Exhibit 10.16
Attachment I
Draft Project Collaborative
Between Ocean Power and EPRIsolutions
1. Ocean Power has developed small Stirling Engine power system for
distributed power applications.
2. Ocean Power seeks to commercialize these systems in the U.S. and seeks the
assistance of EPRIsolutions and its network of electric and gas utilities.
Ocean Power also seeks electric and gas utilities as strategic partners and
potential distributors of its product.
3. Ocean Power plans to form a new venture (NewCo) in the U.S. to
commercialize the Stirling Engine and other distributed generation
technologies.
4. EPRIsolutions can conduct initial baseline testing at its world class
EPRI-PEAC test facility in Knoxville, TN. Such testing will provide NewCo
with information regarding their product's ability to meet US electrical
interconnection and power quality requirements. EPRIsolutions testing of
the NewCo product will provide important referencing and products readiness
information for the US market. The details of the Phase I approach are
outlined below:
5. NewCo will provide a unit and ship it to EPRIsolutions' test facility at a
price estimated at about $75,000 for testing at its EPRI-PEAC facility.
6. EPRIsolutions will test the unit at its own cost under a pre-determined
test protocol.
7. EPRIsolutions will provide NewCo with a test report and will reference the
testing in a mutually agreed upon press release.
8. NewCo and EPRIsolutions will launch a business collaborative outlined
below.
9. NewCo will grant EPRIsolutions an exclusive role in securing 20 beta units
in the US, Canada for at least a min. one year period. EPRIsolutions can
also secure beta sites in Japan, and in developing countries. The outside
US strategy will be developed with NewCo.
10. NewCo will develop pricing and terms for the beta unit for field-testing.
Such pricing will be FOB TBD. NewCo will also provide arrangements for
shipping or transporting beta units to US test sites. Shipping costs will
be paid by NewCo.
11. EPRIsolutions will obtain commitments for 20 beta units for a US field test
and demonstration via a private R&D collaborative.
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12. EPRIsolutions will manage the organization of the field test effort. This
field test program will include periodic meetings; discussion of field
deployment results such as siting, permitting, operation and maintenance,
etc.
13. NewCo or the Utilities will own the beta test units. If owned by NewCo they
will be returned at NewCo's expense after the testing period.
14. NewCo will provide necessary field test support as may be required by the
host utilities.
15. NewCo will provide initial training for installation and operation. Such
training could also be developed in concert with EPRIsolutions at its
EPRI-PEAC facility.
16. In return for EPRIsolutions efforts at facilities of NewCo's
commercialization venture in the US. NewCo will develop value proposition
terms for both EPRIsolutions and its electric and gas members:
17. Such terms could include the following:
a) NewCo shall issue a mutually agreeable number of warrants to
EPRIsolutions in return for its purchase of the pre-beta Stirling
engine to be validation tested in Phase I. The strike price for such
warrants shall be mutually agreed upon.
b) NewCo shall issue warrants to electric and gas utilities for each $
committed by electric and gas utilities and paid to NewCo for a beta
unit and responding EPRIsolutions' private R&D collaborative with
NewCo. The strike price for such warrants shall be mutually agreed
upon.
c) NewCo shall grant each participating electric or gas utility in the
field test program an option to be US distributor. Terms of such option
will be developed.
d) NewCo shall grant EPRIsolutions warrants in NewCo for every $ US dollar
of revenue committed and paid to NewCo either directly by electric or
gas utilities responding to an EPRIsolutions private R&D solicitation
or indirectly to NewCo via an EPRIsolutions/NewCo purchase order. The
strike price for such warrants shall be mutually agreed upon.
This is a non-binding agreement. Both parties agree to develop this project
under a best effort basis.
/s/ Xxx Xxxxxxx
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Xxx Xxxxxxx
Area Manager
Distributed Technologies
EPRIsolutions
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
President
Ocean Power
