<PAGE>
EXHIBIT 10.40
SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
STI HAS REQUESTED CONFIDENTIAL
TREATMENT FOR TEXT MARKED
WITH *****
PATENT LICENSE AGREEMENT
BETWEEN
LUCENT TECHNOLOGIES GRL LLC
AND
SUPERCONDUCTOR TECHNOLOGIES INC.
EFFECTIVE AS OF EXECUTION
RELATING TO ********************
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SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
PATENT LICENSE AGREEMENT
TABLE OF CONTENTS
ARTICLE I - GRANTS OF LICENSES
1.01
Grant
1.02
Duration and
Extent
1.03
Scope
1.04
Ability to Provide Licenses
1.05
Joint Inventions
1.06
Publicity
1.07
Confidentiality
ARTICLE II - ROYALTY AND PAYMENTS
2.01
Royalty
2.02
Accrual
2.03
Records and Adjustments
2.04
Reports and Payments
2.05
Representations and Warranties
ARTICLE III - TERMINATION
3.01
Breach
3.02
Voluntary Termination
3.03
Survival
ARTICLE IV - MISCELLANEOUS PROVISIONS
4.01
Disclaimer
4.02
Nonassignability
4.03
Addresses
4.04
Taxes
4.05
Choice of Law
4.06
Integration
4.07
Other Conditions and Registration
4.08
Releases
4.09
Counterparts
4.10
Bankruptcy
DEFINITIONS APPENDIX
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SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
PATENT LICENSE AGREEMENT
THIS PATENT LICENSE AGREEMENT (this
"Agreement"), effective as of EXECUTION
("EFFECTIVE DATE"), is made by and between
LUCENT TECHNOLOGIES GRL LLC, a
Delaware limited liability company
("LUCENT-GRL"), having an office at 2400 S.W.
145th Avenue, Miramar, Florida 33027,
United States of America, and
SUPERCONDUCTOR TECHNOLOGIES INC., a
Delaware Corporation ("LICENSEE"), with
offices at 460 Ward Drive Santa Barbara,
California 93111-2310, United States of
America. LUCENT-GRL and LICENSEE are
sometimes referred to herein individually
as a "Party" and collectively as the
"Parties", the Parties agree as follows:*
WHEREAS, without admitting to the
infringement or validity of any of
LUCENT-GRL's PATENTS, LICENSEE desires a
license on the terms set forth below.
ARTICLE I
GRANTS OF LICENSES
1.01 GRANT
LUCENT-GRL grants to LICENSEE under
LUCENT-GRL's PATENTS personal, nonexclusive
and non-transferable licenses in the U.S.,
Canada, and the DESIGNATED COUNTRIES
for:
TYPE 1 LICENSED PRODUCTS; AND
TYPE 2 LICENSED PRODUCTS.
1.02 DURATION AND EXTENT
(a) Subject to any termination of a Party's
licenses in accordance with Article
III of this Agreement, all licenses in the
U.S. and Canada granted herein under
any patent shall continue for the entire
unexpired term of such patent, for as
much of such term as the grantor has the
right to grant.
(b) Subject to any termination of a Party's
licenses in accordance with Article
III of this Agreement, all licenses in the
DESIGNATED COUNTRIES granted herein
to a Party under any patent shall terminate
on the earlier of (i) such patent's
expiration or for as much of a term as the
grantor has the right to grant; or
(ii) the end of the LIMITED PERIOD.
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*Any term in capital letters which is
defined in the body of this Agreement or
the Definitions Appendix shall have the
meaning specified therein.
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SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
1.03 SCOPE
(a) The licenses granted herein are
licenses to (i) make, have made, use, lease,
sell, offer to sell, and import LICENSED
PRODUCTS; (ii) make, have made, use and
import machines, tools, materials and other
instrumentalities, insofar as such
machines, tools, materials and other
instrumentalities are involved in or
incidental to the development, manufacture,
testing or repair of LICENSED
PRODUCTS which are or have been made, used,
leased, owned, sold or imported by
the grantee of such license; and (iii)
convey to any customer of the grantee,
with respect to any LICENSED PRODUCT which
is sold or leased by such grantee to
such customer, rights to use and resell
such LICENSED PRODUCT as sold or leased
by such grantee (whether or not as part of
a larger combination); provided,
however, that no rights may be conveyed to
customers with respect to any
invention which is directed to (1) a
combination of such LICENSED PRODUCT (as
sold or leased) with any other product
regardless of whether such product is
hardware, software or another LICENSED
PRODUCT, (2) a method or process which is
other than the inherent use of such
LICENSED PRODUCT itself (as sold or leased),
or (3) a method or process involving the
use of a LICENSED PRODUCT to
manufacture (including associated testing)
any other product.
(b) Licenses granted herein to LICENSEE are
not to be construed to include
licenses to contributorily infringe or
induce infringement under U.S. law or a
foreign equivalent thereof.
(c) The grant of each license hereunder
includes the right to grant sublicenses
within the scope of such license to a
Party's RELATED COMPANIES for so long as
they remain its RELATED COMPANIES. Any such
sublicense may be made effective
retroactively, but not prior to the
EFFECTIVE DATE hereof, nor prior to the
sublicensees becoming a RELATED COMPANY of
such Party.
(d) The grant of each license hereunder
also includes the right of a Party to
sublicense (within the scope of its own
licenses) any business which is divested
by that Party or any of its RELATED
COMPANIES provided that the sublicense is
granted within sixty (60) days of
divestiture and the divested business is
itself a legal entity at the time of
divestiture or within sixty (60) days
thereafter. Such sublicense may continue
for so long as the divested business
remains a legal entity and shall extend
only to LICENSED PRODUCTS of the type
sold or furnished by the divested business
prior to the divestiture and only for
the patents of the non-divesting Party
licensed to the divesting Party in this
Agreement which are issued as of the date
of divestiture. Furthermore, any
sublicense shall not extend to the products
sold or services furnished by a
third party which acquires the divested
business, even if they are of the same
kind or similar to those of the divested
business and even if made, sold or
provided by the divested business. Any
payment obligations of a divesting Party
under this Agreement shall continue in
effect for all LICENSED PRODUCTS,
including the LICENSED PRODUCTS of the
divested business. The divested business
shall be jointly and severally liable with
the divesting Party for royalties
payable on account of the LICENSED PRODUCTS
of the divested business. This
Section 1.03(d) shall apply regardless of
whether the business is divested by a
distribution to existing shareholders, a
sale of assets or as a sale of a legal
entity (e.g., sale of a SUBSIDIARY).
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SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
1.04 ABILITY TO PROVIDE LICENSES
(a) A Party's failure to meet any
obligation hereunder, due to the assignment of
title to any invention or patent, or the
granting of any licenses, to the United
States Government or any agency or designee
thereof pursuant to a statute or
regulation of, or contract with, such
Government or agency, shall not constitute
a breach of this Agreement.
(b) LUCENT-GRL represents that it has the
right to grant the licenses under the
patent portfolio of Lucent Technologies
Inc., LUCENT-GRL's parent company, as
set forth in this Agreement.
1.05 JOINT INVENTIONS
(a) There are countries (not including the
United States) which require the
express consent of all inventors or their
assignees to the grant of licenses or
rights under patents issued in such
countries for joint inventions.
(b) Each Party shall give such consent, or
shall obtain such consent from its
RELATED COMPANIES, its employees or
employees of any of its RELATED COMPANIES,
as required to make full and effective any
such licenses and rights respecting
any joint invention granted to the grantee
hereunder by such Party and by
another licensor of such grantee.
(c) Each Party shall take steps which are
reasonable under the circumstances to
obtain from third parties whatever other
consents are necessary to make full and
effective such licenses and rights
respecting any joint invention purported to
be granted by it hereunder. If, in spite of
such reasonable efforts, such Party
is unable to obtain the requisite consents
from such third parties, the
resulting inability of such Party to make
full and effective its purported grant
of such licenses and rights shall not be
considered to be a breach of this
Agreement.
1.06 PUBLICITY
Nothing in this Agreement shall be
construed as conferring upon either Party or
its RELATED COMPANIES any right to include
in advertising, packaging or other
commercial activities related to a LICENSED
PRODUCT, any reference to the other
Party (or any of its RELATED COMPANIES),
its trade names, trademarks or service
marks in a manner which would be likely to
cause confusion or to indicate that
such LICENSED PRODUCT is in any way
certified by the other Party hereto or its
RELATED COMPANIES.
1.07 CONFIDENTIALITY
The terms, but not the existence, of this
Agreement shall be treated as
confidential information by the Parties,
and no Party shall disclose such terms
to any third party without the prior
written consent of the other Party;
provided however, that each Party may (i)
represent to third parties that such
Party is licensed for the products and
patents as provided by this Agreement;
(ii)
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SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
disclose this Agreement and its terms to
potential acquirers of, investors in or
lenders to such Party (including any
representatives of the parties in such
transaction), or disclosures reasonably
necessary in connection with the
divestiture of all or any portion of a
Party's respective businesses, provided
such disclosure is made pursuant to a
written confidentiality agreement binding
upon such potential acquirer, investor,
lender or other parties which contains
confidentiality obligations which are no
less protective than at least the same
degree of care the disclosing Party
normally exercises to protect its own
proprietary information of a similar
nature; (iii) disclose this Agreement and
its terms in any arbitration, mediation or
other official dispute resolution
procedure pursuant to a written
confidentiality agreement binding upon the
parties which contains confidentiality
obligations which are no less protective
than at least the same degree of care the
disclosing Party normally exercises to
protect its own proprietary information of
a similar nature; and (iv) disclose
this Agreement and its terms which is
requested pursuant to a judicial or
governmental request, requirement or order
under law, provided that such Party
provides the other Party with sufficient
prior notice in order to contest such
request, requirement or order or seek
protective measures. In addition, this
Section 1.07 shall not prevent a Party from
making disclosures reasonably
required by law or as required by a stock
exchange.
ARTICLE II
ROYALTY AND PAYMENTS
2.01 ROYALTY
(a)
In consideration for the grant of licenses, rights and releases
hereunder by LUCENT-GRL to LICENSEE, and in addition to the
royalties specified in Sections 2.01(b), 2.01(c), and 2.01(d),
LICENSEE shall pay to LUCENT-GRL the sum of
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In no event shall such sum or any portion
thereof be refunded to LICENSEE.
(b) Subject to Section 2.01(c), in
consideration for the grant of licenses and
rights hereunder by LUCENT-GRL to LICENSEE,
LICENSEE shall pay a royalty to
LUCENT-GRL as set forth below. For the
convenience of the Parties, taking into
account the unexpired term of LUCENT-GRL
PATENTS, and in lieu of royalties
otherwise payable with respect to patents
licensed hereunder, royalty shall be
payable to LUCENT-GRL by LICENSEE in the
form of royalty payments, for so long
as:
(i)
any of the licenses in the DESIGNATED COUNTRIES granted
hereunder are in effect, at the rate set forth below applied to
the FAIR MARKET VALUE of each LICENSED PRODUCT which is sold,
leased or put into use by LICENSEE anywhere in the DESIGNATED
COUNTRIES, and for each LICENSED PRODUCT which is sold, leased
or put into use by any of its RELATED COMPANIES anywhere in the
DESIGNATED COUNTRIES;
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SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
(ii) any
of the licenses in ************* granted hereunder are in
effect, at the rate set forth below applied to the FAIR MARKET
VALUE of each LICENSED PRODUCT which is sold, leased or put
into
use by LICENSEE anywhere in ***********, and for each LICENSED
PRODUCT which is sold, leased or put into use by any of its
RELATED COMPANIES anywhere in ********.
LICENSED PRODUCT
RATE
TYPE 1 LICENSED PRODUCT
************
TYPE 2 LICENSED PRODUCT
************
Royalty payments under this Section 2.01(b)
shall be payable semiannually, in
accordance with Section 2.04, commencing
with the semiannual period during which
this Agreement is executed. LICENSEE shall
furnish to LUCENT-GRL such LICENSED
PRODUCTS data and the FAIR MARKET VALUE
data with each payment report pursuant
to Section 2.04 and such revenues shall be
subject to an audit by LUCENT-GRL and
its auditors pursuant to Section 2.03.
(c) In the event that at any time the
cumulative royalty accrued, in accordance
with under Section 2.02(a), in a single
ANNUAL PERIOD by LICENSEE and payable to
LUCENT-GRL is equal to
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(d) Commencing with the ANNUAL PERIOD
beginning on ***********, on each October
1st, for so long as any of the licenses
granted to LICENSEE hereunder are in
effect, LICENSEE shall pay an annual
minimum royalty fee ("ANNUAL MINIMUM FEE")
of ************ The ANNUAL MINIMUM FEE paid
under this Section 2.01(d) shall be
creditable with respect to royalties that
may become payable pursuant to Section
2.01(b) for the single relevant ANNUAL
PERIOD. In no event shall any ANNUAL
MINIMUM FEE for any ANNUAL PERIOD under
this Section 2.01(d) or any portion
thereof be refunded to LICENSEE or credited
towards royalties due for any other
ANNUAL PERIOD.
2.02 ACCRUAL
(a) Subject to Section 2.02(b), the royalty
specified in Section 2.01(b) shall
accrue, and shall become payable in
accordance with Section 2.04, in respect of
any LICENSED PRODUCT upon the first sale,
lease or putting into use of such
LICENSED PRODUCT on or after the EFFECTIVE
DATE. Obligations to pay royalties
under Section 2.01 for time periods prior
to any termination of licenses and
rights pursuant to Article III shall
survive such termination and the expiration
of any patent.
(b) Royalties shall not accrue on a
LICENSED PRODUCT under this Agreement if the
LICENSED PRODUCT is sold by the LICENSEE
directly to LUCENT-GRL or its RELATED
COMPANIES and LICENSEE advises LUCENT-GRL
in writing that such LICENSED
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SUPERCONDUCTOR TECHNOLOGIES INC.
-REQUESTED
CONFIDENTIAL TREATMENT
PRODUCT is sold directly to LUCENT-GRL or
its RELATED COMPANIES before treating
any LICENSED PRODUCT as excluded, pursuant
to this Section 2.02(b).
(c) When a company ceases to be a RELATED
COMPANY of LICENSEE, royalties which
have accrued with respect to any products
of such company, but which have not
been paid, shall become payable with
LICENSEE's next scheduled royalty payment.
(d) Notwithstanding any other provisions
hereunder, royalty shall accrue and be
payable only to the extent that enforcement
of LICENSEE's obligation to pay such
royalty would not be prohibited by
applicable law (including but not limited to,
for example, the law related to the
doctrine of exhaustion).
2.03 RECORDS AND ADJUSTMENTS
(a) LICENSEE shall keep full, clear and
accurate records with respect to all
LICENSED PRODUCTS and their FAIR MARKET
VALUES, and shall furnish any
information which LUCENT-GRL may reasonably
prescribe from time to time to
enable LUCENT-GRL to ascertain the proper
royalty due hereunder. LICENSEE shall
retain such records with respect to
LICENSED PRODUCTS and FAIR MARKET VALUES for
at least five (5) years. Not more than once
per calendar year, LUCENT-GRL shall
have the right throug
