<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number 0-21464
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 13-3268435
- --------------------------------------------------------------------------------
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
One Seaport Plaza, 28th Floor, New York, NY 10292
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-3500
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes CK No _
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II
(a limited partnership)
STATEMENTS OF NET ASSETS
(in process of liquidation)
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 3,348,629 $ 3,452,809
Royalties receivable 144,088 --
------------- -------------
Total assets 3,492,717 3,452,809
------------- -------------
Liabilities
Estimated liquidation costs 748,057 873,549
------------- -------------
Contingencies
Net assets in liquidation $ 2,744,660 $ 2,579,260
------------- -------------
------------- -------------
Net assets in liquidation
Limited partners (100,000 units issued and outstanding) $ 2,401,694 $ 2,252,834
General partner 342,966 326,426
------------- -------------
Total net assets in liquidation $ 2,744,660 $ 2,579,260
------------- -------------
------------- -------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in process of liquidation)
(unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
PARTNERS PARTNER TOTAL
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net assets in liquidation--December 31, 1997 $2,252,834 $326,426 $2,579,260
Changes in estimated liquidation values of assets and
liabilities 148,860 16,540 165,400
---------- -------- ----------
Net assets in liquidation--March 31, 1998 $2,401,694 $342,966 $2,744,660
---------- -------- ----------
---------- -------- ----------
</TABLE>
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
2
<PAGE>
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to fairly present the financial
statements of PruTech Research and Development Partnership II (the
'Partnership') as of March 31, 1998, subject to the effects of any further
liquidation accounting adjustments that would have been required had the
realizable values of certain assets and the settlement amounts of certain
liabilities been known when the Partnership first adopted the liquidation basis
of accounting. (See discussion below.)
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1997.
In accordance with the terms of the plan of dissolution and liquidation of
the Partnership (the 'Plan'), R&D Funding Corp (the 'General Partner') has sold
or otherwise disposed of substantially all of the Partnership's remaining
investments of value. The Partnership has a few remaining assets (which are
estimated to have little or no value), and outstanding and potential liabilities
and contingencies which must be resolved before the final liquidation of the
Partnership. The General Partner anticipates that the final liquidation of the
Partnership will occur by December 31, 1998 subject to the resolution of the
Partnership's remaining liabilities and contingencies, certain of which are
involved in ongoing discussions; however, due to the nature of the remaining
contingencies to be resolved, liquidation may take longer.
Upon liquidation, the General Partner intends to distribute the assets of the
Partnership (reduced by a reserve to satisfy any liabilities or contingencies of
the Partnership) to the partners by making a single, final distribution in
accordance with the terms of the Agreement of Limited Partnership, as amended.
It is expected that the Partnership's eventual total distributions will not
equal the partners' initial investment.
As a result of the adoption of the Plan, the Partnership adopted the
liquidation basis of accounting effective December 31, 1996, whereby assets are
valued at their estimated net realizable values and liabilities stated at their
estimated settlement amounts. As of March 31, 1998, the Partnership's estimated
liquidation costs were $748,000. These costs include, but are not limited to,
costs of selling or otherwise disposing of the Partnership's remaining
investments and general and administrative costs through the estimated
conclusion of liquidation. During the three months ended March 31, 1998, the
Partnership reflected an increase of $165,000 in the estimated net liquidation
value of its assets and liabilities due to the sale of certain royalty rights
with Optical Specialties, Inc. (see Note B) and to interest earned on the
Partnership's cash and cash equivalents.
B. Royalties
In March 1998, the Partnership reached an agreement to sell to Nanometrics
Incorporated ('Nanometrics') its right, title and interest in and to certain
technologies which had been licensed to Optical Specialties, Inc. (hereinafter
referred to as the 'Metra Technologies') in exchange for approximately $144,000
which was received in April 1998. Prior to this agreement, the Metra
Technologies had a carrying value of zero on the Partnership's financial
statements. No further royalty payments will be received by the Partnership for
Metra Technologies as a result of this agreement. At March 31, 1998, the
Partnership continues to retain certain royalty rights for other technologies
licensed to Optical Specialties, Inc., which have a carrying value of zero.
C. Investments in Equity Securities
At March 31, 1998 and December 31, 1997, the Partnership's remaining
investments in equity securities consist of 274,628 shares of Optical
Specialties, Inc. common stock and 144,666 shares of its preferred stock. The
carrying value of these remaining positions as of March 31, 1998 and December
31, 1997 is zero.
3
<PAGE>
D. Related Parties
The General Partner and its affiliates perform certain services for the
Partnership (for which they are reimbursed through the management fee) which
include but are not limited to: accounting and financial management; registrar,
transfer and assignment functions; asset management; investor communications and
other administrative services. The Partnership also reimburses an affiliate of
the General Partner for printing services.
In conjunction with the adoption of the liquidation basis of accounting (see
Note A), the estimated costs expected to be incurred through the complete
liquidation of the Partnership are reflected in the Statements of Net Assets.
Included within these estimated liquidation costs as of March 31, 1998 and
December 31, 1997 are approximately $516,000 and $644,000 expected to be charged
by the General Partner and its affiliates during the remaining anticipated
liquidation period. The actual charges will depend primarily upon the length of
the time required to liquidate the Partnership and may differ from the amount
accrued. During the three months ended March 31, 1998, the Partnership paid
management fees of $125,000.
Prudential Securities Incorporated ('PSI'), an affiliate of the General
Partner, owned 340 limited partnership units at March 31, 1998.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of the General Partner, for investment of
its available cash in short-term instruments pursuant to the guidelines
established by the Partnership Agreement.
The Partnership engaged in research and development co-investment projects
with PruTech Research and Development Partnership which was dissolved and
liquidated in December 1996, PruTech Research and Development Partnership III,
and PruTech Project Development Partnership (collectively, the 'PruTech R&D
Partnerships'), for which R&D Funding Corp serves as the general partner. The
allocation of the co-investment projects' profits or losses among the PruTech
R&D Partnerships is consistent with the costs incurred to fund the research and
development projects.
E. Contingencies
On April 15, 1994 a multiparty petition captioned Mack et al. v. Prudential
Securities Incorporated et al. (Cause No. 94-17695) was filed in the 80th
Judicial District Court of Harris County, Texas, purportedly on behalf of
investors in the Partnership against the Partnership, the General Partner, PSI,
The Prudential Insurance Company of America and a number of other defendants.
The petition alleges common law fraud, fraud in the inducement and negligent
misrepresentation in connection with the offering of the Partnership; negligence
and breach of fiduciary duty in connection with the operation of the
Partnership; civil conspiracy; and violations of the federal Securities Act of
1933 (sections 11 and 12), as amended, and of the Texas Securities and Deceptive
Trade Practices statutes. The suit seeks, among other things, compensatory and
punitive damages, costs and attorneys' fees.
The General Partner, PSI and the Partnership believe they have meritorious
defenses to the complaint and are vigorously defending themselves against this
action. The claims of most plaintiffs have been settled or dismissed. It is
currently expected that the remaining claims will be resolved shortly. The
Partnership has not contributed to any settlement or paid any costs of the
litigation, nor is it anticipated that it will. Additionally, the General
Partner believes that the litigation discussed above will not have an adverse
impact on its ability to liquidate the Partnership in accordance with the Plan
and in the time frame currently contemplated by the General Partner.
4
<PAGE>
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At March 31, 1998, the Partnership had cash and cash equivalents of
approximately $3,349,000 which is approximately $104,000 less than the
Partnership's cash balance at December 31, 1997. This decrease in cash was
primarily due to the payment of the fourth quarter 1997 management fee which was
offset, in part, by interest received on the Partnership's cash and cash
equivalents.
In September 1996, R&D Funding Corp (the 'General Partner') mailed to all
limited partners a Consent Solicitation Statement (the 'Statement') asking for
their written consent to approve a plan of dissolution and liquidation of the
Partnership (the 'Plan'), as more fully described in the Statement. Holders of
68.4% of the limited partnership units approved the Plan on October 30, 1996 and
accordingly, the Plan was adopted.
In accordance with the terms of the Plan, the General Partner has sold or
otherwise disposed of substantially all of the Partnership's remaining
investments of value (including the sale of certain royalty rights which had
been licensed to Optical Specialties, Inc. discussed below). The Partnership has
a few remaining assets (which are estimated to have little or no value), and
outstanding and potential liabilities and contingencies which must be resolved
before the final liquidation of the Partnership. The General Partner anticipates
that the final liquidation of the Partnership will occur by December 31, 1998
subject to the resolution of the Partnership's remaining liabilities and
contingencies, certain of which are involved in ongoing discussions; however,
due to the nature of the remaining contingencies to be resolved, liquidation may
take longer.
Upon liquidation, the General Partner intends to distribute the assets of the
Partnership (reduced by a reserve to satisfy any liabilities or contingencies of
the Partnership) to the partners by making a single, final distribution in
accordance with the terms of the Agreement of Limited Partnership, as amended.
It is expected that the Partnership's eventual total distributions will not
equal the partners' initial investment.
During the three months ended March 31, 1998, the Partnership reflected an
increase of $165,000 in the estimated net liquidation value of its assets and
liabilities due to the sale of certain royalty rights with Optical Specialties,
Inc. (discussed below) and to interest earned on the Partnership's cash and cash
equivalents.
In March 1998, the Partnership reached an agreement to sell to Nanometrics
its right, title and interest in and to Metra Technologies which had been
licensed to Optical Specialties, Inc. in exchange for approximately $144,000
which was received in April 1998. Prior to this agreement, the Metra
Technologies had a carrying value of zero on the Partnership's financial
statements. No further royalty payments will be received by the Partnership for
Metra Technologies as a result of this agreement.
Results of Operations
The Partnership adopted the liquidation basis of accounting as of December
31, 1996 in accordance with generally accepted accounting principles and no
longer reports results of operations. As such, there is no management's
discussion regarding the results of operations.
5
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--This information is incorporated by reference to Note
E to the financial statements filed herewith in Item 1 of Part I of the
Registrant's Quarterly Report.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits--
PruTech Research and Development Partnership II Agreement of Limited
Partnership (incorporated by reference to Exhibit 3.1 included with
Registrant's Form S-1 Registration Statement, File No. 2-94273, dated
November 9, 1984)
First Amendment to the Agreement of Limited Partnership of PruTech
Research and Development Partnership II (incorporated by reference to
Exhibit 3 included with Registrant's Annual Report on Form 10-K for
the year ended December 31, 1991)
Purchase Agreement, dated March 1998, among the Registrant, PruTech
Project Development Partnership and Nanometrics Incorporated (filed
herewith)
Financial Data Schedule (filed herewith)
b. Reports on Form 8-K--
No reports on Form 8-K were filed during the quarter.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PruTech Research and Development Partnership II
By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Brian J. Martin Date: May 15, 1998
----------------------------------------
Brian J. Martin
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director for the Registrant
By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: May 15, 1998
----------------------------------------
Steven Carlino
Vice President
Chief Accounting Officer for the
Registrant
7
<PAGE>
PURCHASE AGREEMENT
Purchase Agreement entered into as of March 30, 1998, by and among PruTech
Research and Development Partnership II, a California limited partnership
("PruTech II"), PruTech Project Development Partnership, a California limited
partnership ("PPDP;" PPDP and PruTech II being collectively referred to herein
as "PruTech"), and Nanometrics Incorporated ("Nanometrics"). PruTech and
Nanometrics are referred to collectively herein as the "Parties."
R E C I T A L S:
WHEREAS, Nanometrics is in the business of manufacturing and selling capital
equipment to the semi-conductor industry and to certain other customers;
WHEREAS, PruTech has licensed certain technology to Optical Specialties, Inc., a
California corporation ("OSI"), which is used in the development of the Metra
line of automatic critical dimension and overlay registration semiconductor
wafer measurement systems ("Metra");
WHEREAS, PruTech desires to sell to Nanometrics, and Nanometrics desires to
purchase from PruTech, all of PruTech's right, title and interest in and to
certain technology and rights related to Metra, upon the terms and subject to
the conditions set forth herein; and
WHEREAS, Nanometrics agrees to assume and become responsible for, and indemnify
PruTech and its affiliates from and against, all liabilities of PruTech relating
to such technology, upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties and covenants
herein contained, the Parties agree as follows.
1. Basic Transaction.
(a) Purchase and Sale of Assets. Upon the terms and subject to the conditions of
this Agreement, at the Closing, Nanometrics agrees to purchase and acquire from
PruTech, and PruTech agrees to sell, assign, transfer, convey and deliver to
Nanometrics:
(i) all of PruTech's right, title and interest in and to, if and to the extent
of any interest of PruTech in, all patents and patent rights owned or licensed
by PruTech relating to Metra, including the following patents (the "Patents"):
U.S. Patent No. 5,214,492 "Apparatus for Producing an Accurately Aligned
Aperture of Selectable Diameter," Issued May 25, 1993 and U.S. Patent 5,308,036
"Kinematics Isolation Stand Connector," Issued May 3, 1994. The term "patents"
includes, if and to the extent of any interest of PruTech in, U.S. and foreign
patents, patent applications, disclosures and inventions of PruTech
<PAGE>
relating to Metra, if any, and includes, if and to the extent of any interest
of PruTech in, improvements, continuations, continuations-in-part, divisions
and reissues thereof;
(ii) all of PruTech's right, title and interest in and to, if and to the extent
of any interest of PruTech in, any trademarks and service marks relating to
Metra, including the following trademarks (the "Trademarks"): "METRA," Federal
Registration No. 1,678,055, registered March 3, 1992;
(iii) if and to the extent of any interest of PruTech in, any copyrights, mask
work rights, trade secrets or other intellectual property rights in or related
to Metra and related software/firmware, and all improvements thereof, including
U.S. Copyright Registration 3,066,650 (the "Copyrights");
<PAGE>
(iii) if and to the extent of any interest of PruTech in, all confidential or
proprietary ideas, concepts, methods, systems, procedures, inventions, software
and other proprietary rights owned by PruTech which relate to Metra as more
fully described on Schedule I hereto (the "Technology"),
(iv) PruTech's rights under the Amended and Restated Base Technology License
Agreement dated April 11, 1989 between PruTech and OSI (the "Base Technology
Agreement") and
(v) PruTech's rights under the License Agreement, dated as of April 26, 1993
among PruTech, LAM Research Corporation and OSI (the "LAM Agreement") (the
Patents, the Trademarks, the Copyrights, the Technology, the Base Technology
Agreement and the LAM Agreement being collectively referred to herein as the
"Acquired Assets").
THE ACQUIRED ASSETS ARE BEING SOLD ON AN "AS-IS, WHERE-IS" BASIS, AND PRUTECH
MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN
RESPECT OF THE ACQUIRED ASSETS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
TITLE, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND ANY SUCH
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
Nanometrics acknowledges that the Patents, Trademarks and Copyrights have lapsed
due to the failure to pay maintenance fees. Nanometrics agrees to assume
responsibility for payment of such maintenance fees and curing such lapse. In
the event payment of such fees does not cure the lapse of any of the Patents,
Trademarks or Copyrights, Nanometrics agrees that PruTech shall have no
liability to Nanometrics whatsoever. In addition, Nanometrics acknowledges that
as of the date hereof PruTech does not have rights to patents, other than the
Patents listed on Schedule I, any Trademarks relating to Metra or Copyrights
relating to the Metra. If and when OSI assigns any of its rights to Metra
related Patents, Trademarks or Copyrights to PruTech, PruTech agrees
2
<PAGE>
to promptly assign the same to Nanometrics. However, PruTech shall have no
liability to Nanometrics whatsoever for the failure of OSI to assign any such
rights to PruTech.
(b) Assumption of Liabilities. Upon the terms and subject to the conditions of
this Agreement, at the Closing, Nanometrics agrees to assume and become
responsible for all liabilities arising from and after the Closing Date (a) with
respect to the Patents, the Trademarks and the Copyrights, (b) relating to the
Technology, (c) relating to the Base Technology Agreement, (d) relating to the
LAM Agreement and (e) for transfer, sales, use and other similar taxes arising
in connection with the consummation of the transactions in connection therewith;
provided, however, Nanometrics shall not be liable for any taxes based on
PruTech's net income or gain related to this transaction (all being hereinafter
referred to as the "Assumed Liabilities"). Other than as expressly set forth
above in this Section 1(b) and in Section 2, Nanometrics shall have no liability
to PruTech whatsoever.
(c) The Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Ungaretti & Harris commencing
at 9:00 a.m. local time on March 30, 1998, or such other date or place as the
Parties may mutually determine (the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) PruTech will execute,
acknowledge (if appropriate) and deliver to Nanometrics (A) an instrument of
assignment, assumption and amendment to the Agreement for License or Sale of
Technology dated December 31, 1985 as amended, (B) assignments of PruTech's
right, title and interest in and to the Patents, the Trademarks and the
Copyrights, if any, and (C) a Bill of Sale for the Technology; and (ii)
Nanometrics will execute and deliver to PruTech and OSI (A) the Assignment and
Assumption Agreement and (B) the written consent of LAM Research Corporation
to the transactions contemplated herein. Nanometrics will deliver or cause to
be delivered to PruTech the consideration specified in Section 2 below. The
expenses for all filings by Nanometrics with the U.S. Patent and Trademark
Office shall be borne by Nanometrics.
2. Purchase Price. On the Closing Date, Nanometrics shall pay PruTech $166,000
payable by wire transfer or certified check.
3. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) Notices and Consents. PruTech will give any notices to third parties, and
PruTech will use commercially reasonable efforts to obtain the third party
consents described in Schedule 2 hereof.
3
<PAGE>
4. Miscellaneous.
(a) Further Assurances. After the Closing, each of the Parties shall from time
to time, at the request of the other Party and at the sole cost and expense of
the requesting Party, execute and deliver such other instruments of conveyance
and transfer and take such other actions as the requesting Party may reasonably
request in order to more effectively consummate the transactions contemplated
hereby.
(b) Entire Agreement. This Agreement constitutes the entire agreement between
the Parties and supersedes any prior understandings, agreements or
representations by or between the Parties, written or oral, to the extent they
relate in any way to the subject matter hereof.
(c) Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns.
(d) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which together will constitute one and
the same instrument.
(e) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
(f) Notices. Any notice provided for in this Agreement must be in writing and
must be either (a) personally delivered, (b) mailed by registered or certified
first class mail, prepaid with return receipt requested, or (c) sent by a
recognized overnight courier service, to the recipient at the address below
indicated or (d) by facsimile which is confirmed in writing by sending a copy of
such facsimile to the recipient thereof pursuant to clause (a) or (c) above:
If to PruTech:
PruTech Research and Development Partnership II
c/o Specialty Finance
One Seaport Plaza, 28th Floor
New York, New York 10292-0128
(212) 214-1467 (telecopier)
Attention: Brian Martin
4
<PAGE>
If to Nanometrics:
Nanometrics Incorporated
310 De Guigne Drive
Sunnyvale, California 94086
(408) 720-0196 (telecopier)
Attention: President
or such other address or to the attention of such other person as the
recipient Party shall have specified by prior written notice to
the sending Party. Any notice under this Agreement will be deemed to have been
given (w) on the date such notice is personally delivered, (x) four (4) days
after the date of mailing if sent by certified or registered mail, (y) one (1)
day after the date such notice is delivered to the overnight courier service if
sent by overnight courier or (z) with respect to facsimiles, on the earlier of
one (1) day after the date such facsimile is delivered to the overnight courier
for confirmation or confirmation by telephone to the number designated herein;
provided that in each case notices received after 4:00 p.m. (local time of the
recipient) shall be deemed to have been duly given on the next business day.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without giving effect to any
choice or conflict of law provision or rule (whether of the State of California
or any other jurisdiction).
(h) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by Nanometrics and
PruTech.
(i) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
(j) Expenses. Each of Nanometrics and PruTech will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
5
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by an officer thereunto duly authorized as of the date first above written.
PRUTECH RESEARCH AND DEVELOPMENT
PARTNERSHIP II
By: R & D FUNDING CORP,
its General Partner
By: /s/ Brian J. Martin
---------------------
Name: Brian J. Martin
Title: President, Chief Executive Officer and
Chairman of the Board of Directors
PRUTECH PROJECT DEVELOPMENT
PARTNERSHIP
By: R & D FUNDING CORP,
its General Partner
By: /s/ Brian J. Martin
---------------------
Name: Brian J. Martin
Title: President, Chief Executive Officer and
Chairman of the Board of Directors
NANOMETRICS INCORPORATED
By: /s/ Vincent J. Coates
---------------------
Name: Vincent J. Coates
Title: Chief Executive Officer
6
<PAGE>
SCHEDULE 1
Metra Technology
The Metra product line of automatic critical dimension and overlay registration
measurement systems, as generally described in OSI's Brochure No. 5K 12/96,
including, but not limited to, the following technology:
1. Video Measurement System including:
Digital CCD camera, full frame 8-bit digitizer, video processing for automatic
focus, computer controlled illumination, software including: measurement, focus,
and illumination control windows, overlay measurement using Revision II of OSI's
Digital Image Folding technology, dual axis measurements without image rotation,
statistics, program creation and editing, macro metrology algorithms,
programmable I/O control functions, diagnostics.
2. Automatic Pattern Recognition System including:
Dedicated digitizer for X, Y and theta alignment, user-definable global and site
alignment targets.
3. Optical System including:
Reichert Polylite optical head, 150 watt xcnon illumination system, automated
two-place-fixed-position objective mount with 2.5X and 50X objectives, automated
two-position aperture mount, automated two-position intermediate magnification
changer with 2X and 4X lenses, active air vibration isolation.
4. LaserLine Autofocus including:
Solid state laser diode, LaserLine imaging system, Z-axis drive mechanism, focus
offset capability, Z-graph software.
5. Robotic Wafer Handling including:
Pick-and-place robot, dual end-effector, non-contact pre-aligner, 4" through 8"
wafer capability, two cassette positions, notch, major/minor flat capability.
6. Motorized Programmable X, Y Precision Stage including:
8" x 8" travel, crossed roller bearings, closed-loop Heidenhain linear scales
and encoders, 0.25 micron resolution.
7
<PAGE>
7. Micropositioning Z Stage including:
Pneumatically controlled air flexure chuck.
8. Operator Interface including:
14" B/W video image display, 14" color text display, full ASCII keyboard for
system setup and programming, joystick stage control.
9. System Electronics including:
90 Mhz Pentium computer, 8Mbyte RAM, 540Mbyte hard disk drive, 3-1/2" floppy
disk drive, 250mb tape back-up, 2 RS-232C serial interface ports, 2 parallel
ports, STD bus computer with 8088 processor.
10. Metra System Analysis Software.
11. Clean Environment:
Equipped with a fully contained Class I Laminar Flow System. This provides a
clean environment that is undisturbed by personnel and provides a basis for SMIF
interfacing and bulkhead (through the wall) mounting; and including any addition
product enhancements developed as a part of the Metra product line, including
but not limited to, overlay analysis, operating system and image processing
software as well as electrical mechanical and optical hardware enhancements.
The following two patents are part of the Metra Technology:
U.S. Patent 5,308,036 Kinematic Isolated Stand Connector
U.S. Patent 5,214,492 Apparatus for Producing an Accurately Aligned
Aperture of Selectable Diameter
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for PruTech Research and
Development Partnership II and is qualified in its
entirety by reference to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000774560
<NAME> PruTech Research and Development Partnership II
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Mar-31-1998
<PERIOD-TYPE> 3-Mos
<CASH> 3,348,629
<SECURITIES> 0
<RECEIVABLES> 144,088
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,492,717
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,492,717
<CURRENT-LIABILITIES> 748,057
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,744,660
<TOTAL-LIABILITY-AND-EQUITY> 3,492,717
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>
Registrant adopted the liquidation basis of accounting
on December 31, 1996, and, accordingly, has not
reflected operations subsequent to 1996. See Note A to
the financial statements for further details.
</FN>
</TABLE>
