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EXHIBIT 10.20
AGREEMENT
BETWEEN
PIRELLI CAVI S.P.A.
AND
AMERICAN SUPERCONDUCTOR CORPORATION
DATED
OCTOBER 1, 1995
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INDEX
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Section 1. DEFINITIONS
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1.1 Affiliate
1.2 Agreement
1.3 ASC
1.4 Cable Wire
1.5 CPSA
1.6 Contract Technology
1.7 Control Cables
1.9 Excluded Technology
1.10 Far East
1.11 Field
1.12 Inco Agreement
1.13 Magnet Cables
1.14 Magnet Wire
1.15 Materials
1.16 Other Superconductor Products
1.17 Person
1.18 Pirelli
1.19 Power Cables
1.20 Products
1.21 Program
1.22 Project Board
1.23 Research and Development Program I
1.24 Research and Development Period
1.25 Specifications
1.26 Subsequent Research and Development Program
1.27 Superconductor Wire
1.28 Technology
1.29 Transmission Current Limiters
1.30 1990 Agreement
Section 2. THE PROGRAMS AND THE BUSINESS DEVELOPMENT PLAN
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2.1 Scope of the Programs
2.2 Pirelli Cable Research and Development
2.3 The Business Development Plan
2.4 Best Efforts Performance
2.5 Reciprocal Disclosures
2.6 Check Points
2.7 Participation of Pirelli Employees
2.8 Visits
2.9 Project Board
2.10 Project Board Meetings
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2.11 Records and Reports
2.12 Funding of Research and Development Program I and Subsequent
Research and Development Programs
2.13 Certain ASC Research Projects Not involving Power or Control
Cables
2.14 Other ASC Research Projects Involving Power Cables
2.15 Research Project relating to Transmission Current Limiters
2.16 Clearance
2.17 Pirelli option for additional research and development in
the Field
Section 3. OWNERSHIP OF RESEARCH AND DEVELOPMENT PROGRAM RESULTS
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3.1 Ownership of Contract Technology
3.2 Cooperation
3.3 Confidentiality Restriction
Section 4. EXPLOITATION RIGHTS
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4.1 Pirelli's Exploitation Rights
4.2 ASC's Exploitation Rights
4.3 Manufacturing and sub-licensing in Japan
4.4 Manufacturing in Canada, the United States of America,
Mexico and Far East
4.5 Manufacturing outside Canada, the United States of America,
Mexico and Far East
4.6 Exclusive Supply; Preservation of Pirelli's Supply
4.7 Irrevocability of Pirelli's Exploitation Rights
4.8 Price of Cable Wire
4.9 Sales of Superconductor Wire to Pirelli
4.10 Sublicense of Rights Under Inco Agreement
4.11 Additional licenses
4.12 Royalty Amounts
4.13 Transfer Costs
4.14 Disclosure of Technology and Technical Assistance by ASC
Section 5. 1990 AGREEMENT AND THE 1994 AGREEMENT
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5.1 Partial Termination of the 1990 Agreement
5.2 Partial Termination of the 1994 Agreement
Section 6. REPRESENTATIONS AND WARRANTIES
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6.1 Representations and Warranties of Pirelli
6.2 Representations and Warranties of ASC
Section 7. CONFIDENTIALITY
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7.1 Obligation to Maintain Secrecy
7.2 Exceptions
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7.3 Matters Not Considered Public Knowledge
7.4 Period of Confidentiality
7.5 Covenant of ASC
Section 8. TERM AND EXTENSION
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8.1 Term of Research and Development Program I
8.2 Term of Agreement
8.3 Early Termination
8.4 Extensions
8.5 Effect of Termination or Expiration
Section 9. MISCELLANEOUS
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9.1 Indemnification
9.2 Non-Solicitation
9.3 Export Controls
9.4 Force Majeure
9.5 Resolution of Disputes
9.6 Publicity
9.7 Assignment
9.8 Notices
9.9 No Prejudice by inaction
9.10 Relationship of Parties
9.11 Written Amendments Only
9.12 Applicable Law; Entire Agreement; Headings
9.13 Covenants with Respect to Conduct of Litigation
9.14 Provisions relating to the Bankruptcy Code
9.15 Xxxx-Xxxxx-Xxxxxx and European Commission Filings
Exhibits
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2.1 Research and Development Program
2.7 ASC Secrecy Agreement
2.9 Responsibilities of the project Board
4.8 Price for Cable Wire
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AMENDED AGREEMENT
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This is an amended research, development and exploitation agreement (the
"Agreement"), dated and effective as of October 1, 1995, between PIRELLI CAVI
S.P.A., a corporation organized under the laws of Italy ("Pirelli"), and
AMERICAN SUPERCONDUCTOR CORPORATION, a corporation organized under the laws of
Delaware ("ASC").
WHEREAS, ASC and Cables Pirelli S.A. ("CPSA"), an Affiliate (as defined in
Section 1.1) of Pirelli, were parties to a Research and Development Agreement,
dated as of February 1st, 1990 (the "1990 Agreement"), which provided for basic
research on high-temperature superconductors to be used in wire and cable
products and development work on wire products using high-temperature
superconductors; and WHEREAS, ASC, when the 1990 Agreement was entered into, had
developed or acquired and had the ownership of or rights to utilize certain
proprietary technology relating to superconductors; and
WHEREAS, CPSA, when the 1990 Agreement was entered into, had developed and
had the ownership of certain proprietary technology relating to wire and cable
products; and
WHEREAS, CPSA, pursuant to Section 8.6 of the 1990 Agreement, has assigned
to Pirelli all of its rights, title and interest in
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and to the 1990 Agreement; and
WHEREAS, the research activities under the 1990 Agreement have continued
without interruption under an agreement between Pirelli and ASC dated as of
January 1, 1994 (the "1994 Agreement"); and
WHEREAS, Pirelli, prior to the effective date of the 1994 Agreement, had
developed and had the ownership of certain proprietary technology relating to
wire and cable products; and
WHEREAS, Pirelli is interested in developing commercially exploitable
superconducting wire and line transmission products and accessories using
superconductors and such superconductor wires not presently available and in
order to do so is willing to support the research and development of such
superconductors at ASC; and
WHEREAS, ASC has carried on and is willing to carry on research and
development program on superconducting wires, the goal of which is to produce
superconducting wires which are suitable for the production of commercially
exploitable superconducting line transmission products; and
WHEREAS, the parties wish to amend the 1994 Agreement and the terms and
conditions for the continued research and development program and to define the
ownership of the results of such a program and the rights of exploitation of
such results;
NOW, THEREFORE, for and in consideration of these premises,
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which are part and parcel of this Agreement, and of the mutual covenants and
agreements contained in this Agreement, and subject to the terms and conditions
set forth in this Agreement, the parties agree as set forth below.
Section 1. DEFINITIONS
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For the purpose of this Agreement the following capitalized terms have
the following meanings:
1.1 "AFFILIATE" means, as to any Person, another Person that, directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person.
1.2 "AGREEMENT" means this Agreement, including Exhibits 2.1, 2.7, 2.9 and
4.8 with the same effect as if they were incorporated in this Agreement itself.
1.3 "ASC" means American Superconductor Corporation, a Delaware
corporation.
1.4 "CABLE WIRE" means a Superconductor Wire, designed to transmit
electrical power or electrical signals, and to be used in the Field.
1.5 "CPSA" means Cables Pirelli S.A., an Affiliate of Pirelli.
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1.6 "CONTRACT TECHNOLOGY" means all Technology:
(i) conceived, first reduced to practice or developed by ASC alone or
in conjunction with any other party;
(ii) in which ASC has acquired rights other than by reason of this
Agreement;
during the Research and Development Period but before termination or
expiration of the Agreement and which has not become Excluded Technology (as
defined in Section 1.9).
1.7 "CONTROL CABLES" means single-core or multi-core cables made up from
Cable Wire, with or without a protective sheath, designed and intended to
operate at direct current or low frequency alternating current for the purpose
of transmitting control signals from an external transmitting point to an
apparatus to be controlled, or for transmitting signals from said apparatus to
said external transmitting point; provided, however, that for the purposes of
this Agreement, Control Cables shall not include cables for the transmission of
voice or video signals or digital signals other than digital signals which are
transmitted between said external transmitting point and said apparatus.
1.8 "CURRENT LEADS" means electrical leads made up from superconductors,
including but not limited to Materials, and designed to conduct electricity from
a source operating at room temperature to a device or equipment operating at
lower temperatures.
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1.9 "EXCLUDED TECHNOLOGY" means any Technology as described in Section
8.5.4.
1.10 "FAR EAST" means Bangladesh, Burma, Cambodia, China, India, Indonesia,
Korea, Laos, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.
1.11 "FIELD" means 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
the Field does not include Other Superconductor Products (as defined in section
1.16).
1.12 "INCO AGREEMENT" means the agreement, dated June 27, 1988, between ASC
and Inco Alloys, Inc. (together with its Affiliates, "Inco"), as that agreement
has been or may be amended, extended, modified or superseded.
1.13 "MAGNET CABLES" means single core or multi core cables made up from
Magnet Wires, with or without a protective sheath, which are designed to operate
with direct current or alternating current for the purpose of generating
magnetic fields.
1.14 "MAGNET WIRE" means an electrically insulated Superconductor Wire,
designed to operate with direct or alternating current and to be used in the
manufacture of magnet
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Cables, magnets, coils or other forms or devices for the generation of magnetic
fields.
1.15 "MATERIALS" means superconductor materials and precursors of these
materials in raw form such as granules or powder, or in any partially or fully
processed form such as Superconductor Wire which can be used, for example, as
Cable Wire, Magnet Wire or any other wire, tape, rod, sheet, tube, or
arbitrarily shaped superconductor, whether or not clad, and which become
superconductive when the temperature thereof is the temperature of liquid
nitrogen or higher.
1.16 "OTHER SUPERCONDUCTOR PRODUCTS" means the following products made from
Materials (or other superconductors): Current Leads; Magnet Wire; Magnet Cables;
Transmission Current Limiters; Distribution Current Limiters; transformers;
power electronic devices; energy storage devices; coils and other devices when
used for the generation of magnetic fields; wires or cables made from
Superconductor Wire when used for transmission of voice, data, or video signals
and which are other than Control Cables.
1.17 "PERSON" means any individual, partnership, joint venture,
corporation, trust, estate or government or any department or agency of a
government.
1.18 "PIRELLI" means Pirelli Cavi S.p.A., a corporation organized under the
laws of Italy.
1.19 "POWER CABLES" means single-core or multi-core cables
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made up from Cable Wires, with or without a protective sheath, and which are
designed to operate with direct current, or low frequency (typically 50 to 60
Hz) alternating current for the purpose of transmitting electric power.
1.20 "PRODUCTS" means any product, composition, method, machinery,
apparatus, service or the like which are or will be used in the Field including,
but without limitation, Cable Wire, Control Cables, Materials, Power Cables,
Superconductor Wire and raw materials or semi-finished products thereof, and any
method, composition or apparatus to produce them.
1.21 "PROGRAM" means Research and Development Program I and any Subsequent
Research and Development Program.
1.22 "PROJECT BOARD" see Section 2.9.
1.23 "RESEARCH AND DEVELOPMENT PROGRAM I" means the research and
development activities that are described in Section 2.
1.24 "RESEARCH AND DEVELOPMENT PERIOD" means the period prior to September
30, 1999 or prior to the end of period ASC is conducting Research and
Development Programs for New Products accepted by Pirelli, whichever is later.
1.25 "SPECIFICATIONS" means Pirelli's specifications for the electrical,
magnetic, geometrical and mechanical characteristics of, as well as their cost
objective for, the Cable Wires intended for use in the production of Power
Cables, all as currently set forth in EXHIBIT A TO EXHIBIT 2.1, as they may be
modified by
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mutual consent of the parties, and the consent of ASC shall not be unreasonably
withheld.
1.26 "SUBSEQUENT RESEARCH AND DEVELOPMENT PROGRAM" means a program for a
research and development relevant to the Field proposed by ASC pursuant to
Section 2.17.
1.27 "SUPERCONDUCTOR WIRE" means a fully reacted length of wire or tape
containing superconductor materials and which is designed to transmit either
direct or alternating current in the superconducting state.
1.28 "TECHNOLOGY" means any and all data and information of a Person,
whether or not patentable and whether or not copyrightable, including, without
limitation, ideas, concepts, formulas, methods, procedures, designs,
compositions, plans, applications, specifications (Specifications included),
drawings, techniques, processes, research, technical data, know-how, apparatus,
equipment, samples, inventions, discoveries, and the like, and financial data,
business plans, demonstrations and trade secrets (all whether or not in tangible
or oral form) and all intellectual property rights associated therewith,
including any of the aforesaid rights available to such Person which such Person
is free to disclose and license or sub-license.
1.29 "TRANSMISSION CURRENT LIMITERS" means current limiting devices for
preventing fault overload in a power transmission systems operating at voltages
greater than 20KV. Transmission
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Current Limiters does not include current limiting devices for preventing fault
overload in power distribution systems which operate at voltages equal to or
less than 20KV ("Distribution Current Limiters").
1.30 "1990 AGREEMENT" means the Research and Development Agreement dated as
of February 1, 1990 between ASC and CPSA.
1.31 "1994 AGREEMENT" means the Research and Development Agreement dated as
of January 1, 1994 between ASC and Pirelli.
Section 2. THE PROGRAMS AND THE BUSINESS DEVELOPMENT PLAN
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2.1 SCOPE OF RESEARCH AND DEVELOPMENT PROGRAMS. The Programs shall consist
of research and development activities performed by ASC in cooperation with
Pirelli (to which Pirelli has contributed as described in Sections 2.12 and
2.17) and by Pirelli as contemplated in Section 2.2 with the goal of developing
Cable Wire which can be used to produce Power and Control Cables. Research and
Development Program I is more specifically described in EXHIBIT 2.1.
2.2 PIRELLI CABLE RESEARCH AND DEVELOPMENT. Pirelli will during the
Programs and at its own expense develop, design and experimentally produce
prototypes of commercial Power and/or Control Cable(s) utilizing Cable Wire
produced by ASC.
2.3 THE BUSINESS DEVELOPMENT PLAN. Before October 1, 1997
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or another date mutually agreed by the parties, a Business Development Plan will
be performed by Pirelli at its own expense and in cooperation with ASC,
consisting of experimental production, investigating market needs, defining
technical specifications for Cable Wire and Power and Control Cable(s) meeting
such needs, defining price targets, to the extent and along the lines described
in Exhibit 2.1, with the goal of developing markets for Power Cables and/or
Control Cables.
2.4 BEST EFFORTS PERFORMANCE. Each party shall use its best efforts to
achieve the goals set forth in Sections 2.1, 2.2 and 2.3. In particular, each
party shall provide personnel qualified to perform the activities contemplated
by Sections 2.1, 2.2 and 2.3 and appropriate resources to enable Research and
Development Program I and the Business Development Plan to progress in
accordance with the goals and criteria set forth in Exhibit 2.1. During the
period extending from 1 October 1995 through 30 September 1999 (or during a
shorter period if Pirelli terminates Research and Development Program I before 1
October 1999), ASC shall spend at least US $5,000,000 per year in research and
development on superconductor materials, precursors of superconductor materials
and/or wire and tape containing superconductor materials, in addition to the
amounts paid by Pirelli pursuant to Section 2.12. If ASC cannot demonstrate that
it has either (i) spent at least US $5,000,000 as stated above or
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(ii) achieved the milestones defined in Research and Development Program I, ASC
shall be considered to have made a material breach of this Agreement.
2.5 RECIPROCAL DISCLOSURES. Subject to the provisions of Section 7
(Confidentiality), and solely for the purposes of the Programs, each party, to
the extent that it now has or hereafter obtains the right to do so, shall make
available to the other party all Technology necessary to carry out their
obligations under Sections 2.1, 2.2 and 2.3. The rights of either party to use
or exploit any Technology other than in the course of the Programs, and the
disclosure of Technology other than in and for the purposes of the Programs,
shall be as provided in Section 3 and Section 4.
2.6 CHECK POINTS. During the Programs and during the Business Development
Plan a check point in each calendar year shall be established by the parties in
order to verify the feasibility, timing and results of the activities undertaken
pursuant to that Program. In the event that Pirelli at the time of any check
point finds that a Program is not feasible from a technical point of view,
Pirelli may terminate its participation in the Program as provided in Section
8.3.
2.7. PARTICIPATION OF PIRELLI EMPLOYEES. ASC agrees to permit, and to
assist Pirelli in making it possible for, up to two (2) qualified technical
employees of Pirelli (or of any Affiliate
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of Pirelli designated by Pirelli) to participate as researchers in the Programs,
preferably for periods not less than 6 months. ASC and Pirelli agree that,
during the time in which any such employees are participating in Programs, they
shall be employees of Pirelli (or of an Affiliate of Pirelli), and shall not be
deemed to be employed by ASC or any of its Affiliates during that time. Pirelli
shall pay such employees, salaries and other benefits as additional funding for
Programs. As employees of Pirelli, such employees shall have no authority
whatsoever to act on behalf of or contractually bind Pirelli or any of its
Affiliates. At the end of their participation in Programs, Pirelli shall have
the right to appoint additional employees to replace the employees who leave
Programs. Each such individual designated by Pirelli shall execute a
confidentiality agreement with ASC, in form and substance as set forth in
EXHIBIT 2.7.
2.8 VISITS. During the Programs, each party may send technical personnel to
the other party or receive technical personnel from the other party for
consultation on the problems arising from the research and development
activities and for discussion of the results of the Programs. The duration and
frequency of these consultations and visits shall be determined by informal
agreement of the parties, from time to time, as requests may be made therefore,
and permission for such visits shall not be unreasonably withheld.
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2.9 PROJECT BOARD. There is hereby established a Project Review Board (the
"Project Board"), which shall have the responsibility for the management,
supervision, approval or disapproval of the research during the Programs and of
Program budgets. The Project Board shall be comprised of four members, two
appointed by ASC and two appointed by Pirelli. The Project Board's
responsibilities, obligations and powers are set forth in EXHIBIT 2.9.
2.10 PROJECT BOARD MEETINGS. The Project Board shall meet on the dates of
the check points established pursuant to Section 2.6 and at such other times as
the parties may agree to. Personnel of the parties, other than the Board
Members, may be invited to the meetings on the basis of their contribution to
the technical problems under discussion. Minutes of each meeting shall be kept
and shall be countersigned by one representative of each party within thirty
(30) days after each meeting.
2.11 RECORDS AND REPORTS. ASC will prepare and maintain full and accurate
records and books relating to the progress and status of the Programs, the
conception and reduction to practice of the Contract Technology, all financial
matters connected therewith, and all expenditures made or costs incurred in
connection therewith. These records and books shall be made available at all
reasonable times to Pirelli and the Project Board for the purposes of
management, supervision and verification of ASC's obligations
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hereunder. At least once each calendar quarter, within fifteen (15) days after
the end of the quarter, ASC will prepare and deliver to Pirelli and the Project
Board reports setting forth:
(a) summaries of the status and progress of then-current Programs;
(b) all expenditures made or costs incurred in connection therewith; and
(c) projections of expenditures required in connection with then-current
Programs for each of the four calendar quarters following the date of such
reports.
2.12 FUNDING OF RESEARCH AND DEVELOPMENT PROGRAM I AND SUBSEQUENT RESEARCH
AND DEVELOPMENT PROGRAMS.
(a) Pirelli shall, subject to the provisions of Section 8.3 and the timely
performance by ASC of all its obligations hereunder, pay to ASC for its
performance under Research and Development Program I in each contract year,
starting from the effective date of this agreement the following amounts:
Year 1 Year 2 Year 3 Year 4
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US$ 3,500,000 2,500,000 2,500,000 1,500,000
Of the amount for Year 1, US $1,000,000 is for research and development
work performed prior to October 1, 1995 and US $2,500,000 is for work subsequent
to October 1, 1995.
The above payments shall be invoiced quarterly in advance.
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With respect to Year 1, the first two payments (in a total amount of
$2,000,000 now being due) shall be paid before March 31, 1996, and
subsequent payments shall be paid within ninety (90) days of the date of
invoice. Payments for Years 2 through 4 shall be made within sixty (60) days of
the date of invoice, in accordance with the payment schedule in the projected
budget set forth in Exhibit 2.1, as that budget may be reasonably adjusted by
the parties with reference to the quarterly projections submitted by ASC
pursuant to Section 2.11. All amounts paid by Pirelli pursuant to this Section
2.12 shall be expended for no purpose other than Research and Development
Program I unless re-allocated by Pirelli according to Section 2.17. All
equipment purchased with such amounts and with the approval of Pirelli shall be
the property of ASC. All payment obligations of Pirelli under this Section shall
cease upon early termination of this Agreement pursuant to Section 8.3. In the
event that Pirelli has made an advance quarterly payment and Research and
Development Program I is terminated before the end of a quarter for which
payment has been made, ASC shall refund to Pirelli the excess of the quarterly
payment above amounts expended prior to the notice of termination and amounts
reasonably required to terminate the Program after such notice has been given
unless Pirelli has not re-allocated funding in accordance with Section 2.17.
(b) The funding to be provided by Pirelli for a Subsequent
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Research and Development Program shall be as follows:
(i) 25% of the cost relating thereto; or
(ii) such different percentage the parties may establish as set forth
below;
PROVIDED HOWEVER that ASC shall make available funding for the development
of Technology relevant to such Program at a level that is not less than
Pirelli's contribution under the Program, which calculation shall not take into
account any funding received by ASC from third parties on specific programs
outside and not relevant to the Field.
The above joint funding by Pirelli and ASC of such Program is to be
proportional to the projected business in the Field utilizing the Technology
relative to the total projected business utilizing the Technology. The initial
funding shall be as provided in (b) (i) above unless the parties agree
otherwise. Thereafter, within the month of February each year the parties shall
discuss in good faith if there are elements at hand which may lead to the
determination of the value of the business in the Field related to the total
business to which the Technology in question relates. If the parties determine
to establish a different percentage then the funding, from the date of such
determination, shall be amended accordingly.
If the parties cannot agree on the percentage to be provided by Pirelli,
either party may request that the relevant percentage,
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based on the above criteria, be defined by an independent expert agreed upon by
the parties or, failing such agreement, by the President of the American
Arbitration Association, at the request of either party.
2.13 CERTAIN ASC RESEARCH PROJECTS NOT INVOLVING POWER OR CONTROL CABLES.
During the Research and Development Period, prior to entering into any
relationship with any third party concerning research directed to the
development, manufacture, installation or operation of products which are
designed to be used for transmission of voice, data or video signals, ASC shall
give Pirelli notice of its intent to enter a relationship with a third party,
and, if requested by Pirelli, Pirelli and ASC shall attempt, in good faith, to
agree upon a similar relationship between the two of them. If Pirelli does not
request such negotiation, or, after good faith negotiations by ASC and Pirelli
agreement on the terms of the relationship is not reached within six months of
ASC's notice, ASC shall have the right to enter into such a relationship with a
third party at any time during the subsequent 24-month period. If ASC does not
enter into a written agreement with such third party within that 24-month
period, ASC's right to enter into such an agreement shall cease and Pirelli
shall again have the right of first negotiation, described above, as to any such
proposed subsequent relationship.
2.14 OTHER ASC RESEARCH PROJECTS INVOLVING POWER CABLES.
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Without the prior written consent of Pirelli, during the Research and
Development Period ASC shall not enter into any other agreement or other
arrangement concerning participation in, funding of, or any partnership, joint
venture or similar relationship involving, ASC research activities directed
specifically to the Field with:
(a) a utility whose business includes the generation and/or distribution of
electricity,
(b) any person or company, or through an affiliate or company, engaged in
the manufacture and sale of Cable Wire, Control Cables or Power Cables, or
(c) any organization involved in Cable Wire, Control Cable or Power Cable
research.
This Section 2.14 shall not affect the right of ASC to enter into any
agreement with any person or company outside the Field, but during the Research
and Development Period ASC shall inform Pirelli of any proposed agreement with a
party within (a) through (c) above prior to entering into the same.
2.15 RESEARCH PROJECT RELATING TO TRANSMISSION CURRENT LIMITERS. Not later
than 1 June 1996, ASC shall provide Pirelli a proposal for a new separately
funded program to be carried out by the parties for the research and development
and commercial exploitation of Transmission Current Limiters. Thereafter, the
parties will negotiate in good faith with respect to an agreement
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for the research and development and commercial exploitation of Transmission
Current Limiters. If the parties fail to reach such agreement within three (3)
months from the date ASC provides its proposal to Pirelli, then ASC shall be
free to negotiate also with third parties provided that ASC hereby grants
Pirelli a first refusal right to enter into any such agreement. ASC shall,
before consummating any such agreement with a third party, give Pirelli notice
(a "License Notice") containing a copy of the proposed agreement with such third
party relating to the Transmission Current Limiters. Pirelli shall have a period
of ninety (90) days following the License Notice in which to exercise its right
of first refusal. If Pirelli does not exercise its right of first refusal within
the applicable time, ASC shall be free to consummate such arrangement with the
relevant third party; provided the transaction is consummated without any
material changes which are more favorable to such third party than the terms
specified in the License Notice.
2.16 CLEARANCE.
(a) The parties shall, before June 30, 1997, jointly perform a patent
clearance of Contract Technology.
(b) ASC shall, during the term of this Agreement, inform Pirelli of any
third party industrial property rights known to it that may be relevant to the
activities of ASC in the Field or to the rights granted to Pirelli in Section
4.1.
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(c) ASC shall, promptly after the date of this Agreement, inform Pirelli of
the existence of any third party know-how or intellectual property rights
relating to the Field available to it which it cannot disclose or license to
Pirelli and provide Pirelli evidence in support of such information.
(d) ASC Undertakes not to knowingly direct a Program in a way which would
result in Contract Technology being dependent on third party's intellectual
property right, unless ASC has either (i) disclosed to Pirelli all the relevant
information known to it with respect to such third party intellectual property
rights and any related negotiations or agreements, or (ii) succeeded in
obtaining licenses from such third parties relating to such rights, including
the right to grant Pirelli a sub-license to the extent necessary to exercise the
rights granted in Section 4.1.
2.17 PIRELLI OPTION FOR ADDITIONAL RESEARCH AND DEVELOPMENT IN THE FIELD.
(a) If ASC, during the term of this Agreement, becomes aware of Technology
which has potential applications in the Field or if ASC begins exploratory
research and development concerning such Technology, itself, in collaboration
with or through third parties, then ASC shall promptly inform Pirelli. When ASC
has concluded that the Technology has a potential for Product applications in
the Field, a research and development proposal for a Subsequent Research and
Development Program shall be submitted
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to Pirelli. Such proposal shall contain a detailed written program, including:
(i) a proposed statement of work; (ii) an analysis of the potential advantages
of the proposed activities with respect to the Technology being developed under
Research and Development Program I or the then existing Subsequent Research and
Development Programs; (iii) to the extent feasible, an analysis of ASC's and any
third party's intellectual property rights relating to the proposed activities
and the exploitation of the resulting products which is known to ASC; (iv)
milestones; (v) and projected costs for such Program.
(b) If Pirelli accepts to fund a Subsequent Research and Development
Program the following shall apply:
(i) the terms and conditions of this Agreement shall apply to such
Subsequent Research and Development Program;
(ii) the funding to be provided by Pirelli for such Subsequent
Research and Development Program may be in addition to the funding provided for
Research and Development Program I pursuant to Section 2.12 or be provided by
allocating, wholly or partly, the funding under Section 2.12 to such Subsequent
Research and Development Program.
(c) If Pirelli elects not to participate in the funding of a proposal for a
Subsequent Research and Development Program the following shall apply:
(i) ASC shall have the right to pursue such Subsequent
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Research and Development Program itself at its own expense, but ASC's right to
accept funding of such Subsequent Research and Development Program from any
third party is subject to the provisions of Section 2.14;
(ii) ASC shall from time to time inform Pirelli of the results of its
research and development relating to such Subsequent Research and Development
Program;
(iii) Pirelli shall, for a period of four (4) years from the date of
the proposal in section (a) above, have the right to participate in the funding
of such Subsequent Research and Development Program. If Pirelli makes such
election then Pirelli shall, in addition to the funding going forward calculated
in accordance with Section 2.12 (b), make a payment to ASC for the activities
undertaken by ASC prior to such election equal to the cost of such Subsequent
Research and Development Program up to the date of such election calculated in
accordance with Section 2.12 (b) multiplied by a factor of 1,5;
(iv) upon Pirelli exercising the right in Section (c) (iii) the
provisions of Section (b) shall apply to such Subsequent Research and
Development Program;
(d) if Pirelli has not exercised the right in Section (c) (iii) within the
period stated therein the provisions of Section 8.5.4 shall apply to such
Subsequent Research and Development Program.
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Section 3. OWNERSHIP OF RESEARCH AND DEVELOPMENT
------------------------------------------------
PROGRAM RESULTS
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3.1 OWNERSHIP OF CONTRACT TECHNOLOGY.
(a) ASC shall own all Contract Technology, except as provided in Section
3.1 b., but Pirelli shall have exclusive rights in all such Contract Technology
in the Field as provided in Section 4.
(b) Pirelli shall own Contract Technology developed in the course of a
Program directed specifically to the design and manufacture of Power Cables and
Control Cables, but ASC shall have the exclusive, irrevocable and royalty-free
right to use all such Contract Technology outside the Field.
3.2 COOPERATION. Subject to Sections 3.3 and 7, ASC and Pirelli shall
provide each other with all Technology which is useful or needed to obtain
patents directed to Contract Technology owned by the other party in any country
according to the patent laws of the countries where the patent protection is
sought by the other party; including under any international patent convention
such as the Paris Convention, the Patent Cooperation Treaty or the European
Patent Convention. Prior to the filing by one party or its Affiliate of a patent
application containing information as to Technology of the other party, such one
party shall provide to such other party a copy of the proposed patent
application at
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least thirty (30) business days prior to the proposed filing date of or earliest
bar date for such application, and unless such one party has received the
consent of the such other party or its Affiliate (which consent shall not
unreasonably be withheld, provided that it shall not be unreasonable for ASC to
withhold consent to disclosure in a patent application of Technology owned by
ASC relating to the manufacture, but not to the specifications, properties or
characteristics, of Cable Wires or Superconductor Wires, and provided further
that it shall not be unreasonable for Pirelli to withhold consent to disclosure
in a patent application of Technology owned by Pirelli relating to the
manufacture, but not to the specifications properties or characteristics, of
Power Cables or Control Cables), or has met the conditions of Section 3.3, such
one party shall not file such proposed application.
3.3 CONFIDENTIALITY RESTRICTION. Neither party shall disclose any
Technology received from the other party, or otherwise disclose any such
Technology of the other party in a patent application or in connection with the
filing or prosecution of any patent application or the defense or enforcement of
any patent except: (i) as permitted by Section 7, and (ii) to the extent that
one party or its Affiliate has included any such Technology in a patent
application filed by such one party or its Affiliate, such Technology may be
included in applications filed by the other party or its Affiliates.
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If in the judgment of the other party it is necessary to include any
Technology of such one party in a patent application, the other party will so
inform such one party, and the parties will consult in good faith to attempt to
resolve whether such Technology may be so included.
Section 4. EXPLOITATION RIGHTS
------------------------------
4.1 PIRELLI'S EXPLOITATION RIGHTS.
(a) ASC grants Pirelli and Pirelli's Affiliates the worldwide, irrevocable,
royalty-bearing, exclusive license in the Field, to use Contract Technology to
manufacture, have manufactured, use and sell the Products.
(b) Pirelli shall have the right in the Field to sub-license any ASC patent
rights included in Contract Technology licensed to Pirelli pursuant to Section
4.1 a. Pirelli will notify ASC before entering into formal negotiations with any
third party with respect to grant of sub-licenses hereunder, will keep ASC
constantly and fully informed with respect to any such negotiations under
specific ASC patent rights, and allow representatives of ASC to consult with
Pirelli's attorneys with respect to all aspects of such negotiations, provided
however that the foregoing shall not limit Pirelli's rights to conduct
preliminary discussions with third parties relating to
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sub-licensing hereunder without prior notice to ASC. If the third party grants
any rights to Pirelli pursuant to such negotiations, Pirelli shall use its best
efforts to ensure that such rights inure to the benefit of ASC, ASC Affiliates,
and joint ventures to which ASC is a party at least to the extent that they
include rights to manufacture, use or sell any Products.
(c) Pirelli shall not knowingly sell Cable Wire, Superconductor Wire or
Materials to customers who intend to use them outside the Field. To the extent
it is reasonably practicable, Pirelli shall sell Cable Wire, Superconductor Wire
or Materials that potentially have applications outside the Field only under an
express agreement limiting the use thereof to use in the Field. If use outside
the Field has occurred notwithstanding the provisions of this Section, Pirelli
shall supply to ASC all data and information relating sales to a party making
such use as ASC may reasonably require to enforce its rights hereunder.
4.2 ASC'S EXPLOITATION RIGHTS.
(a) Pirelli grants to ASC, ASC's Affiliates, and any joint venture in which
ASC or ASC's Affiliates hold an interest, the exclusive, irrevocable and
royalty-free license, under all rights now and hereafter granted to Pirelli
pursuant to Section 4.1, to use Contract Technology in the Field:
(i) to manufacture Cable Wire in Canada, the United States of America,
Mexico, Japan and the Far East, subject to Sections
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4.1(b), 4.3 and 4.4;
(ii) to sell such Cable Wire in and for use in Canada, the United States of
America and Mexico exclusively to Pirelli and Pirelli's Affiliates, who shall
purchase such Cable Wire for use in Canada, the United States of America and
Mexico only from ASC or ASC's Affiliates or, at ASC's option, a joint venture in
which ASC or ASC's Affiliates hold an interest, subject to Sections 4.1(b), 4.6,
4.8 and 8.5.3;
(iii) to sell such Cable Wire in Japan for use in the domestic market of
Japan, subject to the provisions of Sections 4.1(b) and 4.3;
(iv) to sell such Cable Wire in and for use in the Far East exclusively to
Pirelli and Pirelli's Affiliates who shall purchase such Cable Wire for use in
Products sold in the Far East only from ASC, ASC Affiliates or manufacturing
operations established pursuant to Sections 4.1(b), 4.3, 4.4 or 4.5.
(b) Nothing in this Agreement shall limit ASC's right to manufacture, use
or sell Materials or Superconductor Wire for any application which is not in the
Field. ASC shall not knowingly sell Materials or Superconductor Wire to
customers (other than Pirelli) who intend to use such Materials or
Superconductor Wire in the Field. To the extent it is reasonably practicable,
ASC shall sell Materials or Superconductor Wire that potentially have
applications in the Field only under an express agreement limiting
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the use thereof to use outside the Field. If use in the Field has occurred
notwithstanding the provisions of this Section, ASC shall supply to Pirelli all
data and information relating sales to a party making such use as Pirelli may
reasonably require to enforce its rights hereunder.
4.3 MANUFACTURING AND SUB-LICENSING IN JAPAN.
Notwithstanding the provisions of Sections 4.1 and 4.2:
(a) MANUFACTURE OF CABLE WIRE. Any manufacturing of Cable Wire in Japan by
a joint venture in which ASC or ASC Affiliates hold an interest shall be by such
a venture in which ASC and/or ASC Affiliates, alone or in combination with
Pirelli and/or Pirelli Affiliates, hold a majority interest;
(b) PIRELLI RIGHTS. Pirelli may grant any third party in Japan
non-exclusive rights in the Field under any patent rights included in Contract
Technology;
(c) SUB-LICENSING FOR CONTROL AND POWER CABLES. Pirelli will, at the
request of ASC, grant customers in Japan of ASC, ASC Affiliates, or joint
ventures in which ASC or ASC Affiliates hold an interest, a royalty-free,
non-exclusive, sub-license under any patent rights included in the Contract
Technology to use Cable Wire in Power and Control Cables in the domestic market
of Japan, provided that Pirelli shall not be obliged to grant any such
sub-license unless any such customer, at the request of Pirelli, has disclosed
to Pirelli all patent rights available to it at the
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time that ASC's request is made relating to Cable Wire and Power and Control
Cables, and, at the request of Pirelli, has granted Pirelli non-exclusive,
royalty-free rights under such patent rights to use Cable Wire in Control or
Power Cables in the domestic market of Japan. For the avoidance of doubt it is
hereby declared that nothing contained in this Agreement shall constitute an
obligation on Pirelli to grant licenses under any patent rights owned by it or
its Affiliates relating to Power and Control Cables.
4.4 MANUFACTURING IN CANADA THE UNITED STATES OF AMERICA AND MEXICO AND THE
FAR EAST.
(a) CANADA, THE UNITED STATES OF AMERICA AND MEXICO. In the event that ASC
decides to establish a separate manufacturing facility exclusively for the
manufacture of Cable Wire in Canada, the United States of America or Mexico,
Pirelli and ASC agree to investigate in good faith the potential for Pirelli's
participation in the manufacturing of Cable Wire in Canada, the United States of
America or Mexico through a minority interest in such facility. ASC shall have
the right to sub-license the rights granted in Section 4.2 a. to such a
manufacturing operation. Such sub-license shall be a royalty-bearing license and
may include the right to use any Contract Technology licensed to ASC under
Section 4.2 a.
(b) THE FAR EAST. If the opportunity to establish
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manufacturing facilities for the production of Cable Wire in the Far East shall
be identified by ASC or be offered to ASC by a third party, then ASC shall
promptly notify Pirelli of such opportunity and, within sixty (60) days of such
notification, Pirelli may elect to have such Cable Wire manufactured by a joint
operation controlled by ASC in which ASC shall have a majority interest if
permitted by law, and otherwise an interest greater than that of any other
single participant, and in which Pirelli also shall have an interest. ASC shall
have the right to sub-license the rights granted in
Section 4.2 a. to such a manufacturing operation. Such sub-license shall be a
royalty-bearing license and may include the right to use any Contract Technology
licensed to ASC under Section 4.2 a. in the manufacture of Cable Wire. Such
manufacturing operation shall sell such Cable Wire to third parties only for use
in the domestic market of Japan, as provided in Section 4.2 a., or to Pirelli
and Pirelli's Affiliates.
4.5 MANUFACTURING OUTSIDE CANADA, THE UNITED STATES OF AMERICA, MEXICO,
JAPAN AND THE FAR EAST. Notwithstanding the provisions of section 4.1, Pirelli
shall, subject to Section 4.8, purchase from ASC or ASC Affiliates, in the
aggregate, acumulative total of at least US $10,000,000 (ten million US
dollars) of Cable Wire for use in Control Cable and Power Cables to be sold
outside Canada, the United States of America, Japan,
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Mexico and the Far East prior to commencing commercial manufacture of Cable Wire
pursuant to the license in Section 4.1 itself or through any Affiliate. ASC
shall have the right to participate, and at its request may participate, in any
such manufacturing of such Cable Wire by a joint Pirelli-ASC venture in which
ASC has a minority interest, the terms and conditions of such joint venture and
the extent of ASC's interest therein to be determined by subsequent negotiations
between the parties, the conduct of such negotiations shall not delay any
activities in relation to the setting up of such manufacturing. In any event,
however, Pirelli and ASC agree to investigate in good faith the potential for
the supply of partially processed Materials, such as billets or rods, for use in
the manufacture of such Cable Wire employing a metallic precursor process from
ASC or a joint venture including ASC and Inco, to the extent that ASC or such
joint venture can supply such partially processed Materials on reasonable
commercial terms.
4.6 EXCLUSIVE SUPPLY; PRESERVATION OF PIRELLI'S SUPPLY
(a) Pirelli agrees that Pirelli and Pirelli Affiliates will purchase from
ASC, ASC Affiliates, and joint ventures (other than manufacturing operations
established pursuant to Section 4.5) in which ASC or ASC Affiliates have an
interest Pirelli's and Pirelli Affiliates' requirements for Cable Wire utilizing
or covered by any Contract Technology ("Contract Technology Cable Wire") as
follows:
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(i) Pirelli's and Pirelli Affiliates' requirements for Contract
Technology Cable Wire used or sold in Canada, the United States of America, and
Mexico,
(ii) To the extent that such requirements are not purchased from
manufacturing operations established pursuant to Section 4.5, Pirelli's and
Pirelli Affiliates' requirements for Contract Technology Cable Wire used or sold
in the Far East and Japan, and
(iii) To the extent that such requirements are not purchased from
manufacturing operations established pursuant to Section 4.5, Pirelli's and
Pirelli Affiliates' requirements for Contract Technology Cable Wire used or sold
outside Canada, the United States of America, Canada, Mexico, Japan and the Far
East.
(b) ASC shall, with respect to the countries and geographical areas of
Section 4.6 a. supply to Pirelli and Pirelli's Affiliates all the quantities for
Contract Technology Cable Wire that may be ordered by them under this Agreement.
Two years before the expected commencement of commercial sales, the parties will
develop a procedure to be followed for forecasting and meeting the needs of
Pirelli of such Cable Wire to be manufactured by ASC, ASC Affiliates and any
joint venture (other than manufacturing operations established pursuant to
Section 4.5) in which ASC or ASC Affiliates hold an interest and supplied to
Pirelli and Pirelli Affiliates pursuant to Section 4.6 a. and for
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forecasting the facility requirements of ASC for such supplies of such Cable
Wire on an on-going basis. If ASC, ASC Affiliates or such joint ventures
thereafter (i) do not together commit to supply all requirements of such Cable
Wire meeting the Specifications for use in Products to be sold in Canada, the
United States of America and Mexico for a given calendar year, (ii) do not
together commit to supply all requirements (other than requirements provided by
manufacturing operations established pursuant to Section 4.5) of such Cable Wire
for use in Products to be sold in the Far East or Japan by Pirelli and Pirelli
Affiliates for a given calendar year, (iii) do not together commit to supply all
requirements (other than requirements provided by manufacturing operations
established pursuant to Section 4.5) for such Cable Wire for use in Products to
be sold outside Canada, the United States of America, Canada, Mexico, Japan and
the Far East for a given calendar year, or (iv) having committed to supply a
particular quantity of such Cable Wire to Pirelli or Pirelli's Affiliates for a
given calendar year, fail to supply at least 80% of that amount as ordered by
Pirelli and Pirelli's Affiliates, then Pirelli may, notwithstanding the
provisions of Sections 4.2, 4.5 and 4.6 a., (i) import such Cable Wire from
manufacturing operations established pursuant to Section 4.5 during the period
of shortage to make up for the resulting shortage or (ii) purchase such Cable
Wire from other sources in the relevant territory,
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provided that to the extent Pirelli purchases any Contract Technology Cable Wire
from other sources Pirelli will pay ASC a royalty with respect to such Cable
Wire at the royalty rate specified in Section 4.12.
(c) If, in any calendar year, Pirelli, Pirelli Affiliates and Pirelli joint
ventures (other than joint Pirelli-ASC joint ventures authorized by Section 4)
obtain less than all of their requirements of Contract Technology Cable Wire
from ASC, ASC Affiliates, joint Pirelli-ASC joint ventures authorized by Section
4 or manufacturing operations established pursuant to Section 4.5. Pirelli will
pay ASC a royalty with respect to all Contract Technology Cable Wire obtained
from anyone other than ASC, ASC Affiliates, joint Pirelli-ASC joint ventures
authorized by Section 4 or manufacturing operations established pursuant to
Section 4.5. The royalty shall be paid at the royalty rates specified in section
4.12 with respect to the first 5% of such requirements of Contract Technology
Cable Wire obtained from such others and, only with respect to the royalty rate
specified in section 4.12 (b) for royalties to ASC, at 150% of such royalty with
respect to all other Contract Technology Cable Wire obtained from such others.
(d) The provisions of Section 4.6 c. shall not apply to the extent that the
failure of Pirelli, Pirelli Affiliates and Pirelli joint ventures (other than
joint Pirelli-ASC joint ventures
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authorized by Section 4) is caused by ASC's failure to commit to supply or to
supply cable wire as provided in Section 4.6 b.
4.7 IRREVOCABILITY OF PIRELLI'S EXPLOITATION RIGHTS.
(a) It is agreed and understood that the rights granted to Pirelli in
section 4.1, shall not and cannot be revoked, voided, or rescinded for any
reason whatsoever in consideration of the financing of the Programs provided by
Pirelli under this Agreement, the 1990 Agreement and the 1994 Agreement. ASC's
sole remedy in case of Pirelli's breach of any of the provisions of this
Agreement shall be limited to the recovery of any damages, if applicable, and of
any payments due hereunder, plus interest on any sum recovered. ASC waives any
claims or rights to seek recision of this Agreement.
(b) If Pirelli terminates this Agreement as provided in section 8.5.2 the
rights granted to Pirelli shall be modified as provided in Section 8.5.2.
4.8 PRICE OF CABLE WIRE. The price at which Cable Wire shall be sold by ASC
and ASC Affiliates and purchased by Pirelli for commercial applications pursuant
to this Section 4 shall be determined by the parties within two (2) years from
the date of this Agreement in accordance with SCHEDULE 4.8 attached hereto.
4.9 SALES OF SUPERCONDUCTOR WIRE TO PIRELLI. In consideration of the
contribution made by Pirelli through the 1990 and 1994 Agreements, Pirelli and
its Affiliates shall have the
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right, in any year following the first year in which ASC and its Affiliates
sell at least US $7,500,000 (seven and one-half million US dollars) worth of
Magnet Wire in Europe, to purchase from ASC and its Affiliates Superconductor
Wire to be used in the manufacture of Magnet Wire and to sell Magnet Wire only
in Europe. The price and other terms for the sale of Superconductor Wire to
Pirelli pursuant to this Section 4.9 shall be determined by future agreement
between the parties, but in any case shall be at least as favorable to Pirelli
as those on which Superconductor Wire in similar quantities and under similar
conditions is sold by ASC to third parties.
4.10 SUBLICENSE OF RIGHTS UNDER INCO AGREEMENT. In connection with the
joint ventures authorized by Section 4.5 or the license granted under Section
4.1 and to the extent it is permitted to do so, ASC will offer to sublicense the
wire forming technology, licensed to it pursuant to the Inco Agreement, to
Pirelli, Pirelli Affiliates, Pirelli's sub-licensees or Pirelli joint ventures
authorized by Section 4.5; and Pirelli, Pirelli Affiliates, Pirelli's
sub-licensees and Pirelli joint ventures authorized by Section 4.5 may accept
such sublicenses on the terms required by the Inco Agreement as needed in
connection with their manufacture and sale of Products.
4.11 ADDITIONAL LICENSES. In connection with the license granted pursuant
to Section 4.1 and to the extent it is permitted
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to do so, ASC will exercise its best efforts to cause its licensors of Contract
Technology to grant to Pirelli or Pirelli Affiliates, such rights as may be
required by Pirelli or Pirelli Affiliates, to exercise the rights in the Field
granted herein. ASC shall, within thirty (30) days after the execution of this
Agreement, supply Pirelli with a list of any such licenses, and shall up-date
such list twice per year before June 30 and December 31. If ASC, notwithstanding
exercising its best efforts, is unable to secure such rights for Pirelli or
Pirelli's Affiliates it shall promptly inform Pirelli giving full details
relating to the arrangement in question.
4.12 ROYALTY AMOUNTS. Under any royalty-bearing license granted pursuant to
Section 4.1 to Pirelli, Pirelli's Affiliates, or Pirelli joint ventures
authorized by Section 4.5, Pirelli will pay ASC royalties with respect to
Products (other than Control Cables or Power Cables) used or sold by or on
behalf of the relevant licensee, provided however that no royalty shall be
payable in relation to the use or sale of such Products purchased from ASC or
ASC Affiliates. The royalties shall be paid in an amount including (a) the
aggregate royalties payable by ASC to third parties with respect to the exercise
by or on behalf of the licensee of any rights sublicensed to the relevant
licensee hereunder (such payments required by any existing agreements of ASC to
be disclosed within ninety (90) days after the date of this
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Agreement and any payments required by future agreements of ASC to be
disclosed promptly after the execution of such agreements, subject to the
provisions of Section 2.16) and (b) a royalty with respect to Products (other
than Control Cables or Power Cables) used or sold by or on behalf of the
relevant licensee calculated from the net sales price of Products (other than
Control Cables or Power Cables) at a rate of **** of the net sales price for
Products (other than Control Cables or Power Cables) sold by or on behalf of the
licensee up to US $10,000,000 (ten million US dollars) in any year, and **** of
the net sales price for any excess over US $10,000,000 (ten million US dollars)
in Product (other than Control Cables or Power Cables) sales in any year. The
net sales price for any sale to a party which is neither Pirelli nor a Pirelli
Affiliate shall be defined as the gross sales price less (i) normal sales
discounts (ii) allowances for defective products, (iii) freight, (iv) insurance,
(v) packing, (vi) commissions, and (vii) any value added or other taxes levied
on the manufacture or the sale. The net sales price for any sale to Pirelli or a
Pirelli Affiliate shall be defined as the net sales price for the most recent
sale to a party which is neither Pirelli nor a Pirelli Affiliate involving
similar types and quantities of Products (other than Control Cables or Power
Cables). In the event that a net sales price cannot be established in this
manner, the applicable net sales price will be
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
negotiated in good faith by the parties, and if the parties cannot, in good
faith, agree on an applicable price, for the purpose of settling such dispute
only, royalties will be payable by the licensee at the royalty rate specified
above multiplied by *************************** of the direct manufacturing
costs (including, without limitation, materials, labor and energy) of the
Products (other than Control Cables or Power Cables) sold, however, the **** of
the direct manufacturing costs shall not be used for any other purpose,
including determining the net sales price of Products (other than Control Cables
or Power Cables).
It is understood that only one royalty under this Section shall be payable
in respect of any Product and that royalty shall accrue on the Product sold by
Pirelli, Pirelli's Affiliates, or Pirelli joint ventures authorized by Section
4.5 to a third party, except that the royalty due on sale of Cable Wire should
accrue on its sale to either a third party or to Pirelli or a Pirelli Affiliate
as provided in this Section 4.12.
4.13 TRANSFER COSTS. Pirelli shall reimburse ASC its reasonable expenses,
including salaries and other reasonable and customary benefits of ASC personnel,
for the implementation of the licenses granted pursuant to Section 4.1, of
Contract Technology relating to facilities, equipment and processes employed in
ASC's manufacture of Cable Wire.
4.14 DISCLOSURE OF TECHNOLOGY AND TECHNICAL ASSISTANCE BY
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ASC. In connection with the license granted pursuant to Section 4.1, ASC shall
disclose to Pirelli, on a continuing basis, such licensed Contract Technology as
it exists from time to time during the term of this Agreement as may be
necessary or useful for Pirelli to exercise such rights and shall, at the
request of Pirelli, provide reasonable technical assistance as hereinafter
provided.
The disclosure of Technology by ASC, for use by Pirelli in connection with
the exploitation of Pirelli's rights under this Section 4, shall take place
through exchange of written reports, personal meetings, visits of Pirelli
personnel to the facilities of ASC and/or ASC's Affiliates and ASC allowing
Pirelli access to and the right to review and copy documents, interview
personnel of ASC etc., at reasonable intervals, during normal office hours and
with reasonable prior written notice.
ASC shall, at the request of Pirelli, provide Pirelli with Contract
Technology and technical assistance as reasonably required to permit Pirelli to
exercise the rights granted in section 4.1 through:
(a) supply of technical information such as, without limitation,
drawings, blue-prints, raw material and technical specifications, machinery,
equipment and plant designs, manufacturing data and procedures, maintenance
procedures, manuals, list of suppliers, quality control and waste handling;
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(b) training of Pirelli personnel in the facilities of ASC;
(c) technical assistance as reasonably requested by Pirelli by ASC's
personnel at the facilities of Pirelli, including assistance for installation
and commissioning of the first plant of Pirelli;
(d) as reasonably requested by Pirelli, periodic visits of ASC's
technicians to Pirelli facilities for reasonable periods of time (e.g. visits by
two technicians each for a period of two days once every six (6) months) to meet
with Pirelli's technicians to discuss the techniques for the manufacture of
Cable Wire and the maintenance of the equipment for such manufacture;
(e) reasonable availability of ASC's technicians to answer questions and
solve problems that Pirelli may submit in writing or by phone.
The duration and timing of the technical assistance and the training shall
be defined by the parties in good faith negotiations, provided that Pirelli
shall, prior to starting its own production, have the right to send up to ten
(10) technicians to any Cable Wire manufacturing facility of ASC or ASC's
Affiliates or, if ASC or its Affiliates have no such facility, the manufacturing
facility of a joint venture of ASC, for a period of up to six (6) months each to
receive training, and further provided that ASC shall provide reasonable
technical assistance
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for a period of six (6) months to the first facility constructed by Pirelli,
Pirelli's Affiliates or Pirelli-ASC joint ventures to provide assistance in the
installation and commissioning of such facility for the manufacture of Cable
Wire.
As provided in section 4.14, Pirelli shall pay all of ASC's reasonable
expenses in connection with any and all technical assistance, training and
transfer of information envisaged or provided for under this Section 4.15.
Pirelli may from time to time supply to ASC data and information relating
to its manufacturing techniques relating to Cable Wire as required to permit ASC
to supply Pirelli and Pirelli's Affiliates with Cable Wire of similar quality as
the Cable Wire produced by Pirelli.
SECTION 5. 1990 AGREEMENT AND THE 1994 AGREEMENT
5.1 PARTIAL TERMINATION OF THE 1990 AGREEMENT. The 1990 Agreement shall
terminate upon payment to ASC of all payments due to ASC from Pirelli under the
1990 Agreement, and thereafter shall have no further legal effect except that
the following provisions of the 1990 Agreement shall remain in effect: Article
II, Section 2.13 (RIGHTS AND OBLIGATIONS OF CLOSE OF RESEARCH PROGRAM) and, to
the extent required by Section 2.13, Article I (Definitions) and Article III
(NEW TECHNOLOGY). ASC agrees that it has received from Pirelli all payments due
to ASC from Pirelli under the 1990 Agreement.
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5.2 PARTIAL TERMINATION OF THE 1994 AGREEMENT. The 1994 Agreement shall
terminate upon payments to ASC of all payments due to ASC from Pirelli under the
1994 Agreement, and therefore shall have no further legal effect except that the
following provisions of the 1994 Agreement shall remain in effect: Section 3.1
and 3.2; Article 1 (Definitions); and Article 7 (Confidentiality).
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF PIRELLI. Pirelli represents and
warrants to ASC as follows:
6.1.1 ORGANIZATION AND AUTHORITY. Pirelli is a corporation duly
organized, validly existing and in good standing under the laws of the Republic
of Italy and has full corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. Pirelli is
qualified and in good standing as a foreign corporation doing business in all
jurisdictions where failure to so qualify would have a material adverse effect
on its business and/or assets. Pirelli has full corporate power and authority to
enter into and perform its obligations under this Agreement in accordance with
its terms.
6.1.2 AUTHORIZATION; NO VIOLATION. The execution, delivery and
performance of this Agreement by Pirelli have been duly authorized by all
requisite corporate action of Pirelli, and this Agreement constitutes the valid
and binding obligation of
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Pirelli, enforceable in accordance with its terms. Neither the execution and
delivery of this Agreement nor the performance by Pirelli of its obligations
hereunder shall (i) violate any provision of its Certificate of Incorporation or
by-laws; (ii) violate, conflict with, or result in the breach or termination of
any agreement or instrument to which Pirelli is a party or by which it is bound,
which breach or termination would adversely affect Pirelli's ability to perform
its obligations under this Agreement; (iii) violate any judgment, order,
injunction, decree or award against, or binding upon, Pirelli; or, (iv)
constitute a violation by Pirelli of any law, directive or regulation of any
jurisdiction.
6.1.3 APPROVALS AND CONSENTS. The execution and delivery of this
Agreement and the performance by Pirelli of its obligations hereunder do not
require notice to, or the approval or consent of, any third party, including
without limitation any educational institution, or governmental or other
regulatory agency, except as provided in section 9.15.
6.2 REPRESENTATIONS AND WARRANTIES OF ASC. ASC represents and warrants to
Pirelli as follows:
6.2.1 ORGANIZATION AND AUTHORITY. ASC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to own, lease and operate its
properties and
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to carry on its business as now being conducted. ASC is qualified and in good
standing as a foreign corporation doing business in all jurisdictions where
failure to so qualify would have a material adverse effect on its business
and/or assets. ASC has full corporate power and authority to enter into and
perform its obligations under this Agreement in accordance with its terms.
6.2.2 AUTHORIZATION; NO VIOLATION. The execution, delivery and
performance of this Agreement by ASC has been duly authorized by all requisite
corporate action of ASC, and this Agreement constitutes the valid and binding
obligation of ASC, enforceable in accordance with its terms. Neither the
execution and delivery of this Agreement nor the performance by ASC of its
obligations hereunder shall (i) violate any provision of its Certificate of
Incorporation or by-laws; (ii) violate, conflict with or result in the breach or
termination of any agreement or instrument to which ASC is a party or by which
it is bound, which breach or termination would adversely affect ASC's ability to
perform its obligations under this Agreement; (iii) violate any judgment, order,
injunction, decree or award against, or binding upon, ASC; or, (iv) constitute a
violation by ASC of any law, directive, or regulation of any jurisdiction.
6.2.3 APPROVAL AND CONSENTS. The execution and delivery of this
Agreement and the performance by ASC of its obligations hereunder do not require
notice to, or the approval or
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consent of, any third party, including without limitation any governmental or
other regulatory agency, except as provided in section 9.15.
6.2.4 THIRD PARTY AGREEMENTS AND INTELLECTUAL PROPERTY RIGHTS. ASC has
obtained certain intellectual property licenses from third parties and to the
extent that it is permitted to do so by such licenses, it will sublicense to
Pirelli and its Affiliates on reasonable terms any intellectual property covered
by those licenses which is necessary in order for Pirelli or its Affiliates to
exercise the rights which Pirelli and its Affiliates have received or are to
receive under this Agreement. Any Cable Wire sold by ASC to Pirelli shall be
sold free of any claim by any third party with which ASC has any agreement that
the sale is in breach of such agreement, and from any claim by any third party
licensor of ASC with respect to any intellectual property licensed to ASC by
such licensor.
SECTION 7. CONFIDENTIALITY
7.1 OBLIGATION TO MAINTAIN SECRECY. Each party undertakes to keep secret
and confidential and to use only as provided in this Agreement, all Technology
disclosed to it by the other party during the term of this Agreement.
7.2 EXCEPTIONS. Notwithstanding the provisions of Section 7.1, a party
receiving Technology from the other party may disclose such Technology:
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(a) pursuant to an order or judgment of any competent court or
governmental body, provided that the receiving party so obliged to disclose
shall give written notice of such order or judgment to the other party prior to
making such disclosure and shall use reasonable efforts to obtain a protective
order covering such Technology,
(b) if required to do so by any law, rule or regulation provided
notice has been given as required by Clause (a) above,
(c) if such Technology is or becomes generally available to the public
through any means other than breach of this Agreement,
(d) if such Technology is disclosed to the receiving party without any
obligation of confidentiality by a third party who has the right to make such
disclosure,
(e) if such Technology has been developed independently by the
receiving party without use of or benefit from such Technology of the other
party as can be shown by written evidence,
(f) if such Technology was in the possession of the receiving party
without an obligation of confidence prior to the 1990 Agreement, as can be shown
by written evidence,
(g) if the disclosing party provides advance written authorization for
the disclosure,
(h) if such Technology was disclosed by the disclosing party to a
third party other than under conditions of confidence,
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(i) to those of its employees, consultants, contractors, who have
agreed in writing to be bound by the same confidentiality obligations contained
in this Section 7 and who need to use such Technology for the purposes of this
Agreement, provided with respect to such consultants and contractors that
disclosure shall be made on a "need to know" basis for work performed on the
behalf of Pirelli or its Affiliates.
7.3 MATTERS NOT CONSIDERED PUBLIC KNOWLEDGE. For the purposes of Section
7.2, Technology shall not be deemed to be generally available to the public,
disclosed without any obligation of confidentiality or conditions of confidence,
or developed independently (hereinafter in this Section 7.3 collectively
referred to as "public knowledge"), if
(a) the general principle is public knowledge or known but the
particular practice is not itself public knowledge,
(b) the generic information is public knowledge but the specific
information is not itself public knowledge or,
(c) it constitutes a combination (not itself public knowledge) of
information which is public knowledge.
7.4 PERIOD OF CONFIDENTIALITY. The provisions of this Section 7 shall
remain in effect for five (5) years after the expiration or termination of this
Agreement or any extensions thereto, but in no event less than ten (10) years
from the date of this Agreement.
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7.5 COVENANT OF ASC. ASC undertakes, notwithstanding the provisions of
Section 7.2 (e), (f) and (h), for the period of confidentiality in section 7.4,
not to make available Contract Technology to the public in any way which would
be materially detrimental to or materially diminish the value of the rights
granted to Pirelli under this Agreement.
SECTION 8. TERM AND EXTENSION
8.1 TERM OF RESEARCH AND DEVELOPMENT PROGRAM I. Insofar as they relate to
the Research and Development Program I (including redirection thereof as
provided in Section 2.17), the provisions set forth in Section 2 of this
Agreement shall remain in force until October 1, 1999 unless earlier terminated
or extended pursuant to this Section 8. Except as otherwise provided herein,
termination of a Program (including but not limited to Research and Development
Program I) shall not affect any other rights or obligations of the parties
contained in this Agreement.
8.2 TERM OF AGREEMENT. Unless earlier terminated or extended pursuant to
this Section 8, this Agreement shall expire twenty (20) years from the date of
ASC's first commercial supply of Cable Wire to Pirelli or to any Pirelli
Affiliate, twenty-five (25) years from the date of this Agreement, or upon the
expiration of the last-to-expire patent included in Contract Technology licensed
to Pirelli hereunder, whichever is the last to occur.
8.3 EARLY TERMINATION. Pirelli shall have the right to
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terminate Research and Development Program I, the Business Plan, and this
Agreement upon (a) the failure of ASC, after consultation, to provide and
continue to provide qualified personnel and appropriate resources to enable
Research and Development Program I and the Business Development Plan to progress
in accordance with the goals and criteria set forth in Exhibit 2.1, (b) a
determination by Pirelli that further development in Research and Development
Program I is not technically feasible, and/or (c) a determination by Pirelli
that the results of the clearance in section 2.16 or the non-availability of
additional licenses under Section 4.11 do not justify the further financing of
Research and Development Program I in accordance with section 2.12. Pirelli
shall have the right to terminate its participation in any other Program upon
(d) the failure of ASC, after consultation, to provide and continue to provide
qualified personnel and appropriate resources to enable such Program to progress
in accordance with the goals and criteria set forth in statement of work for
such Program, (e) a determination by Pirelli that further development pursuant
to such Program is not technically feasible, or (f) a determination by Pirelli
that the results of the clearance in section 2.16 for such Program does not
justify the further financing.
Subject to Section 4.7, either party shall have the right to terminate a
Program, the Business Development Plan, and this
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Agreement upon a material breach by the other of any representations,
warranties, covenants or obligations hereunder. Termination pursuant to the
provisions of this Section 8.3 shall be accomplished by the giving of written
notice by the terminating party to the other party of its election to terminate
and specifying the date of termination, the failure or the breach, such notice
to be given not less than 90 days prior to such date of termination. If such
breach can be cured, the party receiving such notice shall have the right to
prevent termination by curing the specified breach within such 90 day period.
8.4 EXTENSIONS.
(a) This Agreement and/or a Program may be extended by mutual agreement.
(b) If either party requests an extension of a Program, both parties shall
then negotiate in good faith to reach an agreement on such an extension; however
if agreement is not reached, Pirelli nonetheless shall have the right to extend
a Program in a manner consistent with the then-current statement of work for
such Program and under the terms and conditions set forth in Section 2, provided
that the amount paid by Pirelli to ASC for such extended Program shall be equal
to the amount paid or to be paid by Pirelli with respect to the last year of the
then-current Program. All of the other terms of this Agreement shall be
effective with respect to any such extension.
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8.5. EFFECT OF TERMINATION OR EXPIRATION.
8.5.1 Except as specifically otherwise set forth in this Section 8.5, upon
termination (but not expiration) of Research and Development Program I as
provided in Section 8.5.2 or 8.5.3, or upon either termination or expiration of
this Agreement, the provisions of this Agreement shall no longer have any legal
effect except that the following provisions shall survive and shall not be
subject to any limit of time except those expressed in the provisions
themselves:
Section 1 (Definitions)
Section 3 (Ownership of Research and Development Program Results)
Section 4.1 (Pirelli's Exploitation Rights)
Section 4.2 (ASC's Exploitation Rights)
Section 4.7 (Irrevocability of Pirelli's Exploitation Rights)
Section 5 (1990 Agreement and 1994 Agreement)
Section 6 (Representations and Warranties)
Section 7 (Confidentiality)
Section 9.1 (Indemnification)
Section 9.2 (Non-Solicitation)
Section 9.3 (Export Controls)
Section 9.5 (Resolution of Disputes)
Section 9.6 (Publicity)
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
Section 9.7 (Assignment)
Section 9.8 (Notices)
Section 9.9 (No Prejudice by Inaction)
Section 9.11 (Written Amendments Only)
Section 9.12 (Applicable Law; Entire Agreement; Headings)
8.5.2 Termination of a Program shall not be considered termination of this
Agreement. However, if Pirelli terminates the Programs prior to
****************** or before paying to ASC the amount of US $10,000,000 pursuant
to Section 2.12 for reasons other than a breach of this Agreement by ASC
(including the provisions of Section 8.3(a)) then the rights granted to Pirelli
in Section 4.1(a) shall become non-exclusive, Pirelli shall have no rights under
Sections 2.17 and 4.1(b), and ASC shall have no further obligations under
Section 2.
8.5.3 If this Agreement is terminated by Pirelli as a result of a breach of
this Agreement by ASC (including the provisions of Section 8.3(a)), or Research
and Development Program I (including any redirection thereof as provided in
Section 2.17) expires prior to the supply by ASC to Pirelli of Cable Wire
meeting the Specifications and ASC elects not to continue Research and
Development Program I notwithstanding Pirelli's request to do so, then this
Agreement and all rights of ASC under Sections 4.3(c), 4.4, 4.5 and 4.6 shall
immediately terminate, and ASC's rights under Sections 4.2 (ii) and (iv) shall
become non-exclusive.
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8.5.4 If Pirelli elects not to participate in a Subsequent Research and
Development Program and the period in Section 2.17 (c) (iii) has elapsed for
such Subsequent Research and Development Program or if Pirelli terminates its
participation in a Subsequent Research and Development Program, for reasons
other than those of Section 8.3(d), (e) or (f), prior to the supply by ASC to
Pirelli of a product meeting the specifications established for such Subsequent
Research and Development Program, then (i) all rights of Pirelli in any Contract
Technology developed in the course of such Subsequent Research and Development
Program shall terminate and such Contract Technology shall be considered
Excluded Technology; (ii) ASC shall have the right to manufacture, use and sell
(but not to sublicense others to manufacture) Cable Wire employing Excluded
Technology. To the extent that ASC requires the right to use Contract Technology
to exercise its right to use Excluded Technology to manufacture, use and sell
Cable Wire Pirelli shall, at the request of ASC, grant ASC such rights on
reasonable terms and conditions to be agreed upon.
8.5.5 Upon expiration (but not termination) of this Agreement, Pirelli
shall have a fully paid-up license to use Contract Technology licensed pursuant
to Section 4.1 with no further payments to ASC. Expiration of this Agreement
shall not affect the rights or obligations of ASC, ASC Affiliates, Pirelli or
Pirelli Affiliates with respect to any joint venture in which
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ASC or an ASC Affiliate, one hand, and Pirelli and a Pirelli Affiliate on the
other hand, have an interest.
SECTION 9. MISCELLANEOUS
9.1 INDEMNIFICATION. ASC acknowledges that substantially all research
activities conducted pursuant to this Agreement shall be carried on in
facilities controlled by it. All activities carried on by either party pursuant
to this Agreement in the United States of America shall be made in full
compliance with all applicable United States federal, state and local laws,
regulations and ordinances, including, without limitation, all such laws,
regulations and ordinances pertaining to the protection of the environment and
hazardous or toxic substances or wastes as defined in such laws, regulations or
ordinances. Each party shall indemnify and hold the other harmless from and
against any and all claims, liabilities, costs, losses or expenses suffered by
the other resulting from or arising in connection with any violation or alleged
violation of any such laws, regulations or ordinances by the party, or resulting
from the negligence of the party or from the intentional act or failure to act
of the party, if the other party has given the party prompt written notice of
the assertion of any such claim against it and cooperates with the party in the
defense of any such claim.
9.2 NON-SOLICITATION. While this Agreement is in effect and for a period of
one year after it has been terminated, neither
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party will employ, nor solicit for employment, any executive, officer or other
employee of the other or its Affiliates. Each party acknowledges that any
violation by it of the covenant contained in this Section 9.2 is likely to cause
damage to the other party, which may not be adequately compensated by money
damages, and each party agrees that this Section 9.2 may be enforced by an order
for specific performance or injunctive or other appropriate relief by a court of
competent jurisdiction, in addition to any other remedies provided by law.
9.3 EXPORT CONTROLS. The parties agree to comply with all applicable export
control laws and regulations of the United States, Italy, or any other country.
The parties will not export or re-export the technical data, computer software,
prototypes and other commodities which are the subject of this Agreement to any
prohibited destination, including, but not limited to, Libya, Iran, Iraq, South
African military or police entities, Syria, and other destinations found in
Country Groups Q, S, W, Y or Z in the U.S. Export Administration Guidelines. The
parties will obtain all appropriate export and re-export authorizations required
under the Export Administration Regulations of the U.S. Department of Commerce,
the International Traffic in Arms Regulations of the U.S. Department of State,
the Nuclear Regulatory Commission, and any other government agency controlling
the export of technical data, computer software, prototypes and other
commodities which
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are the subject of this Agreement. Each party neither represents that a license
shall not be required nor that, if required, it shall be issued. To the extent
licenses are required, each party will use its best efforts to obtain, or to
assist the other party to obtain, them.
9.4 FORCE MAJEURE. If the performance of any obligation under this
Agreement is prevented by any cause beyond the reasonable control of a party,
such party shall be excused from such performance for so long as is reasonable.
The party so prevented shall use all practical efforts to perform its
obligations as soon as possible.
9.5 RESOLUTION OF DISPUTES. Any dispute arising under or in connection with
this Agreement shall be resolved by arbitration at a mutually agreeable site
within four hundred (400) kilometers of New York City under the rules of the
American Arbitration Association, applying the law of the State of New York.
Demands for arbitration shall be made in writing and shall be served upon the
party to whom the demand is addressed by registered mail. Application may be
made to any court having jurisdiction for judicial acceptance of the award and
for an order of enforcement.
9.6 PUBLICITY. During the term of this Agreement and any extension thereof,
and unless otherwise required by court order, governmental law or regulation, or
any other operation of law, neither ASC nor Pirelli shall issue, nor permit its
employees to
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issue, any news release, advertisement, publicity or promotional material, or
technical articles or paper that quotes any of its employees, officers or
directors in connection with the Research and Development Program, or that
discloses Technology of the other party, the results of the Research and
Development Program or any of the terms of this Agreement (except insofar as
such Technology, results or terms previously have been properly disclosed),
without the prior review and consent of the other party. All such material shall
be submitted by fax to:
FOR PIRELLI: X. Xxxxx
FOR ASC: X. Xxxxx, President
The recipient shall be deemed to consent to the technical article or paper only
if the recipient does not respond within ten (10) business days and shall be
deemed to consent to any other publication hereunder if the recipient does not
respond within fifteen (15) business days.
9.7 ASSIGNMENT. This Agreement shall be binding upon, and inure to the
benefit of, ASC and Pirelli and their respective successors and permitted
assigns. Neither party may assign its rights and obligations under this
Agreement without the prior written consent of the other party, EXCEPT THAT, (i)
either party may assign all or any part of its right, title and interest in and
to this Agreement to any entity that succeeds to all or substantially all of the
business assets of the assignor to which
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this Agreement relates, provided however that if an assignee of either party
uses a technology for the manufacture of Products which permits such assignee to
manufacture the Products without using Contract Technology licensed hereunder,
then, in case Pirelli is the assignor, the rights in Section 4.1 a. shall become
non-exclusive and, in case ASC is the assignor, the rights in Section 4.2 shall
become non-exclusive, and (ii) either party may assign all or any part of its
right, title and interest in and to this Agreement (other than ASC's obligations
under Section 2 which may be assigned under this clause (ii) only with the
consent of Pirelli) to an Affiliate or Affiliates without giving prior notice to
or obtaining the consent of the other party. In the event of any such assignment
or sublicense under this Section 9.7, the assigning party shall remain liable
for all of its obligations under this Agreement accrued prior to such assignment
or sub-license and shall continue to be bound by the secrecy obligations in
Section 7.
9.8 NOTICES. Any notice or communication given pursuant to this Agreement
by either party to the other shall be in writing and delivered or mailed by
registered or certified mail, airmail postage prepaid (airmail notices shall be
deemed to have been given 10 days after having been mailed), as follows:
If to Pirelli: Pirelli Cavi S.p.A,
Xxxxx Xxxxx, 000
00
00
00000 Xxxxxx XX
Xxxxx
Attention: Director of Research and Development
If to ASC: American Superconductor Corporation
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: President
9.9 NO PREJUDICE BY INACTION. NO failure or delay on the part of a party to
exercise any of its rights under this Agreement shall be construed to prejudice
its rights in connection with that or any subsequent default.
9.10 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be construed
to constitute either party as the partner, joint venturer, agent, employee or
Affiliate of the other, it being intended that the parties shall remain
independent contractors and neither party shall be liable for the obligations,
liabilities or representations of the other.
9.11 WRITTEN AMENDMENTS ONLY. No agreement or understanding varying or
extending this Agreement will be binding upon either party unless it is in
writing and signed by a duly authorized officer or representative of both
parties.
9.12 APPLICABLE LAW; ENTIRE AGREEMENT; HEADINGS. This Agreement shall be
construed in accordance with the laws of the
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State of New York. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument. This Agreement contains the entire understanding
between the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements and understandings. The headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
9.13 COVENANTS WITH RESPECT TO CONDUCT OF LITIGATION. The parties agree,
with respect to the conduct of any litigation (including any mediation or
arbitration) regarding any aspect of Contract Technology licensed to Pirelli
pursuant to Section 4.1, as follows:
9.13.1 Each party shall promptly notify the other regarding any
suspected or ascertained infringement of such rights of which it becomes aware.
9.13.2 Pirelli shall have the right to take any action it deems
necessary against suspected or ascertained infringement of Contract Technology
in the Field, provided, with respect to such Technology licensed to ASC from
third parties, that ASC itself has been granted such right and that such right
is transferable to Pirelli. ASC shall disclose any such limitations in its
agreements with third parties to Pirelli as part of the clearance pursuant to
Section 2.16. Pirelli shall inform ASC
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before commencing any suit involving any Contract Technology. If Pirelli is
sued it shall promptly notify ASC.
9.13.3 If Pirelli sues or is sued ASC shall have the right to join in
such litigation at its own expense. Any such suit shall be conducted by Pirelli,
provided that ASC shall have the right, but not the obligation, to join in any
such suit at its own expense, and also shall have the right to control any such
suit to the extent that such suit involves any ASC Contract Technology
applicable outside the Field. ASC shall exercise the right to take control over
such suit within thirty (30) days of receipt of Pirelli's written request to
make such election. If ASC does not exercise its right to take control within
said thirty-days-period, ASC shall be deemed to have waived such right to do so.
9.13.4 If ASC wants to xxx, it shall have the right to so, provided
that it shall inform Pirelli in advance. If ASC brings a suit or is sued, to the
extent that such suit involves any infringement of Contract Technology in the
Field, Pirelli shall have the right to join in such litigation at its own
expense, provided that any such suit shall be conducted by ASC.
9.13.5 Each party shall keep the other party constantly and fully
informed in relation to any litigation pursued by it under this Section and
shall allow representatives of the other party to consult with its attorneys
with respect to
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all aspects of such litigation.
9.13.6 Pirelli shall have the full control of the direction of any
lawsuit which is conducted by Pirelli and does not involve ASC Contract
Technology applicable outside the Field, including the settlement thereof,
subject to the provisions of section 9.13.7
9.13.7 Neither party shall enter into any settlement or consent
judgment or voluntary final disposition of any lawsuit, without the consent of
the other, if such settlement would require such other party to be subject to an
injunction or to make a monetary payment or other consideration, other than
legal fees and expenses. Neither shall either party enter into any such
settlement, consent judgment or voluntary final disposition that affects any
rights owned by or licensed to the other, which consent shall not be
unreasonably withheld. ASC will not enter into any settlement or consent
judgment or voluntary final disposition of any suit commenced by or against
Pirelli as to which ASC has assumed control as provided in Section 9.13.3
without the consent of Pirelli, which consent will not be unreasonably withheld.
9.13.8 Except as otherwise provided, each party shall cover its own
costs in connection with any litigation under this section. Any recovery made
either by Pirelli or ASC in any lawsuit under this Section shall be applied
first to repay
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Pirelli's and ASC's respective actual legal out-of-pocket expenses and fees, or
equitable proportions of them, associated with any lawsuit under this Section
out of any recovery made by either Pirelli or ASC; and if ASC and Pirelli are
both parties to the suit, any excess amount shall be divided equally between
them.
9.14 PROVISIONS RELATING TO THE BANKRUPTCY CODE. All rights and licenses
granted under this Agreement by either party to the other party are, and shall
be deemed to be for the purpose of Section 365(n) of Title 11 of the United
States Code (collectively, the Bankruptcy Code), licenses of rights to
"intellectual property," as defined under Section 101 of the Bankruptcy Code.
The parties agree that: (i) each party, as licensee or sublicensee under this
Agreement, shall retain and may fully exercise all of its rights and election
under the Bankruptcy Code, including, without limitation, any and all rights to
use and exploit all technology and other rights licensed hereunder and any
improvements and developments thereof in accordance with the provisions of this
Agreement, to the extent that the technology and other rights licensed hereunder
or improvements or developments exist prior to the commencement of case under
the Bankruptcy Code involving the other party (as debtor) and regardless of when
a patent application, continuation application or any other application or
registration with respect to technology and other rights licensed hereunder or
any improvements
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or developments thereof is filed; and (ii) all rights to xxx and exploit any and
all intellectual property rights relating to the technology and other rights
licensed hereunder and any improvements or developments thereof in accordance
with the provisions of this Agreement, shall be deemed to exist immediately
prior to the commencement of such case under the Bankruptcy Code, regardless of
which the technology and other rights licensed hereunder, improvements or
developments arise.
9.15 XXXX-XXXXX-XXXXXX AND EUROPEAN COMMISSION FILINGS.
(a) As promptly as practicable after the execution of this Agreement,
Pirelli and ASC shall:
(i) file all reports and notifications that are required to be
filed under the Xxxx-Xxxxx-Xxxxxx Act and shall cooperate in connection with
such filings or responses to requests for additional information;
(ii) file all reports and notifications that may be required to
be filed with the Commission of the European Community and shall cooperate in
connection with such filings or responses to requests for additional
information.
The parties shall use their best efforts to resolve objections, if any, as
the Antitrust Division of the Department of Justice, the Federal Trade
Commission, the European Commission, state antitrust enforcement authorities or
competition authorities of any other jurisdiction may assert under the antitrust
and
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competition laws with respect to the transaction contemplated hereby.
(b) The entering into force of the license granted under Section 4 of this
Agreement is subject to approval of this Agreement under the Xxxx-Xxxxx-Xxxxxx
Act. All other provisions of this Agreement enter into force on the effective
date.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first written
above.
PIRELLI CAVI S.p.A. AMERICAN SUPERCONDUCTOR CORPORATION
By: /s/ Xxxxxxxxx Xxxxxxx By: /s/ X. X. Xxxxx
------------------------- ----------------------------
Its: Its: President
------------------------ ---------------------------
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EXHIBIT 2.1
Pirelli/ASC
-----------
Technical Development Program Statement of Work
-----------------------------------------------
FOREWORD
The Research, Development and Exploitation Agreement, between Pirelli Cavi
S.p.A. and American Superconductor Corporation (the "Agreement") has established
the basic requirements and time lines needed for HTS Cable Wire to be evaluated
for commercial power transmission applications. During the period between 1
February 1990 and 31 September 1995, the parties developed, manufactured and
evaluated the MCA1 wire and conceived and demonstrated the laminated Cable Wire
(a new Cable Wire geometry which can significantly enhance performance and
minimize future development cost). The Project Review Board and Business Review
Board have judged that the accomplishments under this Agreement are sufficient
to demonstrate the potential for HTS Cable Wire to be economically and
technically viable, and therefore warrants additional focused effort to produce
a commercially viable HTS Cable Wire by October 1999.
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CONFINDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSION.
TECHNICAL PROGRAM OBJECTIVES
o The principal objective of the Phase III Pirelli/ASC Technical
Development is to develop HTS wire that meets the specifications for
cable applications.
o A second objective of the program is for Pirelli/ASC to analyze and
model the future potential for HTS cable technology to be economically
competitive with ************ technology upon reaching
**************** wire production level.
Details of the technical program plan will be established and updated by the
Project Review Board. Details of the business development program plan will be
established and updated by a Development Review Board which shall substitute the
Business Review Board under the 1994 Agreement. These plans will be based on the
following general outline.
WIRE SPECIFICATIONS FOR POWER CABLE APPLICATIONS
The specification is focused on achieving a commercially viable HTS Cable Wire
by ************. It is based on the current Pirelli/ASC understanding of
*************************** ************, suitable for **********************
and **** ********** applications. This specification will be updated on a
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE SUCH OMISSIONS.
regular basis, as new information is developed concerning wire operating
performance, commercial cable performance and commercial cable system costs.
The Cable Wire specification is composed of two exhibits; Table 1 provides the
**************************** performance and ******** ********* targets as a
function of *************, Table 2 provides basic Cable Wire requirements and
objectives for all wires produced between *************. This combined wire
specification (Table 1 and 2) defines the specifications and the quantifiable
method for Pirelli to monitor **************************** for the Cable Wire
during the Phase III of this Pirelli/ASC Technical Development Program.
TABLE 1: Table 1 provides a listing of the **************** ********** as a
function of time. The target milestones include; (a) **************** in
*************, indicating the potential for
************************************, (b) demonstration of the
******************* in the *************, assuming a ************
***************, and (c) the ASC theoretical *************** cost per
*************, assuming Cable Wire manufacture in ******** quantities and
********************* price. These milestones provide a meaningful way to judge
future potential of ******** ******************, the existing performance
characteristics in
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************** lengths and a method for ************************* over time.
ASC has completed a preliminary analysis of the direct material and labor cost
for Cable Wire produced in 1999, at ************ manufacture volume. The
projected direct costs assume **** ******* (no **************** has been
applied), constant cost for *********** market price
***************************** associated with ****** and **** fabrication, and
************ costs associated with *********************** (no **************
are included).
The forecast direct costs are divided by the following categories:
*************** cost (******): $******
*************** cost (**********): $******
************ cost: $******
------
Total Forecast Direct Cost: $******
ASC will provide to Pirelli a revised forecast for direct material and labor
cost per meter of Cable Wire on December 1996, 1997 and 1998. The forecast will
define the projected **************, assuming: ************ manufacture volume,
manufacture experience and new processes developed during the given year, and
dollar
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values will be provided in the "then year" dollars.
TABLE 2: Table 2 defines the ************************ for the
**************************************** program. ******** ******************
are defined in terms of the ******************* ***** for each given period.
TECHNOLOGY DEVELOPMENT
A *********** technology development program is envisioned to improve wire
performance to meet the ********************* *****************************
specification: ***************** ************************** and *******. The
Program ********* ***** for each element is identified in Table 1.
WIRE PERFORMANCE
The objective for this effort is to produce a Cable Wire which will be
technically and economically viable for **************** ********* product.
Wire Performance is divided into two major categories; (a) *************
optimization (optimization of ******************, Table 2) and (b) ***********
optimization (optimization of the **************** of the *************, Table
1).
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The ********* Cable Wire is composed of *********************** ******** to an
**************** (the traditional ********).
This Cable Wire configuration offers the wire designer ***** new ******** in
incorporating ************* and *************** materials into Cable Wires. The
**************************** will serve as the ******** for subsequent Cable
Wire development. The ************** development effort will be focused on
achieving the Table 2 objectives: significantly improving the ***************
******************************* and ********************* (which affects
***********************).
This ************************************** will be enhanced over time by
replacing the ******** with subsequently *************** ***************. The
intent is to qualify one ******** Cable Wire for
************************************************************ and ************,
and then **************** Cable Wires can be qualified with significantly less
effort as *** ***************************************** are ******** into
********** Cable Wire ***********************.
ASC will take the critical current performance enhancements discovered and
funded by the ASC R&D group (typically ********
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*********************) and define and demonstrate the manufacture process to
produce *****************************************.
Topics under the Wire Performance task include: ********** ********* vs
***********, **************, ****************, ****** *********,
*******************, ************, *****************, ***********************,
*********, *******, *****, **********, ** ****. ****************** vs
****************, ****************, ****************. ********************** vs
******, ***********, ****************, *******, ***********************,
*************, ******************, ************** and *****************.
LONG LENGTH WIRE AND COST
The objective for this effort is to develop and implement a Cable Wire
manufacture and test process which will produce technically and economically
viable Cable Wire for ************************** product.
ASC will provide to Pirelli a revised forecast for direct material and labor
cost per meter of Cable Wire on December 1996, 1997 and 1998. The forecast will
define the projected 1999 unit cost, assuming: 1000 km/year manufacture volume,
manufacture experience and new processes developed during the given year, and
dollar
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values will be provided in the "then year" dollars.
The strategy for reducing the ********* for the commercial HTS Cable Wire is
based on the following elements: Increase ********************** to reduce the
********* unit and increase *****. This can be accomplished by ********** the
**** and ***** *************** and ******. Implement ********** for ******
*********** to ************. Implement ********************* and
************************** to ************** and ********* *******. Maximize
********************** and ********, ***** ****** to **************. Maximize
***************** to reduce ***** per unit and **************. Implement method
for **** ********************* to ************ per unit and **************.
Establish confidence using ************** vs ************ to ************ per
unit and **************. Reduce ************ unit **** by strengthening
********************. Develop methods for further reducing **************.
AC LOSS
The objective for this effort is to characterize the ** performance of each
Cable Wire generation and working closely with Pirelli determine the
relationship between ************* *********** and the ************** for the
****************
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*********. The intent is to define the ************************** needed and
possible for ***************************. This effort will provide
***************** guidance for the **************** ************ effort.
PROGRAM MANPOWER AND SPENDING BUDGET
Pirelli funding for the Phase III Pirelli/ASC Technical Development Program will
be applied to the tasks defined in the Technology Development Section above. The
ASC Manufacture Development efforts will be directed to the *********** of the
******************. The average annual budget for this activity is **********
and a ***************** is anticipated. This program will yield a
**********************************.
RECORDS AND REPORTS
ASC will prepare reports in accordance with section 2.11 of the Agreement
concerning all expenditures made or costs incurred in connection with the
Research and Development Program and on all expenditures relating to its
research and development on ************************, ********** of
************************ and/or **** and **** containing
************************, in addition to the amounts paid by Pirelli, in
accordance with
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section 2.4. These reports shall be submitted to Pirelli at least once each
calendar quarter, within fifteen (15) days after the end of the quarter, and
will include:
(a) a detailed statement of all expenditures made or costs incurred in
connection with the above items; and
(b) projections of expenditures required in connection with the Research
and Development Program for each of the four calendar quarters following the
date of such reports.
BUSINESS DEVELOPMENT PROGRAM
----------------------------
Pirelli and ASC will form a Development Review Board which shall substitute the
Business Review Board under the 1994 Agreement, which shall meet on a
semi-annual basis. The objectives for this effort will be to prepare Pirelli and
ASC for the exploitation of the license granted to Pirelli under this Agreement
and in particular to exchange information concerning:
1. the ****** for ********** and ***** and ************** made therefrom with
particular reference to ****** needs/requirements;
2. ****** development;
3. definition of ************************ of ********** and ****** to meet
such market needs/requirements;
4. status of ********* or potentially ********* HTS products;
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5. review of **************************** of ************* which may affect
the activities of Pirelli and ASC;
6. programing of the **** necessary to ***** the ****** and the *******
necessary to ******* for *************.
Table 1: Phase III Pirelli/ASC Technical Development
Specification
October 1, 1996
MILESTONE TARGETS FOR THE AMENDED PROGRAM
Manufacture Theoretical
Performance Material
Research ********** Unit Cost ********
Development ** ************** ***************,
***** ************** **************
************* ***** *************
********** ************* **************
************* ************** ***
**** **** ********
**************** ************ ****** *******
********* ****** *******
************* ************ ******* *******
************* ************ ******* *******
************* ************* ******* *******
************ ************* ******* *******
Note: All material unit costs are provided in 1995 dollars.
ASC PROPRIETARY DATA
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Table 2: Phase III Pirelli/ASC Technical Development
Specification
October 1, 1995
CABLE WIRE SPECIFICATION
Requirements
**** **************
********** ****
**************** ****************
************************* ******************
********************** *******
********************************* ***********************
***********************************
**************** ***
*********************************
********** ****
********** ************
************* *********************
********************* *****
*********************************
**************** *******************
*******************************
*************** *******************
******************************** ********************
********* ****
*****************************
**************** **********
Objectives (expectation, not formal obligation)
**************************** ***********************
*************************** ********
************************** ***************
**********
ASC PROPRIETARY DATA
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Exhibit 2.7
-----------
AGREEMENT
---------
THIS AGREEMENT (the "Agreement") is made this _____ day of ______________
199_ by American Superconductor Corporation ("ASC"), Pirelli Cavi, S.p.A.
("Pirelli"), and ________________ an individual employed by Pirelli (or a
Pirelli Affiliate) and residing at ____________________________________ (the
"Assigned Employee").
Contemporaneously herewith, ASC and Pirelli have entered into an Agreement
(the "Pirelli-ASC Agreement"), to which this Agreement is Exhibit 2.7, pursuant
to which Pirelli and ASC will enter into and conduct a research and development
program regarding the development and production of superconducting wires and
cables. As provided in Section 2.7 of the Pirelli-ASC Agreement, various
technical employees of Pirelli may participate in the Research Program (as
defined in the Pirelli-ASC Agreement).
In consideration of the mutual covenants and promises contained in the
Pirelli-ASC Agreement and of ASC's permitting such technical employee to obtain
access to confidential and proprietary information of ASC, ASC, Pirelli and the
Assigned Employee agree as follows:
1. EXPENSES; BENEFITS. Pirelli shall pay the Assigned Employee's salary and
reimburse the Assigned Employee for all reasonable and necessary expenses
incurred or paid by her/him in
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connection with, or related to, his/her activities at ASC. The Assigned Employee
shall not be entitled to any benefits, coverages or privileges, including,
without limitation, social security, unemployment, medical or pension payments,
made available to employees of ASC.
2. INVENTIONS AND PROPRIETARY INFORMATION
2.1 INVENTIONS
(a) Except as otherwise provided in, and subject to ASC's
obligations under, the Pirelli-ASC Agreement (i) all inventions, discoveries,
innovations and improvements whether or not patentable and whether or not
copyrightable) ("Inventions") related to the business of ASC which are conceived
or reduced to practice by the Assigned Employee, solely or jointly with others
and whether during normal business hours or otherwise, during the period that
s/he is at ASC, or thereafter if resulting or directly derived from Proprietary
Information (as defined below), shall be the sole property of ASC; and (ii) the
Assigned Employee hereby assigns, and agrees to assign, to ASC all Inventions
and any and all related patents and other industrial and intellectual property
rights and applications therefor, in the United States and elsewhere, and agrees
further, at the request of ASC and at ASC's expense, to take such further acts
and to execute such further documents as may be necessary or desirable to fully
and completely effectuate this assignment and to secure and protect any such
85
patents and other industrial or intellectual property rights.
(b) The Assigned Employee shall promptly disclose to ASC all
Inventions and will maintain adequate and current written records (in the form
of notes, sketches, drawings and as may be specified by ASC) to document the
conception and/or first actual reduction to practice of any Invention.
2.2 PROPRIETARY INFORMATION.
(a) The Assigned Employee acknowledges that his/her relationship
with ASC is one of high trust and confidence and that in the course of
activities at ASC s/he will have access to and contact with Proprietary
Information. The Assigned Employee agrees that s/he will not at any time
disclose to others, or use for his/her benefit or the benefit of others (except
as may be permitted by written agreement between ASC and Pirelli), any
Proprietary Information or Invention.
(b) For purpose of this Agreement, Proprietary Information shall
mean, by way of illustration and not limitation, all information (whether or not
patentable and whether or not copyrightable) owned, possessed or used by ASC,
including, without limitation, any Invention, formula, apparatus, equipment,
trade secret, process, research, technical data or know-how, that is
communicated to, learned of, developed or otherwise acquired by the Assigned
Employee in the course of his/her activities at ASC.
(c) The Assigned Employee's obligations under this
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Section 2 shall not apply to any information that (i) is or becomes known to the
general public under circumstances involving no breach by the Assigned Employee
or others of the terms of this Section 2.2, (ii) is generally disclosed to third
parties by ASC without restriction on such third parties, (iii) is approved for
release by written authorization of the Board of Directors of ASC, or (iv) was
known to the Assigned Employee (as shown by tangible evidence and other than
under condition of confidence) before the commencement of his/her assignment to
ASC.
(d) Upon termination of his/her activities at ASC, or at any
other time upon request by ASC, the Assigned Employee shall promptly deliver to
ASC all records, laboratory and research notebooks and other documents (and all
copies or reproductions of such materials) relating to the business of ASC;
provided however that U.S. counsel to Pirelli in connection with Pirelli-ASC
Agreement shall retain one copy of each of the foregoing in confidentiality and
under lock and key for the sole purpose of reference with respect to the
obligations of the parties hereunder.
3. PIRELLI EFFORTS. Pirelli agrees to use its best efforts to insure that
the Assigned Employee meets all of his/her obligations hereunder.
4. REMEDIES. Pirelli and the Assigned Employee acknowledge that any breach
of the provisions of Section 2 shall
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result in serious and irreparable injury to ASC for which ASC cannot be
adequately compensated by monetary damages alone. The Assigned Employee and
Pirelli agree, therefore, that, in addition to any other remedy it may have, ASC
shall be entitled to enforce the specific performance of this Agreement and to
seek both temporary and permanent injunctive relief (to the extent permitted by
law) without the necessity of proving actual damages.
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Exhibit 2.9
-----------
Pirelli Cavi, S.p.A. - ASC Agreement
Project Review Board
Terms of Reference of the Project Review Board (PRB)
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 task of
(a) agreeing to any changes to the Scope of Work presented as Exhibit
2.1 to the Pirelli-AS Agreement, including changes in any specific
targets to be achieved or any time limits.
(b) monitoring performance against the Scope of Work, and setting up
check points for the critical results to be achieved.
(c) recommending action as required to achieve the objectives of the
Project, including change of scope if convenient in the light of
new developments in the field.
(d) monitoring costs of the Project and advising Management of Pirelli
and ASC of any change with respect to the original plan.
3 - At least one of the Pirelli 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 agreed research program.
4 - The PRB shall meet as provided in the Pirelli-ASC Agreement, typically
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 Managements of
Pirelli and ASC for final decision.
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SCHEDULE 4.8 PRICE FOR CABLE WIRE
The transfer price of Cable Wire from ASC to Pirelli will be based on a
pricing mechanism that provides a ********** of the ******************* and
*******.
The ****** to be ***** is defined as the difference between (a) the
********* charged by ******** to the ***************** and (b) the *** of the
************** incurred by *** to *********** the ********** and by ******* to
*********** the ***********.
The ****** so determined will be ***************** and ******* on either
the basis of the *********************** and ******* in their respective
*************, and ***************, or of another mechanism that is acceptable
to both parties. For the purposes of this calculation, *********** will not be
included.
Both Pirelli and ASC will work together to further define the transfer
pricing mechanism when more concrete information such as the commercial
specifications, forecasted demand, facility requirements, etc. on the Cable Wire
and Power Cable and/or Power Cable system is available. This work will be
completed by ****************** or another date mutually acceptable by the
parties.
1
