COOPERATIVE AGREEMENT

Exhibit 10.33

 

COOPERATIVE AGREEMENT

 

BETWEEN

 

Cree, Inc.

(The Recipient)

 

AND

 

U.S. Army Research Laboratory (ARL)

 

CONCERNING

 

Manufacturing Technology for SiC Material and Power Devices

 

Agreement No.: W911NF-04-2-0021

Total Estimated Amount of the Agreement: [***]

Total Estimated Government Funding of the Agreement: $15,917,094.00

Total Estimated Recipient Share of the Agreement: [***]

 

Government Funds Obligated: [***]

Authority: 10 U.S.C. 2358

 

Accounting and Appropriation Data:

 

ACRN AA:

 

This Agreement is entered into between the United States of America, hereinafter called the Government, represented by the U.S. Army Research Laboratory (ARL), and Cree, Inc., pursuant to and under U.S. Federal Law.

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Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

Table of Contents

 

ARTICLES

 

Article 1 Scope of the Agreement

 

Article 2 General Definitions

 

Article 3 Program Management

 

Article 4 Staff Rotation

 

Article 5 Fiscal Management

 

Article 6 Agreement Administration

 

Article 7 Term of the Agreement

 

Article 8 Administrative Responsibility

 

Article 9 Public Release or Dissemination of Information

 

Article 10 Patent Rights

 

Article 11 Entire Agreement

 

Article 12 Governing Law/Order of Precedence

 

Article 13 Waiver of Rights

 

Article 14 Use of Technical Facilities

 

Article 15 Metric System of Measurement

 

Article 16 Liability

 

Article 17 Non-Assignment

 

Article 18 Severability

 

Article 19 Force Majeure

 

Article 20 Notices

Article 21 Performance by Foreign Nationals

 

ATTACHMENTS

 

Attachment

1 Standard Terms and Conditions for For-Profit Entities

 

Attachment 2 National Policy Requirement

 

Attachment 3 Other Certifications

 

Attachment 4 Annual Program Plan and Budget*

 

Attachment 5 Reporting Requirements

*	To be completed in accordance with Article 3.5

 

ARTICLE 1 Scope of the Agreement

 

1.1 Introduction

 

This Agreement is a “Cooperative Agreement” (31 USC 6305) and is awarded pursuant to 10 USC 2358 Research Projects. The Parties agree that the principal purpose of this Agreement is for Cree, Inc., hereinafter referred to as the “Recipient”, to provide its best research efforts in the support and stimulation of fundamental research and not the acquisition of property for the direct benefit or use of the Government. FAR and DFARS apply only as specifically referenced herein. 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.

 

1.2 Background and Vision Statement

 

The U.S. Army Research Laboratory (ARL) Sensors and Electron Devices Directorate (SEDD) works in many areas crucial to the success of the future Army, providing fundamental research to give commanders real-time situational awareness; rapid and precise discrimination and targeting; highly compact, lightweight energy sources; as well as mitigating techniques for use against hostile enemy threats.

 

As part of the Army’s strategic plan to transform its field operations into a more strategically responsive force, the Army is actively engaged in efforts to develop a family of manned and unmanned ground weapons systems under the Future Combat Systems program. A key factor in the development and demonstration of FCS platforms is the development of high power density, high temperature traction drive systems.

 

The Army Research Laboratory (ARL) has been charged with the responsibility of developing technologies that will enable FCS demonstrations. This Cooperative Agreement will allow the DoD to utilize a new class of high power motor drives that will positively impact FCS designs.

 

1.3 Scope

 

This effort focuses on the manufacturing technology for high-temperature high-power silicon carbide (SiC) semiconductor material and power devices for use in electric traction drive power components and associated power conditioning and control electronics for the next-generation of combat vehicles. All topics of joint interest regarding the manufacture, processing, and performance of high-temperature high-power SiC power devices for electric traction drive systems may be explored under this agreement. Specifically, quality of SiC starting material (substrates and epi-layers) and the design, development, and operation of SiC power devices for high-temperature, high power motor drive applications.

 

1.4 Goals/Objectives

 

The following schedule gives an estimate of the work to be undertaken during the course of this agreement:

 

Year One

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

Year Two

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

Year Three

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

Year Four

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

Year Five

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

•

Develop manufacturing technology for [***]

 

The Recipient shall participate in a program of coordinated research, development, and education with ARL in accordance with the Annual Program Plan, Attachment 4 to this Agreement, which sets forth the specific goals and objectives for the program for the first twelve-month performance period. The recipient shall also comply with the reporting requirements set forth in Attachment 5.

 

The Government will have continuous involvement with the recipient. The Government will also obtain access to the research results and certain rights in data, computer codes developed,

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Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

and patents pursuant to Article 10 and Attachment 1 to this agreement. The Government and the Recipient are bound to each other by a duty of good faith and best research effort in achieving the goals of the Program.

 

As a condition of this Agreement, it is herein understood and agreed that Federal funds are to be used only for costs that: (1) a reasonable and prudent person would incur, in carrying out the advanced research project herein; and (2) are consistent with the purposes stated in governing Congressional authorizations and appropriations.

 

ARTICLE 2 General Definitions

 

2.1 Recipient — An organization or other entity receiving a grant or cooperative agreement from a DoD Component. For purposes of this Agreement, the Recipient is Cree, Inc.

 

2.2 Party — For purposes of this Agreement, the parties are ARL and the Recipient.

 

2.3 Grants Officer — Is the Government’s principal point of contact for all administrative, financial or other non-technical issues arising under the Agreement.

 

2.4 Agreements Administrator – The Agreements Administrator has authority to administer Cooperative Agreements and, in coordination with the Grants Officer, make determination and findings related to delegated administration functions.

 

2.5 Recipient Program Manager (RPM) — The RPM is the Recipient’s technical representative charged with the Recipient’s overall responsibility of management and guidance of the cooperative agreement.

 

2.6 Cooperative Agreement Manager (CAM) — Is the Government’s technical representative from ARL charged with the overall responsibility of management and guidance of the cooperative agreement.

 

2.7 Annual Program Plan and Budget — Is the baseline document which details the scope, schedule, principal investigator(s), collaboration, staff rotation, and educational opportunities for the research activities. It also includes the financial expression of the project, which serves as the resource allocation/commitment for the research activities. The Budget shall include the sum of both Federal and non-Federal shares, as appropriate.

ARTICLE 3 Program Management

 

3.1 ARL Cooperative Agreement Manager (CAM). The ARL Cooperative Agreement Manager (CAM) is:

 

Dr. C. J. (Skip) Scozzie

U.S. Army Research Laboratory

ATTN: AMSRD-ARL-SE-DP

2800 Powder Mill Road

Adelphi, MD 20783-1197

Phone: 301-394-5211

Fax No.: 301-394-1559

Email Address: sscozzie@arl.army.mil

 

3.2 Recipient Program Manager (RPM). The Recipient Program Manager (RPM) is:

 

Dr. Anant Agarwal

Cree, Inc.

4600 Silicon Drive

Durham, NC 27703

Phone: 919-313-5539

Fax No.: 919-313-5656

Email Address: Anant_Agarwal@cree.com

3.3 Cooperative Agreement Management Committee. The ARL Cooperative Agreement Manager (CAM) is responsible for the overall management and guidance of the cooperative agreement. The CAM, together with the RPM will form the Cooperative Agreement Management Committee (CAMC). Other advisory members may be added by either the CAM, or the RPM, by mutual agreement , when their presence will prove beneficial to the research. The CAMC will prepare and approve the Annual Program Plan.

 

3.4 Management and Program Structure. The CAMC shall be responsible for the management and integration of the party’s collaborative efforts under this agreement including programmatic, technical and reporting.

 

3.5 Annual Program Planning Process. Within 45 days of award, the RPM and ARL CAM will collaborate and prepare the Annual Program Plan (APP) for year 1 (date of award through 12 months). Within 10 days of submission, the Grants Officer, in conjunction with the RPM and ARL CAM, will approve the APP and associated budget for year 1.

 

Once approved, the APP shall serve as the annual baseline document which details the scope, schedule, principal investigator(s), staff rotation, educational opportunities, and resource allocation/commitment of the research activities. Along with the APP, the Recipient shall include a list of foreign nationals proposed to perform during the period in accordance with the notification required by Article 21. This list shall be updated as necessary during the course of the year. The ARL Grants Officer, in conjunction with the CAM, will approve the APP by way of issuing a modification to this agreement. The modification will incorporate the APP and budget to this agreement. The APP will then constitute the necessary “statement of work” and authorization document for each task included in the APP.

 

Beginning 6 months after initial award, the Annual Program Planning Process shall begin for the following year. This process shall continue for the length of the Agreement. As part of this process, one or more site visits may be required. In addition, the ARL CAM or his representatives will have the right to make visits as needed during the year to assess or coordinate performance.

 

The CAMC shall review the progress under the APP at least once annually. If it appears that research milestones will not be met, the CAMC may propose an adjustment of the APP for incorporation into the Agreement by the Grants Officer.

ARTICLE 4 Staff Rotation or On-Site Collaboration

 

4.1 Salary and Travel Costs. All salary and travel costs associated with the rotation of government personnel will be borne by the Government. All salary and travel costs associated with staff rotation or on-site collaboration of recipient personnel will be paid for with funding provided under this agreement.

 

4.2 Host Facility Regulations. All personnel in rotational assignments or on-site collaboration are required to comply with the safety, environmental, security, and operational regulations or requirements of the host facility.

 

4.3 Administrative Support. The host facility will provide adequate office space, communications connections, administrative support, and office supplies, if available, for researchers in long-term rotational assignments. Should it become necessary to procure equipment to facilitate a rotational assignment, the Annual Program Plan should reflect the need for such equipment, and the costs will be borne under the cooperative agreement.

 

ARTICLE 5 Fiscal Management

 

5.1 Allocation of Recipient Funds

 

5.1.1 Restrictions on the Use of Government Funds. Government funds provided under this Agreement must be allocated by the Recipient exclusively for the execution and operation of the Annual Program Plan or Agreement Scope. Government funds shall not be utilized to support the Recipient’s operations or administration unrelated to this Agreement.

 

5.1.2 Obligation. In no case shall the Government’s financial obligation exceed the amount obligated on this Agreement. The total estimated amount of Government funding for performance of this Agreement is $15,917,094.00, subject to the availability of funds. Of this amount, [***] is allotted and available for payment. It is estimated that obligated funds shall be sufficient to cover all areas of performance for the first twelve months of performance. The Government is not obligated to reimburse the Recipient for expenditures in excess of the amount of obligated funds allotted by the Government.

 

5.1.3 Incremental Funding . The Government may obligate funds to this Agreement incrementally. In the event that this Agreement is funded incrementally, the Government anticipates that from time to time additional amounts will be allotted to this agreement by unilateral modification, until the total amount for performance of this Agreement has been funded. To minimize interruption of effort due to lack of funds, the Recipient shall notify the Grants Officer in writing whenever the amount of funds obligated under this agreement when added to anticipated costs in the next 60 days will exceed 75% of the amount allotted.

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Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

5.1.4 Payments

 

a. The Recipient shall submit an original and two (2) copies of all vouchers (SF 270 “Request for Advance or Reimbursement”) to the Agreement Administrator for payment approval. After written verification of progress towards or achievement of the research milestones by the CAM, and approval by the Agreement Administrator, the vouchers will be forwarded to the payment office within ten (10) calendar days of receipt of the voucher. Payments will be made via EFT by the Payment Office listed in Article 8 within 20 calendar days of receipt of transmittal.

 

b. Payments will be made no more frequently than monthly and will be based on reimbursement of actual expenditures as monitored against the Budget Plan contained in the Annual Program Plan. Once the CAM has verified that the Recipient has expended best efforts towards the successful achievement of the research goals, payment will be authorized.

 

5.1.5 Cost Share. The Recipient contributions for the purpose of cost share may consist of both cash and in-kind contributions. All in-kind contributions must comply with the requirements of 32 CFR 34.13 Cost Sharing or Matching. The Government and Recipient estimate that the Scope of this Agreement can only be accomplished with a total aggregate resource contribution of [***] from the effective date of this agreement through 60 months thereafter. For the purposes of this agreement, the cost share ratio shall be $15,917,094.00 Government and [***] Recipient. The Recipient intends, and by entering into this agreement, undertakes to cause these funds to be provided. Failure of either party to provide its contribution may result in termination of this agreement, in accordance with Paragraph 7.4(a) of this agreement, or a proportional reduction in funding. As part of the cost share of this Agreement, the Recipient agrees to provide a [***] throughout the life of this Agreement. [***].

 

5.2 Audit Procedures . The Recipient shall ensure that an audit of all activities under this Agreement shall be conducted annually in accordance with the following subparagraphs and 32 CFR 34.16. Copies of all audit reports shall be provided to the Agreements Administration Office.

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5.2.1. Selection of Auditors, Scope of Audit, and Audit Objectives . An independent auditor, herein defined as a public accountant or government auditor who meets the standards specified in the Government Auditing Standards issued by the U.S. Comptroller General, shall review and report Recipient expenditures of federal funds. The auditor shall determine whether: (1) The financial statements of the Recipient present fairly its financial position and the results of its operations in accordance with generally accepted accounting principles; (2) The Recipient has an internal control structure to provide reasonable assurance that it is managing Federal awards in compliance with applicable laws and regulations, and has in

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Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

place adequate controls to ensure compliance with the laws and regulations that could have a material impact on the financial statements; (3) The Recipient has complied with laws and regulations that may have a direct and material effect on its financial statement and amounts on each major Federal program; (4) The Recipient is operating in compliance with its established policies and procedures; and (5) The Recipient has complied with all requirements of this Agreement.

 

5.2.2 Records . The Recipient shall maintain adequate records to account for Federal funds received, as well as cost share elements, under this Agreement. Upon completion or termination, whichever occurs earlier, the Recipient shall furnish to the Agreement Administrator a copy of the final financial report prepared in accordance with Attachment 5. The Recipient’s relevant financial records are subject to examination or audit by the Government for a period not to exceed three (3) years after expiration of the term of this Agreement. The Agreement Administrator or designee shall have direct access to sufficient records and information of the Recipient, to ensure full accountability for all funding under this Agreement. Upon prior written notice such audit, examination, or access shall be performed during business hours on business days and shall be subject to the security requirements of the audited party.

 

ARTICLE 6 Agreement Administration

 

6.1 Modifications to this Agreement . Any Party who wishes to modify this Agreement shall, upon reasonable notice of the proposed modification to the other Party, confer in good faith with the other Party to determine the desirability of the proposed modification. Modifications shall not be effective until a written modification is signed by the Agreement signatories or their successors. Administrative modifications may be unilaterally executed by the Grants Officer or by the Agreements Administrator.

 

6.2 Requirements for Approval for Changes to the Program Budget and Annual Program Plan . This provision highlights Agency decisions on the terms and conditions of 32 CFR 32.25. During the course of performance, the Grants Officer, in coordination with the CAM, will have approval authority for certain specific changes to the APP including but not limited to:

 

a. Changes in the scope or the objective of the APP or research milestones;

 

b. Change in the key personnel specified in the proposal or award document;

 

c. The absence for more than three months, or a 25% reduction in time devoted to the project, by the approved project director or principal investigator.

 

d. The need for additional Federal funding.

ARTICLE 7 Term of the Agreement, Suspension, and Termination

 

7.1 Term of the Agreement . The term of this Agreement shall commence upon the effective date and continue through sixty months, subject to the availability of funds. The following provisions and 32 CFR 34.51 and 34.52 as applicable address the suspension and termination of this agreement.

 

7.2 No-Cost Period of Performance Extension. In accordance with the DoD Grant and Agreement Regulations (DoD 3210.6-R), the Recipient may initiate a request for a one-time, no-cost extension to the period of performance. The request may not include additional Federal funds, nor change the approved objectives or scope of the program.

 

7.3 Suspension or Termination for Failure to Comply. If the Recipient materially fails to comply with the terms and conditions of the agreement, the Grants Officer may, after having given Recipient thirty (30) days written notice of failure, take one or more of the following actions as appropriate:

 

a. Temporarily withhold payments pending correction of the deficiency by the Recipient, or more severe enforcement action as deemed appropriate by the Grants Officer, or DoD Component;

 

b. Disallow all or part of the cost of the activity or action not in compliance;

 

c. Wholly or partly suspend or terminate the current agreement;

 

d. Withhold further awards for the project or program;

 

e. Take any other legally available remedies.

 

7.4 Termination. This Cooperative Agreement may be terminated in whole or in part by:

 

a. the Grants Officer if a Recipient materially fails to comply with the terms and conditions of the Agreement and the breach is not cured within thirty (30) days after receipt of written notice of said breech;

 

b. the Grants Officer should insufficient funds be available to accomplish the goals or intent of the agreement, or other convenience of the Government;

 

c. the Grants Officer with the consent of the Recipient, in which case the parties shall agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated;

d. the Recipient, upon sending to the Grants Officer written notification setting forth the reasons for such termination, the effective date and, in the case of partial termination, the portion to be terminated. The Recipient must provide such notice at least 30 days prior to the effective date of the termination. If the Grants Officer determines in the case of partial termination that the reduced or modified portion of the cooperative agreement will not accomplish the purposes for which the award was made, the Grants Officer may terminate the agreement in its entirety.

 

7.5 Costs Incurred During Suspension or Termination. Costs of the Recipient resulting from obligations incurred by the Recipient during a suspension or after termination of the agreement are not allowable unless the Grants Officer expressly authorizes them in either the notice of suspension or termination, or subsequently. Other Recipient costs incurred during suspension or termination which are necessary and not reasonably avoidable are allowable if:

 

a. The costs result from obligations which were properly incurred by the Recipient before the effective date of the suspension or termination, are not in anticipation of it, and in the case of termination, are non-cancelable; and

 

b. the costs would be allowable if the agreement were not suspended or the award expired normally at the end of the funding period in which the termination takes effect.

 

ARTICLE 8 Administrative Responsibility

 

8.1 The Agreements Office

 

 

 

 

8.2 Agreements Administrator

 

DCMA Southern Virginia

190 Bernard Road

Bldg 117

Fort Monroe, VA 23651

 

8.3 The Recipient Address and Point of Contact

 

Ms. Sharon M. Hannigan

Cree, Inc.

4600 Silicon Drive

Durham, NC 27703

Phone: 919-313-5554

Fax: 919-313-5696

Email Address: Sharon_Hannigan@cree.com

 

8.4 The Payment Office

 

Operating Location - Rock Island

DFAS - Rock Island

Attn: DFAS-BVAJ/RI, Building 68

Rock Island, IL 61299-8000

CODE: S18129

 

8.5 Address of Payee

 

Cree, Inc.

4600 Silicon Drive

Durham, NC 27703

 

ARTICLE 9 Public Release or Dissemination of Information

 

9.1 Open Publication Policy . Notwithstanding the reporting requirements of this Agreement, parties to this Agreement favor an open-publication policy to promote the commercial acceptance of the technology developed under this Agreement, but simultaneously recognize the necessity to protect proprietary information.

 

9.2 Prior Review of Public Releases. The Parties agree to confer and consult with each other prior to publication or other disclosure of the results of work under this Agreement to

ensure that no classified or proprietary information is released. Prior to submitting a manuscript for publication or before any other public disclosure, each Party will offer the other Party ample opportunity (not to exceed 60 days) to review such proposed publication or disclosure, to submit objections, and to file application letters for patents in a timely manner.

 

9.3 Publication Legend. It is herein agreed that except for the disclosure of basic information regarding this Agreement such as membership, purpose and a general description of the technical work, the Recipient will submit all proposed public releases to the ARL Cooperative Agreement Manager for comment prior to release. Public releases include press releases, specific publicity or advertisement, and articles for proposed publication or presentation. In addition, articles for publication or presentation will contain an acknowledgement of support and a disclaimer. Such statement may be placed either at the bottom of the first page or at