1
EXHIBIT 10.29
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
AGREEMENT
BETWEEN
AMERICAN SUPERCONDUCTOR CORPORATION
AND
ABB TRANSMISSION & DISTRIBUTION TECHNOLOGY LTD.
2
AGREEMENT
This Agreement is entered into and shall be effective as of April 1, 1997
("Effective Date") by and between ABB Transmission & Distribution Technology
Ltd., a corporation of Switzerland, with its principal office at
Affolternstrasse 52, CH-8050 Zurich, Switzerland (hereinafter referred to as
"ABB") and represented in the U.S.A. by ABB Power T&D Company Inc., its agent
and American Superconductor Corporation, a Delaware Corporation with offices at
Two Technology Drive, Westborough, MA 01581, (hereinafter, together with its
Affiliates, "ASC").
DEFINITIONS
In this Agreement the terms listed below have the following meanings:
D.1 ASC BACKGROUND TECHNOLOGY. All AC and HRS HTS wire discoveries,
inventions, data, computer programs and documentation conceived or first reduced
to practice by ASC prior to the effective date of this Agreement or outside the
course of the Work and incorporated into the Deliverables or AC and HRS HTS
wire.
D.2 ASC INTELLECTUAL PROPERTY RIGHTS. All intellectual property rights in
the Technology, including without limitation all current and future worldwide
patents and other patent rights, utility models, copyrights, mask work rights,
trade secrets, and all applications and registrations with respect thereto.
D.3 ASC BACKGROUND INTELLECTUAL PROPERTY RIGHTS. All intellectual property
rights in ASC Background Technology, including with out limitation all current
and future worldwide patents and other patent rights, utility models,
copyrights, mask work rights, trade secrets and all applications and
registrations with respect thereto.
D.4 DATA. Books, records, reports, articles, research notes, charts,
graphs, comments, computations, analyses, blueprints, specifications, drawings,
recordings, photographs, samples of materials, and other graphic or written data
generated in connection with the Work.
D.5 THIRD PARTY INFORMATION. Copyrighted works or proprietary or
confidential information of a third party.
D.6 ASC PRIOR INVENTION. Any invention or know-how made or developed by ASC
and/or licensed to ASC prior to the date of this Agreement or outside the course
of the Work.
D.7 ASC CONFIDENTIAL INFORMATION. Information concerning ASC business and
technology and related information which is confidential or proprietary to ASC.
3
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
D.8 ABB CONFIDENTIAL INFORMATION. Information concerning ABB's or ABB
Affiliates' business and technology and related information which is
confidential or proprietary to ABB or ABB Affiliates.
D.9 i) ABB PATENTS. ABB's patents, and the associated knowledge necessary
to apply the patents, developed prior to and during the course of the Work,
relating to the design and manufacture of AC and HRS HTS wires for application
in Transformers.
ii) ABB AFFILIATES' PATENTS. ABB Affiliates' patents, and the
associated knowledge necessary to apply the patents, developed prior to and
during the course of the Work, relating to the design and manufacture of AC and
HRS HTS wires for application in Transformers.
D.10 TRANSFORMER. An electromagnetic device comprising a magnetic circuit
and both input and output windings and with primary winding voltages of [**]
class or greater, a [**] and power ratings of [**] and both with and without a
[**] included in the [**]. This shall include alternating current ("AC") [**]
for [**] and [**] system transformers and [**] with primary voltages of [**] and
above and power ratings of [**] and above and all for transmission and
distribution of electric power. This shall not include other power devices such
as [**].
D.11 AFFILIATES. With respect to either ABB or ASC shall mean any entity in
which ABB or ASC or their parent company(ies) (one or more parent companies in
an upward series) shall at the time in question directly or indirectly own fifty
percent (50%) or more of the shares or other interest carrying fifty percent
(50%) or more of the voting power to elect directors or other managers of the
said entity.
D.12 AC WIRE. HTS Wire which can maintain low alternating current ("AC")
losses in a [**].
D.13 HRS WIRE. HTS Wire with high longitudinal resistivity sheathing in the
[**].
D.14 WORK. The technical work done under this Agreement and as further set
forth in Article 1, Subarticle 1.1.
D.15 TECHNOLOGY. All discoveries, inventions, data, computer programs and
documentation conceived or first reduced to practice by ASC in the course of the
Work.
-2-
4
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
D.16 CURRENT LIMITER. A stand-alone device or component for limiting fault
currents in electric power transmission and distribution systems using high
temperature superconductor wires. This can be[**] but is not part of the
transformer winding. Transmission Current Limiters are designed for preventing
fault overload in power transmission systems operating at voltages [**], and
distribution Current Limiters are designed for preventing fault overload in
systems which operate at voltages [**].
D.17 HTS. High temperature superconductors for use at [**].
D.18 ASC FISCAL YEAR. The ASC Fiscal year goes from April 1 of the previous
year to March 31 of the following year. E.g. April 1, 1997-March 31, 1998 is the
1998 Fiscal year.
D.19 LINE TRANSMISSION AND DISTRIBUTION FIELD. The field of line
transmission and distribution of (i) electrical power from at least one point to
another and (ii) electrical control signals, where "Line Transmission and
Distribution" means transmission and distribution by cable, wire or the like
physical link in the form of an elongated conductor which is used to transport
electrons, provided however that this field does not include [**] when used for
the generation of magnetic fields. Certain cables for the transmission of [**]
are included in the Line Transmission and Distribution Field.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties intending to be
legally bound, agree as follows:
BACKGROUND
B.1 ABB is organized to manufacture, sell and conduct and, as it deems
appropriate to engage others to conduct research and development with respect to
the transmission, distribution, and utilization of electric energy.
B.2 ASC has in the past and is presently equipped and qualified to perform
research, manufacturing and development in the area of high temperature
superconductors ("HTS"). ASC also has expertise in HTS wire current leads, coil
design, coil manufacturing and cryointegration and can be a potential supplier
of these technologies and products. ASC also desires to be in the business of
development, manufacturing and the offering for sale of Current Limiters.
-3-
5
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
B.3 ABB and ASC, from time-to-time have been working together since April
1, 1996, and it is understood by both parties that the cost for HTS wire
development will be more than [**], and that there are significant technical and
business risks related to this development. Therefore, to offset some of ASC's
development cost for AC and HRS wire, ABB desires to contribute to the cost of
additional research and development by ASC as described herein, and to have the
results thereof made available to ABB under this agreement.
B.4 ABB's primary purpose in entering into this Agreement is for ASC to
develop and make available to ABB certain information and deliverables, and to
establish various pricing discount rights with respect thereto, for the benefit
of ABB.
B.5 Outside of this Agreement, ABB will be responsible for design,
development, manufacturing and marketing of Transformers and any other devices
(except for [**]) in which ABB may wish to develop using the AC and HRS HTS wire
developed under this Agreement, including the necessary research and development
of the [**] as appropriate.
B.6 Under this Agreement ASC will be responsible for the development,
manufacturing and delivery to ABB of the AC and HRS HTS wire that will meet
certain performance targets as provided for under the Schedule to this
Agreement. ASC will also collaborate closely with ABB in the test of wire and
subset model coils and other relevant physical measurements to ensure that the
wire meet ABB specifications.
B.7 ASC and Electricite de France ("EDF") are establishing a separate
agreement ("ASC/EDF Separate Agreement") whereby EDF will provide certain
development funding directly to ASC for the development of the AC and HRS HTS
wires. Under the ASC/EDF Separate Agreement ASC may share certain information
with EDF resulting from the Work undertaken as a part of this Agreement. All
such shared information will be governed by the provisions of Article 9,
Subarticle 9.2.
B.8 It is understood that ASC has the right to sell AC and HRS HTS wires
developed under this Agreement to third parties, and ABB has the right to
purchase any HTS wires from third parties.
B.9 ASC and Pirelli Cavi S.p.A. ("Pirelli") entered into a separate
agreement dated October 1, 1995 granting Pirelli: certain exclusive licenses in
the Line Transmission and Distribution Field; a right of first negotiation
concerning research directed to the development, manufacture, installation or
operation of products which are designed to
-4-
6
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
be used for transmission of voice, data, or video signals; a one-time only right
to enter into an agreement based on an ASC proposal for research and development
and commercial exploitation of Transmission Current Limiters; and a right of
first refusal for any third party agreement for the research and development and
commercial exploitation of Transmission Current Limiters.
OBJECTS OF AGREEMENT
O.1 The overall objective of this Agreement is to develop AC and HRS HTS
wires for application in Transformers at [**]. ABB anticipates that the
development of these wires in the timeframe defined in this Agreement and with
the performance characteristics indicated herein, will permit prototype
Transformers in the range of [**] to be available for field installation and
evaluation in the years [**] with Transformers in the range of [**] available
commercially in the [**] timeframe.
O.2 The parties recognize their mutual interdependence under this
Agreement, and that it is in the best interest of both Parties to work together
to achieve its overall objective. It is expected that the successful completion
of this Agreement will result in further joint efforts to enhance and extend the
technology developed under this Agreement. ASC and ABB acknowledge that they are
independent parties and that no partnership, joint venture or other joint
arrangement has been expressly or impliedly agreed to under this agreement and
that nothing in this agreement shall make either party the agent or legal
representative of the other for any purpose whatsoever, nor does it grant either
party any authority to assume or to create any obligations on behalf of or in
the name of the other, except as expressly set forth herein.
ARTICLE 1
PERFORMANCE OF THE WORK
1.1 WORK. ASC shall use its best efforts, within commercially reasonable
limits, to perform the work (the "Work") and deliver the deliverables (the
"Deliverables") set forth in the Statement of Work in the schedule attached
hereto and made a part hereof (the "Schedule") within the "Budget" as defined in
Subarticle 2.3 below. The Work shall be performed by ASC under the general
direction of the project review board (The "PRB") as defined in the Schedule -
Attachment C.
1.2 PERIOD OF PERFORMANCE. ASC shall use its best efforts, within
commercially reasonable limits, to complete the Work, including submission of
technical reports within
-5-
7
the time period(s) set forth in the Schedule (the "Period of Performance") and
within the Budget.
1.3 PROJECT MANAGERS. A project manager will be designated by ABB (the "ABB
Project Manager") and by ASC (the "ASC Project Manage") as defined in the
Schedule. ABB and ASC, at any time, may designate a new project manager by
written notice to the other party. The ASC Project Manager will maintain contact
with the ABB Project Manager during the Period of Performance. ASC will provide
briefings on the progress of the Work, in addition to the reports required by
this Agreement, as reasonably requested by the ABB Project Manager. Reports,
communications, and questions of a technical nature shall be transmitted to the
ABB Project Manager at the address set forth in Article 16. Matters of a
contractual nature, including but not limited to Agreement terms, annual
funding, the Period of Performance and issues affecting the Budget (as defined
in Subarticle 2.3 below), shall be sent to the ABB Project Manager in accordance
with Article 16 of this Agreement with an information copy to the ABB Business
Development Manager.
1.4 FORCE MAJEURE. ASC shall not be liable for failure to perform or delay
in performance resulting solely from one or more of the following conditions:
from acts of God, acts of civil or military authority, acts (including delays or
failures to act) of any governmental authority, insurrection or riot, fire,
strike, work stoppage or other labor difficulties, failure or delay beyond ASC's
reasonable control in obtaining necessary materials from usual sources, or any
cause beyond ASC's reasonable control.
1.5 COST OF EXCUSABLE DELAYS. The entire cost of any measures taken at the
request of ABB to overcome such excusable delay or delays will be for ABB's
account above the Budget defined in the Schedule.
ARTICLE 2
COSTS
2.1 COST REIMBURSEMENT. ABB shall reimburse ASC for all costs incurred in
the performance of the Work, subject to the limitations contained below in this
Article 2, and Article 3 of this Agreement.
2.2 BEST EFFORTS. ASC agrees to use its best efforts, within commercially
reasonable limits, to perform the Work within the "Budget" as set forth in
Article 2, Subarticle 2.3.
2.3 BUDGET. The total project budget (The Budget) is set forth in the
Schedule. ABB's commitment of funds for each contract year is set forth in the
Schedule. ABB shall not be obligated for costs in excess of that set forth in
The Budget. A Joint Steering Committee as set forth below in this Subarticle
2.3, shall have the authority to revise the
-6-
8
Budget based on recommendations of the Project Review Board (PRB). The
composition and duties of the PRB are set forth in Attachment C to this
Agreement. A Joint Steering Committee will be established to coordinate joint
business opportunities and to give directions to the PRB, and to review progress
and approve recommendation by the PRB with respect to milestones and budgets.
This Committee will meet annually or more frequently as needed. The Joint
Steering Committee shall be composed of two representatives for each party.
2.4 ACCOUNTING PROCEDURES. ASC's costs shall be determined on the basis of
ASC's accounting system, procedures and practices employed as of the effective
date and during the performance of this Agreement; provided that ASC shall use
generally accepted accounting principles and cost reimbursement practices.
2.5 ALLOWABLE COSTS. The costs for which ASC shall be reimbursed under this
Agreement include all costs, direct, indirect and overhead incurred in the
performance of the Work. Costs must be incurred within the Period of
Performance, except for an amount equivalent to that paid by ABB to ASC prior to
the Period of Performance specified in the Schedule. Factors to be considered in
determining whether an individual item of cost is allowable includes (i)
reasonableness of the item, (ii) allocability of the item to the Work, (iii)
ASC's use of generally accepted accounting principles, and (iv) the other terms
and conditions of this Agreement. ABB and ASC will finalize the direct, indirect
and overhead rates as promptly as practicable in accordance with procedures
followed by ASC and acceptable to the ABB Corporate Audit Manager. ABB agrees
that the indirect and overhead rates will be consistent with the established
practices and procedures utilized by ASC for its cost reimbursement contracts
with other corporate partners.
2.6 AUDIT RIGHTS. ASC shall maintain books, records, documents, and other
evidence based on the procedures set forth above, sufficient to reflect properly
all costs incurred in performing this Agreement. The audit of corporate
allocations will be limited to the supporting documentation at the division(s)
performing the Work. A certified public accounting firm designated by ABB, from
a list of such firms as proposed by ASC, may audit such accounting records at
all reasonable times with prior notice by ABB. ABB shall bear the expense of
such audits. It is the intent of the parties that such audits shall ordinarily
be performed not more frequently than once every twelve (12) months during the
performance of the Work. The certified public accounting firm conducting the
audit will certify the accuracy of ASC's costs, calculations and appropriateness
of the allocation methodology. Such accounting firm will be required to execute
an appropriate confidentiality agreement.
ARTICLE 3
PAYMENTS
-7-
9
3.1 INVOICING. Invoices shall be submitted in advance on a quarterly basis
in triplicate as set forth in the Schedule. The period of time covered,
including the beginning and ending dates, must be specified on each invoice. The
invoice will reflect the payments to be made by ABB as reflected in the
Schedule. Actual cost and planned expenditures will be reviewed at the PRB
meetings.
3.2 PAYMENTS. Subject to the provisions of Article 2, ABB shall pay ASC the
total amount of each invoice received and approved by ABB. Requests for payment
with accompanying invoices shall refer to the ABB research project number and
shall be submitted by ASC to the attention of the ABB Accounts Payable. ABB's
payments shall be directed to AS C's address shown on the invoice unless the
parties agree otherwise. If ABB has not paid an invoice within ninety (90) days
of receipt by ABB, or ABB has not notified ASC of the problem(s) associated with
such invoice, a finance charge of one percent (1.0%) per month, or part thereof,
shall accrue and be paid by ABB.
ARTICLE 4
REPORTS
4.1 TECHNICAL PROGRESS REPORTS. ASC shall submit technical progress reports
to the ABB Project Manager at such regular intervals as are set forth in the
Schedule. Such reports shall be in sufficient detail to disclose Work
accomplished and results achieved during the reporting period. In addition, such
reports shall include a summary in non-technical language which briefly
describes the Work and sets forth the important results and contents of the
report. Insofar as it has a right to do so, and disclosing information deemed to
be confidential information, in accordance with Article 9.2, ASC shall endeavor
to keep ABB generally informed in such reports as to the development of work
performed by ASC for its own account or in connection with research contracts in
effect with others, when such work is pertinent to the Work hereunder.
4.2 REPORT DISTRIBUTION. All technical reports of any nature developed and
furnished under this Agreement are intended solely for the purpose of
communicating and transferring information relating to research and are subject
to Article 9 of this Agreement. Technical progress and preliminary reports
furnished by ASC to ABB hereunder and any report resulting from this Agreement
may be distributed to ABB's Affiliates subject to Article 9 of this agreement.
4.3 ADMINISTRATIVE/FINANCIAL REPORTS. ASC shall provide administrative and
financial reports as set forth in the Schedule.
ARTICLE 5
DATA
-8-
10
ASC agrees to maintain the Data in sufficient detail to properly reflect
all Work done and results achieved in the performance thereof. Ownership of all
Data produced, generated or procured under this Agreement, including under any
subcontracts, shall be as provided in Subarticle 7.1.
ARTICLE 6
COMPUTER PROGRAMS
6.1 OWNERSHIP. Title and ownership of computer programs copyrights and
patents therein, shall be as provided in Subarticle 7.1.
6.2 SECURITY. If ASC uses computer software of any kind (designed for
workstations or personal computers) in the performance of the Work, including
but not limited to development thereof, ASC shall systematically check all such
computer software against computer virus contamination. ASC shall check all such
computer software before transmittal of any computer software outside of the
development environment and in a manner acknowledged by ABB to be accepted
industry practice.
ARTICLE 7
INTELLECTUAL PROPERTY RIGHTS
7.1 OWNERSHIP.
(i) Subject to the provisions of Subarticles 7.1(ii), (iii), 7.3 and 7.4
below, relating to ABB Patents, third party rights or ASC's abandonment of the
development technology, ASC shall own exclusively all right, title, and interest
in and to Technology, and ASC Intellectual Property Rights therein.
(ii) ABB agrees to grant and hereby grants to ASC a nonexclusive, worldwide
license, to incorporate ABB Patents in AC and HRS HTS wires (a) royalty free to
ASC for AC and HRS HTS wires sold to ABB or ABB Affiliates, and (b) royalty
bearing for sales or use by other than ABB or ABB Affiliates on terms to be
mutually agreed upon in the future.
(iii) ABB endeavors to obtain for ASC a nonexclusive, world-wide license to
incorporate ABB Affiliates' Patents in AC and HRS HTS wires, (a) royalty free to
ASC for AC and HRS HTS wires sold solely to ABB or ABB Affiliates, and (b)
royalty bearing for sales or use by other than ABB or ABB Affiliates on terms to
be agreed upon with the ABB Affiliates.
-9-
11
(iv) In the event of a joint invention, such joint invention shall be
jointly owned by ABB and ASC. In the event of a joint invention among ABB, ASC
and a third party, such joint invention shall be jointly owned by ABB, ASC and
such third party.
The parties shall mutually determine under the auspices of the PRB and, if
a third party inventor is included, in coordination with the third party,
whether or not application(s) for patents shall be filed, the party which will
prepare, file and manage such application and the country or countries in which
the same are to be filed. Unless otherwise agreed, all expenses incurred for
filing and prosecution of such joint invention applications shall be divided
equally between the parties.
Each joint owner shall possess an equal and undivided interest in any joint
invention, with the unrestricted right to make, have made, use, sell, license
and sublicense the invention without accounting to the other joint owners. Items
which may be joint inventions will be reviewed at each PRB meeting.
(v) ASC hereby grants to ABB and ABB Affiliates an irrevocable, exclusive,
perpetual, worldwide, royalty-free license in the field of Transformers, under
all ASC Intellectual Property Rights relating to Transformers except those
relating to AC and HRS HTS Wire to make, have made, use and sell Transformers
incorporating this portion of the Technology. ASC agrees to grant and hereby
grants to ABB and ABB Affiliates a non-exclusive, worldwide license in the field
of Transformers under all ASC Background Intellectual Property Rights relating
to Transformers except those relating to AC and HRS HTS Wire to make, have made,
use and sell Transformers incorporating these portions of the ASC Background
Intellectual Property Rights (a) royalty-free for Transformers made from AC and
HRS HTS Wire purchased from ASC, and (b) royalty-bearing for Transformers made
from third party wire on terms to be mutually agreed upon in the future.
7.2 NO CLAIM. The Parties agree that they will not assert or establish or
assist any third party with respect to any claim for intellectual property
rights inconsistent with those granted to ABB or ASC herein.
7.3 INCORPORATION OF ASC PRIOR INVENTION. If ASC incorporates into
Deliverables or AC or HRS HTS Wire any ASC Prior Invention, such ASC Prior
Inventions shall become part of the ASC Background Intellectual Property Rights
licensed by ASC to ABB in Section 7.4 ii) below, to the extent that ASC has the
right to do so and shall otherwise become subject to the provisions of 7.4 iii).
7.4 LICENSING. ASC agrees to grant and does hereby grant to ABB to the
extent that ASC may grant such licenses and undertake such obligations without
breach of law, i) an irrevocable, exclusive, perpetual, worldwide, royalty free
license, with rights to sublicense, under ASC Intellectual Property Rights to
make, have made, use and sell products incorporating Technology in the field of
Transformers and, to make, have
-10-
12
made, use and sell AC and HRS HTS Wire incorporating Technology (except for
products in the Line Transmission and Distribution Field) and, ii) an
irrevocable non-exclusive, perpetual, worldwide, royalty free license, with
rights to sublicense, under ASC Background Intellectual Property Rights, to
make, have made, use and sell products in the field of Transformers, and, to
make, have made, use and sell AC and HRS HTS Wire incorporating Technology
(except for products in the Line Transmission and Distribution Field) and iii)
if ASC knowingly after a reasonable investigation incorporates into the
Technology Third Party Information, ASC agrees to use reasonable efforts at an
appropriate time and at a reasonable cost for the value obtained, to obtain a
non-exclusive license for ABB to use such Third Party Information; provided,
however, that the foregoing grants and obligations shall only apply in the event
that ASC abandons AC and/or HRS HTS wire technology or the Technology as
evidenced by, i) an inability to fill orders based on mutually agreed
specifications and delivery dates at the time of a firm purchase order from ABB
for a period of eighteen months, during the duration of this Agreement or for
commercial orders for 10 years thereafter, provided, ABB has supported the
development effort at ASC through commercialization as set forth in this
Agreement, and as long as ASC has provided them, ABB has purchased ninety
percent (90%) of its requirements of AC and HRS HTS wires for Current Limiters
and Transformers from ASC for commercialization; or, ii) ASC's notification to
ABB in writing that they will no longer supply AC and HRS HTS wires; or iii)
termination of this Agreement under the provisions of Article 15, Subarticles
15.3 or 15.4. or, (iv) ASC rejects this Agreement pursuant to section 365 of the
United States Bankruptcy Code. In the event the licence in this paragraph is
exercised, the Technology will be supplied to ABB to the extent necessary
through training and in documentary form in sufficient detail to be
self-explanatory, consistent with provisions of subarticle 18.7 and so as to
enable one skilled in the art, to make, use and sell AC and HRS HTS Wire
incorporating the Technology and ASC Prior Invention, and this may include
multiple week visits by ABB or its authorized representative to the ASC
facilities where the Work is done to observe the Work in sufficient detail to
make use of the Technology.
7.5 LICENSING TO EDF AFTER ASC ABANDONMENT OF TECHNOLOGY. In the event that
ASC abandons AC and/or HRS HTS wire technology or the Technology under the
conditions set forth in Section 7.4 above, and ABB exercises its rights under
Section 7.4 above, ABB, contingent upon EDF continuing the funding of ABB or
whomever ABB selects to continue with the completion of the Work, or has fully
funded the Work as set forth under the ASC/EDF Separate Agreement, agrees to
grant and does hereby grant to EDF the same rights provided to EDF as set forth
in the ASC/EDF Separate Agreement, Article 4: Pay-back, section 4.3 Royalties
and section 4.4 Commercial Discounts; Such Article and Sections are set forth in
Attachment D.
7.6 ABB agrees that no AC or HRS HTS wires developed under this Agreement,
no HTS wires sold to it or its Affiliates by ASC, and no AC or HRS HTS wires
manufactured by it or for it or its Affiliates under any license granted by ASC
or using any Technology developed hereunder will be used for products in the
[**].
-11-
13
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
ARTICLE 8
INTENTIONS AND EXPECTATIONS OF THE PARTIES
8.1 BUSINESS PLAN FOR HTS BASED POWER TRANSFORMERS
a) Outside of this Agreement ABB has successfully demonstrated a 630 kVA,
HTS transformer based on DC HTS wires supplied by ASC, in the first quarter of
1997.
b) ABB and/or it's Affiliate(s) plan to have in place an agreement with a
third party (or parties) to provide funding support to ABB for the HTS
transformer prototype development and construction.
c) ABB and/or its Affiliate(s) plan to deliver [**] HTS transformer
prototypes for markets in Europe and the United States in [**].
8.2 BUSINESS PLAN FOR HTS WIRE PRODUCTION.
By [**], ABB and ASC will develop a business plan that will project the
potential for HTS wires, the timing of beta test sites, the timelines for
commercialization etc. Two years before the expected commencement of either
commercial sales or sale of prototypes, the parties will develop a procedure to
be followed for forecasting and meeting the future needs of ABB and facility
requirements of ASC on an ongoing basis. Once ABB and ASC have agreed to the
forecast and delivery requirements, ABB will be given "preferred availability"
rights and ASC will first meet the ABB requirements for the AC and HRS HTS wire
before other customers for AC and HRS HTS wire. This preferred availability
right will be for the same period as the price discount in section 8.3 a). As
part of this business plan the parties will mutually agree on the definition of
commercial sale.
8.3 COMMERCIAL DISCOUNTS
a) ASC will provide to ABB and ABB Affiliates, an irrevocable right to at
least a [**] price discount from the lowest commercial price available from ASC
for similar quantities for all commercial products purchased from ASC which
embody the Technology. However, since ASC has agreed to discount certain
transactions concerning the [**] in consideration of EDF's development funding
for the HRS and AC HTS conductor Work, ASC shall have the right to assign a [**]
to the EDF development
-12-
14
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
funding as a portion of [**] of these transactions only. Thus, ABB agrees that
no [**] under this section 8.4 shall be applied to the [**] price. The ABB price
discount will apply until such time as ABB [**] to ASC under this Agreement or
[**] from the [**] of HTS commercial conductors [**], whichever is the earliest.
b) In further recognition of ABB's contribution to the development of AC
and HRS HTS wires, ASC agrees that at no time will any royalties payable or paid
by ASC to EDF on AC or HRS HTS wires under the ASC/EDF Agreement be considered
in determining the price of such wires offered for sale or sold to ABB or ABB
Affiliates.
8.4 DISCOUNTS ON DEMONSTRATION AND PROTOTYPE WIRE
a) ASC understands that it is ABB's goal that, in the period of the
Agreement the total cost to ABB of the HTS conductor purchased for any
demonstration Transformer system shall not exceed [**] of the total cost of the
demonstration Transformer system to ABB. The conductors produced during this
period will be demonstration and prototype conductors, not commercial
conductors. During this period ASC agrees that if the applicable discount
offered to ABB under Article 8.4 b) or 8.4 c) results in a total HTS conductor
cost for any demonstration Transformer system which exceeds ABB's [**] goal, ASC
will increase its discount by up to an additional [**] to meet ABB's [**] goal.
In the event that the total cost to ABB of the HTS conductor is still greater
than [**] of the total cost of the demonstration Transformer system to ABB, both
ASC and ABB will share the remaining cost difference equally between them. ASC's
fully loaded HTS conductor cost and the total cost of ABB's demonstration
Transformer system will be based on GAAP accounting.
b) In the period of the Agreement ASC will offer to ABB wires based on the
Technology for the first prototype transformer, "EDF Transformer", and any
associated experimental coils at a [**] discount to the ASC fully loaded cost
per unit for use in the field of Transformers. The fully loaded cost will be
based on GAAP accounting.
c) In the period of the Agreement ASC will offer to ABB wires based on the
Technology for the second prototype transformer, "SCE transformer", and any
associated experimental coils a [**] discount to the ASC fully loaded cost per
unit or, if in effect at that time, the established market price for such wires
for the use in the fields of Transformers.
ARTICLE 9
-13-
15
CONFIDENTIALITY AND RESTRICTIONS ON DISCLOSURE AND USE
9.1 ABB INFORMATION.
a) ASC acknowledges that during the term of this Agreement it may be
exposed to certain information concerning ABB's business and technology and
related information which is confidential or proprietary to ABB. All ABB
CONFIDENTIAL INFORMATION shall be marked by ABB as "ABB CONFIDENTIAL". ASC shall
protect and maintain such ABB CONFIDENTIAL INFORMATION in the same manner and to
the same degree it protects its own confidential information, but in no event
with less than reasonable care.
b) ASC agrees that during the term of this Agreement and for a period of
ten (10) years, thereafter unless both parties agree to extend the period beyond
ten (10) years, it will not use any ABB CONFIDENTIAL INFORMATION except in
accordance with the provisions and for the purposes of this Agreement, and will
not disclose any ABB CONFIDENTIAL INFORMATION to any third party without the
prior written consent of ABB.
9.2 ASC INFORMATION. The parties contemplate that in the performance of the
Work ASC may furnish information to ABB that is confidential or proprietary to
ASC. ASC shall clearly mark it as "ASC CONFIDENTIAL INFORMATION". ABB shall
protect and maintain such ASC CONFIDENTIAL INFORMATION in the same manner and to
the same degree it protects its own confidential information, but in no event
with less than reasonable care. ABB agrees that during the term of this
Agreement and for a period of ten (10) years, thereafter unless both parties
agree to extend the period beyond ten (10) years, ABB or ABB Affiliates with a
need to know only will not use any ASC CONFIDENTIAL INFORMATION except in
accordance with the provisions and for the purpose of this Agreement, and will
not disclose any such ASC CONFIDENTIAL INFORMATION to any third party (except to
ABB Affiliates who require access to such information and who agree to be bound
by Article 9) without the prior written consent of ASC. The Technology, when
marked confidential will be treated as such by the parties, except that
information strictly related to AC and HRS wire may be disclosed by ASC to EDF
in accordance with their Separate Agreement; provided, however, that ABB
CONFIDENTIAL INFORMATION shall not be disclosed to EDF without the prior written
consent of ABB.
9.3 EXCEPTIONS. The provisions of this Article 9 shall not apply to either
party's CONFIDENTIAL INFORMATION to the extent that:
a) such information was generally known or otherwise in the public domain
prior to disclosure hereunder, or becomes so known subsequent to such disclosure
through no fault of the receiving party; or
-14-
16
b) such information is received by the receiving party after the Effective
Date of this Agreement without restriction from a third party not under an
obligation to the disclosing party not to disclose it and otherwise not in
violation of the disclosing party's rights; or
c) such information is furnished to third parties by the disclosing party
without a similar restriction on the third party's rights, or
d) such information is already in the possession of the receiving party, as
shown by written records, without violation of this Agreement.
e) such information has been independently developed by the receiving party
without reference to or reference on the other party's Confidential Information.
9.4 COURT ORDER. In the event either party's Confidential Information is
subpoenaed or otherwise required to be produced or made available by the other
party to a third party by order of a court or governmental administrative
agency, the party required to produce such information shall promptly notify the
other party in writing and allow ten (10) days or, if less, the maximum amount
of time possible under the circumstances, for response by the disclosing party
before producing such documents. The receiving party will cooperate with the
disclosing party in obtaining a protective court order or take such other action
as may be appropriate under the circumstances.
9.5 SURVIVORSHIP. The provisions of this Article 9 shall survive any
termination of this Agreement.
ARTICLE 10
REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 ASSIGNMENTS AND LICENSES. Each party represents and warrants for
itself to the other party on a continuing basis that each party has the right
and power to make any assignments and the right and power to grant any licenses
as may be provided for in this Agreement.
10.2 BINDING OBLIGATION. This Agreement is the valid and legally binding
obligation of each party in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and similar laws and to general
principles of equity which are within the discretion of courts of applicable
jurisdiction.
10.3 NO LITIGATION OF CLAIMS. ASC represents and warrants to ABB that to
the best of ASC's knowledge at the time of execution of this Agreement, there is
no pending litigation or knowledge of a claim which may substantially affect
ASC's ability to fulfill its obligations pursuant to this Agreement.
-15-
17
10.4 AGREEMENTS WITH EMPLOYEES. Except as otherwise prevented by law, both
parties will maintain with their respective employees, agents, subcontractors
and consultants who perform under this Agreement and who have access to the
Technology, written agreements sufficient to enable each party to perform its
obligations hereunder.
10.5 COMPLIANCE WITH LAWS. Each party will comply with all laws and
regulations applicable to the performance of its obligations hereunder,
including, without limitation, all safety, health and environmental laws, and
will obtain all necessary government authorizations, approvals and permits
required to perform the Work.
10.6 ASC represents and warrants to ABB that the ASC/EDF Separate Agreement
shall not diminish or abrogate the rights of ABB under this Agreement.
10.7 ASC PROMISES AND COVENANTS.
NO INFRINGEMENT. ASC shall perform the Work in a manner so that to the best
of ASC's knowledge, neither the Technology being developed, the Deliverables
being supplied to ABB, nor the exercise by ABB of any of the rights granted
hereunder, infringes any intellectual property right of any third party;
provided, however, the foregoing covenant shall not apply to patent rights, and
to copyrights unless ASC knowingly infringes such copyrights.
ARTICLE 11
VISITS AND INSPECTIONS
11.1 VISITS. ABB and any of its authorized representatives, shall have
the right, with reasonable notice, during ordinary business hours to visit the
offices of ASC and its subsidiaries, if any, and to visit and inspect the site
or sites at which the Work is being performed, to the extent that such visits do
not unreasonably interfere with the Work. These visits and inspections may
include multiple week visits by ABB to participate in specific tasks that will
be mutually defined, and to observe the Work in sufficient detail to make
informed decisions on the direction and use of the Work as it relates to design
of Transformers and Current Limiters. Any such long term visiting ABB employees
or representatives shalt have signed or will sign a confidential agreement
acceptable to ASC for protecting ASC Confidential Information.
11.2 FACILITIES. ASC shall provide all reasonable facilities and assistance
for the safety and convenience of such representatives during their visits,
including making personnel engaged in the performance of the Work available for
consultation at all reasonable times.
ARTICLE 12
-16-
18
PUBLICITY RELEASES
PRIOR APPROVAL. Unless required by law or stock market regulations neither
party may issue any publicity releases (including news releases and advertising)
relating to this Agreement and the Work performed hereunder without the prior
written approval of the other party. Such approval shall not be unreasonably
withheld. ABB and ASC will coordinate their responses to any substantial inquiry
from news media concerning this Agreement.
ARTICLE 13
INDEMNIFICATION AND LIMITATION OF LIABILITY
13.1 INDEMNITY. Both parties shall protect, defend, indemnify and hold
harmless the other party its agents, employees and directors from any claim,
loss, cost, liability or expense (including court costs and reasonable fees of
attorneys and other professionals) arising out of or resulting from any breach
of the representations, warranties and covenants made in Article 10; not
withstanding Subarticle 10.6, ASC will indemnify ABB against any claims that the
Deliverables under this agreement infringe any third party patents and
copyrights.
13.2 GENERAL INDEMNITY. Notwithstanding Subarticle 13.1 herein. each party
shall protect, defend, indemnify and hold harmless the other party, its agents,
employees and directors from any claim, loss, cost, liability or expense
(including court costs and reasonable fees of attorneys) arising out of any
injury, including death, or any property damage suffered by any third party as a
result of or related to any negligent act or negligent failure to act of such
parties subcontractors or its subsidiaries, or of any of their respective
employees or agents in connection with or related to the Work or the performance
of this Agreement except to the extent that any losses, costs, liabilities,
claims or expenses are the result of any negligent act or negligent failure to
act of the other party, its agents, employees and directors, such directors only
when acting in their official capacity.
13.3 CONDITIONS AND OBLIGATIONS. Each party's obligations under Subarticles
13.1 and 13.2 above are conditioned upon (i) the other party giving notice,
which is timely under the particular circumstances, to such party's
representative (as such representative is specifically named in Article 16
herein), of any claim made against the other party or any claim made by the
other party hereunder, provided, however, notice shall be considered timely
unless such party has suffered substantive or irreparable prejudice as a result
of a delay by the other party in giving notice to such party in (y) the defense
of such claim or (z) such party giving notice to an applicable insurer of such
claim and (ii) the other party giving such party the right to control and direct
any investigation, defense and settlement of such claims, provided, however,
such party shall not settle,
-17-
19
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
compromise or resolve such claim (except if such settlement, compromise or
resolution consists only of a payment of money to be made by ASC) without the
prior written approval of the other party (which approval shall not be
unreasonably withheld). The other party shall provide full and timely
cooperation to such party in the defense or settlement of such claims.
13.4 LIMITATION OF LIABILITY. (i) IN NO EVENT WILL EITHER PARTY BE LIABLE
TO THE OTHER FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF THIS AGREEMENT,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. (ii) THE
TOTAL CUMULATIVE LIABILITY OF ASC TO ABB, ARISING FROM INTELLECTUAL PROPERTY
INFRINGEMENT OR IN ANY WAY CONNECTED TO THE PERFORMANCE OR NONPERFORMANCE OF
THIS AGREEMENT, WHETHER IN INTELLECTUAL PROPERTY INFRINGEMENT, CONTRACT, TORT
(INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE FOR DAMAGE OR LOSS OF
OTHER PROPERTY OR EQUIPMENT, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF
EQUIPMENT OR POWER SYSTEM, COST OF CAPITAL, COST OF PURCHASED OR REPLACEMENT
POWER OR TEMPORARY EQUIPMENT (INCLUDING ADDITIONAL EXPENSES INCURRED IN USING
EXISTING FACILITIES), CLAIMS OF CUSTOMERS OF ABB, SHALL NOT EXCEED THE FUNDING
RECEIVED BY ASC FROM ABB.
ARTICLE 14
INSURANCE
14.1 REQUIREMENTS. ASC shall not commence the Work until it obtains, and
shall maintain for the term of the Agreement insurance in the types and amounts
required under this Article 14, or provides equivalent protection through an
insurance program.
14.2 COVERAGE. ASC shall obtain and maintain the following insurance:
a) General Comprehensive Liability Insurance, including Contractual
Liability Insurance covering all of ASC's obligations under this Agreement
subject to a single aggregate policy limit of [**] per occurrence and [**]
aggregate.
-18-
20
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
b) Insurance or self insurance covering all of ASC's obligations under this
Agreement regarding worker's compensation including employer's liability in an
amount of [**] and/or all other insurance required by law in the jurisdiction in
which the Work will be performed.
c) ASC shall require that its subcontractors carry worker's compensation
including Employer's Liability and General Comprehensive Liability Insurance
including Contractual Liability Insurance, in the amount of [**].
14.3 CHANGES. All commercial policies of insurance applied for or obtained
to meet the requirement of this Agreement shall not be materially changed or
canceled until thirty (30) days prior written notice has been given to ABB.
ARTICLE 15
TERMINATION
15.1 TERMINATION. This Agreement may be terminated, without cause and for
its convenience, by ABB at any time upon ninety (90) days written notice to ASC,
but in the event that ABB terminates for convenience prior to commercialization,
the licenses granted to ABB under 7.4 shall also terminate. In full discharge of
any payment obligations to ASC in respect of this Agreement and such
termination, ABB shall pay for costs and noncancellable commitments incurred
prior to the date of termination and fair closeout costs to be negotiated by the
two parties, in accordance with Article 2. ASC shall take all reasonable steps
to minimize termination costs.
15.2 If ABB fails to commit adequate funds to support the Work, and such
failure results in a substantial reduction in the scope of the Work or a
substantial extension of the period of performance, ASC may, by providing prompt
notification of its election thereof to ABB, treat such failure as a termination
by ABB pursuant to Subarticle 15.1 above, but this will only apply if ABB
reduces its funding by twenty-five percent (25%) or greater as compared to the
budget set forth in the schedule. Unless otherwise notified by ABB, ASC may
carry forward any unexpended committed funds into succeeding contract years.
15.3 If ASC fails to commit adequate funds, and such failure results in a
substantial reduction in the scope of the Work or a substantial extension of the
period of performance, ABB may, by providing prompt notification of its election
thereof to ASC, treat such failure as a termination by ASC, but this will only
apply if ASC reduces
-19-
21
its funding by twenty-five percent (25%) or greater as compared to the budget
set forth in the Schedule. If this Agreement terminates pursuant to this
Subarticle 15.3, ABB shall not be obligated to make any further payments, beyond
those due as of the date of termination, to ASC hereunder; any license granted
to ABB pursuant to this Agreement shall continue; and, any license granted to
ASC pursuant to this Agreement shall cease.
15.4 TERMINATION FOR BANKRUPTCY OR INSOLVENCY. ABB may terminate this
Agreement by giving ten (10) days written notice to ASC if ASC files or has
filed against it any petition in bankruptcy or any proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit of
creditors, if that petition or proceeding is not dismissed within thirty (30)
days after filing. Such termination shall be effective as of the tenth day
following such notice. If ABB terminates this Agreement pursuant to this
Subarticle 15.4, ABB shall not be obligated to make any further payments, beyond
those due as of the date of termination, to ASC hereunder; any license granted
to ABB pursuant to this Agreement shall continue; and, any license granted to
ASC pursuant to this Agreement shall cease.
In the event ASC files for bankruptcy and a court of appropriate
jurisdiction enters a final order authorizing ASC to reject this Agreement, ABB
shall have the rights set forth in Section 365(n) of the Bankruptcy Code.
15.5 SURVIVAL. The provisions of Subarticle 2.6 (Audit Rights), Article 5
(Data), Article 6 (Computer Programs), Article 7 (Intellectual Property Rights),
Article 9 (Confidentiality), Article 10 (Representations, Warranties and
Covenants), Article 13 Indemnification and Limitation of Liability, Article 17
(Dispute Resolution) and Article 18 (Miscellaneous) shall survive completion or
termination of this Agreement for any reason.
ARTICLE 16
NOTICES
Any notices or communications required or permitted under this Agreement
shall be in writing and personally delivered or sent to the address of each
party as set forth below, or to such other address as either party may
substitute by written notice to the other in any manner expressly provided for
herein.
a) Notices to ABB under this Agreement:
1) ABB Project Manager
ABB Power T&D Company Inc.
1021 Main Campus Drive
Raleigh, NC 27606
-20-
22
2) ABB Power T&D Company Inc.
Attn: Manager Business Development
1021 Main Campus Drive
Raleigh, NC 27606
(b) Notices to ASC under this Agreement:
American Superconductor Corporation
Attn: Chief Financial Officer
Two Technology Drive
Westborough, MA 01581
ARTICLE 17
DISPUTE RESOLUTION
17.1 MEDIATION. If a dispute arises out of or relates to this Agreement, or
any breach thereof, and if such dispute cannot be settled through direct
negotiation between the parties, and if the parties mutually agree, the parties
shall submit the dispute to mediation with a mediator to be mutually agreed upon
by the parties. The mediation may be initiated by the written request of either
party and sent to the other party and shall commence within fifteen (15) days of
receipt of such notice, unless otherwise agreed by the parties. In the event the
parties fail to mutually agree on mediation procedures or if the mediation fails
to resolve any dispute, either party may enforce its rights in a court of
competent jurisdiction.
17.2 Each party shall bear its own expense of such mediation proceedings,
unless otherwise agreed by the parties.
ARTICLE 18
MISCELLANEOUS
18.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without reference
to conflicts of law principles.
18.2 ASSIGNMENT. Except to accomplish the sale or transfer of a business
unit or division, or sale or reorganization of either party, this Agreement may
not be assigned, in whole or in part, by either party without the prior written
consent of the other party which consent shall not be unreasonably withheld.
18.3 BENEFIT. Subject to Subarticle 18.2 above, this Agreement is binding
upon and shall inure to the benefit of the parties hereto, their
representatives, successors and permitted assigns.
-21-
23
18.4 WAIVER. No failure or successive failures on the part of either party,
its successors or assigns, to enforce any covenant or agreement, and no waiver
or successive waivers on its or their part of any condition of this Agreement
shall operate as a discharge of such covenant, agreement, or condition, or
render the same invalid, or impair the right of either party, its successors and
assigns, to enforce the same in the event of any subsequent breach or breaches
by the other party hereto, its successors or assigns.
18.5 ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all previous agreements and understandings
relating to the Work, including any letter agreement between the parties. This
Agreement may not be altered, amended, or modified except by a written
instrument signed by the duly authorized representatives of both parties.
18.6 INDEPENDENT CONTRACTOR. ASC shall perform its obligations hereunder as
an independent contractor and shall be solely responsible for its own financial
obligations. Nothing contained herein shall be construed to imply a joint
venture or principal and agent relationship between the parties and neither
party shall have any right, power or authority to create any obligation, express
or implied, on behalf of the other in connection with the performance hereunder.
18.7 ADDITIONAL OBLIGATIONS. At any time or from time to time on and after
the Effective Date of this Agreement, ASC shall at the reasonable request of ABB
(i) deliver to ABB such records, data or other documents consistent with the
provisions of this Agreement, and (ii) execute, and deliver or use its
reasonable efforts to cause to be delivered, all such assignments, consents,
documents or further instruments of transfer or license, and (iii) take or cause
to be taken all such other actions, as ABB may reasonably deem necessary or
desirable in order for ABB to obtain the benefit of this Agreement and the
transactions contemplated hereby.
18.8 WARRANTY DISCLAIMER. WITHOUT LIMITING ASC'S OBLIGATIONS PURSUANT TO
ARTICLE(S) 10 AND 14 HEREIN, IN RECOGNITION THAT THE NATURE OF THE WORK INVOLVES
RESEARCH AND DEVELOPMENT, ASC MAKES NO WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, BY STATUE OR OTHERWISE, REGARDING THE WORK; AND ASC SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE AND ANY WARRANTIES FROM COURSE OF DEALING OR USAGE OF TRADE.
18.9 HEADINGS. The Article and Subarticle headings contained in this
Agreement and in the Schedule and Exhibits hereto are for convenience of
reference only and shall not in any way affect the meaning or interpretation of
this Agreement, the Schedules or the Exhibits.
-22-
24
18.10 SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
18.11 FURTHER ASSURANCES. If, at any time, either party has reasonable
grounds to believe that the other party may be unable to perform its obligations
hereunder, the first party may in writing demand adequate assurance of due
performance, and until it receives such assurance to its satisfaction it may
suspend performance of its obligations hereunder.
18.12 EXPORT REGULATIONS. All technical data or commodities of United
States origin made available directly or indirectly hereunder for use outside
the United States shall be used subject to and in accordance with any applicable
laws and regulations of the departments and agencies of the United States
Government. The recipient of such technical data or commodities agrees not to
re-export, directly or indirectly, any technical data of United States origin
acquired from the Disclosing Party or any commodities using such data to any
destination requiring United States Government approval for such re-export until
a request for approval has been submitted to and granted by the United States
Government.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
ABB Transmission & Distribution American Superconductor Corporation
Technology Ltd.
By: /s/ F. Gabella By: /s/ G.J. Yurek
----------------------------------- ----------------------------------
Print Name: F. Gabella Print Name: G.J. Yurek
--------------------------- --------------------------
Title: Business Mgr. Title: President
-------------------------------- -------------------------------
Date: Jan 2nd, 1998 Date: Jan. 2. 1998
-------------------------------- -------------------------------
-23-
25
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
SCHEDULE TO THE AGREEMENT
BETWEEN
ABB AND ASC
1.0 STATEMENT OF WORK
1.1 The Statement of Work is attached hereto as Attachment A, which is
hereby deemed incorporated and made an integral part of this Agreement.
2.0 PERIOD OF PERFORMANCE
Agreement will be for a four year period, covering April 1, 1997 through
March 31, 2001.
3.0 BUDGET
The budget is set forth in this Article 3 and in Attachment B to this
Schedule. The parties contemplate that the budget to perform the work will be
[**].
3.1 ABB has paid ASC 0.3 MUSD towards the development outlined in this
Agreement in calendar year 1996 and ABB will pay ASC; 1.75 MUSD in calendar year
1997; including 0.7 MUSD paid prior to April 1, 1997; [**] in calendar year
1998; [**] in calendar year 1999; and [**] in calendar year 2000, and [**] in
calendar year 2001, for a total of 5.0 MUSD.
3.2 ASC will spend 5.0 MUSD total towards the development outlined in this
Agreement in their Fiscal Years 1998, 1999, 2000 and 2001 with target levels of
0.625 MUSD in FY 1998, [**] in FY 1999, [**] in FY 2000, and [**] in FY 2001.
Any spending below or above target in the first fiscal years may be compensated
in subsequent fiscal years.
3.3 The Schedule of the development costs payable to ASC by ABB are
detailed in Attachment B to this Schedule.
3.4 The parties contemplate that EDF will contribute 5.0 MUSD to the Work
under the provisions of the Separate Agreement.
4.0 DELIVERABLES
-24-
26
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
4.1 All deliverables identified in this Article 4 are to be made to ABB as
specified by the ABB Project Manager.
4.2.1 Technical Progress Reports
ASC shall submit to the ABB Project Manager a technical progress report
with respect to the Work at the PRB meetings.
4.2.2 Administrative/Financial Reports
The invoicing as identified in Article 3.1 of the Agreement shall serve as
the Administrative/Financial Report; provided, however, upon request of the ABB
Project Manager or the PRB, ASC shall provide to ABB or the PRB various
estimates and forecasts as to the time and costs to complete the Work.
4.3 Prototype Conductor Milestones (1)
The milestones may be modified in preliminary design review for the [**]
transformers. All values listed are minimum performance requirements with [**].
AC loss values are determined by [**] unless otherwise specified.
4.3.1 [**] GENERATION [**]: feasibility demonstrated in [**] with the
following combined characteristics:
1. [**] at [**] and in [**] to plane.
2. [**] at [**] and in [**] to plane.
3. [**] and operating [**] total current [**] consistent with the above
[**] specifications.
4.3.2 [**] GENERATION [**]: feasibility demonstrated in [**] with the
following combined characteristics:
1. [**] at [**] and in [**] to plane.
- --------
(1) SECTION 4.3 INCLUDES ASC CONFIDENTIAL INFORMATION UNDER THIS AGREEMENT.
-25-
27
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
2. [**] at [**] and in [**] to plane.
3. [**] and operating [**] total current [**] consistent with the above
[**] specification.
4.3.3 [**] GENERATION [**] : [**] process demonstrated with characteristics
of 4.3.2.
4.3.4 [**] GENERATION [**]: feasibility demonstrated in [**] with the
following combined characteristics:
1. [**] at [**] and in [**] to plane determined by a [**] measurement.
2. [**] at [**] and in [**] to plane determined by a [**] measurement.
3. [**] and operating [**] total current [**] consistent with the above
[**] specifications.
4.3.5 [**] GENERATION [**]: [**] completed and first production [**] with
4.3.2 specs supplied to ABB.
4.3.6 [**] GENERATION [**]: [**] completed and [**] with 4.3.4 specs
supplied to ABB.
4.3.7 [**] GENERATION [**]: feasibility demonstrated in [**] with the
following combined characteristics:
1. AC loss 0.25 mW/Am at [**] and in [**] to plane.
2. [**] and operating [**] total current [**] consistent with the above
[**] specification.
3. [**] resistivity [**] rated current.
4.3.8 [**] GENERATION [**]: [**] process demonstrated with the
characteristics of 4.3.7.
4.3.9 [**] GENERATION [**]: feasibility demonstrated in [**] with the
following combined characteristics:
-26-
28
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
1. [**] at [**] and in [**] to plane.
2. [**] and operating [**] total current [**] consistent with above [**]
specification.
3. [**] resistivity [**] rated current.
4.3.10 [**] GENERATION [**]: [**] available from [**], with characteristics
of 4.3.7.
4.3.11 [**] GENERATION [**]: [**] completed and [**] piece length with
4.3.9 specs supplied to ABB.2.
4.4 Development Documentation
To be developed by the PRB
4.4.1 Conductor Requirement Specifications
4.4.2 Conductor Design Specifications
4.4.3 Test Plan
4.4.4 Test Analysis Report
5.0 INVOICING
All invoicing shall make reference to this Agreement by Number and shall be
mailed to ABB at the following address:
ABB Power T&D Company Inc.
Electric Systems Technology Institute
Attention: Accounts Payable
1021 Main Campus Drive
Raleigh, NC 27606
6.0 PROJECT MANAGERS
a) ABB designates Dr. Steinar Dale as ABB Project Manager
b) ASC designates Dr. Alex Malozemoff as ASC Project Manger
-27-
29
7.0 AGREEMENT WITH EMPLOYEES
a) There are no items specifically listed.
-28-
30
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
ATTACHMENT A
TO AGREEMENT BETWEEN ASC AND ABB
ASC STATEMENT OF WORK FOR HTS TRANSFORMER WIRE
DEVELOPMENT AND DEMONSTRATION
Wire [**] will be developed in the context of several designs being considered
for an HTS transformer. The two main types of wires include 1) [**] wire with
[**] and [**] for use in the [**] of the [**] and 2) an [**] with [**] for use
[**] of the [**] . [**] may also be used throughout the [**] . Critical program
wire performance issues include (i) [**] and [**], (ii) achieving the [**] under
[**], (iii) [**] within [**] , (iv) achieving [**] in the [**], and (v)
achieving an architecture with [**] during a [**].
The general HTS wire development process proceeds in three stages: first, a
feasibility stage using [**]; second, a process development stage for [**]; and
third, a scaleup for [**]. After feasibility, each [**] stage has an anticipated
duration of approximately [**]. This program proposes to [**] this development
process for a [**] prototype by using [**] throughout the entire [**], and to
enable a [**] which will incorporate [**].
Through the course of the program, several generations of wire with increasingly
advanced specifications (summarized in 4.3) are identified as Generation [**],
with Generation [**] referring to a [**] (not taken beyond feasibility),
Generation [**] referring to the level required for the [**], and Generation
[**] referring to the level required for [**]. This program covers feasibility
and [**] for HRS and AC wire types and for all different generations of both
[**] of Generation [**] AC wire (Generation [**] is not specified) which is
excluded. [**] and [**] of [**] is contingent on funding and a specific separate
program for a [**]. [**] of any of the wires is also outside the bounds of the
program, except for [**], which is included. These program elements and their
anticipated time periods are summarized in the attached Gantt chart.
The anticipated commercial price target, averaged over the [**], is [**].
The Wire Development Program is divided into four major segments: [**], with the
[**]. Major milestones are listed in Section 4.3 of the Schedule. All fields,
currents, and voltages are [**] (unless otherwise specified). Generation [**]
conductor specifications will be reviewed by [**] in the light of Generation
[**] milestone status and [**] requirements.
HRS [**] DEVELOPMENT:
-29-
31
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
HRS [**] will build on the [**], with either a [**] to [**] indicated in the
Schedule, Section 4.3. [**] may need to be considered depending on the design
established in the [**], and [**] for this task needs to be determined.
Task 1. HRS GEN [**] FEASIBILITY. A baseline [**] for a [**] will be developed
and demonstrated in [**] , with Generation [**] as in the Schedule, Section
4.3.7 [**]; and [**] rated current). Both [**] approaches to increase the [**]
will be investigated.
Task 2. HRS. [**] Subject to positive results on [**] of [**] from Task 14, the
feasibility of [**], consistent with [**] established by ABB by [**], will be
tested at ASC [**]. Samples will also be provided to ABB for test. [**] beyond
feasibility will be negotiated based on the results of this task.
Task 3. HRS GEN [**]. A [**] with the [**] and the other HTS Gen [**] will be
developed in [**], starting in [**] to the [**] of Task 1 and completed by [**].
Issues of [**] will be addressed.
Task 4. HRS GEN [**]. The [**] of Task 1 will be developed for [**] and combined
with the [**] of Task 3, to demonstrate by [**] with the Generation [**].
Task 5. HRS GEN [**] A [**] of Generation [**] will be established, culminating
with the delivery of a [**] to ABB by [**]. Additional delivery of this [**] for
the [**] will then continue after [**] outside the bounds of this program.
Task 6. HRS GEN [**] FEASIBILITY. Generation [**] will be developed in [**]
meeting Section 4.3.9 specs of the Schedule ( [**], and [**]), for a feasibility
milestone by [**].
Task 7. HRS GEN [**] The Generation [**] will be developed [**] , addressing
[**] issues. The first [**] length will be delivered to ABB by [**]. Delivery of
this [**] in production quantities will require [**] and will continue after
[**] outside the bounds of this program for [**].
[**] DEVELOPMENT:
[**] requires [**].
Task 8. AC GEN [ **] FEASIBILITY. [**] with Generation [**] specs of Section
4.3.1 of the Schedule ([**]) will be developed via a [**] approach. Feasibility
will be demonstrated in [**].
-30-
32
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
Task 9. AC GEN [**] FEASIBILITY. [**] with Generation [**] specs of Section
4.3.2 of the Schedule ([**]) will be developed via [**] in the [**] and [**] by
cabling. Feasibility will be demonstrated in [**] by [**] .
Task 10. AC GEN [**]. [**] of the Generation [**] of Task 9 will begin on [**]
and provide a [**] for delivery to ABB by [**]. Scale-up for pilot production
will occur after [**]. This task is [**] on [**] such as that from the [**], and
on a targeted prototype which requires AC Gen [**].
Task 11. AC GEN [**] FEASIBILITY. [**] with Generation 2 [**] of Section 4.3.4
of the Schedule ([**]) will be developed via [**] in the [**] and achieving [**]
in Task 13.
Feasibility will be demonstrated in [**].
Task 12. AC GEN [**]. [**] of the Generation [**] of Task 8 will begin on [**]
and provide a [**] to ABB by [**]. Scale-up for commercial production will occur
after [**], [**] of this program.
CABLING:
Task 13. [**] DEVELOPMENT: This task will target [**] of HRS and/or [**] as
needed to meet the total current requirements of the Gen [**] specs. In
particular, [**] is expected to be required for reaching the [**] by [**] for
Gen [**] and by [**] for Gen [**].
CHARACTERIZATION AND TEST:
These studies will be done in close collaboration with ABB and EDF.
Task 14. [**] FEASIBILITY TESTING. An early task will focus on demonstrating
[**] in HRS [**]. This will start with [**] in applied field. Experiments
comparing [**] will be conducted in collaboration with ABB. A first milestone
for these experiments is targeted for [**]. [**] for the [**] will be agreed
upon with ABB. If adequately [**] are obtained in these first round tests, such
studies will be extended to HRS [**] and [**], with a milestone for establishing
[**] by [**]. Specs for, and basic approach to, HRS [**] development will be
reviewed upon the completion of this milestone.
Task 15. [**] TESTING. [**] techniques for [**] will be established for [**] and
[**] will be established to monitor ongoing [**].
-31-
33
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
Task 16. [**] TESTING. [**] will be constructed and measured for [**] to access
[**] for all generations of HRS and [**] as soon as [**] become available. These
tests will confirm [**] in the [**]. Also tests of [**] in HRS and [**] will be
conducted.
Task 17. [**] TESTING. [**] tests, both [**] of HRS and [ **] will be conducted
as different generations become available. Specs will be established based on
[**] design and manufacturing requirements, including [**] and [**] .
Task 18. PROGRAM MANAGEMENT. The technical program will be managed via an ASC
program manager in accordance with this agreement.
-32-
34
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
ATTACHMENT B: SCHEDULE OF ABB DEVELOPMENT COSTS:
YEAR ABB PAYMENT TO ASC ASC FISCAL YEAR
A1. 1996 0.3 MUSD
Qtr. 4 1996 0.3 MUSD 1997
A2. 1997 1.75 MUSD
Qtr. 1 1997 0.70 MUSD 1997
Qtr. 2 1997 0.35 MUSD 1998
Qtr. 3 1997 0.35 MUSD 1998
Qtr. 4 1997 0.35 MUSD 1998
A3. 1998 [**]
Qtr. 1 1998 [**] 1998
Qtr. 2 1998 [**] 1999
Qtr. 3 1998 [**] 1999
Qtr. 4 1998 [**] 1999
A4. 1999 [**]
Qtr. 1 1999 [**] 1999
Qtr. 2 1999 [**] 2000
Qtr. 3 1999 [**] 2000
Qtr. 4 1999 [**] 2000
A5. 2000 [**]
Qtr. 1 2000 [**] 2000
Qtr. 2 2000 [**] 2001
Qtr. 3 2000 [**] 2001
Qtr. 4 2000 2001
A6. 2001 [**] 2001
-33-
35
TOTAL ABB PAYMENTS TO ASC FOR 1996-2001; 5 MUSD
-34-
36
ATTACHMENT C: PROJECT REVIEW BOARD
1- The PRB shall be composed of 2 representatives of each party, with the
possibility of inviting specialists whenever required by the complexity of any
item to be discussed.
2- The PRB has the duty of:
2.1 agreeing to any changes to the scope of the Statement of Work set forth
in Attachment A, including changes in any specific targets to be achieved or any
time limits.
2.2 monitoring performance against the Statement of Work, and setting up
check points for the critical results to be achieved.
2.3 recommending action as required to achieve the objectives of the
Agreement, including change of scope if convenient in the light of new
developments in the field.
2.4 monitoring cost of the work and advising the Joint Steering Committee
of ABB and ASC of any change with respect to the original plan.
3- At least one of the ABB representatives shall be a person with
significant involvement in R&D on superconductivity.
One of the ASC representatives shall be the person responsible for the
implementation in ASC of the Statement of Work.
4- The PRB shall meet quarterly, and shall have access to the necessary
technical and financial documentation, which shall be provided by the Parties
before the meeting.
5- The decisions of the PRB shall be taken unanimously. In case of failure
to agree, the relevant matter shall be submitted to the Joint Steering Committee
of ABB and ASC for final decision.
-35-
37
CONFIDENTIAL TREATMENT
AMERICAN SUPERCONDUCTOR CORPORATION HAS
REQUESTED THAT THE MARKED PORTIONS OF THIS
DOCUMENT BE ACCORDED CONFIDENTIAL TREATMENT
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED
ATTACHMENT D: ACS/EDF AGREEMENT, ARTICLE 4: PAY-BACK
4.3 ROYALTIES. For [**] from [**] of HTS commercial conductors by ASC for
transformers, ASC will pay to EDF a royalty of [**] on [**] HTS [**] sales. For
the purpose of this royalty calculation, sales for the [**] as described under
Article 4.4 will be excluded. For the purpose of this royalty calculation, sales
to ABB will be excluded the [**] and included after [**] and until [**] from the
[**] of HTS [**] by ASC for transformers.
4.4 COMMERCIAL DISCOUNTS. In recognition of EDF's contribution to the
development of HTS conductors for transformers, ASC undertakes to sell any AC
and HRS conductor developed by ASC under this Agreement, which is to be used in
HTS transformers designated for and sold in the [**] to the manufacturers of
these transformers at pricing not to exceed to the one proposed to ABB under
ASC's agreement with ABB on development of AC and HRS HTS wire. The current
price discount to ABB amounts to a [**] price discount from the lowest
commercial price available from ASC for similar quantities for any AC and HRS
HTS conductors developed by ASC under this Agreement, or any HTS conductor
originating from the Work, and this discount shall not be taken into
consideration in determining the lowest commercial price. When a HTS transformer
is commissioned for use in the [**], EDF will notify ASC. It is agreed that ASC
shall have no right to influence any negotiation between EDF and any transformer
manufacturer.
The definition of a commercial conductor sale under this Agreement is sale of
HRS or AC wire which is applicable to a High Temperature Superconducting
Transformer which is either the [**] in the [**] of [**] HTS transformers, or
the [**] in the [**] HTS transformers, whichever is sold first.
The above-mentioned discount will apply during [**] from the [**] of HTS
commercial conductors for HTS transformers by one of these designated
manufacturers.
-36-