EXHIBIT 10.39
CONFIDENTIAL TREATMENT REQUESTED -- CONFIDENTIAL PORTIONS
OF THIS DOCUMENT HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
PURCHASE AGREEMENT
BETWEEN
CONDUCTUS, INC.
AND
▇▇▇▇▇▇ CELLULAR SYSTEMS, INC.
TABLE OF CONTENTS
PAGE
TABLE OF CONTENTS................................................................................................i
RECITALS.........................................................................................................1
AGREEMENT........................................................................................................1
1. DEFINITIONS.............................................................................................1
2. PURPOSE OF THE AGREEMENT................................................................................2
3. COVERAGE OF THE AGREEMENT...............................................................................2
4. PRODUCT SPECIFICATION...................................................................................3
5. PRODUCT CHANGES OR SUBSTITUTIONS........................................................................3
6. PLACING AN ORDER........................................................................................4
7. WARRANTS TO PURCHASE COMMON STOCK.......................................................................4
8. PRICE...................................................................................................4
9. PAYMENT.................................................................................................4
10. SHIPPING................................................................................................5
11. INSTALLATION............................................................................................5
12. AFTER-SALE SUPPORT......................................................................................5
13. RETURNS.................................................................................................6
14. DOCUMENTATION...........................................................................................6
15. TITLE AND RISK OF LOSS..................................................................................6
16. WARRANTY................................................................................................6
17. DISCLAIMER OF PATENT LICENSE............................................................................7
18. PATENT AND COPYRIGHT INDEMNITY..........................................................................7
19. CONFIDENTIALITY.........................................................................................8
20. SOFTWARE LICENSE........................................................................................8
21. LIMIT OF LIABILITY......................................................................................9
22. PROPRIETARY RIGHTS......................................................................................9
23. DISTRIBUTION RIGHTS....................................................................................10
24. PERMITTED USE..........................................................................................10
25. FORCE MAJEURE..........................................................................................10
26. NOTICE.................................................................................................10
27. AGREEMENT PERIOD.......................................................................................11
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
28. TERMINATION FOR CAUSE..................................................................................11
29. REMEDIES...............................................................................................11
30. GOVERNING LAW..........................................................................................11
31. DISPUTES...............................................................................................11
32. ASSIGNMENT.............................................................................................13
33. WAIVER.................................................................................................13
34. SEVERABILITY...........................................................................................13
35. SURVIVAL...............................................................................................13
36. ENTIRE UNDERSTANDING...................................................................................13
37. HEADINGS...............................................................................................13
38. ADDITIONAL TERMS.......................................................................................13
EXHIBIT A: ORDER PROJECTIONAND DELIVERY SCHEDULE........................................................1
EXHIBIT B: PRODUCT SPECIFICATIONS.......................................................................1
[***]
EXHIBIT C: PRICING SCHEDULE.............................................................................1
EXHIBIT D: WARRANT AGREEMENT............................................................................1
[***] Confidential material redacted and filed separately with the Commission.
-ii-
TABLE OF CONTENTS
(CONTINUED)
An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
-iii-
PURCHASE AGREEMENT BETWEEN
CONDUCTUS, INC. AND ▇▇▇▇▇▇ CELLULAR SYSTEMS, INC.
This Purchase Agreement (the "Agreement") is made and entered into as of
August 7, 2000, between ▇▇▇▇▇▇ Cellular Systems, Inc. (hereafter "Buyer"), an
Oklahoma corporation, having its place of business at ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ and Conductus, Inc. (hereafter "Seller"), a
Delaware corporation having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
WHEREAS, Seller manufactures and sells Superconductor Systems for Cellular
and PCS radio networks.
BAS, Buyer desires to purchase Superconductor Systems for use in their
cellular and PCS networks and wishes to put in place a corporate purchase
agreement
AGREEMENT
Now, therefore, in consideration of the mutual obligations herein
contained, the parties agree as follows:
1. DEFINITIONS.
"Affiliate" means any person or entity that directly, indirectly through
one oar more intermediaries controls, is controlled by, or is under common
control with, another person or entity. "Control" for this definition is defined
as holding at least a majority of voting power or operating control.
"Agreement" means this purchase agreement, including any exhibits
referenced herein.
"Confidential Information" means any confidential product, marketing,
financial or business information, plans and data of a party that is treated as
such by the party that discloses the information.
"Documentation" means any plans, manuals, drawings, blueprints,
photographs, specifications, or other documents or media of expression attached
or related to this Agreement, including the documentation referred to in
Paragraph 14 concerning the Superconductor Systems, whether or not described in
this Agreement.
"Government" means any federal, state, or local government authority, and
any agency, department or instrumentality of any of the above.
"Market Area" means those markets, as defined by the Buyer in the ordinary
course of its business, owned and/or managed by Buyer as of the effective date
of this Agreement and any markets added or deleted by Buyer from time to time.
"Superconductor System(s)" means a Seller-manufactured filter or filter and
LNA system(s), including receiver subassembly and compressor subassembly, as set
forth in Exhibit B hereto, for use in cellular and PCS radio networks, and
includes all systems and assemblies delivered by Seller in conjunction with such
items.
2. PURPOSE OF THE AGREEMENT.
2.1 ESTABLISHMENT OF TERMS OF PURCHASE.
This Agreement sets forth the terms and conditions under which Seller will
sell Superconductor Systems to Buyer during the term of this Agreement.
2.2 EXCLUSIVE VENDOR RELATIONSHIP.
2.2.1 EXCLUSIVITY.
Buyer agrees that, during the term of this agreement, it will purchase
all of its requirements for superconductor filter systems from Seller. Nothing
herein shall prevent Buyer from buying complete base stations containing
integrated superconductor filter systems from [***], provided that if [***]
offers a choice of integrated superconductor filter systems produced by Seller
[***].
2.2.2 RELIEF FROM EXCLUSIVITY.
In the event that Seller fails to make delivery within thirty (30)
business days after the scheduled delivery date on an accepted P.O. on three or
more separate occasions, the exclusivity provisions of Paragraph 2.2.1 shall be
suspended until such time as Seller has met the scheduled delivery on three
subsequent deliveries.
2.3 MINIMUM PURCHASE COMMITMENT.
Buyer also agrees that it will purchase a minimum of two hundred (200)
units from Seller during the term of this Agreement.
The parties shall negotiate the projected product mix and approximate
delivery schedule. Attached hereto as Exhibit A is the projected product mix and
delivery schedule for the initial fifty (50) units. The parties shall confer and
amend Exhibit A no later than January 15, 2001 to project product mix and
approximate delivery schedule for the year 2001. Thereafter, the parties shall
confer quarterly and update Exhibit A, as appropriate.
3. COVERAGE OF THE AGREEMENT.
Buyer may purchase Superconductor Systems and other goods from Seller
under the terms of this Agreement by issuing regular Buyer purchase orders
(hereafter "P.O."). Each P.O. shall be deemed a separate agreement between
the parties incorporating all of the terms and conditions of this Agreement
Buyer shall place its initial P.O. for a minimum of fifty (50) Superconductor
Systems concurrent with the execution of this Agreement, with [***] units to
be delivered in [***] and the remaining [***] in [***].
4. PRODUCT SPECIFICATION.
Specifications of Superconductor Systems that may be purchased under this
Agreement are attached as Exhibit B. From time to time during the course of this
Agreement, Buyer and Seller may, upon mutual agreement, add additional products
to Exhibit B. Seller represents that
[***] Confidential material redacted and filed separately with the Commission.
2
the Superconductor Systems will meet the applicable specifications of Exhibit
B at the time of delivery. Seller also represents that it believes that its
Superconductor Systems are compatible with existing [***] equipment and that
it will [***]. Finally, Seller represents that its equipment is compatible
with [***] performance management software systems.
5. PRODUCT CHANGES OR SUBSTITUTIONS.
5.1 MODIFICATIONS.
At any time during its performance of this Agreement, Seller may implement
changes in the products set forth in Exhibit B, modify the drawings and
specifications relating thereto, or substitute therefore different products;
provided, however, that any such changes, modifications or substitutions, under
normal, and proper use:
(i) shall not materially or adversely affect physical or functional
interchangeability, interoperability with [***] systems, or performance of
Buyer's existing systems (except where there is written agreement between the
parties that specific characteristics will be so affected);
(ii) shall not adversely affect any upgrade path for upgrading an
existing system to a more advanced system (e.g., affect upgradability from 2G to
3G) and
(iii) shall not detract from the safety of the product.
5.2 NEW MODELS.
If; during the term of this Agreement, Seller releases for sale a new
product with enhanced functionality or performance, Seller will offer Buyer the
option of substituting such new model for Superconductor Systems that have been
ordered but not yet shipped, subject to a price adjustment reflecting the
prorated difference, if any, between the list price of the new model and that of
the previously ordered Superconductor Systems.
5.3 OBSOLETE SYSTEM PARTS AVAILABILITY.
For a period of [***] after any discontinuation or modification of a
product listed in Exhibit B, Seller shall make available replacement parts for
repair of such obsolete product.
6. PLACING AN ORDER.
Buyer will purchase Superconductor Systems by issuing regular Buyer P.O.s
to Seller referencing this Agreement and specifying the number and type of
Superconductor Systems purchased, desired delivery date, and other details of
the purchase. Seller will accept or propose modifications to any such P.O. by an
acknowledgment letter sent to the issuer of the P.O.
[***] Confidential material redacted and filed separately with the Commission.
3
7. WARRANTS TO PURCHASE COMMON STOCK.
Concurrently with the execution of this Agreement, Seller shall enter into
a separate agreement with Buyer's parent corporation, ▇▇▇▇▇▇ Communications
Corporation ("▇▇▇▇▇▇"), in the form set forth in Exhibit D attached hereto,
under which Seller will ▇▇▇▇▇ ▇▇▇▇▇▇ a warrant to purchase up to five hundred
thousand (500,000) shares of Seller's common stock at a per share price
determined by averaging the closing price of Seller's common stock on the Nasdaq
market for the five trading days immediately preceding the date of execution of
this Agreement ("Warrant Agreement"). The right to exercise warrants under the
Warrant Agreement shall vest quarterly as to the number of shares calculated by
dividing the total revenue to Seller based on shipments to Buyer during the
preceding quarter divided by [***].
8. PRICE.
8.1 PRICING TERMS.
The prices shall be those set forth in Exhibit C. Prices do not include any
sales or use taxes and Buyer is responsible for any such taxes or expenses
related to this Agreement, including taxes paid by Seller or its suppliers or
subcontractors on sales of goods or services. The amount of any such taxes will
be included on Seller's invoice for the goods or services as a separate item.
8.2 PRICE PROTECTION.
If, during the term of this Agreement, [***].
9. PAYMENT.
9.1 TERMS.
Buyer shall pay Seller net forty-five (45) days from date of shipment, FOB
Seller, Sunnyvale, California.
9.2 INVOICES.
Invoices shall be sent to Buyer at the address set forth below unless
otherwise specified by Buyer in writing:
Mr. ▇▇▇▇▇ ▇▇▇▇▇
Technical Operations Center
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[***] Confidential material redacted and filed separately with the Commission.
4
10. SHIPPING.
Seller shall pay the costs of shipping and shall determine the methods of
packing and shipment of goods purchased under this Agreement. Shipments will be
F.O.B. Seller, Sunnyvale, California.
11. INSTALLATION.
11.1 SELLER'S DUTIES.
Seller shall, at Buyer's request, install the first Superconductor System
delivered to Buyer in each of Buyer's Market Areas. For the initial installation
and all additional installations made by Seller at Seller's request, Seller
shall be responsible for all compensation and expenses for its personnel and
contractors. All installations made by Seller shall be made by Seller personnel
or contractors under the direct supervision of Buyer or Buyer's designated
representative.
11.2 BUYER'S DUTIES.
Buyer shall be responsible for all costs associated with installation of
the Superconductor System by Buyer. Additionally, for Superconductor Systems
installed by Seller, Buyer will be responsible for all site preparation work
related to the installation of the Superconductor System, for the salaries and
expenses of Buyer personnel and contractors involved in the installation, and
for any systems engineering work related to each installation.
Buyer will be responsible for any additional documented installation costs
incurred by Seller resulting from Buyer's failure to perform under this Article
11.2, including failure to make the site available or adequately prepare the
site by the date of installation as indicated in Article 11.1 above. Additional
costs incurred by Seller shall be invoiced in accordance with Article 9.2 of
this Agreement. Buyer shall obtain all Government consents, permits and licenses
that may be required for the installation.
12. AFTER-SALE SUPPORT.
12.1 TRAINING.
Seller shall provide up to [***] of training, at no cost to Buyer, in each
of Buyer's Market Areas at the time of the installation of the first
Superconductor System within the Market Area.
[***] Confidential material redacted and filed separately with the Commission.
5
12.2 TECHNICAL SUPPORT.
Seller shall provide toll free, three hundred sixty-five day a year,
24-hour per day telephone support during the term of the warranty, and shall
offer a maintenance agreement on reasonable terms and conditions including
toll-free technical support after the expiration of the warranty for the useful
life of the Superconductor Systems.
12.3 REPAIR/RETURN.
In case of major alarm (as defined in Exhibit B), Seller shall replace the
system or appropriate module and return the system to operational condition
within [***] of notification. Seller can also provide monitoring, at Buyer's
request, by using the alarm system's real-time alert capability.
12.4 MAINTENANCE
Seller shall [***] without charge to Buyer.
13. RETURNS.
A Returned Materials Authorization ("RMA") must be obtained from an
authorized agent of Seller before shipment of returned materials to Seller.
Seller will respond to any request for a RMA within ten (10) business days after
receipt of the request. All Superconductor Systems returned are to be packaged
in accordance with the instructions provided with the RMA, identified with the
RMA number, and shipped, freight charges prepaid, to Seller, Sunnyvale,
California.
14. DOCUMENTATION.
Seller shall provide Buyer with instructional material for each
Superconductor System as to the (i) proper installation of Superconductor
Systems; (ii) proper operation and maintenance procedures; (iii) removal and
replacement of Superconductor Systems; and (iv) use of the alarm system
incorporated with each Superconductor System. Seller shall provide Buyer at the
time of installation with Documents evidencing the conformity of the
Superconductor Systems shipped to Buyer with the appropriate specification
listed in Exhibit B.
15. TITLE AND RISK OF LOSS.
Title and risk of loss to the Superconductor Systems supplied hereunder
shall pass to Buyer upon delivery of the Superconductor Systems to Buyer, FOB
Sunnyvale, California.
16. WARRANTY.
Seller warrants the Superconductor Systems delivered under this
Agreement shall, at the time of delivery, be free from material defects in
materials and workmanship. This warranty shall survive for a period of [***]
from the date of shipment, provided that Buyer gives notice of any defect to
Seller within sixty (60) days of discovery. THE ABOVE WARRANTIES ARE
EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Liability under this warranty is limited to the furnishing of replacement
parts or an exchange of Superconductor Systems only. Any Superconductor Systems
to be repaired or replaced pursuant to the foregoing warranty shall be returned
to Seller only with the prior approval of Seller, at Buyer's expense and shipped
to Seller at Seller's address set forth on the
[***] Confidential material redacted and filed separately with the Commission.
6
signature page of this Agreement according to Seller's written instructions.
This warranty covers the cost of any parts or labor required to cure such
breach, but excludes any indirect, punitive, consequential or special damages.
This Warranty does not cover defects, damage or malfunctions resulting from
(i) use of goods other than in compliance with Seller specifications and
instructions for the intended purpose; (ii) misuse, tampering, accident,
neglect, alteration, or site conditions not conforming to Seller's written
guidelines provided to Buyer; (iii) unauthorized alterations or repairs, use of
unapproved parts or combining or interfacing the Superconductor Systems in a
manner not permitted by Seller, (iv) an event of Force Majeure (as defined in
Paragraph 25); (v) unauthorized installation; or (vi) improper operation or
maintenance of the Superconductor Systems.
17. DISCLAIMER OF PATENT LICENSE.
Nothing contained in this Agreement shall be deemed to grant, either
directly or by implication, any license under any patents or patent applications
of Seller, except that Buyer shall have the normal non-exclusive, royalty-free
license to use that which is implied, or otherwise arises by operation of law,
in the sale of a product.
18. PATENT AND COPYRIGHT INDEMNITY.
Seller shall defend Buyer against a claim that Seller-manufactured products
or latest unmodified release of Software supplied hereunder infringe a patent or
copyright granted or registered in the United States, unless Buyer fails to (i)
promptly notify Seller in writing of the claim, (ii) grant Seller sole control
of the defense and all related settlement negotiations, or (iii) give Seller
information and assistance for the defense, all at Seller's expense and Seller
is materially prejudiced by Buyer's actions. Subject to the conditions and
limitations of liability stated in this Agreement, Seller shall indemnify and
hold Buyer harmless from all payments that by final judgments in such suits may
be assessed against Buyer on account of such infringement and shall pay
resulting settlements, costs and damages finally awarded against Buyer by a
court of law. Seller represents and warrants that it knows of no such claims
pending as of the date of this agreement.
Buyer agrees that if Seller-manufactured products or Software become, or
in Seller's opinion are likely to become, the subject of such a claim, Buyer
will permit Seller, at its option and expense, either to procure the right
for Buyer to continue using such products or Software or to replace or modify
same so that they become non-infringing, and, if neither of the foregoing
alternatives is available on terms which are reasonable in Seller's judgment,
Buyer can return Seller-manufactured products and/or Software for full credit
on the entire unusable portion thereof. Seller will promptly notify Buyer of
any suit or action brought by a third party against Seller for patent or
copyright infringement that Seller, in its sole judgment, believes has the
potential to adversely affect Buyer's right to continue using products or
Software provided under this Agreement.
Seller has no liability for any claim of patent or copyright infringement
based upon adherence to specifications, designs or instructions furnished by
Buyer, nor for any claim based
7
upon the combination, operation or use of any Seller-manufactured products or
Software supplied hereunder with products, software or data not supplied by
Seller (except where Seller has approved such combination, operation or use),
nor for any claim based upon alteration of the products or modification of
any software supplied by entities other than Seller.
19. CONFIDENTIALITY.
From time to time during the performance of this Agreement, the parties may
deem it necessary to provide each other with Confidential Information. The
parties agree:
(a) To maintain the confidentiality of such Confidential Information and
not disclose it to any third party, except as authorized by the original
disclosing party in writing.
(b) To restrict disclosure of Confidential Information to employees,
directors, consultants, lenders and agents who have a "need to know" and agree
to be bound by these confidentiality provisions, Such Confidential Information
shall be handled with the same degree of care that the receiving party applies
to its own confidential information but in no event less than reasonable care.
(c) To take precautions necessary and appropriate to guard the
confidentiality of Confidential Information, including informing its employees
who handle such Confidential. Information that it is confidential and not to be
disclosed to others.
(d) That Confidential Information is and shall at all times remain the
property of the disclosing party. No use of any Confidential. Information is
permitted except as otherwise provided herein and no grant under any proprietary
rights is hereby given or intended, including any license implied or otherwise.
(e) To use such Confidential Information only as required in performance
of this Agreement
Except as may be required by applicable law, Buyer shall not disclose to
any third party the contents of this Agreement, the Exhibits, documents
incorporated by reference, or any amendments hereto or thereto for a period of
the shorter of one (1) year after termination or two (2) years from the date of
execution hereof without the prior written consent of Seller.
20. SOFTWARE LICENSE.
"Software" is defined as any computer code provided by Seller to Buyer for
use in the temperature control and monitoring of the Superconductor Systems and
any updates or maintenance releases thereto. Software may be provided on
separate medium or may be imbedded (hereafter "Imbedded Software") in the
Superconductor System.
Seller grants to Buyer a limited non-exclusive license to use the Software
solely to support the operation of any Superconductor Systems that are owned by
Buyer and which are installed in cellular or PCS systems owned or operated by
Buyer. Buyer may make copies for its internal use only of non-Imbedded Software
provided with the Superconductor Systems. Prior to accepting a purchase order,
Seller may additionally limit the use of new releases of Software including
Software provided with newly purchased Superconductor Systems to specific
Superconductor
8
Systems, to a limited number of Superconductor Systems or to a specific
division of Buyer, Should Buyer proceed with the purchase order, then said
limitation on use shall be considered to be in conformance with and part of
this Agreement.
Buyer agrees not to decompile, reverse engineer, disassemble, or otherwise
reduce the Software to human perceivable form. Buyer may not modify, adapt,
translate, rent, sublicense, assign, loan, distribute or network the Software or
create derivative works based upon the Software or any part thereof. Buyer is
hereby granted permission to link the Software to its Mobile Switching Office or
Operations and Maintenance Computer(s) for the sole purpose of monitoring and
controlling the Superconductor Systems.
Seller does not warrant that Software is free from bugs, errors or other
program limitations. Seller shall provide, without charge to Buyer, updates, if
any, to previously provided Software to improve performance or remedy bugs and
errors. Buyer agrees that in order to maintain its warranty and service rights,
Buyer will make reasonable efforts to have installed and to use such updates.
21. LIMIT OF LIABILITY.
Neither party, whether as a result of breach of contract, warranty or
(including negligence), patent infringement, copyright infringement or
otherwise, shall have any liability for incidental, special or consequential
damages, including, but not limited to, loss of profit or revenues, loss of use
of the products or any associated equipment, cost of capital, cost of substitute
products, facilities or services, or downtime costs. Seller shall not be liable
for any damage to Buyer's operating systems or equipment except damage caused by
Seller while installing the Superconductor Systems. Seller's liability hereunder
shall in no event exceed the cost of the goods purchased by Buyer.
Notwithstanding the above, in event of breach by a party, the other party may
recover its reasonable, documented, out-of-pocket costs, including consultant
and attorney fees, in an arbitration award.
22. PROPRIETARY RIGHTS.
22.1 RIGHTS WITH RESPECT TO PARTIES TO THIS AGREEMENT
Nothing in this Agreement shall be construed as conferring to Buyer any
right to use any name, trademark or other designation of Seller. Nothing in this
Agreement shall be deemed to grant to Buyer any license under the trademarks,
trade names, patents or patent applications of Seller. Buyer agrees that it
shall not obliterate, deface, mar, cover or otherwise alter or conceal any
corporate or trade or brand names or marks appearing on the Superconductor
Systems as delivered by Seller. Buyer agrees that it will not, either solely or
jointly with any third party(s), attempt to "reverse design" the Superconductor
Systems.
22.2 PUBLICITY.
Seller shall have the right to publicize the existence of this Agreement
and of any accepted purchase orders by Buyer subject to Buyer's review and
approval of press release language.
9
23. DISTRIBUTION RIGHTS.
Buyer shall not distribute or re-sell Superconductor Systems to any entity,
other than to an Affiliate or as part of the sale or transfer of the network
equipment used in connection with the Superconductor Systems, without the
written permission of Seller.
24. PERMITTED USE.
Buyer acknowledges that the products purchased under this Agreement are for
domestic use only, and may not be exported except in compliance with all
Government laws, rules and regulations.
25. FORCE MAJEURE.
No failure or omission by any of the parties hereto in the performance of
any of their obligations under this Agreement shall be deemed a breach of this
Agreement or create any liability, if such failure or omission is a result of
acts of God, war, riot, accidents, compliance with any action or restriction of
any government or agency thereof, or any other similar factor or circumstance
beyond the control of the party, and where not attributable to the negligence of
the party.
26. NOTICE.
Any notice to be given hereunder to any party hereto shall be in writing
and shall be given by registered mail, with appropriate postage prepaid, or in
the form of a facsimile transmission, followed immediately by a confirmation
letter by registered mail. Such notice shall be directed to the following
address or facsimile number of such party or such other address or facsimile
number as such party may designate by written notice given to the other party.
Each notice shall become effective (i) if given by mail, seven (7) days after
being deposited in the mail or (ii) if given by facsimile, when received by such
party:
To Buyer:
▇▇▇▇▇▇ Cellular Systems, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Technical Officer
cc: ▇▇▇ ▇▇▇▇▇▇
Vice President and Senior Corporate Counsel
▇▇▇▇▇▇ Cellular Systems, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
10
To Seller:
Conductus, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
Vice President Marketing & Sales
27. AGREEMENT PERIOD.
This Agreement will commence on the date first written above and will
expire two (2) years after such date. Expiration of this Agreement will not
affect any obligations of the parties arising on or before the date of
expiration.
28. TERMINATION FOR CAUSE.
This Agreement may be terminated upon breach of any provision of this
Agreement by the other party and failure to fully cure the breach within thirty
(30) days (ten (10) days in the case of failure to pay) of written notice
describing the breach.
29. REMEDIES.
Termination is not the sole remedy under this Agreement and, whether or not
termination is effected, all other remedies will remain available.
30. GOVERNING LAW.
This Agreement is governed under the laws of Delaware applicable to
contracts made and to be performed entirely within Delaware, without regard to
conflicts of law principles.
31. DISPUTES.
(a) The parties shall use and strictly adhere to the following dispute
resolution processes, except as otherwise expressly provided in this paragraph,
to resolve any and all disputes, controversies or claims, whether based on
contract, tort, statute, fraud, misrepresentation or any other legal or
equitable theory (hereinafter, "Dispute(s)"), arising out of or relating to this
Agreement (and any prior agreement this Agreement supersedes), including,
without limitation, its making, termination, non-renewal, its alleged breach and
the subject matter of this Agreement (e.g., products or services furnished
hereunder or those related to those furnished).
(b) The parties shall first attempt to settle each Dispute through good
faith negotiations. The aggrieved party shall initiate such negotiations by
giving the other party(ies) written notice of the existence and nature of the
Dispute. The other party(ies) shall in a writing to the aggrieved party
acknowledge such notice of Dispute within ten (10) business days. Such
11
acknowledgement may also set forth any Dispute that the acknowledging party
desires to have resolved in accordance with this Paragraph.
(c) Thereafter, if any Dispute is not resolved by the parties through
negotiation within thirty (30) calendar days of the date of the notice of
acknowledgement, either party may terminate informal negotiations with respect
to that Dispute and have the right, by delivery of written notice thereof (the
"Arbitration Notice") to the other party, to submit the matter to be finally
settled by arbitration in accordance with the Commercial Arbitration Rules then
in effect of the American Arbitration Association, as modified herein (the "AAA
Rules"). The place of arbitration shall be Oklahoma City, Oklahoma if the
Arbitration is initiated by Seller and San Jose, California if the Arbitration
is initiated by buyer. All matters so submitted to arbitration shall be settled
by three arbitrators. Buyer and Seller shall each designate, one arbitrator
within twenty (20) days of the delivery of the Arbitration Notice. If either
party fails to timely so designate an arbitrator, the matter shall be resolved
by one arbitrator timely designated. Buyer and Seller shall cause the designated
arbitrators to mutually agree upon and to designate a third arbitrator,
PROVIDED, HOWEVER, that failing such agreement within 45 days of delivery of the
Arbitration Notice, the third arbitrator shall be appointed in accordance with
the AAA Rules: Buyer and Seller shall each be responsible for the payment of the
fees and expenses of their respectively designated arbitrators and shall bear
equally the fees and expenses of the third arbitrator. Buyer and Seller shall
cause the arbitrators to decide the matter to be arbitrated pursuant hereto
within sixty (60) days after the appointment of the last arbitrator. The
arbitral tribunal is not empowered to award damages in excess of compensatory
damages or similar damages with respect to any Dispute and each party hereby
irrevocably waives any right to recover punitive, exemplary or similar damages
with respect to any Dispute. The final decision of the majority of the
arbitrators shall be furnished to Buyer and Seller in writing and shall
constitute a conclusive determination of the matter in question, binding upon
Buyer and Seller and shall not be contested by any of them. Such decision may be
used in a court of law only for the purpose of seeking enforcement of the
arbitrators' award. Any arbitration proceeding, decision or award rendered
hereunder and the validity, effect and interpretation of this arbitration
agreement shall be governed by the Federal Arbitration Act, 9 U.S.C.
Sections 1-16, and judgment upon any award may be entered in any court of
competent jurisdiction.
(d) Buyer and Seller hereby irrevocably consent to the jurisdiction of the
state and federal courts in the States of Oklahoma and California, and all state
and federal courts competent to hear appeals therefrom, over any actions which
may be commenced against any of them under or in connection with this Agreement.
Buyer and Seller hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which any of them may now or hereafter have to the
laying of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute in the Western District
of Oklahoma and Oklahoma County or the Northern District of California and Santa
▇▇▇▇▇ County.
(e) If any action in law or equity is necessary to enforce or interpret
the terms of this agreement or arbitration provision, the prevailing party shall
be entitled to its reasonable attorneys' fees, costs and disbursements in
addition to any other relief to which it may be entitled.
12
32. ASSIGNMENT.
Other than to an Affiliate, neither this Agreement nor any duty or right
under it shall be delegated or assigned by either party, other than transfer of
warranty in conjunction with the transfer of a Superconductor System as provided
under Paragraph 23, without prior written consent of the other party.
33. WAIVER.
Except with regard to time periods specifically set forth in this
Agreement, failure or delay of either party in exercising its rights hereunder
shall not be deemed a waiver of such rights unless expressly made in writing by
the party waiving its rights.
34. SEVERABILITY.
In the event any one or more provisions of this Agreement is held to be
invalid, illegal or unenforceable, the remaining provisions of this Agreement
shall remain in effect.
35. SURVIVAL.
In addition to any provisions that survive termination according to their
terms, the following sections will survive termination of this Agreement:
Articles 16-22.1, 24-26 and 29-37.
36. ENTIRE UNDERSTANDING.
This Agreement, together with any exhibits, schedules, addenda, amendments,
change orders or other materials incorporated herein, contains the entire
agreement and understanding between the parties with respect to the subject
matter and supersedes all prior oral and written agreements and understandings
relating to such subject matter. No modification, waiver or other understanding
modifying this Agreement will be of any force or effect unless executed in
writing by an authorized representative of both Buyer and Seller.
13
37. HEADINGS.
The headings of this Agreement are for convenience of reference only and
shall not define, modify or otherwise affect any of the provisions hereof.
38. ADDITIONAL TERMS.
Terms and conditions set forth in any Documents provided by Buyer or Seller
that differ from, conflict with or add additional terms and conditions not
included in this Agreement shall not become part of this Agreement unless such
terms and conditions are expressly accepted by both parties in writing.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first written.
▇▇▇▇▇▇ Cellular Systems, Inc. Conductus, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President President & CEO
Network Operations & Engineering
Date: 8-7-00 Date: 8-7-00
--------------------------------- ------------------------------
14
EXHIBIT A: ORDER PROJECTION AND DELIVERY SCHEDULE
[***]
[***] Confidential material redacted and filed separately with the Commission.
A-1
EXHIBIT B: PRODUCT SPECIFICATIONS
[***]
[***] Confidential material redacted and filed separately with the Commission.
B-1
EXHIBIT C: PRICING SCHEDULE
The following price schedule includes warranty, training, and installation.
Prices are valid through [***]. Seller reserves the right to adjust prices up or
down for subsequent contract periods.
[***]
[***] Confidential material redacted and filed separately with the Commission.
C-1
EXHIBIT D: WARRANT AGREEMENT
D-1
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
WARRANT TO PURCHASE 500,000 ISSUE DATE: AUGUST 7, 2000
SHARES OF THE COMMON EXPIRATION DATE: AUGUST 7, 2005
STOCK OF CONDUCTUS, INC. INITIAL EXERCISE PRICE: $13.43 PER SHARE
This Warrant is issued to ▇▇▇▇▇▇ Communications Corporation or its
registered assigns ("Holder") by Conductus, Inc., a Delaware corporation (the
"Company"), on August 7, 2000 (the "Warrant Issue Date"). This Warrant is issued
pursuant to the terms of that certain Purchase Agreement between Conductus, Inc.
and ▇▇▇▇▇▇ Cellular Systems, Inc. (the "Purchase Agreement") dated August 7,
2000.
1. PURCHASE SHARES. Subject to the terms and conditions hereinafter set
forth, the Holder is entitled, upon surrender of this Warrant at the principal
office of the Company (or at such other place as the Company shall notify the
Holder in writing), to purchase from the Company up to five hundred thousand
(500,000) fully paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The number of shares
of Common Stock issuable pursuant to this Section 1 (the "Shares") shall be
subject to adjustment pursuant to Section 7 hereof.
2. EXERCISE PRICE. The purchase price for the Shares shall be $13.43, as
adjusted from time to time pursuant to Section 7 hereof (the "Exercise Price").
3. EXERCISE PERIOD. This Warrant shall be exercisable as follows:
a. Warrants shall become exercisable fifteen (15) days after
the close of each of the Company's business quarters (October 15, 2000 through
October 15, 2002) as to the number of shares determined by dividing the total
revenue to the Company from purchases by ▇▇▇▇▇▇ Cellular Systems, Inc. under the
Purchase Agreement during the quarter by [***];
b. Warrants shall remain exercisable until 5:00p.m. on August
7, 2005;
[***] Confidential material redacted and filed separately with the Commission.
D-2
provided, however, that in the event of (a) the closing of the Company's sale
or transfer of all or substantially all of its assets, or (b) the closing of
the acquisition of the Company by another entity by means of merger,
consolidation or other transaction or series of related transactions,
resulting in the exchange of the outstanding shares of the Company's capital
stock such that at least 50% of the voting power of the Company is
transferred, this Warrant shall, on the date of such event, no longer be
exercisable and become null and void. In the event of a proposed transaction
of the kind described above, (i) the Company shall notify Holder as soon as
practicable, but no less than twenty (20) business days before the
consummation of such event or transaction, and (ii) accelerate vesting of
warrants as to those shares earned in accordance with paragraph 3(a) that are
earned between the end of the last completed quarter and the date of the
transaction.
4. METHOD OF EXERCISE. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(a) the surrender of the Warrant, together with a duly executed
copy of the form of Notice of Election attached thereto, to the Secretary of the
Company at its principal offices; and
(b) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. CERTIFICATES FOR SHARES. Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable).
6. ISSUANCE OF SHARES. The Company covenants that the Shares, when issued
pursuant to the exercise of this Warrant, will be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens, and charges with respect
to the issuance thereof.
7. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES. The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:
(a) SUBDIVISIONS, COMBINATIONS OR OTHER ISSUANCES. If the
Company shall at any time prior to the expiration of this Warrant subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock as a dividend with respect to any shares
of its Common Stock, the number of Shares issuable on the exercise of this
Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the purchase price
payable per share, but the aggregate purchase price payable for the total number
of Shares purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 7(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
D-3
(b) RECLASSIFICATION, REORGANIZATION AND CONSOLIDATION. In
case of any reclassification, capital reorganization, or change in the Common
Stock of the Company (other than as a result of a subdivision, combination,
or stock dividend provided for in Section 7(a) above), then, as a condition
of such reclassification, reorganization, or change, lawful provision shall
be made, and duly executed documents evidencing the same from the Company or
its successor shall be delivered to the Holder, so that the Holder shall have
the right at any time prior to the expiration of this Warrant to purchase, at
a total price equal to that payable upon the exercise of this Warrant, the
kind and amount of shares of stock and other securities and property
receivable in connection with such reclassification, reorganization, or
change by a holder of the same number of shares of Common Stock as were
purchasable by the Holder immediately prior to such reclassification,
reorganization, or change. In any such case appropriate provisions shall be
made with respect to the rights and interest of the Holder so that the
provisions hereof shall thereafter be applicable with respect to any shares
of stock or other securities and property deliverable upon exercise hereof,
and appropriate adjustments shall be made to the purchase price per share
payable hereunder, provided the aggregate purchase price shall remain the
same.
(c) NOTICE OF ADJUSTMENT. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Warrant Price, the Company shall promptly notify the Holder of such
event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
8. NO FRACTIONAL SALE OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this Warrant,
but in lieu of such fractional shares the Company shall make a cash payment
therefor on the basis of the Exercise Price then in effect.
9. NO STOCKHOLDER RIGHTS. Prior to exercise of this Warrant, the Holder
shall not be entitled to any rights of a stockholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
stockholder meetings, and such Holder shall not be entitled to any notice or
other communication concerning the business affairs of the Company. However,
nothing in this Section 9 shall limit the right of the Holder to be provided any
notices required under this Warrant or the Purchase Agreement.
10. REGISTRATION. The Company will use reasonable efforts to file an
appropriate registration statement for the shares of common stock to issue from
the warrants on or before August 7, 2001.
11. TRANSFERS OF WARRANT. Subject to compliance with federal and state
securities laws, this Warrant and all rights hereunder are transferrable in
whole or in part by the Holder to any person or entity upon written notice to
the Company. The transfer shall be recorded on the books of the Company upon the
surrender of this Warrant, properly endorsed, to the Company at its principal
offices, and the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer. In the event of a partial
transfer, the Company shall issue to the holders one or more appropriate new
warrants.
D-4
12. SUCCESSORS AND ASSIGNS. The terms and provisions of this Warrant and
the Purchase Agreement shall inure to the benefit of, and be binding upon, the
Company and the Holders hereof and their respective successors and assigns.
13. AMENDMENTS AND WAIVERS. Any term of this Warrant may be amended and
the observance of any term of this Warrant may be waived (either generally or in
a particular instance and either retroactively or prospectively), with the
written consent of the Company and the Holder. Any waiver or amendment effected
in accordance with this Section shall be binding upon each holder of any Shares
purchased under this Warrant at the time outstanding (including securities into
which such Shares have been converted), each future holder of all such Shares,
and the Company.
14. NOTICES. All notices required under this Warrant and shall be deemed
to have been given or made for all purposes (i) upon personal delivery, (ii)
upon confirmation receipt that the communication was successfully sent to the
applicable number if sent by facsimile, (iii) one day after being sent, when
sent by professional overnight courier service, or (iv) five days after posting
when sent by registered or certified mail. Notices to the Company shall be sent
to the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at such other place
as the Holder shall notify the Company hereof in writing).
15. ATTORNEY'S FEES. If any action in law or equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in addition
to any other relief to which it may be entitled.
16. CAPTIONS. The section and subsection headings of this Warrant are
inserted for convenience only and shall not constitute a part of this Warrant in
construing or interpreting any provision hereof.
17. GOVERNING LAW. This Warrant shall be governed by the laws of the State
of Delaware as applied to agreements among Delaware residents made and to be
performed entirely within the State of Delaware.
18. DISPUTE RESOLUTION.
(a) The parties shall use and strictly adhere to the following dispute
resolution processes, except as otherwise expressly provided in this paragraph,
to resolve any and all disputes, controversies or claims, whether based on
contract, tort, statute, fraud, misrepresentation or any other legal or
equitable theory (hereinafter, "Dispute(s)"), arising out of or relating to this
Agreement (and any prior agreement this Agreement supersedes), including without
limitation, its making, termination, non-renewal, its alleged breach and the
subject matter of this Agreement (e.g., products or services furnished hereunder
or those related to those furnished).
(b) The parties shall first attempt to settle each Dispute through good
faith negotiations. The aggrieved party shall initiate such negotiations by
giving the other party(ies)
D-5
written notice of the existence and nature of the Dispute. The other
party(ies) shall in a writing to the aggrieved party acknowledge such notice
of Dispute within ten (10) business days. Such acknowledgement may also set
forth any Dispute that the acknowledging party desires to have resolved in
accordance with this Paragraph.
(c) Thereafter, if any Dispute is not resolved by the parties through
negotiation within thirty (30) calendar days of the date of the notice of
acknowledgement, either party may terminate informal negotiations with
respect to that Dispute and have the right, by delivery of written notice
thereof (the "Arbitration Notice") to the other party, to submit the matter
to be finally settled by arbitration in accordance with the Commercial
Arbitration Rules then in effect of the American Arbitration Association, as
modified herein (the "AAA Rules"). The place of arbitration shall be Oklahoma
City, Oklahoma if the Arbitration is initiated by Company and San Jose,
California if the Arbitration is initiated by Holder. All matters so
submitted to arbitration shall be settled by three arbitrators. Holder and
Company shall each designate one arbitrator within twenty (20) days of the
delivery of the Arbitration Notice. If either party fails to timely so
designate an arbitrator, the matter shall be resolved by one arbitrator
timely designated. Holder and Company shall cause the designated arbitrators
to mutually agree upon and to designate a third arbitrator, PROVIDED HOWEVER,
that failing such agreement within 45 days of delivery of the Arbitration
Notice, the third arbitrator shall be appointed in accordance with the AAA
Rules. Holder and Company shall each be responsible for the payment of the
fees and expenses of their respectively designated arbitrators and shall bear
equally the fees and expenses of the third arbitrator. Holder and Company
shall cause the arbitrators to decide the matter to be arbitrated pursuant
hereto within sixty (60) days after the appointment of the last arbitrator.
The arbitral tribunal is not empowered to award damages in excess of
compensatory damages or similar damages with respect to any Dispute and each
party hereby irrevocably waives any right to recover punitive, exemplary or
similar damages with respect to any Dispute. The final decision of the
majority of the arbitrators shall be furnished to Holder and Company in
writing and shall constitute a conclusive determination of the matter in
question, binding upon Holder and Company and shall not be contested by any
of them. Such decision may be used in a court of law only for the purpose of
seeking enforcement of the arbitrators' award. Any arbitration proceeding,
decision or award rendered hereunder and the validity, effect and
interpretation of this arbitration agreement shall be governed by the Federal
Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon any award may be
entered in any court of competent jurisdiction.
(d) Holder and Company hereby irrevocably consent to the jurisdiction of
the state and federal courts in the States of Oklahoma and California, and all
state and federal courts competent to hear appeals therefrom, over any actions
which may be commenced against any of them under or in connection with this
Agreement. Holder and Company hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which any of them may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute in the
Western District of Oklahoma and
D-6
Oklahoma County or the Northern District of California and Santa ▇▇▇▇▇ County.
IN WITNESS WHEREOF, the Company caused this Warrant to be executed by an
officer thereunder duly authorized.
CONDUCTUS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief
Executive Officer
D-7
NOTICE OF EXERCISE
------------------
To: Chief Executive Officer
Conductus, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The undersigned hereby elects to purchase ________________ shares of Common
Stock of Conductus, Inc., pursuant to the terms of the attached Warrant and
payment of the Exercise Price per share required under such Warrant accompanies
this notice;
WARRANTHOLDER:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address:
-----------------------------------
-----------------------------------
Date:
-------------
Name in which shares should be registered:
------------------------------------------