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EXHIBIT 10.31
TECHNOLOGY LICENSE AGREEMENT
between
ELECTRIC POWER RESEARCH INSTITUTE, INC.
and
AMERICAN SUPERCONDUCTOR
CORPORATION
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TECHNOLOGY LICENSE AGREEMENT
BETWEEN
ELECTRIC POWER RESEARCH INSTITUTE, INC.
AND
AMERICAN SUPERCONDUCTOR
CORPORATION
THIS AGREEMENT effective on the 1st day of January, 1996 between
ELECTRIC POWER RESEARCH INSTITUTE, INC. (hereinafter called "EPRI"), a
non-profit corporation organized under the laws of the District of Columbia,
having offices at 3412 Hillview Avenue, Palo Alto, California 94304, and
AMERICAN SUPERCONDUCTOR CORPORATION, a corporation of the State of Delaware,
having a principal place of business at Two Technology Drive, Westborough, MA,
01581 (hereinafter referred to as "LICENSEE").
WITNESSETH
WHEREAS, EPRI is engaged in a research and development program with respect to
the area of superconducting technologies described at Subarticle 1.01; and
WHEREAS, LICENSEE is engaged and will continue to be engaged in its own research
and development programs with respect to the Field; and
WHEREAS, EPRI shall own or owns or shall have the right to grant licenses in
Intellectual Property created under EPRI contract(s) in the Field; and
WHEREAS, EPRI and LICENSEE desire to form an alliance in the Field ultimately
leading to production and commercialization by LICENSEE of advanced HTS wire or
other products in the Field; and
WHEREAS, EPRI desires to grant, and agrees to grant, and LICENSEE desires to
obtain an exclusive license under patents (if any when granted to EPRI), patent
applications, confidential data and trade secrets owned by EPRI or which EPRI
otherwise has the right to license pertaining to the Field,
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NOW, THEREFORE, in consideration of the premises, mutual covenants, and
obligations herein contained, it is agreed by and between the parties hereto as
follows:
ARTICLE I - DEFINITIONS
1.01 "Field" shall mean superconducting technologies which result from research
and development in the area of high temperature superconducting biaxially
textured coated conductors as described in greater detail in Attachment A
incorporated herein by this reference.
1.02 "Intellectual Property" shall mean all intellectual property rights vested
in EPRI (i.e., owned by EPRI or which EPRI otherwise has the right to license)
pertaining to the Field. Said Intellectual Property shall include, but is not
limited to, patents (if and when granted), patent applications (if any),
confidential data, proprietary designs and design procedures, computer programs
and databases, test procedures and related trade secrets, developed or owned by
or licensed to EPRI in the Field.
1.03 "Management Agreement" means the agreement of even date between EPRI and
ASC pursuant to which EPRI and ASC have agreed to cooperate with each other
regarding their separate R&D Programs and to fund these research and development
programs in the Field.
1.04 "Program Technology" means all Technology conceived, reduced to practice,
created or otherwise developed under a contract in the Field funded in whole or
in part by EPRI and/or ASC pursuant to the Management Agreement.
1.05 "Warrant Agreement" means the agreement of even date between EPRI and ASC,
a copy of which is attached as Attachment B to this Agreement, providing the
grant to EPRI of warrants for the purchase of 100,000 shares ASC Common Stock.
1.06 "Effective Date" of this Technology License Agreement shall mean January 1,
1996.
ARTICLE II - GRANT
2.01 EPRI hereby grants, and agrees to grant, to LICENSEE an exclusive,
nontransferable, (except as set forth in Subarticles 3.02 and 7.01) worldwide,
royalty-free license to use the Intellectual Property in the further
development, use,
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manufacture, distribution, lease, sale and in other forms of commerce, subject
to the terms and conditions of this Agreement.
2.02 Nothing contained in this Agreement shall be construed as granting to
LICENSEE any other right or license, either express or implied, under any right
of EPRI now or hereafter owned or controlled by EPRI, except the express rights
hereinabove granted.
2.03 The license hereinabove granted neither constitutes nor includes an
agreement by EPRI to provide or to furnish service, support or assistance of any
nature and no service, support or assistance has been, is being or will be
furnished by EPRI hereunder.
2.04 To the extent that EPRI is unable to license any EPRI Intellectual Property
to LICENSEE on an exclusive, worldwide, royalty-free basis, EPRI will grant such
license as it has the right to grant.
ARTICLE III - PROPRIETARY RIGHTS AND CONFIDENTIALITY
3.01 As between the parties, LICENSEE acknowledges that the Intellectual
Property is and shall at all times be and remain the sole and exclusive property
of EPRI, and LICENSEE shall derive no rights, title or interest therein except
as expressly set forth in this Agreement. Further, LICENSEE hereby acknowledges
that a breach of the confidentiality provisions hereunder may cause EPRI
irreparable harm and damage which may not be recoverable at law.
3.02 Subject to the terms and conditions set forth herein, with the consent of
EPRI, which consent shall not unreasonably be withheld, LICENSEE may:
(A) grant sublicenses in the EPRI Intellectual Property or any portion
thereof to others; or
(B) disclose Proprietary Data (including patent applications, confidential
data and trade secrets) associated with or embodied in EPRI
Intellectual Property.
EPRI consents to LICENSEE granting Sublicense(s) to Pirelli (i.e., Pirelli
S.P.A., its subsidiaries and affiliates), and to joint ventures to which
LICENSEE or Pirelli are a party, and to disclosure of Proprietary Data to the
extent that such disclosure is reasonably required and consistent with exercise
of the rights
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licensed hereunder and with the standard of care which LICENSEE uses to protect
its own similar proprietary information. The terms of the Pirelli Sublicense(s)
to EPRI Intellectual Property may be exclusive in the field of Line transmission
and distribution of electrical power and electrical control signals, where
"Line" means cable, wire or like physical link in the form of an elongated
conductor which is used to transport electrons, and non-exclusive in other
fields of use. LICENSEE shall grant no exclusive rights to EPRI Intellectual
Property unless required by Agreements between Pirelli and LICENSEE which
existed prior to the Effective Date of this Agreement. Upon EPRI's written
request and under terms of confidentiality, LICENSEE shall allow EPRI to review
Agreements (past and future) between LICENSEE and Pirelli which pertain to
EPRI's Intellectual Property.
3.03 LICENSEE agrees to protect the confidentiality of the patent applications,
confidential data and trade secrets included in the Intellectual Property with
the same standard of care which it uses to protect its own valuable trade
secrets and proprietary information. LICENSEE shall not be so obligated for such
portions of the Proprietary Information which:
(A) are already or otherwise become publicly known through no act or
failure to act of LICENSEE; or
(B) are received from third parties asserting they are subject to no
restriction of confidentiality; or
(C) were developed by LICENSEE independently of and prior to the
disclosure of EPRI Proprietary Information to LICENSEE.
ARTICLE IV - CONSIDERATION
4.01 In consideration of the rights granted to LICENSEE under Article III
herein, EPRI shall receive an equity position ownership position in LICENSEE
corporation in the form of valuable stock warrants, as provided in the Warrant
Agreement attached to this Agreement and incorporated herein at Attachment B.
4.02 LICENSEE shall show due diligence in its commercialization of the EPRI
Intellectual Property in the Field. The following criteria shall be used to
determine whether the required due diligence has been shown by LICENSEE:
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(A) During the two years following the Effective Date of this
Agreement, LICENSEE shall expend a total of not less than
$5,000,000 in research and development pertaining to high
temperature superconducting ("HTS") biaxially textured coated
conductors and multifilmentary wires produced by metallic precursor
technology, at least $2,000,000 of which shall be expended in each of
such years. For the purposes of this paragraph, the amount expended
by LICENSEE includes, but is not limited to, costs and expenses of
work done by LICENSEE and any amounts paid by LICENSEE to fund work
done by LICENSEE and any amounts paid by LICENSEE to fund work done by
others as provided in the Management Agreement.
(B) Subsequent to the term of the Warrants issued to EPRI pursuant to
Attachment B, if there was no time during the term of the Warrants
that EPRI could have received at least five hundred thousand dollars
($500,000) by exercising the Warrants, then the license hereunder
shall convert to a non-exclusive license; provided however, that ASC
shall have the option to retain the license on an exclusive
royalty-free basis by promptly paying EPRI in cash an amount equal to
the difference between five hundred thousand dollars ($500,000) and
the maximum realizable amount to EPRI if EPRI had exercised at any
time during the term of the Warrants;
(C) LICENSEE shall offer for sale at commercial quantities products based
on EPRI Intellectual Property Rights and/or Program Technology within
ten (10) years after execution of this Technology License Agreement.
This period will be extended for five (5) additional years if LICENSEE
demonstrates to the reasonable satisfaction of EPRI that during such
additional years LICENSEE is diligently engaged in research and
development directed to offering such products for sale at commercial
quantities.
4.03 If LICENSEE fails to meet the criteria of due diligence set forth above,
EPRI shall, in writing, advise LICENSEE of these deficiencies. LICENSEE shall
have sixty (60) days to provide either a justification for the deficiencies or
to propose a plan of corrective action. EPRI shall have (30) days either to
approve the plan (or to accept the justification) or to reject it. If the
parties are either unable to agree upon a plan or corrective
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action or if the agreed-upon plan does not cure the failure of due diligence
within ninety (90) days (or whatever time is provided for in the plan), the
license shall convert without further action by EPRI to a non-exclusive License.
Upon such failure of due diligence, LICENSEE grants to EPRI a non-exclusive
license to LICENSEE's Program Technology; provided however that such license
shall not extend to the field of Line transmission and distribution of
electrical power and electrical control signals, where "Line" means cable, wire
or like physical link in the form of an elongated conductor which is used to
transport electrons. This exclusion is due to the relationship between Pirelli
and LICENSEE in the above field of use.
4.04 A failure of LICENSEE to meet the criteria of due diligence set forth in
Subarticle 4.02 or to cure any such failure pursuant to a plan as provided in
Subarticle 4.03 shall not be deemed a material breach of this Agreement.
4.05 LICENSEE shall maintain accurate and auditable accounting records relating
to its research and development activities in the Field. This includes necessary
records and source documents verifying that the requirement of subarticles 4.01
and 4.02 are being satisfied. Upon the written request of EPRI, said accounting
records shall be subject to audit by EPRI or, at EPRI's option, a public
accounting firm designated by EPRI. It is the intent of the parties that such
audits shall not be performed more frequently than once a year and once upon
expiration or termination of this Agreement.
4.06 During the normal course of EPRI's research Program in the Field, from time
to time, EPRI may seek and obtain patent protection regarding inventions in the
Field. EPRI agrees to inform LICENSEE of all patent disclosures and of EPRI's
intention to file for patent protection prior to the filing of any patent
application; and to provide LICENSEE copies of documents filed in or received
from any patent office in connection with any such application. Within a
reasonable time of not more than thirty (30) days after receiving notice of such
intention or a copy of any document received from a patent office, if LICENSEE
does not object in writing to the filing of such patent protection or to the
continued prosecution or maintenance of such patent application, then LICENSEE
agrees to reimburse EPRI for all reasonable and normal costs and expenses
actually incurred by EPRI regarding such patent filing and application. These
costs and expenses shall not include any of EPRI's internal management or
administrative expenses. If EPRI decides not to seek patent protection with
respect to any invention in the Field, or not to
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maintain any application or patent in the Field, it shall notify LICENSEE and
LICENSEE may seek such patent protection or maintain such application or patent
in EPRI's name but at LICENSEE's sole expense.
ARTICLE V - DURATION AND TERMINATION
5.01 Unless sooner terminated, this License Agreement shall continue for a
period of twenty (20) years from the effective date herein or until the date of
expiration of the last patent to expire, whichever date is later.
5.02 Failure by either party to comply with any of the material obligations and
conditions contained in this Agreement shall constitute a default and shall
entitle the other party to give to the party in default notice requiring the
party in default to cure or to make good such default. If such default is not
cured or made good within sixty (60) days after receipt of such notice, the
other party shall be entitled and empowered to terminate this Agreement by
giving to the party in default notice of termination of this Agreement which
termination shall take effect upon the later of either the date of receipt of
such notice of termination or a later date of termination if specified therein.
5.03 Upon termination of this Agreement by EPRI for material breach by LICENSEE,
the license granted to LICENSEE under the Subarticle 2.01 shall terminate and
LICENSEE shall promptly cease to manufacture, or to have manufactured, HTS wire
or other products which infringe any of the EPRI Intellectual Property.
Termination under this Subarticle shall have no impact on the Warrant Agreement.
5.04 Surviving termination of this Agreement for any reason are:
(A) the provisions of Article III; and
(B) the provisions of Article IV: and
(C) the provisions of subarticle 5.02,5.03 and 5.04; and
(D) the provisions of subarticles 6.01 and 6.04; and
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(E) any cause of action or claim of either party accrued or to accrue
because of any breach or default by the other party including, but not
limited to, injunctive relief and any other relief available whether
in law or in equity.
5.05 In the event of possible receivership or bankruptcy of LICENSEE, LICENSEE
must inform EPRI of its intention to file a voluntary petition in bankruptcy or
of another's intention to file an involuntary petition in bankruptcy, if known
to LICENSEE, to be received, if possible at least thirty (30) days prior to
filing such a petition. LICENSEE's filing without conforming to this requirement
shall be deemed a material, pre-petition incurable breach. In the event LICENSEE
shall make an assignment for the benefit of creditors, or in the event LICENSEE
shall substantially discontinue its business, EPRI may terminate this License
Agreement effective immediately on notice to LICENSEE, but without prejudice to
any rights of EPRI under this Agreement.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
6.01 EPRI represents and warrants that it has the right to grant the license
herein.
6.02 EPRI does not represent or warrant that the use of the Intellectual
Property licensed hereunder will be free of infringement of the right of other
parties.
6.03 NEITHER EPRI, ANY MEMBER OF EPRI, NOR ANY PERSON OR ORGANIZATION ACTING ON
BEHALF OF ANY OF THEM MAKES ANY REPRESENTATION OR WARRANTY EXPRESSED OR IMPLIED
WITH RESPECT TO:
(A) THE ACCURACY, COMPLETENESS OR USEFULNESS OF THE INTELLECTUAL PROPERTY
LICENSED UNDER THIS AGREEMENT, OR
(B) THE MERCHANTABILITY OR THE FITNESS FOR ANY PURPOSE OF THE INTELLECTUAL
PROPERTY LICENSED UNDER THIS AGREEMENT.
6.04 LICENSEE agrees to indemnify EPRI and to hold EPRI harmless against all
loss, cost or damage resulting from judgments arising from claims of third
parties for physical loss or injury, or economic loss, arising from or in
connection with LICENSEE's manufacturing, assembly, use, sale or lease of HTS
wire or other
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Field products incorporating the embodiments of the EPRI Intellectual Property.
ARTICLE VII - MISCELLANEOUS
7.01 This License Agreement may be assigned by either party to a wholly owned
subsidiary, without the prior consent of the other party, provided that:
(A) the other party is advised of the assignment, in writing, at least
thirty (30) days before the effective date of the assignment; and
(B) the subsidiary to whom this Agreement is assigned agrees, in writing
prior to the assignment, to be bound by all the terms and conditions
of this Agreement.
Other than to a wholly-owned subsidiary, this License Agreement may not be
assigned by LICENSEE without the prior, written consent of EPRI and then only to
a party which assumes all the obligations of LICENSEE.
7.02 LICENSEE agrees that any disclosure of technical information under the
terms of this Agreement shall be in compliance with the regulations of any
United States governmental agency exercising jurisdiction with respect to the
transfer of technical data and information outside the United States of America.
7.03 LICENSEE may use the term "EPRI LICENSEE" in connection with any use,
manufacture, distribution, or sale of HTC wire or other Field products. If so
instructed in writing by EPRI, LICENSEE shall cease to use this or similar
language associating EPRI with the HTS wire or other Field products.
7.04 To the extent practical, and unless otherwise instructed, in writing, by
EPRI, LICENSEE agrees to incorporate in its promotional literature suitable
acknowledgment of EPRI participation in co-funding and co-developing LICENSEE
products, and, furthermore, to also acknowledge such participation in
LICENSEE-authored publications in the open scientific and technical literature
in the manner traditional to the professional community.
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7.05 This License Agreement constitutes the entire agreement between the parties
hereto with respect to its subject matter and supersedes all previous agreements
whether written or oral.
7.06 This Agreement may be modified, amended, superseded or terminated, other
than by its terms, only by a writing duly signed by authorized representatives
of both parties. This Agreement, which includes the Warrant Agreement at
Attachment B, is the controlling document with regards to the rights and
obligations each party has to the other in the rights of the Program Technology
and any ambiguity, uncertainty or conflict which arises between prior or
concurrent documents and this Agreement shall be resolved in favor of this
Agreement.
7.07 If any term or provision of this Agreement shall be determined by a court
of competent jurisdiction to be invalid, the remaining terms and provisions
shall remain in effect.
7.08 Any notice, report, or statement required to be given or made hereunder
shall be considered properly given when mailed by registered or certified mail,
return receipt requested, postage prepaid to the respective address of each
party as follows:
EPRI: LICENSEE:
Manager, Intellectual Property Ramesh Ratan
Electric Power Research American Superconductor
Institute Corporation
P.O. Box 10412 Two Technology Drive
Palo Alto, CA 94303 Westborough, Massachusetts 01581
or to such other address as the addressee shall have last furnished in writing
to the addressor.
7.09 This License Agreement shall be construed in accordance with the laws of
the State of California.
7.10 Except for injunctive relief relating to breaches of the confidentiality
provisions of this License Agreement, any dispute or controversy arising out of
or relating to this License Agreement, or any modification or extension thereof,
shall be settled by arbitration conducted in the City of San Francisco,
California, in accordance with the rules of the American Arbitration Association
and judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. The parties consent to the jurisdiction of
the Supreme
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Court of the State of California, and of the United States District Court for
the Northern District of California, for all purposes in connection with
arbitration.
IN WITNESS WHEREOF, the parties have respectively caused this instrument to be
executed by duly authorized officers of each of the dates indicated.
AMERICAN SUPERCONDUCTOR ELECTRIC POWER RESEARCH
CORPORATION INSTITUTE, INC.
By: /s/ Ramesh Ratan By: /s/ Arthur Kenny
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Name: Ramesh Ratan Name: Arthur Kenny
Title: Executive Vice President Title: Intellectual Property
Date: 3/26/96 Attorney
Intellectual Property
Department
Date: 3/25/96
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
ATTACHMENT A
The Field specifically includes the following research and development between
EPRI and third parties listed below in Table A:
TABLE A
Period of
Contractor Contract Number Performance
******** ********** Start ********
End ********
************ ********** Start ********
End ********
************* ********** Start ********
End ********
******************** ********** Start ********
End ********
The Field shall further consist of research and development activities
performed by ASC to the extent financially supported by EPRI or performed
pursuant to contracts with EPRI or ASC to the extent financially supported by
EPRI and/or ASC, with the goal of *********************************************
*****, all as provided below in Table B representing the anticipated annual
funding for *******:
TABLE B
Contractor EPRI ASC Total
**** **** **** ****
**** *** ***
*********** *** ** ***
**** ** **
******** *** ***
********* *** ***
*** *** ***
Total* $1,000 $500 $1,500
*Amounts above in K$.
**The anticipated annual funding for ASC's ****************************
program is $2,000 K$ per year, bringing the ASC total to $5,000 K$
over two years, with at least $2,000 K$ to be expended in each of
such years.
A-1
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
NOTES:
1) EPRI/ASC Program Funding at a total of $7M over two years and $5M over two
years for ASC, with at least $2M to be expended by ASC in each of such years.
2) ********** funding includes ****** to ****************, remaining funding
via **********.
3) EPRI contracts to fund *************************************************
program.
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