EXHIBIT 10.25
Form of Technology and Trademark License Agreement
Superconductor Technologies Inc., a Delaware corporation Superconductor
Investments (Mauritius) Ltd (“STI”) and BAOLI Superconductor Technology Co, Ltd,
a technologically-advanced contractual joint venture in the People’s Republic of
China (“BSTC”), make this License of Technology and Trademark Agreement
(“License Agreement”) as of                 , 2007. Certain capitalized terms
are defined in Schedule A—Definitions.
Recitals
A. Hunchun BaoLi Communications Co. Ltd., a Chinese enterprise (“BaoLi
Communications”) and STI have established BSTC as a technologically-advanced
contractual joint venture, within the territory, and under the laws, of the
People’s Republic of China to manufacture, market and sell the Product in the
Territory and to manufacture the Product for export from the Territory by sale
to STI and its designees.
B. STI makes this License Agreement with BSTC: (a) to enable it (i) to
manufacture the Product in the Territory so that BSTC may market and sell such
Product in the Territory and (ii) to manufacture the Product for export from the
Territory by sale to STI and its designees pursuant to that certain Export
Supply Agreement entered into by and between the parties (the “Export Supply
Agreement”); and, (b) to use certain marks of STI in connection with the
foregoing.
Now therefore, in consideration of the promises herein, and for good and
valuable consideration, the sufficiency and receipt of which is hereby
acknowledged, and intending to be legally bound, the parties hereby agree as
follows:
1. Grant of Technology License
As of the Effective Date, STI grants to BSTC, subject to the limitations of this
License Agreement, an exclusive license, for a term of thirty years (subject to
earlier termination as provided herein), without any right to sub-license, to
use the Technology within the Territory solely to the extent needed to make,
reproduce, and manufacture, the Product: (i) to market, sell, and offer for sale
such Product solely for use within the Territory, in every instance only for
Qualified Uses, and (ii) to sell such Product to STI and its designees for use
outside the Territory pursuant to the terms of the Export Supply Agreement. For
the avoidance of doubt, BSTC expressly agrees that this license to use the
Technology shall not serve to restrict in any manner STI’s exercise of rights
with regard to the Technology outside the Territory. As an express condition of
this license, BSTC shall not have the right to modify or create derivative works
of the Technology without the express permission of STI, nor to use the
Technology to make, reproduce, manufacture, market, sell, or offer for sale any
products other than the Product. All rights not expressly granted herein
regarding the Technology are reserved to STI.
2. Grant of Trademark License
As of the Effective Date, STI grants to BSTC, subject to the limitations of this
License Agreement, an exclusive, royalty-free license, coterminous with the
license of Section 1, without any right to sub-license, to use the Licensed
Trademarks only in connection with the manufacture, sale and service of the
Product within the Territory, in each case only for Qualified Uses and only as
the Product is permitted to be manufactured, sold and serviced in conformity
with the license granted in Section 1.
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EXHIBIT 10.25
3. Related Services
3.1 Transition Assistance During the first year after the Effective Date,
(i) STI will supply BSTC with kits for up to 500 units of the Product, priced at
direct material and labor cost plus 20%, as reasonably requested by BSTC on not
less than 90 days’ notice and (ii) STI will provide reasonable consulting
support to BSTC’s efforts in assembling the kits and acquiring and/or building
the specialty equipment and fixtures necessary to manufacture the Product in
accordance with the training plan attached to this Agreement as
Schedule E—Training Plan. BSTC will pay for all costs required to send its
technical staff to STI to be trained; as well as the expenses (living and travel
costs within the Territory) of any STI staff while within the Territory. STI
will pay for any travel costs to get its personnel to the Territory as required
by the training plan. STI may sell any excess equipment and fixtures it may have
to BSTC as mutually agreed.
3.2 Manufacturing arrangements
If STI determines that it wishes to have the Product made in China, upon STI’s
request from time to time, BSTC will manufacture the Product for sale by STI
outside the Territory, priced to STI at direct material and labor cost plus 20%.
The parties acknowledge that certain aspects of the manufacturing process may be
retained by STI based on factors including economics, feasibility and regulatory
climate. To the extent consistent with compliance with any prohibitions as to
export of pertinent technology, STI will sell to BSTC, priced to BSTC at direct
material and labor cost plus 20%, any components as to which it retains the
manufacturing process.
4. Royalties; payment terms
4.1 Royalties
In consideration, and as a condition to the continuance, of the license granted
under Section 1, BSTC shall timely pay STI royalties equal to the greater of
(i) 7% of Revenues for the corresponding quarter or (ii) any applicable Minimum
Royalty for the corresponding quarter. No payment of Minimum Royalty hereunder
is creditable towards royalty due for future quarters.
4.2 Reporting; payment
During the term of this Agreement and for a period of two (2) years thereafter,
BSTC shall keep and maintain all books of account relating to Revenue reasonably
needed to support the calculation of royalties under this Agreement at its
principal offices, in conformity with generally accepted accounting practices as
observed in the United States. Within 15 days after the end of each calendar
quarter, BSTC shall render a Royalty Statement to STI. BSTC shall pay to STI the
royalty due for each calendar quarter within 15 days after the end of each
calendar quarter by wire transfer in United States Dollars in readily available
funds to an account designated by STI in the United States or such other place
as STI may identify.
STI may audit the books and records of BSTC relating to the calculation of any
Royalty Statement. BSTC shall pay all costs and expenses of any audit if it
shows an underpayment in connection with any such Royalty Statement by more than
5%.
4.3 Taxes
In the event that BSTC is required by the laws of the People’s Republic of China
to withhold or deduct any taxes, levies, fees, imposts, duties or similar
charges (“Local Taxes”) from any payments hereunder to STI, or in the event that
payments by BSTC to STI hereunder are otherwise subject to Local Taxes (in each
case other than the national withholding tax on Chinese-source royalties paid to
nonresidents of China that is currently imposed under Chinese domestic law (the
“Withholding
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EXHIBIT 10.25
Tax”), but only to the extent that the Withholding Tax does not exceed a rate of
10%) then BSTC will pay such additional amounts to STI as shall be necessary in
order that the net amounts received by STI, after withholding, deduction or
payment of such Local Taxes, equal the amounts that would otherwise have been
receivable by STI pursuant to this License Agreement in the absence of such
Local Taxes.
5. Ownership matters
5.1 Technology
As between the parties, STI retains all title, and (except as expressly granted
in this License Agreement) all rights and interest in and to the Technology and
any and all portions thereof. BSTC hereby grants to STI a perpetual royalty-free
license, with right to sublicense, to all rights, title and interest in and to
any BSTC Technology, which license shall be non-exclusive for the Territory and
exclusive outside the Territory. STI consents to the grant by BSTC to BaoLi
Communications of a perpetual, non-exclusive royalty-free license for the
Territory to all rights, title and interest in and to any BSTC Technology.
5.2 Licensed Trademarks
All right, title and interest in and to the Licensed Trademarks, other than the
specific rights granted to BSTC in this License Agreement, are retained by STI
for its own use or license to others. BSTC recognizes the value of the goodwill
associated with the Licensed Trademarks and acknowledges that (as between the
parties) such goodwill belongs exclusively to STI. BSTC agrees that (i) it will
not assert any interest or property rights in any rights included in the
Licensed Trademarks other than the license set forth herein; (ii) all permitted
uses of the Licensed Trademarks by BSTC shall inure to the benefit of and be on
behalf of STI; and (iii) nothing in this License Agreement shall give BSTC any
interest in the Licensed Trademarks other than the right to use the Licensed
Trademarks in accordance with this License Agreement. BSTC shall not attack,
directly or indirectly, the validity of the Licensed Trademarks or STI’s title
in or to the Licensed Trademarks. BSTC will not modify, enhance, or create a
derivative work of the Licensed Trademarks (“Junior Marks”) without the prior
written consent of STI, and STI will own all right, title and interest in and to
the Junior Marks, including all intellectual property rights therein. BSTC
irrevocably transfers and assigns to STI, and agrees to irrevocably transfer and
assign to STI, all right, title and interest in and to the Junior Marks,
including all intellectual property rights therein. At STI’s request and
expense, during and after the term of this License Agreement, BSTC will assist
and cooperate with STI in all respects (and will cause its employees and
subcontractors to assist and cooperate with STI in all respects), and will
execute documents (and will cause its employees and subcontractors to execute
documents), and will take such further acts reasonably requested by STI to
enable STI to acquire, perfect, maintain and enforce STI’s intellectual property
rights in and to the Junior Marks. BSTC hereby appoints the officers of STI as
BSTC’s attorney-in-fact to execute documents on behalf of BSTC and its employees
and subcontractors for this limited purpose. BSTC also, on behalf of itself and
its employees and subcontractors, irrevocably transfers and assigns to STI, and
agrees to irrevocably transfer and assign to STI, and waives and agrees never to
assert, any and all moral rights that BSTC or its employees or subcontractors
may have in or with respect to the Junior Marks, even after termination of the
licenses granted by this License Agreement. BSTC will not register, nor attempt
to register, any trade name, domain name, service mark, or trademark which, in
whole or in part, incorporates or is confusingly similar to the Licensed
Trademarks.
5.3 Clearances
BSTC will be responsible for verifying that its use of any patent rights,
trademark rights or other intellectual property rights related to the
manufacture, marketing or sale of the Product in the
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EXHIBIT 10.25
Territory, including the Technology and the Licensed Trademarks, does not
violate intellectual property rights of any other person.
5.4 Filings; costs
BSTC agrees to assist STI: (i) in recording this License Agreement with
appropriate government authorities where such recording is required by law or
regulation or where such recording is permitted or desired by STI; and, (ii) in
applying in the name of STI for patents and/or trademarks on all or any of the
Technology or the Licensed Trademarks in the Territory. BSTC shall not apply for
any patents on the Technology without the prior written consent of STI. All
costs associated with recording this License Agreement, the licenses granted
herein and registering, maintaining, or renewing rights in and to the Technology
or Licensed Trademarks in the Territory shall be borne by BSTC.
5.5 Infringements
If, at any time, BSTC learns that another party is or may be making unauthorized
use of the Licensed Trademarks or the Technology, BSTC agrees to give STI prompt
notice of that infringement. STI, at its option and for its own account, may
take actions with respect to any such infringement and any other infringements,
and BSTC agrees to cooperate with STI (at the sole expense of STI) in connection
with any action taken by STI with respect to infringements.
5.6 Use
During the term of this License Agreement, BSTC agrees sufficiently to use and
employ the Licensed Marks so as to maintain and preserve the legal validity and
enforceability of the Licensed Marks in the Territory.
5.7 Quality Control
(i) Maintenance of Quality. BSTC agrees that its manufacture of the Product and
its marketing and service thereof will be of high quality and at least of the
quality offered by STI at the time that this License Agreement is entered. BSTC
agrees that it will maintain the same level of quality for its manufacture of
the Product and its marketing and service thereof throughout the term of this
License Agreement and throughout any renewals thereof.
(ii) Investigation. STI may periodically request samples of marketing materials
showing use of the Licensed Trademarks to view how BSTC is using the Licensed
Trademarks. BSTC shall comply with all reasonable instructions given by STI to
BSTC as to the use of the Licensed Trademarks. STI will have the right to access
BSTC’s premises during normal business hours on reasonable advance notice for
the purpose of inspecting the facilities used by BSTC in connection with the
manufacturing, marketing and service of the Product associated with the Licensed
Trademarks in order to ensure the quality thereof.
6. Competition
6.1 Direct or indirect competition
During the term of this License Agreement, except as permitted hereunder BSTC
will not directly or indirectly promote market or sell any products in or
outside the Territory which compete directly or indirectly with any STI
products, nor will it assist any other person in doing so.
6.2 Notification of opportunities
If STI learns of any opportunity for marketing the Product within the Territory,
it will promptly notify BSTC, and if BSTC learns of any opportunity for
marketing the Product outside the Territory, it will promptly notify STI.
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EXHIBIT 10.25
7. Compliance with Law
7.1 Export
BSTC agrees to comply strictly with any and all laws and regulations of the
United States applicable to the transfer of Technology and Products, whether by
sale, lease, license, technical assistance, or any other means of distribution.
Without limitation, in no case may BSTC transfer any Technology or Products in
any manner or to any party in violation of the Export Administration Regulations
(15 CFR Parts 730—774.1) or the regulations of the Office of Foreign Assets
Control, U.S. Treasury Department (31 CFR Parts 500—598), or other U.S.
Government agency with jurisdiction of same. BSTC shall be responsible for
obtaining any and all U.S. Governmental approvals of such transfers, with the
reasonable assistance of STI. This Agreement, and the license in Section 1,
shall not grant any license to any technology to the extent that such licensing
is prohibited by any applicable laws, regulations or other US government
policies.
7.2 Civilian Use Only
None of the Technology transferred to BSTC by STI will be applied to or in any
other way used by BSTC to design or manufacture any Product for use in a
military environment or by a military end-user. Without limiting the generality
of the foregoing, no Product designed or manufactured by BSTC will be sold or
otherwise distributed, directly or indirectly, to any “entity” identified by the
U.S. Government in Part 744 of the Export Administration Regulations, or to any
customer who is classified as a “military end user” by the U.S. Government
without the express advance approval by the U.S. Government.
7.3 Law; Foreign Corrupt Practices Act
BSTC agrees to comply with all laws, statutes, regulations, rules, ordinances,
orders, or other legal requirements, including, but not limited to the U.S.
Foreign Corrupt Practices Act, and Chinese law covering a similar subject
matter, and to obtain and maintain all licenses and permits required to perform
its obligations hereunder. BSTC acknowledges that the U.S. Foreign Corrupt
Practices Act, and Chinese law covering a similar subject matter, specifically
prohibits employees or agents or consultants of Chinese or United States
corporations and their domestic and foreign subsidiaries from offering or making
payments (whether made in China, the United States or elsewhere) to employees or
agents of foreign governments (or government controlled entities) for the
purpose of influencing official acts or decisions. Payments or offers of payment
intended for government officials disguised as compensation to agents,
consultant fees and the like violate the law as much as direct payments and are
not to be made. BSTC agrees that: (i) no undisclosed or unrecorded account,
fund, or assets of the other shall be established by it for any purpose nor
shall any account, fund, or assets of either be held in the name of another
entity or person; (ii) no false, misleading, or artificial entries shall be made
in the books and records of either by the other for any reason and no
arrangement that results in such entries or in any arrangement that omits to
make entries that properly should be made; (iii) no payment from funds of either
shall be approved or made by the other with the intention or understanding that
any part of such payment is to be used for any purpose other than that described
by the documents supporting such payment; and (iv) all payments of any nature
made by either on behalf of the other will be properly identified and recorded
by it, and be made only in accord with the provisions of valid purchase orders,
subcontracts, blanket orders, and written sales agency or consulting agreements
and that full value will be received for each such payment. BSTC further agrees
to adopt and apply the compliance procedures applicable thereto reasonably
approved by Licensor and to conduct employee training and to audit business
transactions in a manner and at such times appropriate to ensure compliance with
the Foreign Corrupt Practices Act and similar laws and regulations of such other
countries.
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EXHIBIT 10.25
8. Default and termination
8.1 Causes of termination
The licenses granted by Section 1 and 2 shall terminate if an Event of Default
has occurred as provided in Section 8.2 and any non-defaulting party elects to
terminate such licenses. Such licenses shall also terminate on the termination
of the BSTC joint venture. The election by a party to terminate such licensees
shall not be the exclusive remedy, and such party shall retain any and all
remedies available under law, equity, or this License Agreement.
8.2 Events of Default
The occurrence of any of the following events shall constitute an Event of
Default on the part of the party in respect of which such event occurs (the
“Defaulting Party”):

(i)   any material default in performance of, or any material failure to comply
with, this License Agreement or any other agreements, obligations or
undertakings of such party to the other party, and the continuation of such
default for thirty (30) days following notice of such default from the other
party;

(ii)   the incorrectness in any material respect of any representation or
warranty contained in this License Agreement or in any certificate or document
delivered hereunder;

(iii)   the institution by a party of proceedings of any nature under any laws,
whether now existing or subsequently enacted or amended, for the relief of
debtors wherein such party is seeking relief as debtor;

(iv)   a general assignment by a party for the benefit of creditors, the
admission by a party in writing of its inability to pay its debts as they
mature, or the institution by a party of a proceeding under any provision of
bankruptcy or insolvency law as now existing or hereafter amended or becoming
effective; or

(v)   the appointment of a receiver for a party or a substantial portion of its
assets which appointment is not vacated within sixty (60) days after the filing
thereof.

8.3 Effect of termination; remedies
The termination under Section 8.2 of the licenses granted by Sections 1 and 2
shall not relieve any party from its other obligations hereunder, including any
liability for past breaches.
9. Indemnification
9.1 Indemnification by STI
STI will defend, indemnify and hold harmless BSTC and its officers, directors,
employees, shareholders, customers, agents, and permitted successors and assigns
from and against any and all loss, damage, settlement or expense (including
legal expenses), as incurred, resulting from or arising out of (i) any breach of
this License Agreement by STI or (ii) any third-party claim based on Product
sold by STI or its assignees outside the Territory, other than claims arising in
conjunction with a breach by BSTC of its obligations pursuant to this License
Agreement.
9.2 Indemnity by BSTC
BSTC will defend, indemnify and hold harmless STI and its officers, directors,
employees, shareholders, customers, agents, and permitted successors and assigns
from and against any and all loss, damage, settlement or expense (including
legal expenses), as incurred, resulting from or arising out of (i) any breach of
this License Agreement by BSTC or (ii) any third-party claim based on Product
sold by BSTC or its assignees, or any other activities of BSTC, whether in
connection with the Licensed Trademarks or otherwise, other than claims arising
in conjunction with a breach by STI of its obligations pursuant to this License
Agreement.
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EXHIBIT 10.25
9.3 Procedure

(i)   Notice. Promptly upon receipt by an indemnified party of a notice of a
claim by a third party that may give rise to a claim hereunder, the indemnified
party shall give written notice thereof to the indemnifying party, although
failure to do so shall not affect the right to indemnification except to the
extent of actual prejudice.   (ii)   Control of defense. The indemnified party
shall allow the indemnifying party to assume control of the defense of any such
action brought by a third party so long as such defense will be conducted by
reputable attorneys retained by the indemnifying party at the indemnifying
party’s cost and expense and the indemnifying party agrees to be solely
responsible for satisfying the claim. The indemnified party will have the right
to participate in such proceedings and to be separately represented by attorneys
of its own choosing at its own expense.   (iii)   Effect. The indemnifying party
may contest or settle any third party claim on such terms as the indemnifying
party may choose; however, the indemnifying party will not have the right,
without the indemnified party’s written consent, to settle any such claim if
such settlement (i) arises from or is part of any criminal action, suit or
proceeding, (ii) contains an admission of wrongdoing on the part of the
indemnified party, or (iii) provides for injunctive relief which is binding on
the indemnified party or limits its use of the Licensed Trademarks.

10. Confidentiality
10.1 Obligations
Each party agrees that (a) except as provided in Section 10.3, it shall maintain
the confidential nature of any Confidential Information received from the other
party, and (b) it shall use such Confidential Information solely for the purpose
of meeting its obligations under this License Agreement and not in connection
with any other business or activity. At the termination of the licenses granted
under Sections 1 and 2, or any time upon demand of a disclosing party, each of
the parties agrees to return any and all materials containing any Confidential
Information.
10.2 Limitations on confidentiality obligations and use restrictions
The restrictions on use and the obligations of confidentiality contained in this
License Agreement will not apply to any item or combination of items of
information (a) that the receiving party can demonstrate (i) is then in the
public domain by acts not attributable to such party, (ii) is disclosed to a
third party on an unrestricted basis by the party to whom it belonged, (iii) is
hereafter received on an unrestricted basis by the receiving party from a third
party source who to the receiving party’s knowledge after due inquiry is not and
was not bound by confidentiality obligations to the disclosing party, or
(iv) was known to the receiving party as shown by its written records prior to
the date of disclosure hereunder.
10.3 Actions if disclosure required
If the receiving party is requested pursuant to, or required by, applicable law
or regulation or by legal process to make any disclosure otherwise prohibited
hereunder, it shall provide the disclosing party with prompt notice of such
requests or requirements prior to disclosure so that (a) the disclosing party
(with the reasonable cooperation of the receiving party) may seek an appropriate
protective order or other remedy and/or (b) the parties can seek in good faith
to agree on the appropriate scope and approach to disclosure. If a protective
order or other remedy is not obtained, the receiving party may furnish only that
portion of the Confidential Information which, in the written opinion of counsel
addressed to the disclosing party, it is legally compelled to disclose and shall
use its reasonable efforts to obtain confidential treatment for the Confidential
Information.
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EXHIBIT 10.25
10.4 Injunctions
The parties agree that remedies at law may be inadequate to protect against
breach of this Article 10, and hereby agree to the granting of injunctive relief
without proof of actual damage or requirement for posting of a bond.
11. General
11.1 Relationship of parties
Nothing contained in this License Agreement will be construed as creating any
agency, partnership, or other form of joint enterprise between the parties. The
relationship between the parties will at all times be that of independent
contractors. Neither party will have authority to contract for or bind the other
in any manner whatsoever. This License Agreement confers no rights upon either
party except those expressly granted herein.
11.2 Authority
Each party represents that it has full corporate power and authority to enter
into this License Agreement and comply with the terms and conditions hereof, and
that the person signing this License Agreement on behalf of such party has been
properly authorized and empowered to enter into this License Agreement.
11.3 Warranty disclaimer
STI does not warrant that the Product or the Technology will meet the needs of
BSTC. STI warrants that any Product or component manufactured and delivered to
BSTC by STI will, when delivered, conform to the documentation and
specifications provided by STI. STI will replace any such STI Product that STI
provides to BSTC and that is defective, upon request by BSTC made within thirty
days after delivery of the defective item and upon return of the defective item.
EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 11.3, STI MAKES NO WARRANTIES TO
ANY PERSON OR ENTITY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, REGARDING THE
SUBJECT MATTER OF THIS LICENSE AGREEMENT. STI SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, NOR ARE
THERE ANY WARRANTIES CREATED BY A COURSE OF DEALING, COURSE OF PERFORMANCE OR
TRADE USAGE. STI DOES NOT WARRANT THAT THE PRODUCT WILL MEET BSTC’S OR ANY
CUSTOMER’S NEEDS OR BE FREE FROM ERRORS, OR THAT THE OPERATION OF THE PRODUCT
WILL BE UNINTERRUPTED. THE FOREGOING EXCLUSIONS AND DISCLAIMERS ARE AN ESSENTIAL
PART OF THIS AGREEMENT AND FORMED THE BASIS FOR DETERMINING THE ROYALTIES
ASSESSED HEREUNDER.
11.4 Limitation of damages
STI’s liability for damages from any cause of action whatsoever, including
liability for any claim of infringement of proprietary rights will not exceed
the value of its ownership interest in BSTC. In no event will STI be liable for
lost profits or other incidental or consequential damages of BaoLi
Communications or of BSTC under any circumstances whatsoever, even if advised of
the possibility of such damages.
11.5 Governing law
This License Agreement and all disputes arising out of or related to this
License Agreement, or the performance, enforcement, breach or termination
hereof, and any remedies relating thereto, will be construed, governed,
interpreted and applied in accordance with the laws of California, without
regard to conflict of laws principles. Except (i) with reference to enforcement
of the obligations of Section 10, (ii) with reference to enforcement of any
final judgment duly obtained, and (iii) as
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EXHIBIT 10.25
provided in this Section 11.5 and Section 11.6, the sole jurisdiction and venue
for actions related to the subject matter hereof will be state and federal
courts in Los Angeles, California and each of the parties hereto submits itself
to this exclusive jurisdiction and venue of such courts for the purpose of such
action. Each party acknowledges that its breach of this License Agreement may
cause irreparable injury to the other for which monetary damages may not be an
adequate remedy. Accordingly, and without prejudice from the dispute resolution
mechanisms of Section 11.6, a party in the event of such a breach by the other
will be entitled without the requirement for posting of any bond to seek
injunctions or other equitable remedy in any jurisdiction through which the
potential for irreparable injury may be mitigated or prevented.
11.6 Arbitration of disputes

(i)   The parties shall use reasonable efforts to resolve and settle amicably
through consultations any dispute, controversy or claim (a “Dispute”) arising
out of or in connection with this License Agreement or its validity,
interpretation, performance, breach or enforceability.   (ii)   If any Dispute
is not settled amicably through consultations within one hundred twenty (120)
days of one party’s receipt of the other party’s notice of a Dispute, then any
party involved in the Dispute may elect to submit such Dispute to arbitration,
in which event such Dispute shall be exclusively and finally settled by binding
arbitration in Singapore under the auspices of the Singapore International
Arbitration Centre through a sole arbitrator.   (iii)   The arbitration
proceedings shall be conducted in the English language, and all documentation to
be reviewed by the arbitrator or submitted by the parties shall be in the
English language. The arbitration tribunal shall apply the Arbitration Rules of
the United Nations Commission on International Trade Law in effect at the time
of the arbitration. However, if such rules are in conflict with the provisions
here set forth, including the provisions concerning the appointment of the
arbitrator, the provisions here set forth shall prevail.   (iv)   During
arbitration, the parties shall perform this License Agreement to the fullest
extent possible, except for the matter or matters in dispute.   (v)   The
arbitrator shall render a written decision in English stating its reasons for
its decision within twelve (12) months of the request for arbitration, and such
award shall be final and binding upon the parties without any right of review or
appeal. Any compensation shall be calculated and paid in United States Dollars.
  (vi)   The Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (also known as the “New York Convention”) shall apply to this License
Agreement and to any arbitral award or order resulting from any arbitration
conducted hereunder. Judgment upon the award rendered by the arbitrator may be
entered in any court of record of competent jurisdiction in any country, or
application may be made to such court for judicial acceptance of the award and
an order of enforcement, as the law of such jurisdiction may require or allow.
The parties agree that the award of the arbitral tribunal shall be the sole and
exclusive remedy among them regarding any and all claims and counterclaims
presented to the tribunal. The parties further agree that this arbitration
clause is an explicit waiver of any immunity or defense that may apply against
the enforcement and execution of any arbitral award or any judgment thereon.  
(vii)   The substantially prevailing party in an arbitration proceeding shall be
entitled, in addition to such other relief as may be granted, to recover its
attorneys’ fees and costs, and the other party shall pay all costs of the
arbitration. The arbitrator shall determine which of the parties has
substantially prevailed based upon an assessment of which party’s major
arguments or positions

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EXHIBIT 10.25
taken in the proceedings could fairly be said to have prevailed over the other
party’s major arguments or positions on major disputed issues.
11.7 Attorneys fees
If the services of an attorney are required by any party to secure the
performance of this License Agreement or otherwise upon the breach or default of
another party to this License Agreement, or if any judicial remedy or
arbitration is necessary to enforce or interpret any provision of this License
Agreement or the rights and duties of any person in relation thereto, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs and
other expenses, in addition to any other relief to which such party may be
entitled. Any award of damages following judicial remedy or arbitration as a
result of the breach of this License Agreement or any of its provisions shall
include an award of prejudgment interest from the date of the breach at the
maximum amount of interest allowed by law.
11.8 Assignment; transfer
This License Agreement and the rights and obligations hereunder are not
transferable or assignable without the prior written consent of the parties
hereto, except that a person or entity who acquires all or substantially all of
the assets or business of STI, whether by sale, merger or otherwise will have
the right to assume all the rights and obligations of STI hereunder.
11.9 Notices
All notices will be in writing and sent by express courier (with written
acknowledgment of receipt), to the following addresses, or such other address as
either party may provide under this Section 11.9:

To BSTC:
 
Jilin Province
People’s Republic of China
Attention:                     
To STI:
Superconductor Technologies Inc. (STI)
460 Ward Drive
Santa Barbara, CA 93111|
USA
Attention: Chief Executive Officer

11.10 Integration; severability
This License Agreement and all schedules, exhibits and attachments hereto
constitute the entire agreement between the parties concerning the subject
matter hereof. This License Agreement replaces and supersedes any prior verbal
or written understandings, communications, or representations between the
parties with respect to its subject matter. If any provision of this License
Agreement will be held to be illegal or unenforceable, that provision will be
limited or eliminated to the minimum extent necessary so that this License
Agreement will otherwise remain in full force and effect and enforceable.
11.11 Construction; headings
Unless the context otherwise requires, the term including means “including but
not limited to.” The section headings herein are provided for ease of reference
only and will have no legal effect. This Agreement has been negotiated by the
parties, which have had reasonable access to legal counsel. This Agreement will
be fairly interpreted in accordance with its terms, without any construction in
favor of or against either party as a result of having drafted any particular
provision.
Confidential

10

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EXHIBIT 10.25
11.12 Amendments; waivers; counterparts
This License Agreement may be amended or modified only with the prior written
consent of both parties. The failure by a party to exercise any rights hereunder
will not operate as a waiver of such party’s right or any other right in the
future. This License Agreement may be executed in counterparts, each of which
will be deemed an original.
In witness whereof, each of the parties has caused this License Agreement to be
executed as of the date first written above by its duly authorized officer.

              Superconductor Investments (Mauritius)   BAOLI Superconductor
Technology Co, LTD, a Delaware corporation   Ltd, a technologically-advanced
contractual joint         venture within the territory of the People’s        
Republic of China
 
           
By:
      By:    
 
           
 
  Name:       Name:
 
  Title:       Title:

Confidential

11

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EXHIBIT 10.25
Schedule A– Definitions
“BaoLi Communications” means BAOLI Superconductor Technology Co, Ltd., a Chinese
enterprise.
“Confidential Information” means all oral, written or recorded information about
or related to the party (or any of its subsidiaries or other affiliates) or its
or their technology, assets, liabilities, or business, which is furnished by its
officers, directors, employees, agents or controlling persons, whether furnished
before or after the date hereof, and regardless of the manner in which it is
furnished, together with any summaries, extracts, analyses, compilations,
studies or other documents or records prepared by the receiving party which
contain, reflect or are generated from such information, regardless of whether
explicitly identified as confidential. Confidential Information also includes
the Proprietary Information and the Technology. For purpose of clarification,
the Licensed Trademarks are not Confidential Information.
“Documentation” means any documentation or materials including reference, user,
installation, systems administrator and technical guides relating to the use of
the Technology.
“Effective Date” means the date ten days after the completion of the
contribution to the capitalization of BSTC of BaoLi Communications as
contemplated by the Joint Venture Contract between BaoLi Communications and STI
dated December 8, 2007.
“BSTC Technology” means inventions or proprietary information that BSTC
accomplishes or creates or to which BSTC acquires rights, other than the
Technology.
“BSTC” means Huichun BaoLi Superconductor Technology Co Ltd, a
technologically-advanced contractual joint venture in the People’s Republic of
China.
“Junior Marks” is defined in Section 5.2.
“Licensed Trademarks” means the marks identified on Schedule D—Description of
Licensed Trademarks.
“Minimum Royalty” means (x) zero in each calendar quarter through December 31,
2009 and (y) $250,000 per quarter in each calendar quarter thereafter.
“Product” means STI’s proprietary, cryogenic front-end receiver product to
improve the performance of base stations in wireless telecommunication networks,
more fully described as follows:
The Product is comprised of (i) a fixed frequency filter that passes the signals
received from cell phone handsets and rejects other frequencies and (ii) an
amplifier that increases the level of the signals that pass through the filter
and adds very little noise in the process.
The filter is made using high temperature superconductor material, and because
of the proprieties of this material, the filter can select frequencies to pass
that are only slightly different than the frequencies that are rejected. This
selectivity allows for example 849MHz to pass the filter, but 851MHz to be
rejected, so that less than one millionth of the power leaks through the filter
at that frequency.
The amplifier is a cryogenically-cooled, low-noise radio-frequency amplifier.
All amplifiers add some electronic noise to the signal that is amplified, but
because the Product’s amplifier is cooled to -320F, the electronic noise that it
adds to the desired signal is minimized.
Confidential

Schedule A-1

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EXHIBIT 10.25
The Product’s use is limited to serving cellular base stations. Typically
cellular base stations use six separate antennas to receive the signals for cell
phones, so each unit of the Product has six filters and six amplifiers.
The filters and amplifiers are mounted in a small enclosure (called a
micro-enclosure) which is then placed inside a larger enclosure (called a
dewar). The dewar is then evacuated to provide thermal isolation between the
cryo-cooled micro-enclosure and the ambient environment. A cooler is then
attached to the dewar to achieve the low temperatures necessary for the high
temperature superconductor to work. A control board is added to monitor and
control the functions of the unit.
The Product will have each of two specific forms:
1) For use in the 850MHz CDMA cellular network, the only variation in the
Product from that heretofore implemented in the United States is an optimization
of the filter (China uses only a sub-set of the frequencies used by the United
States so an optimum design would narrow the filter used in STI’s SuperLink
product), and a minor modification of the power supply.
2) For use in the TD-SCDMA network that is planned to operate in the 2,000MHz
band, the only variation in the Product from that heretofore implemented in the
United States is a modification to operate at 2,000MHz.
“Proprietary Information” means all information of STI that is not generally
known to the public, whether of a technical, business or other nature (including
trade secrets, know-how and information relating to the technology, customers,
business plans, marketing activities, finances and other business affairs of
STI), that is disclosed by STI to BSTC in written, oral, electronic and/or other
form or that is otherwise learned by BSTC in the course of its discussions or
dealings with, or its physical or electronic access to the premises of, STI, and
that has been identified as being proprietary and/or confidential or that by the
nature of the circumstances surrounding the disclosure or receipt should
reasonably be construed as proprietary or confidential. Proprietary Information
also includes (a) all information concerning the existence and progress of the
parties’ dealings and the identity of STI’s vendors and strategic partners and
(b) the existence of, and the data generated by, field trials involving STI’s
products.
“Qualified Uses” of the Product means use by commercial and civilian
telecommunications industry customers and shall expressly not include military
use of any type or nature, whether direct or indirect.
“Revenues” means (a) gross revenues of BSTC or any successor or assign received
or earned from sales of the Product either (i) using any Technology or
(ii) associated with any Licensed Trademarks less (b) sales commissions paid to
any unaffiliated third party and less (c) discounts and allowances to customers
on such revenues and less (d) related shipping and taxes on revenues, but
excluding (e) revenues and sales commissions on (i) the first 500 units of
Product built during the initial development period from the kits provided by
STI as contemplated herein and (ii) any sales from BSTC to STI or its designees.
“Royalty Statement” means a statement in English setting forth the Revenues
during such quarterly period and a calculation of royalty due for the period.
“Technology” means (a) the Proprietary Information pertinent to the technology
described on Schedule B—Description of Proprietary Information included in the
Technology included in the Technology, together with the Documentation,
delivered by STI to BSTC (b) corrections, updates, upgrades, enhancements,
releases, fixes, new versions or other improvements of, modifications to, and
derivative works of, such technology, Proprietary Information and Documentation
developed
Confidential

Schedule A-2

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EXHIBIT 10.25
by BSTC, and (c) the inventions object of the patents issued in China and patent
filings made in China that are identified on Schedule C—Patents and Patent
Applications, but only to the extent of their embodiment in the Product and
solely for the purpose of manufacture and sale of the Product as permitted by
this License Agreement. The Technology does not include any technology pertinent
to certain aspects of the manufacturing process retained by STI based on factors
including economics, feasibility and regulatory climate. The Technology does not
include any technology the licensing or transfer of which is prohibited by any
United States laws, regulations or governmental policies. If any technology
otherwise licensed hereunder is excluded by reason of such laws, regulations or
policies and not addressed through STI’s retention of aspects of the
manufacturing process, STI will use reasonable efforts to obtain any required
United States approval to include it in the Technology.
“Territory” means The People’s Republic of China, including its Special
Administrative Regions of Hong Kong and Macau, but excluding Taiwan.
Confidential

Schedule A-3

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EXHIBIT 10.25
Schedule B– Description of Proprietary Information included in the Technology
A. Proprietary Information pertinent to the manufacture of the Product includes
information relative to the following:
1. Facility/factory layout
(a) locations and specifications for areas such as material receiving,
inspection, material storage, assembly, test and shipping
(b) facility specifications such as electrical power requirements, liquid
nitrogen plumbing, chilled water flow rates and clean room class specifications
(c) process flow descriptions using commercially available methodology for
production planning such as Value Stream Mapping and Just In Time methods
2. Purchasing and procurement for precision mechanical and electronic parts
(a) disclosure of known vendors to produce parts and equipment, such as
electrical RF connectors, RF switches, vacuum test equipment, circuit boards,
hermitic seals, and precision machining
3. Final assembly and test
(a) final assembly and testing of RF filter assemblies using commercially
available electrical test equipment
(b) routinization of assembly steps so as not to require special methods or
techniques such as screw drivers, torque wrenches, etc.
(c) test equipment including noise figure meter, S-Parameter network analyzer,
digital power meters, personal computers, and Agilent VEE or Lab View and
Microsoft SQL software
(d) Electrical testing including RF filter performance, system operating
temperatures, and electrical power consumption at several different temperature
conditions found in a typical indoor controlled environment
4. Cooler assembly
(a) assembly of an enclosed cooler assembly using ultrasonic cleaning equipment,
sand blasting, commercially available vacuum bake oven and epoxy curing ovens,
TIG welding equipment, pressure testing, commercial vacuum leak tester, custom
test equipment using commercially available components, temperature monitor,
network analyzer (mechanical frequency tuning), and Lab View and Microsoft SQL
software
5. Micro Enclosure
(a) assembly of a mechanical/electrical assembly using ultrasonic cleaning
equipment, mechanical hardware, Miyachi wire soldering equipment, Kulicke &
Saffa (K&S) gold wire ball bonder, and spot welding
(b) further elements of assembly including RF testing using S-Parameter network
analyzer, digital power meter, personal computer, and Lab View and Microsoft SQL
software
6. Dewar
(a) assembly of a mechanical vacuum housing with ultrasonic cleaning, LN2
handling, mechanical hardware, TIG welding, and commercially available vacuum
leak tester.
(b) evacuating during assembly an enclosed housing with custom automated vacuum
equipment which consists of commercial available ON-BOARD cryogenic vacuum pump
and a Direct Logic 205 controller system
(c) RF testing using noise figure meter, S-Parameter network analyzer, digital
power meter, personal computers, and Lab View and Microsoft SQL software
Confidential

Schedule B-1

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EXHIBIT 10.25
B. Proprietary Information pertinent to the cryogenic cooling technology to cool
the filters and amplifiers in the Product includes information relative to the
following:
There are two areas of application of the cryogenic cooling technology in the
Product: the cooler and the Dewar.
The cooler works by moving a piston back and forth with an electro magnet: the
piston pushes helium gas back and forth driving a displacer. The displacer
expands cold gas in one spot and compresses hot gas in another spot, pumping
heat away from the cryogenic end. Proprietary technology is used to ensure that
there is no friction as the piston and displacer move back and forth about sixty
times per second. The cryogenic end of the cooler cools the filter and amplifier
to a temperature of -320F, while the heat reject end of the cooler stays just a
few degrees above ambient. Proprietary technology is employed throughout the
cooler to enable it to work correctly over an extended lifetime with a low
failure rate.
The Dewar works by reducing the heat flow. The Dewar reduces all the three
sources of heat flow: convection, conduction, and radiation. Convection is
eliminated by maintaining a vacuum between cold and ambient parts. The high
vacuum is maintained for years using proprietary technology. Conduction is
reduced using proprietary technology to connect the cold and ambient parts
together. Finally radiation is reduced with the careful choice of features and
surfaces, using proprietary technology.
Confidential

Schedule B-2

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EXHIBIT 10.25
Schedule C– Patents and Patent Applications
Issued Patents in China

                              Patent No   Title   Inventors   Docket   Filing
Date   Serial No   Issue Date   Description
ZL01808625.X
  Stirling Cycle
Cryocooler with
Optimized Cold End
Design   Hanes   OMM 0164   16-Apr-01   01808625.X   16-Feb-05   STI’s current
cooler design

Pending Patent Applications in China

                          Serial No   Title   Docket   Inventors   Filing Date  
Status   Description
3804170.7
  Method and Apparatus for Minimizing Intermodulation With an Asymmetric
Resonator   MNG 0056   Ye   19-Feb-03   published    
 
                       
3805589.9
  Resonator and Coupling Method and Apparatus for a Microstrip Filter   MNG 0057
  Ye   10-Mar-03   published    
 
                       
200480036124.X
  Cryocooler Cold-end Assembly Apparatus and Method   MNG 0063   O’Baid, Hanes  
23-Jun-06   published   deep drawn housing
 
                       
200480035702.8
  Growth of In-situ Thin Films by Reactive Evaporation   OMM 0349   Moeckly,
Ruby   08-May-06   published   RCE
 
                       
20058004737
  RF-Properties-Optimized Compositions of (RE)Ba2Cu3O7-d Thin Film
Superconductors   OMM 0365   Moeckly, Willemsen,
Peng, Gilantsev   23-Jun-07   pending   substitution
 
                       
PCT/US2005/042867
  Systems and Methods for Tuning Filters   WAK 0004   Tsuzuki, Hernandez,
Willemsen   30-Jul-07   pending   our “omnibus” tuning application

Confidential

Schedule C-1

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EXHIBIT 10.25
Schedule D– Description of Licensed Trademarks

                          Trademark   Serial No.     Filing Date    
Registration Date     Country

Schedule E- Training Plan
Confidential

Schedule D-1