TECHNOLOGY LICENSE, CONSULTING SERVICES AND
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, made on the Effective Date as defined herein,
by and between Science Applications International Corporation ("SAIC"), a
Delaware corporation having a principal place of business at 10260 Campus Point
Drive, M/S W2, San Diego, California 92121 and Ocean Power (hereinafter "OP"), a
Delaware corporation, having a principal place of business at 5000 Robert J.
Mathews Parkway, El Dorado Hills, California 95762 (each being referred to as a
"Party" and collectively referred to as the "Parties").
WHEREAS, SAIC has the right to license certain intellectual
property and proprietary rights to technology related to solar concentrators and
has made certain items of such technology available for licensing by OP; and
WHEREAS, OP has determined to license the SAIC Technology,
defined below; and
WHEREAS, OP desires to obtain from SAIC, and SAIC desires to
grant to OP on the terms and conditions contained herein, certain non-exclusive
rights to the SAIC Technology; and
WHEREAS, SAIC owns certain components, systems and equipment
related to its business activities involving the SAIC Technology (defined herein
as "SAIC Assets") which it wishes to sell to OP on the terms and conditions
contained herein, and OP may desire to purchase the SAIC Assets; and
WHEREAS, SAIC is in negotiations to become party to an
agreement with the University of Nevada Las Vegas (UNLV) related to solar
concentrator systems, and OP and SAIC mutually desire that SAIC endeavor to make
available for assignment to OP such agreement on the terms and conditions
contained herein; and
WHEREAS, OP owns and controls rights to certain patented and
unpatented technology related to Stirling engines and solar energy power
conversion systems; and
WHEREAS, SAIC has provided a non-exclusive license to STM
Corporation having a principal place of business at 275 Metty Drive, Ann Arbor,
Michigan 48103, and is willing to license OP on similar terms and conditions.
NOW, THEREFORE, the Parties agree as follows:
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Article 1
Definitions
As used in this Agreement, the following terms have the meanings set
out below and as further defined elsewhere in this Agreement.
1.1 "Affiliate" means any legal entity (such as a corporation,
partnership, or limited liability company) that is controlled by a Party. For
the purposes of this definition, the term "control" means (i) beneficial
ownership of at least fifty percent (50%) of the voting securities of a
corporation or other business organization with voting securities or (ii) a
fifty percent (50%) or greater interest in the net assets or profits of a
partnership or other business organization without voting securities.
1.2 "Closing" and "Closing Date" shall have the meanings set forth in
Section 9.3.
1.3 "Confidential Information" shall have the meaning set forth in
Section 5.1.1.
1.4 "Contract Year" shall mean any twelve-month period beginning on the
Effective Date or any anniversary of the Effective Date.
1.5 "Cooperative Agreement" shall have the meaning set forth in the
recitals.
1.6 "Effective Date" of this Agreement is the date of complete
execution by all Parties of the signature page of this Agreement.
1.7 "Field of Use" means solar concentrator systems for driving Engines
or PV receivers to produce electric power.
1.8 "Gross Sales Price"means the gross amount invoiced (together with
any and all other forms of consideration that is received) for sales of a
Licensed Product.
1.9 "Improvements" means any invention, discovery, improvement,
derivative know-how, technical information or other technology discovered, made,
developed, conceived and/or reduced to practice or otherwise acquired, possessed
or controlled by either Party as part of the contracted work from Newco to SAIC
hereto, or their affiliates, employees, agents or assigns during the term of
this Agreement applicable within the Field of Use, which increases or enhances
the performance, economics or efficacy of the Licensed Product and is based on
the SAIC Energy Products Division Patents or the SAIC Energy Products Division
Technology Information.
1.10 "Licensed Product(s)" means components, sub-assemblies or systems
for concentrating solar energy incorporating SAIC Technology within the Field of
Use.
1.11 "Minimum Royalty" shall have the meaning set forth in Section 4.2.
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1.12 "Net Selling Price" means Gross Sales Price of Licensed Products,
less (i) reasonable transportation charges for Licensed Product consisting of
freight, packaging expense, shipping expense and insurance expense, as
applicable, paid by OP, (ii) returns or customary rebates, (iii) customary
trade, quantity and normal or ordinary cash discounts allowed or taken, (iv)
reasonable sales commission, invoice taxes, or duties levied on sales of
Licensed Product paid by OP, (v) advertising and promotion expense, and (vi)
warranty reserves; provided that the sum of deductions specified in the
preceding provisions (i) through (vi) shall not reduce the Net Selling Price to
less than eighty percent (80%) of the Gross Sales Price.
1.13 "Royalty" shall have the meaning set forth in Section 4.1and shall
apply to sales of OP to itself for power production as an independent power
producer.
1.14 "Royalty Term" shall have the meaning set forth in Section 3.1 and
Section 4.5.
1.15 "SAIC Assets" shall have the meaning set forth in Section 9.1.
1.16 "SAIC Patents" means those patents and patent applications
identified in Exhibit A, and all continuations, continuations-in-part,
reexaminations, reissuances and/or extensions thereof which are owned by SAIC,
along with any other patents and patent applications which SAIC owns originating
from SAIC's Energy Products Division.
1.17 "SAIC Technical Information" means those trade secrets,
confidential information, and know-how applicable within the Field of Use which
are identified in Exhibit A and are directly or indirectly relevant to the
development, manufacture, use or sale of Licensed Product.
1.18 "SAIC Technology" means SAIC Energy Products Division Patents,
SAIC Energy Products Division Technical Information and Improvements.
1.19 "Term" shall have the meaning set forth in Section 3.1.
1.20 "Territory" shall mean United States and Canada.
Article 2
Grant of Rights
---------------
2.1 License Grant: Subject to the terms and conditions of this
Agreement, SAIC grants to OP a non-exclusive, royalty-bearing right and license
under the SAIC Technology to make, use, import, offer to sell, and sell Licensed
Products, and have made components and sub-assemblies only of Licensed Products,
within the Field of Use and within the Territory. The license rights granted
herein are based upon OP's demonstrated expertise in the Field of Use and,
therefore, are non-assignable and non-sublicensable by OP, except as expressly
permitted under Section 2.5 with respect to certain Affiliates of OP and under
Section 2.7 with respect to creation of a New Business Entity.
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2.2 Rights to Improvements: All Improvements which are made, conceived
or reduced to practice by SAIC Energy Products Division (or its employees,
agents, representatives or collaborators), either alone or together with others,
shall be the sole property of SAIC; provided, however, that any such
Improvements shall be included within the meaning of the SAIC Technology
licensed to OP hereunder. SAIC grants back to OP the same rights to the
enhancements or improvements as are enumerated in the Agreement without
additional costs.
2.3 Reserved Rights of SAIC: This Agreement is not intended and shall
not be construed to in any way restrict SAIC's right to engage in research,
development, marketing, sales, licensing or other activities relating to SAIC
Technology (whether or not such activities are within the Field of Use) or in
any other activity which is not inconsistent with this Agreement. No rights are
transferred to OP outside of the Field of Use and SAIC reserves all rights which
are not expressly granted to OP.
2.4 Government Rights: OP acknowledges that the United States
government possesses certain rights in the SAIC Technology. Nothing in this
Agreement will negate or qualify any rights of the United States government with
respect to SAIC Technology, and the license granted to OP herein is subject to
all such rights. OP acknowledges and agrees that Licensed Product leased or sold
in the United States by OP shall be manufactured substantially in the United
State. If the United States government is participating in the project, and
there is a Use American Suppliers clause.
2.5 Affiliates: OP represents, warrants and covenants that it will not
directly or indirectly sublicense, assign or in any way transfer any rights in
the Licensed Technology to any other party, including Affiliates of OP, without
SAIC's express written consent which shall not be unreasonably withheld.
Notwithstanding the foregoing, OP may manufacture (or have manufactured)
Licensed Product anywhere in the world on the premises of an Affiliate of OP who
has the scientific, manufacturing and other resources necessary to fulfill OP's
obligations hereunder (subject to compliance with all applicable laws and the
requirements of Section 16.8). The effectiveness of any sublicense or
authorization granted to such an Affiliate respecting the manufacture of
Licensed Product is conditioned upon delivery to SAIC of a written license
agreement signed by such Affiliate containing obligations in favor of SAIC
substantially identical to those stated in Sections 2.2, 2.3 and 2.4, and
Articles 3, 5 and 6.
2.6 Compliance with Laws: OP represents, warrants and covenants that it
will comply with all applicable laws, rules and regulations, including all laws,
rules and regulations relating to the design, development, manufacturing, sale
and use of Licensed Product, and maintain and fulfill all relevant regulatory
requirements applicable to the manufacture of Licensed Product.
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2.7 Creation of New Business Entity: It is contemplated that a new
business entity may be created by OP for the purpose of developing and selling
solar energy conversion systems ("New Business Entity"). Notwithstanding any
other provisions of this Agreement, upon satisfaction of the requirements set
forth below, all rights and duties of OP shall be assignable to such newly
created entity. Subject to the requirements of Section 2.5, the license herein
granted to OP shall extend to such New Business Entity, provided that: a) SAIC
and APS shall receive 5% and 0.5% interests respectively in the New Business
Entity; b) a shareholders agreement is executed by OP, SAIC, and APS, which
conforms to the terms set forth in the Term Sheet executed by OP and SAIC on
January 17, 2001; and, c) substantially all assets of OP specifically directed
to solar energy conversion systems are transferred, sold, licensed, sublicensed,
or leased to such entity by OP, and (1) such New Business Entity agrees in
writing to be bound by all of the terms of the license herein granted including,
but not limited to, payment of royalties, provisions of reports and audit of the
New Business Entity premises; (2) such New Business Entity shall not have the
right to transfer any rights to any other party (including its Affiliates)
without SAIC's prior written consent; (3) royalty payments and reports on the
activities of such New Business Entity shall be made directly by OP to SAIC, as
if such activities had been performed by OP directly; and (4) OP shall guarantee
the performance by any New Business Entity of its obligations to SAIC. The
license or assignment to a New Business Entity shall immediately and
automatically terminate upon termination of this Agreement for any reason. Not
withstanding the foregoing, SAIC hereby waives any Rights of First Refusal it
may have to purchase up to $20,000,000.00 of the initially authorized stock of
the New Business Entity, which may be issued or sold by such New Business Entity
for the purpose of raising initial operating funds. All such stock shall come
from the 94.5% which would otherwise be issued to OP.
Article 3
Term of Agreement
-----------------
3.1 Term: This Agreement and the license granted herein to OP shall
become effective as of the Effective Date and, unless terminated earlier
pursuant to the terms of this Article 3, shall continue until the date of
expiration of the last to expire of the SAIC Patents (the "Term"). OP's
obligation to pay royalties shall continue until the sooner to occur of (i)
thirty (30) years after the Effective Date, or (ii) the date of expiration of
the last to expire of the SAIC Patents or as provided by Article 4.5 (the
"Royalty Term").
3.2 Expiration of Royalty Term: Upon expiration of the Royalty Term,
unless OP is then in breach of this Agreement, OP's non-exclusive license to use
the SAIC Technology will become fully paid up and royalty-free; all of the other
terms and conditions of the license herein granted shall continue without
modification for the duration of the Term.
3.3 Termination by a Party:
3.3.1 Breach: Each Party shall have the right to terminate this
Agreement, effective immediately, upon written notice to the other Party, if the
other Party has failed to perform any obligation under this Agreement or cure
any other breach of this Agreement within sixty (60) days after receiving
written notice of such nonperformance or breach from the terminating Party.
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3.3.2 Insolvency: A Party may terminate this Agreement upon
written notice to the other if (i) the other Party files a petition under the
United States Bankruptcy Code, as amended, or for the appointment of a receiver,
(ii) an involuntary petition in bankruptcy is filed against the other Party and
said petition is not discharged within thirty (30) days, (iii) the other Party
becomes insolvent or makes a general assignment for the benefit of its
creditors, or (iv) the business or property of the other Party comes into the
possession of its creditors or of a receiver.
3.3.3 Failure to Fund Development or to Make Royalty Payment:SAIC
shall have the right to terminate this Agreement, effective immediately, upon
written notice to OP, if OP has failed to fund the Four Million Dollar
($4,000,000.00) in SAIC dish development in two years or to timely make any
Royalty or Minimum Royalty payment to SAIC when such payment becomes due and
such payment is not made within thirty (30) days of such notice.
3.3.4 Failure to Form New Business Entity: SAIC shall have the
right to terminate this Agreement or renegotiate the royalty of this Agreement,
effective immediately, upon written notice to OP, if OP has failed to deliver
equity in a new business entity to SAIC and APS.
3.4 Effect of Termination: Expiration or termination of this Agreement
shall not affect any right of action of either Party that arises from any act or
omission prior to such termination taking effect, including the right of either
Party to collect any fees then owing or damages caused by a breach. Upon
termination of this Agreement by SAIC pursuant to Section 3.3, OP shall
immediately discontinue its use (and make no further use) of any and all
Licensed Technology, and the license rights granted herein to OP shall
immediately revert to SAIC. Within three (3) months after the effective date of
termination, OP shall use its best efforts to sell all of its remaining
inventory of Licensed Product in a manner and at a price consistent with past
practices. Any inventory not sold within such period shall be destroyed or
returned to SAIC, at SAIC's option. SAIC shall purchase any inventory that SAIC
requests OP to return to SAIC at an amount equal to OP's direct manufacturing
cost for such product. Except for sales made to SAIC, OP shall pay royalties at
the rates specified in Section 4.1 for all sales of inventory made after the
effective date of termination.
3.5 Survival of Obligations: Termination or expiration of this
agreement shall not affect any rights and obligations of the Parties which are
intended to survive termination including, but without limitation, applicable
provisions of Sections 3.4, 4.1, 4.3, 4.4, 4.5, 10.4, 16.7, 16.10, and Articles
5, 6, 12 and 14.
Article 4
Royalties
---------
4.1 Running Royalties: OP will pay a running royalty ("Royalty") based
on the Net Selling Price of any Licensed Product sold by OP (or its permitted
Affiliates under Section 2.7) during the Royalty Term in accordance with the
following schedule:
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(a) Three percent (3.0%) of Net Selling Price for all
sales made during the Royalty Term, until after the
cumulative total of Royalties paid to SAIC exceeds
$100,000;
(b) Two and One-Half percent (2.5%) of Net Selling Price
for all sales made during the Royalty Term after the
cumulative total paid to SAIC exceeds $100,000, and
until the cumulative total exceeds $500,000; and
(c) Two percent (2.0%) of Net Selling Price for all sales
made during the Royalty Term once the cumulative
total Royalty paid to SAIC exceeds $500,000.
4.2 Minimum Royalty Payments: During the Royalty Term, OP shall make
the following minimum royalty payments ("Minimum Royalty") on each of the
indicated due dates:
Contract Year Minimum Royalty Amount Due Date
- ------------- ---------------------- --------
1 (None) (Not applicable)
2 $ 25,000 1st anniversary of Effective Date
3 $ 50,000 2nd anniversary of Effective Date
4+ $ 100,000 3rd anniversary of Effective Date,
and each subsequent anniversary of
Effective Date
4.3 Payment of Royalties: Payment of a Royalty respecting the sale of
Licensed Product shall be made to SAIC within thirty (30) days after the end of
the calendar quarter during which the Licensed Product is shipped from the
manufacturing facility. All such payments shall be accompanied by a report
containing the information specified in Section 6.2. The amount of Royalty
received by SAIC during each calendar year shall be credited toward the Minimum
Royalty due for the next Contract Year. The amount of (i) Royalty received by
SAIC in excess of the Minimum Royalty due for a Contract Year, plus (ii) any
credit that carried forward to such year but was not credited toward the Minimum
Royalty due for such year, will carry forward and be credited toward the Minimum
Royalty due during the next Contract Year. The amount of Royalty received by
SAIC during a calendar year in excess of the Minimum Royalty due for the next
Contract Year will carry forward and be credited against the Minimum Royalty due
for subsequent Contract Years. OP's obligation to make Royalty and Minimum
Royalty payments will survive termination of this Agreement with respect to
Licensed Product sold prior to the effective date of termination.
4.4 Payments in U.S. Dollars: All Commissions, Royalty and Minimum
Royalty payments shall be paid in United States dollars. Conversion of foreign
currency to United States dollars shall be made at the conversion rate existing
in the United States (as reported in the Wall Street Journal) on the last
working day of the calendar quarter to which the payment relates. Such payments
shall be without deduction of exchange, collection, or other charges.
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Article 5
Confidentiality
---------------
5.1 Confidentiality:
5.1.1 Confidential Information: "Confidential Information" means
this Agreement and any other confidential or proprietary information or item
disclosed or made available by either Party to the other that is marked or
identified as "confidential" or "proprietary" prior to the time of its
disclosure. In addition, information which is orally disclosed to the other
Party shall be Confidential Information if it is identified as such at the time
of its disclosure and if within five (5) business days after disclosure the
disclosing Party delivers to the other Party a written document describing such
Confidential Information, referencing the place and date of such oral disclosure
and the name of the agents of the Party to whom such disclosure was made, and
stating that such information is deemed confidential by the disclosing Party.
The SAIC Technical Information and all Improvements that are not the subject of
US or foreign patents shall be deemed to be Confidential Information of SAIC.
5.1.2 Restriction on Use and Disclosure: The Party receiving
Confidential Information ("Recipient") agrees that during the Term and for a
period of three (3) years thereafter, Recipient will regard and preserve such
information and materials as strictly confidential, and without the express
prior written consent of the Party disclosing Confidential Information
("Discloser") will not directly or indirectly disclose to any third person, or
use for the benefit of anyone other than Discloser, any and all Confidential
Information. However, Recipient may disclose Confidential Information to its
officers, employees and agents who have a need to know the same who have signed
a non-disclosure agreement or otherwise have obligations of confidentiality to
the Recipient. Recipient agrees that all information, documents, data, other
tangible material pertaining to Confidential Information and obtained from or
through Discloser shall remain the property of Discloser. Recipient will be
responsible for any breach of this Agreement by its agents and representatives.
5.1.3 Required Disclosure: If Recipient or its agents or
representatives are required by order of a court or other governmental entity to
disclose any Confidential Information, it shall provide the Discloser with
prompt prior written notice of such requirement so the Discloser may seek a
protective order or other appropriate remedy and/or waive compliance with the
terms of this Agreement. If such protective order or other remedy is not
obtained, or Discloser waives compliance with the provisions of this Agreement,
Recipient agrees to furnish only that portion of the Confidential Information
which it is advised by written opinion of counsel is legally required and to
exercise best efforts to obtain assurance that confidential treatment will be
afforded to the Confidential Information thus disclosed.
5.1.4 Return of Information: Within twenty (20) days after the
date of termination, expiration or cancellation of this Agreement, or at any
other time upon written request by Discloser, Recipient will promptly return to
Discloser all Confidential Information in its possession or in the possession of
its agents and representatives, and will promptly destroy all copies of any
analyses, compilations, summaries, derivations, studies or any other documents
or tangible media which contain or reflect any Confidential Information. Upon
request by Discloser, Recipient shall furnish Discloser with a certificate
signed by an executive officer of the Recipient verifying that the same has been
done.
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5.1.5 Survival: The Parties' obligations under this Article shall
survive the termination, expiration or cancellation of this Agreement.
Article 6
Records, Reports, and Audits
----------------------------
6.1 Records: OP will make and maintain accurate business records
according to generally accepted accounting principles showing the number of
units of each Licensed Product made by or made for OP and the manufacturer, the
quantity of Licensed Products sold by or for OP and the customer, the number of
units sold for each customer, the amount received from each customer, all
returns, discounts, rebates, shipping, insurance, taxes, trade discounts and
other amounts that are used to compute the Net Selling Price for each Licensed
Product, scrap parts and parts destroyed in shipment. OP will maintain all such
records for a period of at least three (3) years after the end of the calendar
year in which the Licensed Products is sold, and for at least three (3) years
after expiration or termination of this Agreement.
6.2 Reports: Within thirty (30) days after the end of each calendar
quarter commencing after the first commercial sale in any country of Licensed
Product, OP shall deliver to SAIC a report of its activities relating to the
preceding calendar quarter. Such report shall contain all of the following
information: (a) the quantity of each Licensed Product manufactured at each
facility; (b) the quantity of each Licensed Product sold in each country; (c)
the Gross Sales Price of each Licensed Product sold in each country; (d)
adjustments and calculation of Net Selling Price for each Licensed Product in
each country of sale; (e) the Net Selling Price of each Licensed Product with
the exchange rates used for conversion; (f) the total royalty payment due for
the quarter for each Licensed Product; and (g) the activities of OP directed
toward promoting the sale and use of Licensed Product in each country. If no
payment is to be made by OP for any reporting period, the report shall so state
and the information set forth in item (g) shall be provided. All such reports
shall be considered Confidential Information under this Agreement.
6.3 Inspection: Upon SAIC's written request, and from time to time
during the term of this Agreement (but not more than once per calendar year),
and for three (3) years after expiration or termination of this Agreement, OP
will permit an independent Certified Public Accountant selected by SAIC and
acceptable to OP (acceptance not to be unreasonably withheld, delayed or
conditioned), during normal business hours, to inspect all of the records which
OP is required to maintain pursuant to Section 6.1. The independent Certified
Public Accountant shall report to SAIC (and simultaneously to OP) only such
information that relates to the accuracy of reports and payments delivered under
this Agreement. The Parties shall reconcile any underpayment or overpayment
within thirty (30) days after the accountant delivers the results of the audit.
In the event that any audit performed under this Article 6 reveals an
underpayment in excess of five percent (5%) of the amount due for any quarter,
OP shall bear the full cost of such audit.
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Article 7
Warranties and Representations
------------------------------
7.1 By SAIC: SAIC represents and warrants that (i) it has ownership of
the SAIC Patents and has the right to grant all licensed rights, including
rights to SAIC Patents and SAIC Technical Information under this Agreement, (ii)
it has the right to enter into this Agreement, (iii) it has taken all corporate
action necessary to authorize the execution and delivery of this Agreement and
the performance of its obligations under this Agreement, and (iv) SAIC's
performance of its obligations under this Agreement, will not violate any
agreement between SAIC and any third person. SAIC does not warrant that OP can
manufacture and/or sell the Licensed Products without infringing or otherwise
violating any other person's patent or other intellectual property rights but
does represent, however, that it is unaware of such a written claim by any third
party, except as disclosed in Exhibit B.
7.2 By OP: OP represents and warrants that (i) it has the right to
enter into this Agreement, (ii) it has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance of
its obligations under this Agreement, (iii) OP's performance of its obligations
under this Agreement will not violate any agreement between OP and any third
person, and (iv) it will not undertake any actions that could adversely affect
the preparation, filing, prosecution, maintenance or confidentiality of the SAIC
Technology.
7.3 No Additional Representations. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS ARTICLE, ANY OTHER PROVISION OF THIS AGREEMENT, OR
ANY OTHER COMMUNICATIONS BETWEEN THE PARTIES ORALLY OR IN WRITING, IT IS THE
EXPLICIT INTENT OF EACH PARTY THAT SAIC IS MAKING NO REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OR REPRESENTATION AS TO
CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF THE PROPERTIES OR ASSETS
OF SAIC LICENSED OR SOLD HEREUNDER, INCLUDING BUT NOT LIMITED TO SAIC TECHNOLOGY
AND SAIC ASSETS. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
THE SAIC ASSETS (AS DEFINED IN SECTION 9.1) ARE BEING SOLD ON AN "AS IS, WHERE
IS" BASIS.
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Article 8
Patent Maintenance
------------------
8.1 Rights Reserved to SAIC: SAIC shall have the right to prepare,
file, prosecute and maintain patent applications and patents, continuations,
continuations-in-part divisions, reissues, additions, renewals or extensions
thereof covering SAIC Technology in countries of its choice throughout the world
at SAIC's sole cost and expense. OP agrees to cooperate fully in the
preparation, filing, prosecution, and maintenance of all such patents. Such
cooperation includes, without limitation, (i) promptly executing all papers and
instruments, or requiring its employees, consultants, and agents to execute such
papers and instruments, as are reasonable and appropriate; and (ii) promptly
informing SAIC of all matters that may affect such patents and patent
applications.
8.2 United States Patents: SAIC shall have the obligation, at its sole
cost and expense, to prepare, file, prosecute and maintain each of the SAIC
Patents in the United States.
8.3 Patents Outside the United States: SAIC shall negotiate in good
faith upon request of OP, whether to file, prosecute and/or maintain a patent
application or a patent covering SAIC Technology in those countries designated
by OP. Notwithstanding such negotiation, SAIC shall, on request of OP, file,
prosecute and/or maintain a patent application or a patent covering SAIC
Technology in those countries designated by OP; provided that OP agrees in
writing to advance all of the costs and expenses associated therewith. SAIC
shall have the right to choose patent counsel, subject to approval by OP, which
approval will not be unreasonably withheld.
Article 9
Asset Purchase and Sale
-----------------------
9.1 Option to Purchase Certain Equipment: OP shall have for a period
not longer than six (6) months from the Effective Date an option to purchase the
following:
(a) Components -Those certain components listed in Exhibit C, the
purchase price of which shall be the price stated in Exhibit C; and
(b) Other Equipment - any or all of the equipment specified on
Exhibit D, as amended.
Such option shall be exercised by giving SAIC written notice specifically
identifying the components and other equipment to be purchased. Such notice
shall constitute OP's agreement to purchase the specified components and other
equipment at the stated price(s). With respect to the items of equipment
specified in Exhibit D, the consummation of the purchase and sale of such
equipment shall take place, with respect to each item to be purchased, on such
date that SAIC determines, in its sole discretion, that it no longer has a use
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for such equipment (or such other date that is mutually agreed in writing by the
Parties). The purchase price for the equipment specified in Exhibit D shall be
its fair market value as determined by SAIC. SAIC may at any time effective ten
(10) days after written notice to OP either (i) modify any or all of the
equipment, prices or other terms that are specified in Exhibit D, or (ii)
terminate the option granted to OP pursuant to this Section 9.1 as it pertains
to the items in Exhibit D
9.2 Transfer of Title to the Assets: SAIC shall sell, assign, convey,
transfer and deliver the SAIC Assets to OP on or before the Closing Date by
means of bills of sale, assignments, endorsements, certificates and such other
instruments of transfer as shall be necessary or appropriate to vest good title
to the SAIC Assets in OP, free and clear of any liens, charges and encumbrances,
except as otherwise set forth in this Agreement. SAIC shall use good faith
efforts to obtain any third party consents required in connection with the sale
of SAIC Assets to OP.
9.3 Closing Date: The consummation of the transactions contemplated
hereby will take place at San Diego, CA within six months of April 23, 2001 at
10:00 a.m. Pacific Standard Time, or the date of signature execution or on such
other date and time as may be mutually agreed upon by the Parties in writing
(the "Closing"). Unless otherwise agreed in writing the date upon which the
Closing occurs is referred to herein as the "Closing Date."
9.4 Assumed Liabilities: Upon, from and after the Closing Date, OP
shall, without any further responsibility or liability of, or recourse to, SAIC
or any of its directors, shareholders, officers, employees, agents, consultants,
representatives, parent entities, affiliates, subsidiaries, successors or
assigns, absolutely and irrevocably assume and be solely liable and responsible
for any and all liabilities and obligations of any kind or nature of SAIC
(whether fixed or contingent, matured or unmatured, foreseen or unforeseen,
known or unknown), which may arise out of any of the following after the Closing
Date and which are attributable to the period on or after the Closing Date, as
applicable: (i) the ownership, use or possession or condition of the SAIC
Assets; and (ii) liability for all federal, state, local and foreign taxes
relating to the SAIC Assets.
9.5 Retained Liabilities: SAIC shall at all times, without any
responsibility or liability of, or recourse to, OP or any of its directors,
shareholders, officers, employees, agents, consultants, representatives, parent
entities, affiliates, subsidiaries, successors or assigns, absolutely and
irrevocably be and remain solely liable and responsible for any and all
liabilities and obligations of any kind or nature (whether fixed or contingent,
matured or unmatured, foreseen or unforeseen, known or unknown) existing or
arising from or in connection with SAIC's use of the SAIC Assets prior to the
date that it is delivered to OP, unless the terms hereof or of an Exhibit hereto
expressly state that such liability or obligation shall transfer to OP at
another time, including, but not limited to, the obligations set forth in
Article 12.
12
Article 10
Assignment of Rights under the UNLV Program
-------------------------------------------
10.1 Assignment: SAIC has been awarded the right to negotiate a
contract with the University of Nevada Las Vegas ("UNLV") which concerns a
program for Solar Dish/Stirling Systems and is identified more particularly in
Exhibit E. OP desires an option for SAIC to assign and transfer to OP all of
SAIC's rights and interest in the UNLV Program and, subject to the terms and
conditions of this Agreement, SAIC shall endeavor to do so.
10.2 Limited Assignment Efforts: Upon request by OP, SAIC will provide
OP all reasonable cooperation and assistance in order to assign SAIC's rights
and interest in the UNLV Program; provided, however, that SAIC shall not be
required to incur any out-of-pocket costs. The assignment shall provide that OP
assumes (i) the role of "Seller" under the UNLV Program and (ii) all of SAIC's
rights, obligations and liabilities under the UNLV Program. OP acknowledges that
the UNLV Program has not been, and may never be awarded to SAIC and consent of
UNLV is a condition of any such assignment. SAIC makes no representations,
warranties or promises, express or implied, respecting the UNLV Program,
including without limitation, with respect to the negotiations of a possible
award of the UNLV Program or the possibility that it can be assigned.
10.3 Assignment Fee: In the event that an assignment of the UNLV
Program to OP occurs, OP shall pay to SAIC a non-refundable fee in the amount of
$150,000, representing a portion of the marketing costs and expenses incurred by
SAIC in connection with the UNLV Program.
10.4 Assumed Liabilities: OP shall, in the event of assignment of the
UNLV Program, without any further responsibility or liability of, or recourse
to, SAIC or any of its directors, shareholders, officers, employees, agents,
consultants, representatives, parent entities, affiliates, subsidiaries,
successors or assigns, absolutely and irrevocably assume and be solely liable
and responsible for any and all liabilities and obligations of any kind or
nature of SAIC (whether fixed or contingent, matured or unmatured, foreseen or
unforeseen, known or unknown), which may arise out of or relate to the UNLV
Program after the date of its assignment to OP. SAIC shall not be required by
this Agreement to perform any services or incur any expenses under the UNLV
Program (either prior to or after its assignment). OP shall reimburse SAIC for
(i) the reasonable cost of any services provided or expenses incured by SAIC at
the request of OP, and (ii) the reasonable cost of any services that OP is
required to provide under the UNLV Program prior to or after its assignment.
Payment shall be made by OP to SAIC within thirty (30) days after the receipt of
an invoice therefore. OP shall be responsible for payment of any fees, costs or
expenses required in connection with the transfer or assignment of the UNLV
Program to OP.
10.5 Release:OP hereby forever irrevocably releases SAIC, its past and
present representatives, agents, employees, attorneys, partners, affiliates and
their respective successors and assigns, from any and all claims, demands,
suits, cross-complaints, causes of action, assertions, liabilities and debts of
any nature, whether known or unknown, absolute or contingent, presently existing
or hereafter discovered, pertaining to, connected with are arising out of the
UNLV Program and/or SAIC's efforts and negotiations relating thereto. OP
expressly waives and relinquishes any and all rights or benefits it may have
under, or which may be conferred upon it by the provisions of Section 1542 of
the California Civil Code to the fullest extent allowed by law, respecting the
subject matter of this release. This Section 10.5 is not intended and shall not
be construed to release SAIC from any liability respecting a breach or default
of its obligations under this Agreement.
13
Article 11
Consulting Services
-------------------
11.1 Services: OP or the New Business Entity (hereinafter "OP") shall
retain SAIC to provide certain consulting services, including but not limited
to, concerning research, development and commercialization of the SAIC
Technology and Licensed Product. The consulting services to be provided are
subject to mutual agreement between SAIC and OP when scheduled. The Consulting
Agreement shall further provide for a value not less than Four Million Dollars
($4,000,000.00) over a 2 two year period commencing on the effective date of
this Agreement. SAIC and OP agree that any consultation provided by SAIC,
whether in writing or orally, is purely advisory and that there is no guarantee
of any particular result therefrom. Any such consulting services shall be
provided by employees or consultants who are retained by SAIC at its sole cost
and expense.
11.2 Payment For Services:OP agrees to pay for any consulting services
requested by OP, at SAIC's ordinary and customary consulting rates, as amended
from time to time by SAIC in its sole discretion. SAIC's currently effective
standard consulting rates are set forth in Exhibit F. Consulting services
scheduled at OP's request outside of normal business hours shall be provided at
the premium rates specified in Exhibit F.
11.3 Scheduling: Consulting services shall be provided on mutually
agreed dates and times, taking into consideration the location where the
services are to be provided, the nature of the services, availability of
qualified staff and the urgency of the need. OP shall be responsible for payment
of consulting fees for services requested, unless otherwise agreed in writing.
11.5 Payments and Expenses: Billing shall be by invoice prepared by
SAIC each month. Unless otherwise agreed by SAIC in writing, payment shall be
due within thirty (30) days after the date of invoice. SAIC shall not be
required to provide any services during any periods of time while OP is
delinquent on payments due to SAIC under this Agreement; and failure to make
payments when due shall be cause to terminate this Agreement. SAIC shall be
reimbursed by OP for all out-of-pocket expenses that are reasonably incurred in
the performance of consulting services including, but not limited to, reasonable
travel costs, per diem, telephone, communication and other expenses.
11.6 Independent Contractor Status: OP and SAIC agree that SAIC shall
perform its consulting services under this Agreement as an independent
contractor.
14
Article 12
Indemnification
---------------
12.1 OP shall, at its expense, indemnify, defend and hold SAIC, its
officers, directors, employees, agents and parent and affiliated entities,
harmless from and against any and all expenses, damages, claims, suits, losses,
actions, judgments, liabilities and costs whatsoever (including attorney fees)
arising out of, or relating to: (i) OP's or its Affiliate's breach of any
representation, warranty or covenant contained in this Agreement; (ii) product
liability relating to the Licensed Product, or infringement of any United States
copyright, trademark, patent, trade secret or other intellectual property of any
third party relating to any Improvement made, conceived or reduced to practice
by OP or its Affiliate. This provision shall survive the termination or
expiration of this Agreement.
12.2 SAIC shall, at its expense, indemnify, defend and hold OP, its
officers, directors, employees, agents and parent and affiliated entities,
harmless from and against any and all expenses, damages, claims, suits, losses,
actions, judgments, liabilities and costs whatsoever (including attorney fees)
arising out of, or relating to: SAIC's breach of any representation or warranty
contained in this Agreement. This provision shall survive the termination or
expiration of this Agreement.
Article 13
Consents/Approvals
------------------
Notwithstanding anything herein to the contrary, this Agreement shall
not constitute an agreement to assign any contract, rights or obligations if the
attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach of any obligation of SAIC or is otherwise not
permitted by the terms of any agreement or instrument governing or affecting
such contract, rights or obligation, or by applicable law. Any transfer or
assignment to OP by SAIC of the UNLV Program and/or any of the SAIC Assets shall
be made subject to all third party consents or approvals being obtained.
Article 14
PCS Warranty
------------
Not applicable.
15
Article 15
Press Releases and Publications
-------------------------------
The Parties agree to maintain the terms of this Agreement in confidence
during the Term and for a period of three (3) years after the Term. In the event
that either Party desires to publish or disclose to a third party (other than
the financial or legal advisors of such party) (i) the terms of this Agreement,
(ii) a description of the nature of the relationship created by this Agreement,
or (iii) data, costs, or performance attributes of any Licensed Products, then
such intent will be communicated to the other Party, and such publication or
disclosure shall be permitted only upon approval of the other Party, which
approval shall not be unreasonably withheld, delayed or conditioned.
Article 16
Miscellaneous
-------------
16.1 Governing Law: The validity, construction, interpretation, and
enforceability of this Agreement will be determined and governed by the laws of
the State of California, United States of America without regard to any
principles of conflicts of laws.
16.2 Entire Agreement: This Agreement comprises the entire agreement
between OP and SAIC and supersedes all other agreements, oral or written,
heretofore made with respect to the Licensed Product, Licensed Technology, and
the transactions contemplated by the Agreement.
16.3 Modification:This Agreement may be amended only in writing signed
by both Parties.
16.4 Notices: Any notice required or permitted under the terms of this
Agreement or required by law must be in writing and must be (a) delivered in
person, (b) sent by first class registered mail, or air mail, as appropriate, or
(c) sent by overnight air courier, in each case properly posted and fully
prepaid to the appropriate address set forth below. Either Party may change its
address for notice by notice to the other Party given in accordance with this
Section 16.4. Notices will be considered to have been given at the time of
actual delivery in person, three (3) business days after deposit in the mail as
set forth above, or one (1) day after delivery to an overnight air courier
service.
If to SAIC: SCIENCE APPLICATIONS INTERNATIONAL CORP.
10260 Campus Point Drive, M/S W2
San Diego, California 92121
Attention: Art Goddard
16
If to OP: OCEAN POWER CORPORATION
5000 Robert J. Mathews Parkway
El Dorado Hills, California 95762
Attention: J. Michael Hopper
16.5 Waiver: No waiver of any right or remedy in respect of any
occurrence or event on one occasion will be deemed a waiver of such right or
remedy of such occurrence or event on any subsequent occasion.
16.6 Relationship of Parties:Nothing contained in this Agreement shall
(i) establish a joint venture or partnership between the Parties hereto; (ii)
establish an employment relationship between OP and any principal, employee,
officer, director or other representative of SAIC or (iii) establish an agency
relationship between OP and any principal, employee, officer, director or other
representative of SAIC. Neither Party shall incur any obligations for or in the
name of the other Party, or have the authority to bind or obligate the other
Party.
16.7 Injunctive Relief: OP acknowledges and agrees that the disclosure
of Confidential Information and the breach of the provisions of this Agreement
may give rise to irreparable injury to SAIC which cannot be adequately
compensated with monetary damages, and OP further agrees that SAIC may seek and
obtain injunctive relief against the breach or threatened breach of any of the
provisions of this Agreement and/or specific enforcement of such provisions in
addition to any other legal or equitable remedies which may be available.
16.8 Severability: If any provision of this Agreement is held to be
unenforceable for any reason, the remaining provisions will remain in full force
and effect and the unenforceable provision will be considered modified to the
extent necessary to render such provision enforceable under applicable law.
16.9 Export: OP may not export or re-export Licensed Products or SAIC
Technology without the prior written consent of SAIC and without the appropriate
United States and foreign government licenses.
16.10 Dispute Resolution: Except as provided below, no civil action
concerning any dispute under this Agreement shall be instituted before any
court, and all such disputes shall be submitted to final and binding arbitration
before the American Arbitration Association. The place for any arbitration shall
be in San Diego County, California, and the laws of the State of California
shall govern, and the arbitrator solely shall apply them to the interpretation
and construction of this Agreement. Such arbitration shall be conducted in
accordance with the Commercial Rules of the American Arbitration Association
then in effect ("Commercial Rules") before a single neutral arbitrator; except
that either Party may request an expedited arbitration pursuant to the
Commercial Rules. If possible, the choice of arbitrators presented to the
Parties shall include persons who have experience with license agreements and
commercial matters. Discovery shall be allowed in arbitration in accordance with
the provisions of the California Code of Civil Procedure. Any award issued shall
be made in accordance with California law and shall include the award to the
17
prevailing party of its costs and expenses (including but not limited to
attorneys' fees and costs and arbitration costs and arbitrator's fees). An award
shall be final and binding and may not be appealed or reviewed, except upon the
ground of malfeasance or fraud by the arbitrator. Judgment upon the award may be
enforced in any court of competent jurisdiction, wherever located.
Notwithstanding the foregoing, either Party shall have the right, at its sole
discretion, to seek equitable relief from a court of competent jurisdiction,
without being limited in recourse to arbitration, in the event that a breach by
the other Party of this Agreement shall result in irreparable injury to it or if
monetary damages would be inadequate and impossible to calculate adequately,
which equitable relief shall include (but not be limited to) the entering of a
temporary restraining order and/or a preliminary injunction.
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the Effective Date, and this Agreement will be deemed dated as of such
date.
OCEAN POWER CORPORATION SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By: s/___________________________ By:________________________________
Name:JOSEPH P. MACEDA Name: Thomas M. Taylor
----------------------------
(typed or printed)
Title:PRESIDENT Title: Group Contracts Director
Date:____________________________ Date:______________________________
18
EXHIBIT A
SAIC TECHNOLOGY
1. SAIC Patents
o Status: Issued
Country: United States
Inventors: B. Butler, K. Beninga
Title: Focus Control System for Stretched Membrane Mirror Modules
Serial No: 5,016,998
Date: May 21, 1991
o Status: Issued
Country: United States
Inventors: B. Butler
Title: Long Life Self Renewing Solar Reflector Stack
Serial No: 8,393,472
Date: April 24, 1995
o Status: SAIC Docket 96-01 Part 98-02
Country: United States
Inventors: B. Butler
Title: Self-Deploying Advance Azimuth/Elevation Drive System
Serial No:
Date:
o Status: SAIC Docket 96-01 Part 98-03
Country: United States
Inventors: B. Butler
Title: Advanced Face-Down Stow System
Serial No:
Date:
o Status: SAIC Docket 96-01 Part 98-04
Country: United States
Inventors: B. Butler
Title: Advance Low Cost High Strength High Stiffness/Radiation Reflector Drive System
Serial No:
Date:
19
o Status: SAIC Docket 96-23
Country: United States
Inventors: R. Davenport, D. Smith
Title: Variable Focus Solar Concentrator Flux Modulation
Serial No:
Date:
o Status: SAIC Docket 98-01 (Disclosure in preparation)
Country: United States
Inventors: A. Davenport, B. Butler
Title: Advanced Optical High Flux Smoothing Device
Serial No:
Date:
o Status: SAIC Docket 98-05 (Disclosure in preparation)
Country: United States
Inventors: R. Davenport, B. Butler
Title: Staggered Facet Deployment
Serial No:
Date:
o Status: SAIC Docket 98-06 (Disclosure in preparation)
Country: United States
Inventors: R. Davenport, B. Butler
Title: Advanced Dish Control System
Serial No:
Date:
2. SAIC Technical Information (Confidential and Proprietary)
(a) Trade Secrets and Know-How
--------------------------
o Membrane welding technology
o Membrane ring welding technology
o Membrane tension technology
o Glass tile application
o Controls software and tracking equipment/methods
o System to grid integration
o Facet focusing devices and methods
o Variable focus operating methodology for power output maximization and
electric load following (considering patent application)
o Solar receiver aiming strategies
o Radial support structure designs
o Mirror facet layout and positioning
(b) Engineering drawing packages for Phase I and Phase II 24 KW dish system
-----------------------------------------------------------------------
as existing as of the Effective Date hereof
-------------------------------------------
o Structural drawings
o Specifications for procurement of purchase parts
o Electrical and interface drawings
o Control system logic and specifications
o Electronic component specifications
20
(c) Manufacturing plant technology as existing as of the Effective Date
-----------------------------------------------------------------------
hereof
------
o Plant layout drawings
o Unit process/operations stations and layout
o Tooling and fixturing drawings
o Design for manufacturability data
o Quality control plan
o Plant supervisors
o Continuous improvement program to lower concentrator cost
o Production costing and cost accounting systems
21
EXHIBIT B
THIRD PARTY CLAIMS
(1) SAIC hereby discloses that it has received notice of a claim of
infringement under U.S. Patent No. 4,583,520 titled "Balanced Solar
Concentrator System." Further information respecting such claim is
available from SAIC upon request.
(2) SAIC hereby discloses that it has a signed non-exclusive License
Agreement with STM Corporation dated September 17, 1999. This agreement
has similar terms and conditions. It is worthwhile for STM to integrate
their Stirling engine power conversion system onto the SAIC dish.
22
EXHIBIT C
TOOLING AND COMPONENTS
1. Components. The components to be made available by SAIC for purchase
by OP and their per unit purchase price are set forth below. The actual number
of each such component to be purchased shall be determined by OP in its
discretion and specified in a written order submitted to SAIC; provided, that
SAIC shall not be required to provide more than the estimated number of each
such item specified below. The components shall be delivered at OP's cost on
mutually agreed date(s) and times determined after the written order is
submitted.
- ----------------- -------------------------------------- ---------------------
Estimated Number Description Purchase Price (Each)
- ----------------- -------------------------------------- ---------------------
8 Flenders drives
- ----------------- -------------------------------------- ---------------------
Not refurbished $2,500.00
- ----------------- -------------------------------------- ---------------------
Refurbished $12,500.00
- ----------------- -------------------------------------- ---------------------
66 Heliostat mirror modules
- ----------------- -------------------------------------- ---------------------
As is, thick glass $1,000.00
- ----------------- -------------------------------------- ---------------------
With thin glass applied $2,500.00
- ----------------- -------------------------------------- ---------------------
22 Focus control valves and arms $200.00
- ----------------- -------------------------------------- ---------------------
4 Complete dish structures $250,000.00
- ----------------- -------------------------------------- ---------------------
23
EXHIBIT D
EQUIPMENT
Item Estimated Value
---- ---------------
Fork Lift $12,000
Man Lift $12,000
Truck $ 7,000
Trailer $ 2,000
24
EXHIBIT E
SAIC and Stirling Energy Systems (SES) have jointly marketed a 40 dish power
park to be built in Nevada on UNLV property. SAIC and SES will prepare a joint
proposal, where SAIC will provide 20 dish/engine systems and SES will produce 20
dish systems. This $12M project is expected to be awarded in November 2001.
25
EXHIBIT F
CONSULTING SERVICES
- --------------------------------------------------------------------------------
Exhibit F - SAIC Consulting Rates (Time and Material)
Title: SAIC Consulting Services
Customer: OP Corporation
Standard Premium
SAIC Labor Category Billing Rate Billing Rate
- ----------------------------------------------------------------------------
Sr. Program Manager 02.89 304.33
Sr. Project Manager 39.97 209.95
Sr. Engineer 14.10 171.16
Manufacturing Supervisor 83.60 125.39
Fabrication/Installation Supervisor 62.57 93.86
Project Engineer 37.60 56.40
Project Technician 37.65 56.48
Sr. Structural Engineer 88.66 132.98
Administrative Assistant 49.78 74.67
Notes:
(1) Rates effective from October 1, 1999 - September 30, 2000 (2) Other Direct
Costs (including travel) shall be invoiced at actual cost plus an administrative
handling charge of 18%.
- --------------------------------------------------------------------------------
26