EXHIBIT 6a
DEVELOPMENT AGREEMENT
This development agreement (the "Agreement") is made as of this 17th
day of May, 2001 (the "Effective Date"), by and between NRG Tech, a
Nevada corporation, with its principal place of business at 000 Xxxxxx
Xxx, Xxxx XX 00000 ("NRG"), and Chapeau, Inc., with its principal
place of business at 000 Xxxxxx Xxx. Xxxx XX 00000 ("CHAPEAU"), each a
"Party" and collectively referred to as the "Parties."
RECITALS
NRG has developed or acquired rights patent pending to certain
technology and equipment relating to the operation of an internal
combustion engine using a gaseous fuel comprised of reformed natural
gas where exhaust gas is recycled and introduced to a reactor for the
purpose of reforming the gaseous fuel to reduce engine emissions; and
The Parties contemplate NRG developing a low emissions gas reactor for
Deutz 14 Liter stationary engine platforms; and
CHAPEAU is a manufacturer of stationary engine platforms using, among
others, a Deutz 14 Liter engine; and
The Parties desire to initiate a project to develop the technology
described below, the project being divided into six sequential phases
to be completed under this Agreement.
TERMS
Now therefore, in consideration of the mutual obligations undertaken
by each Party, the Parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the definitions provided in this section whenever initially
capitalized, and all other initially capitalized terms parenthetically
identified in this Agreement shall have the meanings ascribed to them.
1.1 Affiliate means a legal entity that controls a Party, is
controlled by a Party, or under the control of the same group of
shareholders or owners that control a Party.
1.2 Confidential Information means any proprietary information
not generally known to the public which is owned or controlled by a
Party and disclosed in the course of performing this Agreement,
including without limitation technical information such as inventions,
methods, designs specifications, and test data; and business, market,
and financial information.
1.3 Developed Technology means any rights, Intellectual Property
or improvements related to the Product or the Technology and developed
or reduced to practice by either Party in the course of performing the
Project, or during the course of manufacturing, commercializing,
producing, improving, selling, enhancing, modifying or creating
derivations of the Product.
1.4 Existing Technology means all Intellectual Property owned or
controlled by each Party before the Effective Date of this Agreement
and that is relevant to the Technology.
1.5 Intellectual Property means 1) U.S. and foreign patents,
patent applications, or statutory invention registrations, 2)
copyrightable works, copyrights, and registrations and applications
for registration thereof, and 3) trade secrets and know-how.
1.6 Platform means a Deutz 14 Liter stationary engine platform.
1.7 Product means a low emissions natural gas reactor and other
equipment for the Platform, that uses hydrogen and assists the
Platform to achieve 0.15 g/hp-hr of NOx emissions, with no loss in
fuel efficiency.
1.8 Project means the undertaking to develop the Technology as
described in Section 2 of this Agreement, comprised of six phases.
1.9 Technology means a method for building and operating the
Product.
2. General Structure of the Project. The Parties agree to undertake
the Project in six sequential phases. This Agreement describes the
respective duties of each Party for each phase of the Project.
CHAPEAU agrees to use commercially reasonable efforts to facilitate
the accomplishment of the general objectives of the Project by
providing reasonable consultation to NRG for the purpose of
accomplishing the objectives for which NRG bears primary
responsibility during each phase of the Project.
2.1 First Phase. Upon the Effective Date of this Agreement, the
Parties will undertake the First Phase of the Project.
2.1.1 Project Management. Promptly after the Effective
Date, each Party will designate a program manager to be responsible
for supervising and directing that Party's performance of this
Agreement (the Program Manager). The Program Managers will
cooperatively work together to ensure a coordinated development effort
and communicate regularly regarding the Project. The Program Managers
shall hold periodic progress review meetings between the
representatives of each Party to serve as a forum for discussing and
managing the progress of the Project and working out any problems that
arise.
2.1.2 Deutz Engine Platform. CHAPEAU will provide one
Platform to NRG at no cost, receipt of which NRG hereby acknowledges,
for NRG's sole and exclusive use in the performance of this Agreement.
CHAPEAU will make modifications to the Platform as reasonably
requested by NRG at the sole expense of CHAPEAU. If reasonably
requested Platform modifications are delayed for reasons beyond the
control of NRG, CHAPEAU will extend any and all deadlines commensurate
with the delay.
2.1.3 Development and Testing Equipment. Upon the
Effective Date of this Agreement NRG will acquire the equipment and
material needed to accomplish this project.
2.1.4 NRG's First Phase Responsibilities. NRG will use
commercially reasonable efforts to accomplish the mapping of the
Platform engine emissions, power, and efficiency with respect to
hydrogen content of fuel and lean burn level (equivalence).
2.1.5 First Phase Completion. Within 30 days of the
beginning of the First Phase, NRG will deliver to CHAPEAU a report
certifying completion of NRG's First Phase Responsibilities.
2.1.6 Financing the First Phase. CHAPEAU also shall pay
NRG the following amounts in consideration of performing the First
Phase of the Project, at the times indicated:
a) On the Effective Date of this Agreement, CHAPEAU
shall pay NRG $50,000.00 U.S.
b) Upon First Phase Completion, NRG will invoice
CHAPEAU for the amount of $50,000.00 U.S. CHAPEAU shall pay the
foregoing amount with 10 days after the date shown on the invoice.
2.2 Second Phase. Upon First Phase Completion, the Second Phase
will automatically commence.
2.2.1 NRG's Second Phase Responsibilities. NRG will use
commercially reasonable efforts to design and build a feasibility
prototype of the Technology (the "Feasibility Prototype").
2.2.2 Second Phase Completion. Within 30 days of the
commencement of the Second Phase, NRG will deliver to CHAPEAU a report
certifying completion of NRG's Second Phase Responsibilities.
2.2.3 Financing the Second Phase. Upon Second Phase
Completion, NRG will invoice CHAPEAU for the amount of $50,000.00 U.S.
CHAPEAU shall pay the foregoing amount within 10 days after the date
shown on the invoice.
2.3 Third Phase. Upon Second Phase Completion, the Third Phase
will automatically commence.
2.3.1 NRG's Third Phase Responsibilities. NRG will use
commercially reasonable efforts to fully test the Feasibility
Prototype in accordance with protocols it develops to determine
chemical conversion efficiency with respect to exhaust gas temperature
and space velocity.
2.3.1 Third Phase Completion. Within 30 days of
commencement of the Third Phase, NRG will deliver to CHAPEAU a report
certifying completion of NRG's Third Phase Responsibilities.
2.3.2 Financing the Third Phase. Upon Third Phase
Completion, NRG will invoice CHAPEAU for the amount of $50,000.00 U.S.
CHAPEAU shall pay the foregoing amount within 10 days after the date
shown on the invoice.
2.4 Fourth Phase. Upon Third Phase completion, the Fourth Phase
will automatically commence.
2.4.1 NRG's Fourth Phase Responsibilities. NRG will use
commercially reasonable efforts to design, document, and fabricate one
pre-production prototype based on testing of the Feasibility Prototype
(the "Pre-production Prototype").
2.4.2 Fourth Phase Completion. Within 30 days of
commencement of the fourth Phase, NRG will deliver to CHAPEAU a report
certifying completion of NRG's Fourth Phase Responsibilities.
2.4.3 Financing the Fourth Phase. Upon Fourth Phase
Completion, NRG will invoice CHAPEAU for the amount of $50,000.00 U.S.
CHAPEAU shall pay the foregoing amount within 10 days after the date
shown on the invoice.
2.5 Fifth Phase. Upon Fourth Phase completion, the Fifth Phase
will automatically commence.
2.5.1 NRG's Fifth Phase Responsibilities. NRG will use
commercially reasonable efforts to perform extensive testing for the
Pre-production Prototype.
2.5.2 Fifth Phase Completion. Within 30 days of
commencement of the Fifth Phase, NRG will deliver to CHAPEAU a report
certifying completion of NRG's Fifth Phase Responsibilities.
2.5.3 Financing the Fifth Phase. Upon Fifth Phase
Completion, NRG will invoice CHAPEAU for the amount of $50,000.00 U.S.
CHAPEAU shall pay the foregoing amount within 10 days after the date
shown on the invoice.
2.6 Sixth Phase. Upon Fifth Phase completion, the Sixth Phase
will automatically commence.
2.6.1 NRG's Sixth Phase Responsibilities. NRG will use
commercially reasonable efforts to make necessary final modifications
to the Pre-production Prototype and build the Product.
2.6.2 Sixth Phase Completion. Within 30 days of
commencement of the Sixth Phase, NRG will deliver the following to
CHAPEAU:
a) a report certifying completion of NRG's Sixth
Phase Responsibilities;
b) one Finished Product;
c) a copy of all plans, specifications, and written
expressions of the Technology (the "Plans"), which CHAPEAU hereby
acknowledges to be Confidential Information, in a form such that
CHAPEAU can manufacture the Finished Product containing the embodiment
of the Technology pursuant to a separated Technology License Agreement
intended to be entered into between the Parties pursuant to paragraph
3.3 below.
d) Financing the Sixth Phase. Upon Sixth Phase
Completion, NRG will invoice CHAPEAU for the amount of $50,000.00 U.S.
CHAPEAU shall pay the foregoing amount within 10 days after the date
shown on the invoice.
2.7 Special Provisions Regarding Payment. Notwithstanding
anything to the contrary contained in this Agreement, it is
specifically understood and agreed that NRG may immediately suspend
its performance hereunder at any time that a payment is past due from
CHAPEAU, and an extension of all affected deadlines hereunder will be
automatically granted for such period of suspension. Upon payment,
all work will recommence immediately and neither NRG nor CHAPEAU will
have any claim for additional compensation due to the suspension of
work.
3. Ownership and Licensing: Rights related to the Technology and
the Product shall be owned and licensed by the Parties as provided in
this Section.
3.1 Intellectual Property and Existing Technology. Each Party
shall retain ownership of its respective existing Intellectual
Property and all rights in its respective Existing Technology, except
as expressly provided in this Agreement.
3.2 Ownership of Technology, Developed Technology and
Improvements. NRG (or its assigns or transferees) shall solely own
all Technology and Developed Technology, including improvements
thereto or to the Product or the Technology.
By this Agreement, CHAPEAU shall be deemed to transfer and
assign all
Developed Technology and all such improvements to NRG.
3.3 License to CHAPEAU. Upon completion of the Sixth Phase of
the Project and receipt by NRG of the payments described above from
CHAPEAU, the Technology License Agreement attached hereto as Exhibit
"B" shall become effective.
4. Representations and Warranties; Disclaimer. The Parties
undertake the following representations and Warranties to each other.
4.1 Representations and Warranties of NRG. NRG hereby
represents and warrants to CHAPEAU:
4.1.1 That it has the full right and power to enter into
and perform its obligations hereunder according to the terms of this
Agreement;
4.1.2 That in the event any of NRG's Existing Technology is
owned or controlled by third Parties, NRG will at all times have
sufficient rights from such third Parties to grant CHAPEAU all of the
rights granted herein that are dependant upon such existing
technology, and further that NRG will at all times keep any and all
license agreements with such third Parties relevant to such NRG
Existing Technology in force and in good standing.
4.2 Representations and Warranties of CHAPEAU. CHAPEAU hereby
represents and Warrants to NRG that:
4.2.1 CHAPEAU has the full right and power to enter into
and perform its obligations hereunder according to the terms of this
Agreement.
4.3 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES BY NRG. NRG
HEREBY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANT
ABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND
INCLUDING ANY WARRANTIES RELATED TO THE TECHNOLOGY OR
THE SAFETY OR PERFORMANCE OF THE PRODUCT. THE PURPOSE OF
THE PROJECT IS FOR RESEARCH AND DEVELOPMENT AND THE
RESULTS THEREOF SHALL BE CONSIDERED EXPERIMENTAL. ANY
PROTOTYPES PRODUCED AND DELIVERED BY NRG TO CHAPEAU
PURSUANT TO THIS AGREEMENT ARE ONLY INTENDED TO
DETERMINE THE VIABILITY OF THE TECHNOLOGY ON THE
PLATFORM, AND ARE NOT PRODUCTION UNITS READY FOR SALE OR
DISTRIBUTION. CHAPEAU SHALL USE THE PRODUCT AND
MANUFACTURE ADDITIONAL PRODUCT AT ITS OWN RISK AND THE
RISK OF ITS CUSTOMERS.
5. Indemnification.
5.1 CHAPEAU' Obligation to Indemnify. CHAPEAU shall indemnify
and hold harmless NRG and its officers, directors, employees, and
affiliates from any actions, claims, liabilities, and costs (including
reasonable attorney's fees) relating to: (i) any claim related to the
manufacture, use, sale or distribution of any Product or related
apparatus by CHAPEAU or by any person, entity or business that works
with CHAPEAU; (ii) to CHAPEAU's use of the product; and (iii) any
claim which, if true, would be a breach of CHAPEAU' representations
and warranties in this Agreement.
5.2 NRG's Obligation to Indemnify. NRG shall indemnify and hold
harmless CHAPEAU and its officers, directors, employees, and
Affiliates from any actions, claims, liability, and costs (including
reasonable attorney's fees) relating to any claim which, if true,
would be a breach of NRG's representations and warranties in this
Agreement.
6. Indemnification Process. If any action shall be brought against
either Party (the "Claimant") in respect to which indemnity may be
sought from the other Party (the "Non-Claiming Party") pursuant to the
provisions above, the Claimant shall promptly notify the Non-Claiming
Party in writing, specifying the nature of the action and the total
monetary amount sought or other such relief as is sought therein. The
Non-Claiming Party may, upon written notice thereof to Claimant,
undertake to conduct all proceedings or negotiations in connection
therewith and may assume the defense thereof. If the Non-Claiming
Party assumes the defense of the action, it shall have the right to
employ counsel and also to settle the action, all at its expense. The
Claimant shall cooperate with the Non-Claiming Party at the Non-
Claiming Party's expense in all reasonable respects in connection with
the defense of any such action. Claimant shall have the right to
employ separate counsel at its expense and participate in the defense
of the action. The Non-Claiming Party shall reimburse Claimant upon
demand for any payments made or loss suffered by it at any time after
the date hereof, based upon the judgment of any court of competent
jurisdiction or pursuant to a bona fide compromise or settlement of
claims, demands, or actions, in respect to any damages to which the
foregoing relates.
7. Payments. All payments made to NRG by CHAPEAU are deemed earned
on the date of invoice from NRG.
8. Term and Termination. This Agreement shall become effective as
of the Effective Date and shall expire and terminate upon completion
of each Party's duties recited herein. This Agreement is also subject
to termination as provided below.
8.1 Termination. If any of the following events occur, either
Party shall have the right to terminate this Agreement on the terms
and conditions provided in this section:
8.1.1 The other Party files, or has filed against it a
petition for relief under any chapter of the federal bankruptcy laws;
8.1.2 An event of force majeure ends or delays for more
than 6 months the completion of any phase or milestone in developing
the Technology under the Project;
8.1.3 The other Party materially breaches its performance
under this Agreement, other than a payment breach by CHAPEAU, and if
such breach is curable, said other Party fails to cure the breach for
a period of 60 days after written notice of breach is sent by the
Party seeking termination, except that neither Party will be required
to provide more than two (2) cure periods for a breach of the same
character or type;
8.1.4 NRG fails to develop the Technology despite the
exercise of good faith and commercially reasonable efforts; or
8.1.5 CHAPEAU fails to pay, for the second time, any amount
due under this Agreement within five (5) days of the date due.
8.2 Survival. Termination of this Agreement shall not eliminate
or affect rights that have accrued to either Party before termination,
and provisions of this Agreement on which such rights are based shall
survive for purposes of enforcing the accrued rights. Sections 5, 6,
7, 8.2, and 9 hereof shall survive any termination or expiration of
this Agreement.
9. Confidentiality
9.1 The Product, Technology, Existing Technology and Developed
Technology. Each Party agrees to indefinitely keep in confidence and
prevent the disclosure of all trade secrets and know-how embodied in
or related to the Product, the Technology, the Existing Technology and
the Developed Technology unless and until the trade secret or
information in question becomes part of the public domain without
breach of this Agreement. Each Party can, however, disclose its own
trade secret information related to its Existing Technology to third
Parties who have signed a confidentiality agreement covering such
trade secret information.
The requirements and specifications of the Technology shall
be regarded as Confidential Information by both Parties, to the extent
not published in documents or manuals that are distributed in
connection with the Product. CHAPEAU shall not allow the utilization
of any of the aforementioned trade secrets, know-how or information in
a way that xxxxx, diminishes or adversely impacts the rights or
interests of NRG.
9.2 Confidential Information. Except with regard to the
Confidential Information that is separately restricted under section
9.1 above, each Party shall at all times safeguard and hold in trust
and confidence, and neither use or disclose to any third party during
the term of this Agreement and for a period of three years after the
last purchase of any license under the Technology License Agreement,
all other Confidential Information. These obligations, however, shall
not apply to information which (a) at the time of the disclosure to
the receiving Party is in the public domain, (b) becomes part of the
public domain without breach of this Agreement, (c) has been received
from a third party without recipient's knowledge of any obligation of
confidentiality between the third party and the other Party to this
Agreement, or (d) is properly in the possession of the Party receiving
the information at the time of the disclosure.
10. New Platforms
10.1 Adaptation of Technology. Following completion of all other
obligations of the Parties under this Agreement and for a period of
three (3) years following the Effective Date of this Agreement, to the
extent that CHAPEAU desires to have NRG adapt the Technology to
alternative stationary platforms less than 450 kW, NRG will negotiate
with CHAPEAU in good faith concerning the same and NRG will charge
rates not to exceed the prevailing rate of a comparable, nationally
recognized engineering company reasonably skilled in the art. For a
period of one year from the date of this Agreement, NRG will not adapt
the Technology to any completing Deutz co-generation platforms to be
sold in the United States.
11. General
11.1 Limitation of Liability. Neither Party hereto shall be
liable to the other for any indirect, consequential, punitive, or
incidental damages (including but not limited to damages for loss of
business profits, business interruption, loss of business information,
and the like) arising out of this Agreement, even if a Party has been
advised of the possibility of such damages.
11.2 Notices and Requests. All notices, authorizations, and
requests in connection with this Agreement shall be deemed given on
the day they are sent by air express or courier, charges prepaid; and
addressed as follows:
NRG: NRG Tech CHAPEAU: Blue Point Energy
000 Xxxxxx Xxx
Xxxx, XX 00000 Reno, NV
Attn: Xxx Xxxxxxx Attn:
or to such other address as the Party to received the notice
or request so designates by written notice to the other.
11.3 Prohibition on Assignment. Except as expressly provided
below, this Agreement, and any rights or obligations hereunder, shall
not be assigned or sub-licensed by either Party (whether by operation
of law or otherwise) without the prior written approval of the other
Party. Any attempt to do so shall be null and void.
Notwithstanding the above, (i) this Agreement may be
assigned to a purchaser involved in the sale of all or substantially
all of a Party's equity or assets, (ii) this Agreement may be assigned
to an Affiliate, and (iii) nothing herein shall be construed to
prevent a transfer or assignment of NRG's rights and interests
including, but not limited to, the Technology, NRG's Existing
Technology, the Developed Technology, and NRG's Intellectual Property
and related rights.
11.4 Independent Parties. NRG and CHAPEAU will remain
independent contractors and not agents or employees of one another,
and nothing in this Agreement will be construed as creating an
employer-employee relationship, a partnership, an agency relationship,
or a joint venture between the Parties, or any other form of business
organization.
11.5 Governing Law / Dispute Resolution. This Agreement will be
governed by the laws of the State of Nevada, USA, notwithstanding any
applicable conflicts or choice of law principles. The Parties agree
that any controversy or dispute arising out of or relating to this
Agreement shall first be discussed by the Program Managers who shall
make a good faith attempt to resolve the dispute or controversy. If
such controversy or dispute cannot be resolved by the Program
Managers, then the controversy or dispute shall then be discussed by
designated corporate officers of CHAPEAU and NRG who shall make a good
faith attempt to resolve the dispute or controversy. The Parties
agree that any controversy or dispute arising out of or relating to
this Agreement that is not resolved by the foregoing informal methods
within 30 days of the date one Party notifies the other of such
dispute or controversy, shall be finally settled by binding
arbitration in accordance with the then current rules and procedures
of the American Arbitration Association utilizing a single arbitrator
in a neutral location.
11.6 Severability. If any provision of this Agreement shall be
held by a court of competent jurisdiction to be illegal, invalid or
unenforceable, the remaining provisions shall remain in full force and
effect.
11.7 Waiver. No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any prior, concurrent or
subsequent breach of the same or any other provisions hereof, and no
waiver shall be effective unless made in writing and signed by an
authorized representative of the waiving Party.
11.8 Entire Agreement. Upon execution by both Parties, this
Agreement and all Exhibits referenced in this Agreement shall
constitute the entire agreement between the Parties with respect to
the subject matter hereof, all prior and contemporaneous
communications shall be merged into this Agreement. This Agreement
shall not be modified except by a written agreement dated subsequent
to the Effective Date of this Agreement and signed on behalf of
CHAPEAU and NRG by their respective and duly authorized
representatives.
11.9 Section Headings. The Section headings used in this
Agreement and the attached Exhibits are intended for convenience only
and shall not be deemed to supersede or modify any provisions.
In Witness Whereof, the Parties have executed this Agreement to become
effective on the Effective Date. This Agreement may be signed in
original counterparts, and it will become effective when each Party
has duly executed a counterpart.
Chapeau, Inc. NRG-Tech
"CHAPEAU" "NRG"
By: s/ By: s/
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Print Name: Xxx Xxxxxxxx Print Name: Xxxxxx Xxxxxxx
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Title: CEO Title: President
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Date: 6-19-01 Date: May 17, 2001
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