodily injury or damage to real property or tangible personal property for which
IBM is legally liable, will IBM be liable to IBIS for actual damages in excess
of the amount paid by IBIS for property under this Agreement. These limitations
apply, regardless of the form of action, whether in contract or in tort,
including negligence.
GENERAL -- This Agreement shall be governed by the laws of the State of New
York, without regard to die conflict of laws principles thereof. The parties
hereto expressly waive any right they may have to a jury trial and agree that
any proceeding under this Agreement shall be tried by a judge without a jury.
If any section or subsection of this Agreement is found by competent judicial
authority to be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of any such section or subsection in every other
respect and the remainder of this Agreement shall continue in effect so long
38
as the redacted contract still expresses the Intent of the parties. If the
intent of the parties cannot be preserved, this Agreement shall be either
renegotiated or terminated.
All obligations and duties which by their nature survive the expiration or
termination of this Agreement shall remain in effect beyond any expiration or
termination.
No actions, regardless of form, arising out of this Agreement, may be brought by
either party more than two years alter the cause of action has arisen, or, in
the case of nonpayment, more than two years from the date payment was due.
Neither party shall assign this Agreement or any rights hereunder without the
prior written consent of the other party.
The waiver by either party of any instance of the other party's noncompliance
with any obligation or responsibility herein shall not be deemed a waiver of
subsequent instances or of either party's remedies for such noncompliance.
CONFIDENTIAL INFORMATION -- If any confidential information is to be disclosed
by IBM or IBIS, such disclosure shall be under the terms of the EPMA.
39
CHEMICAL -- IBIS agree to indemnify IBM against any and all claims or actions
for damage or other relief that may arise due to the property containing
chemical residue. IBIS agree to meet all applicable government safety standards
and environmental regulations and laws for the removal and transportation of
this property
EXPORT -- Some material(s) included in this sale may be a controlled commodity
and require a validated export license issued by the U.S. Department of Commerce
prior to the export of such commodities from the U.S. As a condition of sale,
Buyer will abide by all U.S. Export/Re-export Administration regulations,
including export license whenever applicable. IBIS acknowledge awareness of such
regulations and agree to become familiar with them prior to exporting any
property from the U.S.
SOLE AGREEMENT - THIS AGREEMENT embodies the understanding of the parties with
respect to the sale of the property and supersedes all previous communications,
representations or understandings, either written or oral, between the parties.
INTERNATIONAL BUSINESS IBIS TECHNOLOGY
MACHINES CORPORATION CORPORATION
BY: /s/ Michael J. Flaherty BY: /s/ Al Alioto
-------------------------------------- ------------------------------
TITLE: Mgr. Capital Equipment Procurement TITLE: VP of Sales and Marketing
----------------------------------- --------------------------
DATE: 5/14/98 DATE: April 11, 1998
----------------------------------- --------------------------
40