FIRST AMENDMENT TO
RESEARCH & DEVELOPMENT AGREEMENT
This FIRST AMENDMENT TO RESEARCH & DEVELOPMENT AGREEMENT (this
"First Amendment"), effective as of December 31, 1996 (the "Effective
Date") by and between THE DOW CHEMICAL COMPANY ("Dow") and DESTEC ENERGY,
INC. ("Destec").
RECITALS:
WHEREAS, Dow and Destec entered into the Research & Development
Agreement, effective as of March 1, 1990 (the "Agreement"), whereby
Destec engaged Dow to provide certain research and development services
with respect to intellectual property relating to the gasification of
carbonaceous materials and to lignite beneficiation, which intellectual
property was assigned to Destec by Dow pursuant to the Assignment
Agreement effective as of March 1, 1990; and
WHEREAS, Dow and Destec desire to amend the Agreement.
NOW, THEREFORE, Dow and Destec hereby agree to the following terms,
covenants, conditions and obligations as amendment and supplement to the
Agreement:
1. All terms, covenants, obligations and conditions in the
Agreement not superseded or amended by this First Amendment remain in
full force and effect as originally written in the Agreement. All
capitalized terms used in this First Amendment and not otherwise defined
in this First Amendment have the meaning assigned to such term in the
Agreement.
2. Article II of the Agreement is hereby deleted in its entirety
and replaced by the following text:
Article II - Term. This Agreement shall terminate on December
31, 1997, unless otherwise agreed in writing by the parties.
3. Sections 4.1, 4.2 and 4.3 are deleted in their entirety and
replaced by the following text for Sections 4.1 and 4.2:
4.1 In order to conduct the research activities Dow shall
provide personnel for such research activities at such level of
support to be mutually agreed to by both Dow and Destec in
accordance with Section 5.5.
4.2 As requested in writing by Destec, the Dow research and
development personnel assigned to Destec activities, as
identified in Section 5.5 (the "Designated Dow R&D Person(s)"),
shall conduct such studies, investigation, inquiries,
experiments, analyses and research and development activities
as are requested by Destec, through its Gasification Business
Unit ("GBU") Director (or the equivalent functional department)
or the designee of the GBU Director, and agreed to by Dow and
such Designated Dow R&D Person(s). Such written requests may
take the form of Goals and Objectives which are reviewed at
least quarterly for progress or which may be altered at the
request of Destec and agreed to by Dow. The written requests
for such assignments shall constitute the research plan of the
parties (the "Research Plan").
4. The following Section 5.5 is added to Article 5 of the
Agreement:
5.5 From the Effective Date through December 31, 1997, Dow
shall provide two and one-half (2 1/2) man years of effort for
research and development support pursuant to this Agreement. To
the extent that such individuals remain Dow employees (they are
not subject to employment contract and Dow is not required by
virtue of this Agreement to retain them in Dow's employment),
Dow shall dedicate the following Dow personnel to such efforts
until December 31, 1997:
Personnel Location Time Allocated to Destec
-------------------------------------------------------------
Albert Tsang Terre Haute, IN 100%
Cliff Keeler Terre Haute, IN 100%
Doug Merrick Midland, MI 50%
5. Sections 6.1, 6.2 and 6.3 are hereby deleted in their entirety.
6. Section 9.1 is hereby deleted in its entirety and replaced by
the following text:
9.1 (a) Destec will reimburse Dow for (i) a fee of One Hundred
Twenty-Five Thousand and No/100 Dollars ($125,000.00) per man
year of effort for services of each of the Designated Dow R&D
Person(s), such fee to be prorated, (ii) reasonable travel
expenses incurred by Dow personnel, including the Designated
Dow R&D Person(s), at Destec's request, (iii) the fully
absorbed costs plus a five percent (5%) adder for any services
provided by Dow to Destec other than the services of the
Designated Dow R&D Person(s) (e.g. analytical services,
computer services), and (iv) all reasonable out-of-pocket
expenses incurred for patent filing fees, prosecution costs and
maintenance fees associated with any patent applications filed
or patents obtained by Dow under Section 7 of the Agreement on
behalf of Destec. Reimbursement by Destec of costs incurred by
Dow under Section 7 of the Agreement in excess of 110% of the
agreed upon patent obtention and maintenance fees shall require
the advance written consent of Destec.
(b) In addition to the foregoing, Destec shall pay the
reasonable relocation expenses of any Designated Dow R&D
Person(s), for which relocation is required in order to
effectuate the terms of Section 5.5. In the event that any
change in location is at the request of Dow, then Dow shall be
responsible for the relocation expenses of such Designated Dow
R&D Person(s). Upon the termination of this Agreement, any
relocation expenses of the Designated Dow R&D Person(s) located
at Destec's Terre Haute facility, which are incurred due to
such termination, are to be the responsibility of Dow.
7. Section 9.3 is amended by deleting the phrase "the Dow Louisiana
Division in Plaquemine, Louisiana" from the 3rd sentence, and
substituting the phrase "Dow's offices located in Midland, Michigan" in
place thereof.
8. With respect to any Destec employees currently working at the
Wabash Project as of February 17, 1997, who are subsequently hired by
Dow, Dow will make such individuals available to Destec under the terms
of this Agreement, at Destec's request, at fully absorbed cost plus 30%
until December 31, 1998.
IN WITNESS WHEREOF, the parties have executed this First Amendment
as of the day and year first above written.
THE DOW CHEMICAL COMPANY
By: /s/ B. G. Taylorson
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Name: B. G. Taylorson
Title: Corporate Director,
Mergers & Acquisitions
DESTEC ENERGY, INC.
By: /s/ Enrique M. Larroucau
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Name: Enrique M. Larroucau
Title: Senior Vice President,
Chief Financial Officer
and Treasurer