C/4017
TECHNOLOGY TRANSFER AGREEMENT
THIS TECHNOLOGY TRANSFER AGREEMENT, entered into this 23rd day of February,
1993, by and among the parties: NGV SYSTEMS, INC. (hereafter "NVSI"), a Delaware
corporation having a place of business at 2250 Cherry Industrial Circle, Long
Beach, California 90805; ALCOA COMPOSITES, INC. (hereafter "ACI"), a Delaware
corporation, and a wholly-owned subsidiary of Aluminum Company of America
("Alcoa"), ACI having a place of business at 605 E. Huntington Drive, Suite 200,
Monrovia, California 91016; and AUDIE L. PRICE, P.E. (hereafter "PRICE"), an
individual residing at 4437 Via Precipicio, San Diego, California 92122.
WITNESSETH:
WHEREAS, PRICE represents that he has developed and owns technology
relating to processes and equipment designs for winding high service pressure
cylinders (hereafter "Tank Technology"); and
WHEREAS, on April 24, 1992, ACI obtained from PRICE an exclusive license
for the Tank Technology; and
WHEREAS, ACI is willing to transfer, and NGVSI desires to obtain, ACI's
exclusive license to continue developing and marketing compressed gas cylinders
for self-contained breathing systems, compressed natural gas storage tanks and
other related applications under the terms and conditions of this Technology
Transfer Agreement; and
WHEREAS, PRICE is willing to assent to the transfer of ACI's exclusive
license to NGVSI, and NGVSI desires to obtain PRICE's other related technology
rights in order that NGVSI can further develop and commercially use such
technology under the terms and conditions of this Technology Transfer Agreement.
NOW, THEREFORE, in consideration of this mutual premises and covenants, and
intending to be legally bound, the parties agree as follows:
ARTICLE I - DEFINITIONS
For purposes of this Technology Transfer Agreement, the following terms
shall have the following respective meanings:
Section 1.1. Technology. The term "Transferred Technology" means (i) all
models, samples, know-how, technical data, methods, equipment, designs,
specifications, drawings, compositions and other information developed or
acquired by PRICE prior to June 25, 1990, PRICE's employment date with ACI,
which models, samples, know-how, technical data, methods, equipment, designs,
specifications, drawings, compositions and other information relate to the
fabrication of pressure cylinders by a winding process in which the cylinder is
fabricated using a combination of plastic molding which may include layers of
broadstock, metal or nonmetallic materials, and/or metal or nonmetallic
weldment, such constructions serving as an essentially non-fixture supported
mandrel suitable to support winding operations (hereafter "ACI Licensed
Technology"); and (ii) any and all modifications, enhancements, redesigns or
improvements to the ACI Licensed Technology developed by either ACI or PRICE (or
its agents, employees, consultants, independent contractors or affiliates) or
PRICE (or his agents, employees, consultants, independent
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contractors or affiliates) from June 25, 1990 through the date of this
Technology Transfer Agreement first written above. Expressly excluded from
Transferred Technology are any technologies pertaining to ACI's fiber wound
tanks for containment of aviation fuel and other liquids.
Section 1.2. Technology Patents. The term "Technology Patents" means any
United States patent or pending application pertaining to Transferred Technology
and owned by ACI or PRICE as of the date of execution of this Technology
Transfer Agreement.
Section 1.3. Technology Products. The term "Technology Products" means any
pressure cylinder including, but not limited to, the firemens' breathing system
(hereafter "FBS") bottles and compressed natural gas (hereafter "CNG") tanks,
which cylinders are fabricated by NGVSI, or a licensee of NGVSI, using the
Transferred Technology. Technology Products shall pertain to only the
aforementioned pressure cylinders and not include any ancillary or peripheral
equipment not integral with the cylinder such as valves, fittings, regulators,
shields or the like.
Section 1.4. Improvements. The term "Improvements" means any modification,
enhancement, redesign or improvement to the Transferred Technology, whether
patentable or unpatentable, which is conceived or reduced to practice by either
PRICE, or NGVSI, throughout the term of this Technology Transfer Agreement.
Section 1.5. Net Selling Price. The term "Net Selling Price" means: (a) the
actual net amount received by NGCSI, or a commercial manufacturing licensee of
NGVSI (other than a research and development licensee), for Technology Products
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sold to any third party less any amount actually paid or credited by NGVSI for
any Technology Products returned for refund; and (b) the net price at which
Technology Products are being sold or offered for sale in similar quality and
quantity on the date when such Technology Products are delivered for use by
either NGVSI or a licensee thereof under circumstances where NGVSI or such
licensee are the end users of such Technology Products.
ARTICLE II - TECHNOLOGY TRANSFER
Section 2.1. ACI hereby transfers to NGVSI all rights, property interests
acquired and obligations under its License Agreement with PRICE, and PRICE
hereby consents to such transfer thereby granting exclusively to NGVSI, full
right, title and license to make, have made, use and sell Technology Products
throughout the world, subject to the reversionary rights at Section 9.4 hereof
for the first ten (10) years from the date of execution of this Technology
Transfer Agreement. The parties acknowledge and agree that, at the end of said
ten (10) year period, said reversionary rights shall lapse, and thereupon ACI
shall have no rights, title or interest whatsoever to the Transferred
Technology, improvements, Technology Patents or Technology Products.
Section 2.2. ACI acknowledges that NGVSI is the exclusive owner of all
Improvements, subject to the reversionary rights at Section 9.4 hereof for the
first ten (10) years from the date of execution of this Technology Transfer
Agreement. The parties acknowledge and agree that, at the end of said ten (10)
year period, said reversionary rights shall lapse and thereupon ACI shall have
no rights, title or interest to said improvements.
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Section 2.3. PRICE hereby transfers to NGVSI all his rights and property
interests to the Transferred Technology and PRICE hereby creates in and grants
to NVGSI full right, title and license to make, have made, use and sell
Technology Products and Improvements, subject to the reversionary rights at
Section 9.4 until the cumulative Net Selling Price received by NGVSI or its
licensees with respect to the sale of Technology Products cumulatively equals
One Hundred Million Dollars ($100,000,000.00). The parties acknowledge and agree
that, after said Net Selling Price cumulatively equals said sum, said
reversionary rights shall lapse, and PRICE shall have no rights, title or
interest whatsoever to the Transferred Technology Products or Improvements.
ARTICLE III - ROYALTIES
Section 3.1. In consideration of the transfer of the Transferred Technology
and other rights granted in this Agreement, NGVSI shall:
(a) assume all obligations owned by ACI to PRICE under the License
Agreement dated April 24, 1992, including paying directly to PRICE:
(i) a minimum annual royalty of Sixty Thousand Dollars ($60,000),
payable at the rate of Five Thousand Dollars ($5,000) per month
during the term of this Technology Transfer Agreement. Any
difference between the annual royalties payable under Section 3.1
(a) (iii) hereof and the annual minimum royalty payable hereunder
shall be credited against annual royalties under Section 3.1(a)
(iii), for a three year carry-forward period; and
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(ii) a Fifty Thousand Dollar ($50,000) bonus to be divided $25,000 for
FBS bottles and $25,000 for CNG tanks due promptly after NGVSI
receives "Exemption" approval from DOT to sell such bottles and
tanks made using the Transferred Technology, provided that such
DOT approvals are received prior to April 25, 1995; and
(iii) a running royalty of one and one-half percent (1.5%) of the Net
Selling Price of Technology Products sold for the first One
Hundred Million Dollars ($100,000,000) in Net Sales after which
said royalty payment obligation shall expire; and
(b) In addition to the foregoing assumed obligations, pay to PRICE a
non-refundable Technology Transfer fee of Twenty Five Thousand Dollars ($25,000)
payable promptly after execution of this Technology Transfer Agreement by all
parties, and pay to ACI:
(i) a non-refundable Technology Transfer fee of Two Hundred and
Eighty-Seven Thousand Dollars ($287,000) payable in semi-annual
installments of Fifty Thousand Dollars ($50,000) each, except
that the last and final installment shall be in the amount of
Thirty-Seven Thousand Five Hundred Dollars ($37,500.00), with the
first of said payments being due one year from the date of
execution of this Technology Transfer Agreement by all parties;
(ii) a running royalty of one and one-half percent (1.5%) of the Net
Selling Price of Technology
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Products sold by NGVSI during the next ten (10) years from the
date of execution of this Technology Agreement after which said
royalty payment obligation shall expire;
(iii) a running royalty of one and one-half percent (1.5%) of the Net
Selling Price of Technology Products sold by any license of NGVSI
hereunder during the next ten (10) years after which said royalty
payment obligation shall expire; and
(iv) twenty-five percent (25%) of any royalty/transfer fees (lump sum
or up-front payments) that NGVSI demands from any licensee
hereunder during the next ten (10) years, after which said
royalty payment obligation shall expire. The parties agree that
in the event NGVSI, by reason of its receipt of any such fees, is
obligated to credit its licensee with respect to royalties
thereafter otherwise arising with respect to said licensee's
sales of Technology Products, then and in such event, NGVSI shall
receive a credit under Section 3(b)(iii) hereof from ACI equal to
such credit provided to its licensee.
Section 3.2. For purposes of determining when royalty obligations accrue
under Section 3.1, Technology Products shall be considered to be sold when NGVSI
or a licensee of NGVSI has received payment from its customers for said
Technology Products.
Section 3.3. NGVSI agrees to commit, and provide ACI with written evidence
that it has committed, at least Two Hundred
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Thousand Dollars ($200,000) in working capital and resources toward exploitation
of the Transferred Technology during the next three (3) years, said amount
including a Six Thousand Dollar ($6,000) reimbursement for ACI's U.S. patenting
costs and expenses. Should NGVSI fail to make such commitments during the next
three (3) years, ACI shall have the option to terminate this Technology
Transfer Agreement subject to the terms of Section 9.3 and 9.4 hereof.
ARTICLE IV - RECORDS AND PAYMENT
Section 4.1. NGVSI agrees to keep written records showing the Net Selling
Price of any Technology Products sold by NGVSI, and reportedly sold by any
licensee of NGVSI, together with a calculation of royalties due to both ACI and
PRICE on any such sales. Such records shall be available for inspection at
NGVSI's designated office upon reasonable prior written notice by ACI or PRICE
to NGVSI, at reasonable intervals and during regular business hours by a
certified public accountant acceptable to NGVSI. Any fees and expenses
associated with such inspections shall be paid by the party requesting such
inspection, either ACI or PRICE. This record keeping requirement shall cease
when the cumulative Net Selling Price of Technology Products equals One Hundred
Million Dollars ($100,000,000) or on the tenth (10th) anniversary of this
Technology Transfer Agreement, whichever occurs later.
Section 4.2. Royalties under this Technology Transfer Agreement shall be
calculated and paid based on calendar quarters ending March 31, June 30,
September 30 and December 31, respectively. NGVSI agrees to make quarterly
reports to both ACI and PRICE on or before the last day of February, May, August
and November of each year showing:
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(a) the cumulative Net Selling Price of all Technology Products sold by
NGVSI, and reported by NGVSI by its licensees as sold by them during the
preceding calendar quarter;
(b) the royalties due and payable to both ACI and PRICE on such sales,
after a reduction of the royalty by any credits or deductions allowed under this
Agreement; and
(c) the status of all other fees and bonuses payable by NGVSI to both
ACI and PRICE hereunder.
Each quarterly report shall be accompanied by NGVSI's payment of the royalties
due and payable to both ACI and PRICE.
ARTICLE V - TECHNOLOGY AND PATENTS
Section 5.1. Promptly after execution of this License Agreement, ACI and
PRICE shall fully disclose and provide NGVSI with a complete written description
of the Transferred Technology to the extent they have not already done so.
Section 5.2. PRICE and NGVSI, at NGVSI's expense, shall be jointly
responsible for applying for DOT certification of any Technology Products
requiring such certification, and NGVSI shall keep both ACI and PRICE fully
aware of the status of any such certification applications.
Section 5.3.
(a) Promptly after the execution of this Technology Transfer Agreement by
all parties, ACI shall reassign its rights in all Technology Patents to NGVSI
thereby transferring to NGVSI primary control over the prosecution and
maintenance
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of any such Technology Patents. PRICE consents to the aforementioned
reassignment, ACI and PRICE shall continue to cooperate and assist in such
prosecution and maintenance, including executing any such documents and taking
such actions as NGVSI shall deem necessary in connection with the Technology
Patents. PRICE consents to the aforementioned reassignment.
(b) In the event NGVSI elects to discontinue prosecuting or maintaining any
Technology Patents, NGVSI shall notify ACI of its intent to do so after which
ACI may elect to assume full responsibility for the prosecution and/or
maintenance of such Technology Patents following their reassignment from NGVSI
to ACI.
Section 5.4. NGVSI shall keep ACI and PRICE notified of its intentions
to seek equivalent patent protection on any Transferred Technology in any
foreign countries at NGVSI's sole expense.
ARTICLE VI - LITIGATION
Section 6.1. ACI, PRICE and NGVSI agree to notify each other in the event
that any party becomes aware of any infringement of Technology Patents by any
third party. The assignee of record for such Technology Patents shall have the
right to initiate and maintain proceedings against such infringers at its own
expense and for its own benefit.
Section 6.2. In the event that a third party brings litigation against
NGVSI regarding NGVSI's use of the Transferred Technology, NGVSI shall decide
whether to defend such action at its own expense. NGVSI has the right to deduct
from subsequent royalties due ACI or PRICE under this
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Technology Transfer Agreement all out-of-pocket expenses, legal fees and other
costs incurred by NGVSI in the defense of such third party litigation.
Section 6.3. The parties agree to cooperate with each other in any patent
proceeding brought by or against NGVSI relating to the Transferred Technology.
ARTICLE VII - WARRANTIES
Section 7.1. ACI makes no warranties and representations as to the accuracy
of any Transferred Technology or Technology Patents, or as to any third party
infringement through NGVSI's use of the same, provided, however, that ACI and
PRICE represent and warrant to NGVSI that to the best of their knowledge none of
the Transferred Technology, as used heretobefore by ACI, infringes upon the
rights of third parties in existence as of the date this Technology Transfer
Agreement. All rights provided by ACI to NGVSI under this Technology Transfer
Agreement are being transferred with all faults "AS IS, WHERE IS".
Notwithstanding the foregoing, ACI represents and warrants that, following the
execution and delivery of this Technology Transfer Agreement, neither it or any
affiliate will possess any Transferred Technology or Improvements unless it
receives same by operation of the reversionary provisions of Section 9.4 hereof.
Section 7.2. With respect to any Technology Products made by NGVSI, ACI
makes no warranties and/or representations, including but not limited to
warranties of merchantability and/or fitness for a particular purpose.
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ARTICLE VIII - CONFIDENTIALITY
AND NON-COMPETITION
Section 8.1. For a period of one (1) year from the termination date of this
Technology Transfer Agreement for any reason, ACI, NGVSI and PRICE shall take
reasonable precautions to treat any proprietary information relating to the
Transferred Technology in confidence, and except as permitted in this Agreement,
and shall not disclose such proprietary information to third parties without the
consent of the other parties; and NGVSI and PRICE shall have the right to use
such proprietary information only in accordance with this Technology Transfer
Agreement.
Section 8.2. The foregoing obligations of confidentiality, limited use and
nondisclosure shall not apply to any proprietary information which:
(a) is now or hereafter becomes available to the public through no fault of the
parties; such as by public disclosure in an issued U.S. patent;
(b) was known to the receiving party prior to the date of its disclosure to
said party; or
(c) is received from a third party having no secrecy obligation to any of the
parties hereunder.
Section 8.3. This Technology Transfer Agreement shall not relieve PRICE of
his obligations to disclose inventions to NGVSI by virtue of PRICE's employment
or PRICE's Employee Agreement with NGVSI (a copy of which is attached as Exhibit
A). ACI acknowledges and agrees that PRICE is authorized to make disclosures as
to the Transferred Technology to NGVSI in
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order to consummate this Technology Transfer Agreement.
Section 8.4. During the term of this Agreement, and provided NGVSI is not
in default of its obligations to pay royalties in the amount and at the time
herein provided, neither ACI, or its affiliates, nor PRICE, or his affiliates,
shall compete, directly or indirectly, with the business of NGVSI relating to
the manufacture, design, fabrication, development, testing or sale of Technology
Products, nor interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between NGVSI and any of its customers, clients,
suppliers, consultants, employees or any research support to it, provided,
however, that nothing herein contained shall prevent ACI from engaging in the
business of manufacturing, designing, fabricating, developing, testing or
selling fiber wound tanks for containment of aviation fuel and other liquids.
Section 8.5. In consideration of the royalties payable hereunder any NGVSI,
during the term of this Agreement, PRICE agrees, without charge, to promptly
disclose to NGVSI and, as directed in writing by NGVSI to NGVSI's licensees, any
improvements, modifications, upgrades, enhancements, or advancements, with
respect to the Transferred Technology, Technology Products or Improvements, made
by PRICE.
ARTICLE IX - TERM AND TERMINATION
Section 9.1. This Technology Transfer Agreement shall be effective as
of the date first written above and, unless earlier terminated as provided
herein, extend (i) as to PRICE's transfer to NGVSI and NGVSI's obligations of
payment and performance hereunder in connection therewith until the
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receipt by NGVSI of cumulative Net Selling Price for Technology Products equal
to One Hundred Million Dollars ($100,000,000.00) as provided in Section 3.1(a)
(iii) hereof; and (ii) as to ACI's transfer to NGVSI and NGVSI's obligations or
payment and performance hereunder in connection therewith until the tenth (10th)
anniversary date of the date this Technology Transfer Agreement is executed.
Section 9.2. NGVSI may unilaterally terminate this Agreement by providing
ACI with ninety (90) days prior notice to an effective date of termination
selected by NGVSI. In such event:
(a) all rights in any Technology Patents (and Improvements) shall
automatically revert to ACI who shall be free to utilize the Transferred
Technology or license it in whole or in part to any third parties;
(b) NGVSI shall return all ACI and/or PRICE proprietary information to ACI,
and discontinue its use of the Transferred Technology and Technology Patents
until the last U.S. patent in the Technology Patents expires.
(c) NGVSI shall have the option to obtain a nonexclusive worldwide license
from ACI and/or PRICE as to the Transferred Technology, Technology Patents,
Technology Products and Improvements on terms mutually satisfactory to the
parties.
Section 9.3. ACI or PRICE may terminate this Technology Transfer Agreement
if NGVSI, at any time, defaults in its payment of royalties due hereunder by
giving NGVSI sixty (60) days written notice of its intent to terminate provided
NGVSI does not pay such due royalties to ACI or PRICE before the expiration of
this sixty (60) day period.
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Section 9.4. Should this Technology Transfer Agreement be terminated early
for default of royalty payments by NGVSI to either ACI or PRICE, all Transferred
Technology shall revert to ACI and rights to all Improvements shall
automatically be reassigned from NGVSI to ACI, provided, however, that NGVSI
shall have the right and privilege in such event to retain a nonexclusive
worldwide license to the Transferred Technology, Technology Patents, Technology
Products and Improvements on terms mutually satisfactory to the parties. Should
the parties not agree on mutually satisfactory terms for this non-exclusive
license, any remaining terms under the exclusive license between ACI and PRICE
shall be revised to the extent such terms have not already been discharged
through the prior acts or payments of NGVSI to PRICE.
ARTICLE X - ASSIGNABILITY
Section 10.1. This Technology Transfer Agreement may not be fully assigned
by any party without the prior consent of the other parties except that ACI may
assign its rights, specifically including the right to receive all or any
portion of NGVSI's consideration under Article III hereof and its obligations,
to its parent, ALCOA, or to any entity directly or indirectly controlling or
controlled by ALCOA, without NGVSI's prior written consent. In any event, this
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors, heirs and assigns.
ARTICLE XI - MISCELLANEOUS
Section 11.1. Notice. All notices required or permitted to be given under
this Technology Transfer Agreement shall be in writing, postage prepaid, and
shall be deemed to be
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properly given if sent by certified or registered mail to the party entitled to
receive such notice at the respective addresses set forth below, or in
accordance with the last written instructions received from such party
concerning the mailing addresses to be used for any notice. The date of said
notices shall be the date shown on the postmark if the same shall be sent by
certified or registered mail.
Address for ACI: Alcoa Composites, Inc.
605 East Huntington Drive
Suite 200
Monrovia, CA 91016
Facsimile: ______________________
Attention: ______________________
cc: M.D. Scott and
G.P. Topolosky
Aluminum Company of America
Legal Dept., Patent Division
100 Technical Drive
Alcoa Center, PA 15069-0001
Address for NGVSI: NGV Systems, Inc.
2250 Cherry Industrial Circle
Long Beach, CA 90805
Facsimile: (310) 630-1382
Attention: Arthur L. Boschen, Executive Vice
President and Chief
Operating Officer
Address for PRICE: Audie L. Price, P.E.
4427 Via Precipicio
San Diego, CA 92122
Facsimile: (619) 457-2236
Section 11.2. Integration. This Technology Transfer Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof, and unless otherwise stated supersedes all previous negotiations,
commitments, writings and agreements including the Memorandum of Understanding
dated August 27, 1992.
Section 11.3. Waiver. None of the terms, covenants and
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conditions of the Technology Transfer Agreement may be waived except by the
express written consent of the party waiving compliance thereto. The failure of
any party to assert any right hereunder or to insist upon compliance with any
term or condition of the Technology Transfer Agreement shall not constitute a
waiver of that right or excuse any subsequent failure to perform such other
terms or conditions by any party.
Section 11.4. Modification. In the event that any provision of this
Technology Transfer Agreement is declared invalid by a court of competent
jurisdiction from which no appeal can be taken, the remainder hereof shall be
deemed to remain in effect as modified in conformity with that court's
declaration.
Section 11.5. Warranty and Representation. PRICE and ACI represent and
warrant that they: (a) are the sole owners of the Transferred Technology; (b)
have the right to transfer to NGVSI the Transferred Technology set forth herein;
and (c) are not aware of any claim or controversy involving the Transferred
Technology or Technology Patents.
Section 11.6. Applicable Law. This Technology Transfer AGREEMENT shall be
construed, interpreted and applied according to the laws of the State of
California, not including, however, rules relating to choice or conflict of law.
Section 11.7. Arbitration. It is the intent of the parties to this
Agreement that any dispute relating to its terms and administration be resolved
as quickly as possible. To that end, the parties agree that disputes in the
United States shall be submitted to arbitration in the State of California
pursuant to the commercial arbitration rules of the American Arbitration
Association then existing. If the parties
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can agree, a single arbitrator is deemed to be desirable. If such an agreement
cannot be reached, a panel of three arbitrators shall be utilized.
IN WITNESS WHEREOF, the parties hereto have executes this Technology
Transfer Agreement in triplicate as of the date first written above.
WITNESS: ALCOA COMPOSITES, INC.
By: /s/[Illegible] By: /s/[Illegible]
--------------------------- --------------------------
Title: President A.C.I.
WITNESS: NGV SYSTEMS, INC.
By: /s/[Illegible] By: /s/Arthur L. Boschen 2/23/93
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Arthur L. Boschen
Title: Executive Vice President and
Chief Operating Officer
WITNESS: AUDIE L. PRICE
By: /s/[Illegible] By: /s/Audie L. Price 2/23/93
--------------------------- --------------------------
Audie L. Price
Title:
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