CONFIDENTIAL
TREATMENT REQUESTED: Certain portions of this document have been
omitted pursuant to a request for confidential treatment and, where
applicable, have been marked with an asterisk
(“[****]”) to denote where omissions have been made.
The confidential material has been filed separately with the
Securities and Exchange Commission.
This PV LICENSE
AGREEMENT (this “Agreement”) is made as of this 5th day
of September, 2007 (the “Effective Date”) by and
between ESLR1, LLC, a Delaware limited liability company with a
principal place of business at 138 Bartlett Street, Marlborough, MA
01752 (“ESLR1”), and TISICS Ltd., a corporation
incorporated under the laws of England and Wales with a principal
place of business at 22 Invincible Road, Farnborough, Hampshire, UK
GU14 7QU (“TISICS’). Each of ESLR1 and TISICS shall
sometimes be individually referred to herein as a
“Party” and collectively referred to herein as the
“Parties”.
WHEREAS, Evergreen
Solar Inc. (“Evergreen”), the sole initial member of
ESLR1, formed ESLR1 on August 27, 2007 for the purpose of,
among other things, (a) manufacturing SiC Fiber (as defined
below) for Evergreen’s String Ribbon operations based on
TISICS’ technology, (b) manufacturing SiC Fiber for
TISICS’ composite technologies based on TISICS’
technology, (c) conducting manufacturing- and product
technology-oriented development work required to optimize its
activities in the PV Field only and (d) conducting other
activities necessary for the manufacture, testing and shipment
(including to Third Parties (as defined below)) of SiC Fiber in the
PV Field (as defined below); at the same time as entering into this
Agreement, the Parties will enter into that certain Other Fields
License Agreement (the “Other Fields License
Agreement”);
WHEREAS, the
Parties will negotiate in good faith the terms and conditions of an
agreement under which TISICS will grant ESLR1 a non-exclusive
license to the TISICS IP for use in the Composite Field (the
“Composite Field License Agreement”);
WHEREAS,
Evergreen, ESLR1 and TISICS entered into that certain Securities
Purchase and Contribution Agreement dated as of September 5,
2007 (the “Contribution Agreement”) pursuant to which,
among other things, (a) Evergreen agreed to contribute assets
in consideration for membership units in ESLR1, and (b) TISICS
agreed to contribute its agreements and covenants set forth in that
certain Facilities and Start Up Agreement dated as of
September 5, 2007 between TISICS and ESLR1 (the
“Facilities and Start Up Agreement”), and that certain
Supply Agreement dated as of September 5, 2007 between TISICS
and ESLR1 (the “Supply Agreement”), in each case,
(among other things) in consideration for an option to purchase
membership units in ESLR1, all on the terms and conditions set
forth in the Contribution Agreement;
WHEREAS, TISICS
desires to grant ESLR1 a license to certain TISICS technology,
know-how, plans and designs related to (1) the manufacture of
SiC Fiber for use in the PV Field, which license shall be exclusive
inside the PV Field (with licenses in other fields to form the
subject of the Other Fields License Agreement and Composite Field
License Agreement), and (2)
the
construction and operation of a SiC Fiber factory and perform
related knowledge transfer and other services on behalf of ESLR1
all on the terms and conditions set forth herein; and
NOW THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein, ESLR1 and TISICS hereby agree as follows:
1.1
“Affiliate” means, with respect to an entity, any
entity that directly, or through one or more intermediaries,
controls, is controlled by, or is under common control with such
entity, as applicable, where “control” for purposes of
this definition means the ownership of at least fifty percent (50%)
of such company’s or entity’s capital stock or the
power to direct or cause the direction of such company’s or
entity’s management, whether by ownership of securities, by
contract or otherwise.
1.2
“Composite Field” means [****]
1.3
“Controlled” or “Controls”, when used in
reference to the rights of a Party or a Party’s Affiliate(s)
in and to Technology or Intellectual Property Rights, means that
such entity owns or purports to own or has the right or purports to
have the right to grant a license or sublicense with respect to
such Technology or Intellectual Property Rights to the other Party
as provided for herein without breaching the terms of any agreement
such entity has with a Third Party.
1.4
“Encumbrances” means any Liens, agreements, voting
trusts, proxies and other arrangements or restrictions of any kind
whatsoever.
1.5 “ESLR1
Competitor” means any Third Party that manufactures, sells or
provides products or services in the PV Field, plus any other Third
Party that manufactures, sells or provides products or services
relating to strings of material. For the avoidance of doubt and
without limitation, the following entities are ESLR1 Competitors as
of the Effective Date: Sharp, Q-Cells, Kyocera, REC, Sanyo, BP
Solar, Mitsubishi Electric, Schott, Shell, Isophoton, SolarWorld,
Photowatt, GE, Suntech, Motech, Kaneka, ErSol, ECD, Sunways, First
Solar, Solarfun, SunPower, MEMC, Crystalox, Solarforce, Solon and
Conergy.
1.6 “ESLR1
IP” means all Intellectual Property Rights Controlled by
ESLR1 as of or during the Grantback License Term that is embodied
in Technology (including Improvements) related to the use of SiC
Fiber-related Technology, excluding the TISICS IP.
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1.7 “ESLR1
Facilities” means, collectively, (i) manufacturing
facilities for the Exploitation of SiC Fiber and (ii) any
equipment installed or used in such facilities, in each case that
are owned or controlled primarily by or on behalf of ESLR1 or a
ESLR1 Sublicensee.
1.8
“Exploit” means to make, have made, import, sell, have
sold, offer for sale and otherwise use, including, but not limited
to, to research, design, develop, register, modify, enhance,
improve, manufacture, export, transport, distribute, promote,
market or otherwise commercialize.
1.9
“Governmental Entity” means (i) any federal,
state, local, municipal, foreign or other government; (ii) any
governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
entity or self-regulatory organization and any court or other
tribunal); or (iii) any body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature,
including any arbitral tribunal
1.10
“Grantback License Term” means [****] commencing on the
Effective Date, plus, if on the [****] anniversary of the Effective
Date TISICS owns at least [****] of ESLR1’s outstanding LLC
Units (as defined in the Contribution Agreement), for so long after
such [****] anniversary that TISICS owns at least [****] of
ESLR1’s outstanding LLC Units, in each case, unless this
Agreement is earlier terminated.
1.11
“Improvements” means all Technology that constitutes an
improvement, enhancement, alteration or modification to or of any
Technology.
1.12
“Intellectual Property Rights” means, collectively, all
rights in, to and under (i) Patents, (ii) registered and
unregistered copyrights and (iii) all other intellectual
property rights (including trade secret rights, trademarks, service
marks, trade dress and similar rights of any type under the laws of
any governmental authority), including all applications and
registrations relating to the foregoing.
1.13 “Joint
IP” means all Intellectual Property Rights embodied in
Technology that is jointly invented, created or developed by one or
more employees, consultants or contractors of each
Party.
1.14 “Key
Customer” means, [****]
1.15
“Laws” means any federal, state, local, municipal or
foreign statute, law, ordinance, regulation, rule, code, order,
principle of common law or judgment enacted, promulgated, issued,
enforced or entered by any Governmental Entity, or other
requirement or rule of law.
1.16
“Lien” or “Liens” means any mortgage,
pledge, security interest, encumbrance, lien or charge of any kind
or any subordination arrangement in favor of another
Person.
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1.17 “Other
Fields” means fields not included within the PV Field or
Composite Field.
1.18
“Patents” means patents and patent applications (which
for the purposes of this Agreement shall be deemed to include
certificates of invention and applications for certificates of
invention), including provisionals, divisionals, continuations,
continuations-in-part, reissues, reexaminations, renewals,
extensions, supplementary protection certificates, and the like of
any such patents and patent applications, and any foreign
equivalents thereof, and shall include patents whose term has been
extended by statutory patent term adjustments in any jurisdiction
in the world, including those patent term adjustments granted under
35 U.S.C. § 154(b).
1.19
“Person” means an individual, a partnership, a
corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or
political subdivision thereof.
1.20 “PV
Field” means (i) [****], and (ii) [****].
1.21
“Sold” shall mean having closed a transaction under
which ESLR1 or any ESLR1 Sublicensee actually derives revenues from
any sale, conveyance or other transfer of SiC Fiber (for clarity,
excluding bad debt transactions which do not involve Evergreen and
returns of SiC Fiber). Any such transaction shall be referred to as
a “Sale”. Further, any inventory of SiC Fiber that is
purchased by Evergreen or any of Evergreen’s Affiliates and
that is held in ESLR1’s or a ESLR1 Sublicensee’s
inventory for more than a period of [****] days after such purchase
shall be deemed to have been Sold upon the expiration of such
period.
1.22 “SiC
Fiber” means [****]
1.23
“Technology” means, collectively, (i) know-how,
show-how, trade secrets, inventions, discoveries, developments,
methods, modifications, designs, chemical and biological materials,
formulae, processes, information, documents, studies, techniques,
algorithms, results, data, data structures, databases, data
collections, mask works, manufacturing processes and data,
specifications, sourcing information, supplier and customer lists,
and quality control and testing procedures, and (ii) original
published and unpublished works of authorship fixed in a tangible
medium of expression, including software and code (including
software and firmware listings, assemblers, applets, compilers,
source code, object code, net lists, design tools, user interfaces,
application programming interfaces, protocols, formats,
documentation, annotations, comments, system build software and
instructions), graphics or images, text, audio or visual works,
materials that document design or design processes, or that
document research or testing, schematics, diagrams, product
specifications and other works of authorship, in each case of
clauses (i) and (ii), whether or not patented or patentable
and whether or not in written form.
1.24 “Third
Party” shall mean any Person, other than ESLR1, TISICS and
their respective Affiliates.
1.25 “TISICS
Competitor” means any Third Party that (i) develops,
manufactures, distributes or sells composite materials or
components utilizing silicon carbide monofilaments in
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the Composite
Field and/or (ii) develops, manufactures, distributes or sells
silicon carbide fiber or similar filamentary reinforcements in the
Composite Field.
1.26 “TISICS
IP” means all Intellectual Property Rights Controlled by
TISICS or any of its Affiliates as of the Effective Date or during
the Term that is embodied in Technology (including Improvements)
related to (a) the research, design, development, manufacture
or testing of SiC Fiber or (b) the planning, design,
construction, commissioning, operation, maintenance, support or
other use (collectively, “Construction and/or
Operation”) of the ESLR1 Facilities. A description of TISICS
IP existing as of the Effective Date is set forth in
Exhibit B . For the avoidance of doubt, TISICS IP shall
not include any Intellectual Property Rights embodied in Technology
or Improvements created after the Effective Date that are
identified pursuant to a written notice delivered in good faith by
TISICS to ESLR1 as not Controlled by TISICS, which notice
(i) is delivered on or prior to TISICS’ first delivery
or making available of any such Technology or Improvements to ESLR1
and (ii) describes the substance of such Technology or
Improvements and identifies the applicable Third Party that owns or
controls such Technology or Improvements.
(a)
License . TISICS, for itself and on behalf of its
Affiliates, hereby grants ESLR1 an irrevocable, perpetual,
worldwide, royalty-bearing (in accordance with Section 4 and
subject to Section 4.4), transferable (in accordance with
Section 11.7), sublicensable (in accordance with
Section 2.1(b)) right and license under the TISICS IP within
the PV Field only to (i) Exploit SiC Fiber,
(ii) Construct and/or Operate the ESLR1 Facilities and
(iii) copy, distribute, display, perform and modify (including
the right to create derivative works (for use in the PV Field only)
of) the TISICS IP for the purpose of engaging in the activities
described in the foregoing clauses (i) and (ii). The license
granted pursuant to the preceding sentence shall be exclusive (even
as to TISICS and its Affiliates) in the PV Field.
(b)
Sublicensing . The license contained in Section 2.1(a)
includes the right to grant sublicenses in the PV Field only to
Third Parties other than TISICS Competitors (each Third Party
sublicensee, a “ESLR1 Sublicensee”), provided that
ESLR1 shall remain responsible for the performance of the ESLR1
Sublicensees hereunder and any such sublicense granted by ESLR1
shall be pursuant to a written agreement that is at least as
protective of TISICS, with respect to the license contained in
Section 2.1(a), as this Agreement and provided that TISICS has
consented to the granting of such sublicense, such consent not to
be unreasonably withheld or delayed, provided further that ESLR1
may grant Evergreen and Evergreen’s Affiliates a sublicense
without TISICS’ consent or any requirement of a written
agreement (but subject to prior written notice of such sub-license
being given to TISICS). ESLR1 Sublicensees shall not have the right
to grant any further sublicenses under any such sublicense granted
by ESLR1. The terms of the agreement with ESLR1 Sublicensees will
expressly prohibit in writing all of its ESLR1 Sublicensees from
exercising the license grant contained in Section 2.1(a) (but
not any other sublicenses such ESLR1 Sublicensee may be granted,
for example, under the Composite Field License Agreement or Other
Fields License Agreement) outside the PV Field. Subject to
Section 2.5, any purchaser of SiC Fiber in the PV Field shall,
by operation of this Agreement,
5
receive the
right to sell, offer for sale, resell, offer for resale, import and
otherwise use such SiC Fiber in the PV Field by operation of the
patent exhaustion/first sale doctrine, but otherwise shall receive
no licenses, sublicenses or other rights under the TISICS IP by
virtue of its purchase of SiC Fiber in the PV Field from ESLR1 or a
ESLR1 Sublicensee.
2.2 Reservation
of Rights . Subject to Section 2.3(d), ESLR1 shall acquire
no right, title or interest in, to or under, and TISICS and its
Affiliates hereby reserve all right, title and interest in, to and
under, the TISICS IP, by implication, estoppel or otherwise, other
than the express license grant to ESLR1 set forth in
Section 2.1(a) or as otherwise expressly provided
herein.
2.3 Ownership
of Intellectual Property Rights . The following shall apply to
all Technology (and all Intellectual Property Rights embodied
therein) invented, created or developed under this Agreement, the
Other Fields License Agreement, the Composite Field License
Agreement, the Supply Agreement, the Facilities and Start Up
Agreement and any other written agreement between the Parties
during the respective terms of such agreements:
(a)
TISICS IP . As between the Parties, TISICS and/or its
Affiliate(s) shall have exclusive ownership of the TISICS
IP.
(b)
ESLR1 IP . As between the Parties, ESLR1 shall have
exclusive ownership of the ESLR1 IP.
(c)
Newly Developed Intellectual Property . As between the
Parties, subject to Section 2.3(d), (i) TISICS and/or its
Affiliate(s) shall have exclusive ownership of (A) all
Technology (and all Intellectual Property Rights embodied therein)
invented, created or developed by one or more employees,
consultants or contractors of TISICS and/or its Affiliate(s), as
applicable, during the Term without any employees, consultants or
contractors of ESLR1, except to the extent that any such Technology
constitutes an Improvement solely to the ESLR1 IP or any other
Intellectual Property Rights then-Controlled by ESLR1 ( i.e.
, such Technology does not constitute an Improvement to any of the
TISICS IP or Joint IP) (such Improvement, a “ESLR1 IP
Improvement”), and (B) TISICS IP Improvements (as
defined below) and (ii) ESLR1 shall exclusively own
(A) all Technology (and all Intellectual Property Rights
embodied therein) invented, created or developed by one or more
employees, consultants or contractors of ESLR1 and/or its
Affiliate(s), as applicable, during the Term without any employees,
consultants or contractors of TISICS or Affiliates of TISICS,
except to the extent that any such Technology constitutes an
Improvement solely to the TISICS IP or any other Intellectual
Property Rights then-Controlled by TISICS and/or its Affiliate(s)
(i.e., such Technology does not constitute an Improvement to any of
the ESLR1 IP or Joint IP) (such Improvement, a “TISICS IP
Improvement”) and (B) ESLR1 IP Improvements.
(d)
Joint IP . If Technology is jointly invented, created or
developed by one or more employees, consultants or contractors of
each of ESLR1 and/or its Affiliate(s), on the one hand, and TISICS
and/or its Affiliate(s), on the other hand, then such Technology,
and all Joint IP therein, shall be jointly owned by ESLR1, on the
one hand, and TISICS and/or its Affiliate(s), on the other hand, as
applicable, without any duty to account.
6
(e)
Assignment . To the extent any Party or its Affiliates
retains any ownership interest in, to or under any Technology or
Intellectual Property Rights that are properly owned (in accordance
with this Section 2.3) by the other Party or such other
Party’s Affiliates, such Party hereby assigns, and will
assign, on behalf of itself and its Affiliates, to such other Party
or such other Party’s Affiliates, as applicable, all of its
ownership interest in, to and under such Technology and
Intellectual Property Rights in all countries and territories
worldwide and under any international conventions, free and clear
of any and all Encumbrances. Each Party shall provide to the other
Party all assistance (including the execution of any applicable
documents of assignment or registration) reasonably requested by
such other Party to perfect the rights described in this
Section 2.3.
(f)
Licenses . For the avoidance of doubt and without
limitation, the Intellectual Property Rights embodied in the
Technology covered by this Section 2.3 shall be deemed TISICS
IP or ESLR1 IP, as applicable, and thus subject to the licenses
granted in the applicable agreement between the Parties, to the
extent the scope of the definitions of “TISICS IP” or
“ESLR1 IP”, respectively, cover such
Technology.
2.4 Assignment
of Inventions by Personnel . Each Party shall enter into
binding agreements obligating all employees, consultants and
contractors performing activities related to, under or as
contemplated by this Agreement, the Other Fields License Agreement,
the Composite Field License Agreement, the Supply Agreement, the
Facilities and Start Up Agreement or any other written agreement
between the Parties (i) to assign his/her interest in any
Technology conceived or reduced to practice in the course of such
activities (and all Intellectual Property Rights therein) to the
Party for which such employee, consultant or contractor is
providing its services and (ii) to maintain the
confidentiality of the same in accordance with reasonable
confidentiality provisions at least as protective of the Technology
and Intellectual Property Rights owned by the other Party or such
other Party’s Affiliates as those provisions set forth in
Section 6.
2.5 Third Party
Sales . All sales of SiC Fiber to Third Parties by ESLR1 and
ESLR1 Sublicensees must contain appropriate restrictions preventing
the use by Third Parties of SiC Fiber in the Composite Field,
whether directly or as a recycled material. If ESLR1 becomes aware
of any use by a Third Party of such SiC Fiber in the Composite
Field, ESLR1 shall reasonably cooperate with TISICS, at
TISICS’ cost, in enforcing such restrictions.
2.6 Field
Limitation . For the avoidance of doubt, without limiting and
subject to the rights granted pursuant to the Composite Field
License Agreement, ESLR1 shall not intentionally develop Technology
under the license granted in Section 2.1(a) that is
specifically and exclusively targeted for the production and use of
SiC Fiber in the Composite Field.
3.
Delivery of TISICS IP; Other Obligations .
3.1 Delivery of
TISICS IP .
(a) As
soon as practicable after the Effective Date, TISICS shall make
available for inspection by ESLR1, in hardcopy or electronic
format, a copy of documents relevant to the Construction and/or
Operation of the ESLR1 Facilities and to the manufacture
of
7
SiC Fiber
(excluding, for clarity, any documents that are irrelevant to the
performance of such activities in the PV Field), including
documents, drawings and specifications (“TISICS
Materials”), in each case, existing as of the Effective Date
and for use in the PV Field. TISICS shall provide ESLR1 with copies
of such TISICS Materials that are material to the performance of
such activities in the PV Field as soon as commercially possible
but in any event within the earlier of (i) [****] calendar days
following the Effective Date or (ii) [****] calendar days after the
receipt of written notice from ESLR1 if ESLR1 determines in good
faith that TISICS is not cooperating with ESLR1 or otherwise not
complying with its obligations in this Section 3.1(a), in each
case, which TISICS Materials shall include the documents, drawings
and specifications set forth in Exhibit C .
(b) Thereafter,
TISICS shall continue to give ESLR1 access to TISICS Materials as
ESLR1 may reasonably request for the purposes of ESLR1’s
Construction and/or Operation of the ESLR1 Facilities and
manufacturing of SiC Fiber in the PV Field. Further, TISICS shall
[****] develop a process for manufacturing SiC Fiber for use in the
PV Field that is reasonably acceptable to ESLR1. Without limiting
any of ESLR1’s remedies, TISICS shall deliver to ESLR1 copies
of all TISICS Materials (for any field) not already delivered to
ESLR1 within one (1) month of the occurrence of any of the
following: (A) TISICS having not developed such a process
within [****] after the Effective Date or (B) ESLR1 delivering
written notice to TISICS at any time that TISICS is not using its
best efforts to develop such a process, provided that TISICS shall
have [****] after receiving such notice to cure such failure to
[****]. For the purposes of assessing [****] of TISICS, TISICS
shall provide monthly plans indicating milestone targets for the
development of such process in accordance with such [****]
timetable, which plans shall be subject to the written approval of
ESLR1. The Parties acknowledge that the direction and timescales of
such plans will evolve as work progresses and TISICS and ESLR1 will
work in good faith to keep the milestone plans current to the
progress achieved.
(c) The
Parties acknowledge that the initial specifications for SiC Fiber
for use with Evergreen’s String Ribbon process are set forth
in Exhibit A , and that such specifications represent a
starting point for the development of SiC Fiber by the Parties for
use in the PV Field. The Parties shall work together in good faith
to improve and modify such specifications, in conjunction with the
development of a process for manufacturing SiC Fiber for use in the
PV Field, to achieve the SiC Fiber performance and quality
characteristics reasonably required by ESLR1.
(d) Where
TISICS requires String Ribbon process trials in order to assess the
performance of the SiC Fiber during development, these trials will
be conducted in a timely manner and any delay that may be required
by Evergreen and/or ESLR1 for operational reasons will be added to
the delivery time frame referred to in 3.1(b)(A) above. Evergreen
and/or ESLR1 will provide TISICS with timely feedback with respect
to such trials and will specify to TISICS which aspects of the
tested SiC Fiber does not provide the performance and functionality
required by Evergreen and/or ESLR1.
(e) TISICS’
obligations to make and deliver copies of TISICS Materials shall be
subject to any applicable Third Party copyright and confidentiality
agreements. TISICS shall deliver to ESLR1 updates (if any) to such
TISICS Materials on no less than a calendar quarterly
8
basis to
reflect changes in or additions to (if any) the TISICS Materials.
Further, TISICS shall update Exhibit B upon ESLR1’s
reasonable request in order to maintain an up-to-date inventory of
TISICS IP within the PV Field. and at a minimum to maintain a
complete and accurate list of all Patents contained within the
TISICS IP (the “TISICS Patents”).
3.2 Fiber
Development Documentation . At the Effective Date TISICS will
not be able to determine which TISICS IP is essential to the
development, manufacture and maintenance of SiC Fiber for the PV
Field. Without limiting the generality of Section 3.1, upon
completion of the development of Technology for manufacturing SiC
Fiber in the PV Field, TISICS will provide all TISICS Materials
generated for such Technology and any background TISICS Materials
deemed to be essential for the future maintenance and control of
such Technology.
3.3 Outsourced
Services . Notwithstanding the foregoing, the Parties
acknowledge and agree that ESLR1 may request that Evergreen (or any
of ESLR1’s other Affiliates), TISICS (or any of TISICS’
Affiliates) or Third Parties perform, whether on a permanent or
temporary basis, certain services (such as services relating to
infrastructure, management, operations, technology support and
development) to the extent that ESLR1 determines, after
consultation with the relevant entity, that such entity can perform
such services on a more cost-effective basis than if ESLR1 were to
perform such services itself. To the extent that Evergreen (or any
of ESLR1’s other Affiliates) or TISICS (or any of
TISICS’ Affiliates) agrees to perform such services, ESLR1
shall pay for such services on a cost-plus basis to be reasonably
determined by the applicable parties. Outsourcing to a TISICS
Competitor for performance of the services described in this
section will be subject to the consent of TISICS, such consent to
be withheld by TISICS in its sole discretion.
3.4 Compliance
with Laws . The Parties shall comply with all applicable Laws
(including any intellectual property marking Laws) in the exercise
of their rights or performance of their obligations
hereunder.
4.1
Payments . Subject to the terms and conditions hereof
(including Section 4.4), ESLR1 shall pay TISICS the
Conditional Fees and PV Royalties (each as defined in
Exhibit D ) as set forth in Exhibit D
.
(a) Further,
subject to Section 4.4, in the event (i) ESLR1 grants a
sublicense to a Third Party (other than a Key Customer of ESLR1)
pursuant to Section 2.1(b) and (ii) in consideration for
the grant of such sublicense, such ESLR1 Sublicensee pays ESLR1
amounts in the form of a royalty or sublicense fee based on the
Sale of SiC Fiber by such ESLR Sublicensee in the PV Field, which
amounts are in excess of the PV Royalties payable to TISICS
hereunder based on such Sale or, if applicable, the underlying sale
which triggered ESLR1’s obligation to pay PV Royalties (such
excess, the “Excess Fees”), then during the Term ESLR1
shall pay TISICS an amount (the “PV Shared Excess
Fees”) equal to the Excess Percentage (as defined below) of
the Excess Fees received by ESLR1. The “Excess
Percentage” shall equal (i) [****] percent ([****]%) if
TISICS has not exercised Tranche One (as defined in that certain
LLC Membership Interest Purchase Option granted to TISICS dated as
of September 5, 2007 (the
9
“Option”)), (ii) [****] percent
([****] %) if TISICS exercises Tranche One or (iii) [****] percent
([****] %) if TISICS exercises Tranche Two (as defined in the
Option).
(b) ESLR1
shall not have any obligation to pay any PV Shared Excess Fees
based on the following: (i) any sales by Evergreen,
ESLR1’s other Affiliates or ESLR1’s Key Customers as
ELSR1 Sublicensees hereunder, (ii) any sales by ESLR1
Sublicensees of SiC Fiber to Evergreen, ESLR1’s other
Affiliates or ESLR1’s Key Customers in or after Period 7 or
to Third Parties (other than ESLR1’s Key Customers) in or
after Year 11; and (iii) any sales by ESLR1 Sublicensees of
SiC Fiber to the extent that the the manufacture or sale of such
SiC Fiber does not infringe or misappropriate or otherwise involve
the use of any of the the TISICS IP (other than any Joint
IP).
4.2 Payment
Terms; Reports; Records; Taxes; Audits .
(a)
Payment . All payments to be made by ESLR1 hereunder shall
be made in U.S. dollars by wire transfer to such bank account as
TISICS may designate.
(b)
Reports . For as long as PV Royalties or PV Shared Excess
Fees are due hereunder, ESLR1 shall furnish to TISICS a written
report, within [****] days after the end of each calendar quarter,
showing the amount of (i) SiC Fiber Sold for which PV
Royalties and/or PV Shared Excess Fees are due hereunder and
(ii) the PV Royalties and/or PV Shared Excess Fees due for
such calendar quarter. PV Royalty and PV Shared Excess Fee payments
for each calendar quarter shall be due at the same time as such
written report for such calendar quarter. All such reports shall be
treated as Confidential Information of ESLR1.
(c)
Records . ESLR1 and ESLR1 Sublicensees shall keep adequate
books and records of accounting for the purpose of calculating all
PV Royalties and PV Shared Excess Fees payable to TISICS hereunder.
For the [****] years following the end of the calendar year to
which each shall pertain, such books and records of accounting
shall be kept at each of their principal place of business and
shall be open for inspection at reasonable times and upon
reasonable notice by an independent certified accountant selected
by TISICS, and which is reasonably acceptable to ESLR1, for the
sole purpose of inspecting the PV Royalties and PV Shared Excess
Fees due to TISICS under this Agreement. In no event shall such
inspections be conducted hereunder more frequently than once every
[****]. Such accountant must have executed and delivered to ESLR1
and ESLR1 Sublicensees, as applicable, a confidentiality agreement
as reasonably requested by ESLR1, which shall include provisions
limiting such accountant’s disclosure to TISICS to only the
results and basis for such results of such inspection. The results
of such inspection, if any, shall be binding on both Parties. Any
underpayments shall be paid by ESLR1 within [****] days of
notification of the results of such inspection. Any overpayments
shall be full
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