GROUND PENETRATING RADAR DEVELOPMENT AGREEMENT
THIS AGREEMENT is entered into as of June 19, 1996, by and between POWER
SPECTRA, INC., a California corporation, located at 000 Xxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000 ("PSI") and Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxxx,
Xxxxxxx Rhode and Xxxxxxx Xxx Xxxx, collectively d.b.a. European Industries
Associates, a California general partnership, located at 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxxxxxx, XX 00000 ("EIA").
WHEREAS, PSI desires to demonstrate the feasibility of its Ground
Penetrating Radar (GPR) system technology in locating geological structures,
cataloguing mineralogical radar signatures, and developing a bread-board,
proof-of-concept GPR system capable of locating geo-structures and mineralogical
deposits relating to the installation, use, and support of certain PSI products
in a user site prior to formal product release; and
WHEREAS, EIA desires to license said GPR technology for use in mining,
mineral, oil and gas, and potentially land-based archeological applications; and
WHEREAS, PSI and EIA have agreed to form a new company, called LandRay
Technology, Inc. (LTI), a Delaware corporation, as a joint venture for the
expressed purposes of developing PSI GPR systems for use in mining and petroleum
exploration and exploitation applications (See EXHIBIT I - Letter of Intent &
Preliminary Term Sheet).
IN CONSIDERATION THEREOF AND THE MUTUAL PROMISES CONTAINED HEREIN, THE
PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
1.1 "GPR System" shall mean the PSI product(s) specified in Schedule A
attached hereto.
1.2 "GPR System Feasibility Test Period" shall mean period of time set
forth in Section 3.1 during which testing of and adjustments to the
GPR technological feasibility contemplated hereunder will be
undertaken, as specified in Schedule B attached hereto.
1.3 "Mining and Petroleum Exploration and Exploitation" shall mean the use
of PSI's GPR system for the detection, evaluation, exploration and
exploitation of, but not limited to, mining, mineral, and oil and gas
applications from above, on, or below
the surface of the earth or water, for example, defining the extent of
an ore body to petrochemical field, and examining for mine defects.
2. PURCHASES AND PAYMENTS
2.1 Order and Acceptance. The signing of this contract by EIA and/or LTI
is considered to be an order for the GPR system technology feasibility
demonstration as described herein, in substantially the form of
Exhibit I (GPR Prototype System Concept) attached hereto, and for a
demonstration test period of about, but not limited to, a nine (9)
month period. PSI's signing of this agreement shall constitute
acceptance of this contract by PSI. EIA and/or LTI acknowledges and
agrees that the delivery dates specified in PSI's acceptance of any
contracts or purchase orders are estimates only.
2.2 Purchase Price. EIA and/or LTI agrees to pay PSI Five Hundred and
Fifty Thousand Dollars ($550,000) for this GPR System Technology
Feasibility Demonstration (the "Purchase Price"). Following the
signing of the 6Jun96 Agreement between the parties (see EXHIBIT I),
EIA has already forwarded the initial $50,000. The parties realize and
agree that this Purchase Price does not reflect the total cost PSI has
incurred in developing its GPR system.
2.3 Market Product. Subject to Section 7.4 hereof, upon due completion of
the GPR system technology feasibility test period and after signing of
a formal agreement establishing LTI, estimated to occur within three
months from the date of the execution and delivery of this agreement,
PSI agrees to (i) provide LTI with a functional GPR system in exchange
for a development contract for $3,000,000, and (ii) provide the GPR
system exclusively to LTI for use and distribution worldwide in mining
and petroleum exploration and exploitation markets, upon terms and
conditions to be mutually agreed upon during the GPR technology
feasibility test period, as generally expressed in EXHIBIT I.
Notwithstanding the foregoing, should the demonstration not occur in a
reasonable time period, EIA and/or LTI shall not be obligated to raise
the additional $3,000,000 in capital and PSI has the right to cease
and abandon the proposed project without any obligation or liability
whatsoever to EIA and/or LTI. EIA and/or LTI shall have no rights to
distribute the GPR system anywhere in the world for any purpose other
than mineral and petroleum exploration and exploitation, unless
otherwise agreed under separate contract.
2.4 Non-recurring Engineering Expense Fee. Upon execution of this
Agreement, EIA and/or LTI shall pay PSI a non-refundable fee totaling
Five Hundred Thousand dollars ($500,000) within 8 weeks of signing
this contract, if possible, or on the earlier of (i) October 19, 1996
or (ii) three business days after the closing of LTI's
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private placement of securities valued at $600,000, to partially cover
non-recurring engineering expenses as well as GPR system feasibility
testing and demonstration.
3. GPR TECHNOLOGY FEASIBILITY DEMONSTRATION TEST PERIOD
3.1 Feasibility Demonstration Test Period. EIA agrees to fund the
feasibility demonstration of PSI's GPR system under this Agreement for
a period of no more than nine (9) months commencing with the signing
and delivery of this agreement. Such period may be extended or reduced
by mutual agreement of the parties.
3.2 Feasibility Test Site. The test site(s) shall be the principal offices
of PSI and at other mutually agreed upon mining sites for EIA's mining
experts to verify the demonstration of PSI's system technology.
3.3 Feasibility Test Period Obligations. During the feasibility test
period, EIA and PSI shall each undertake and perform their respective
obligations as set forth in Sections 4 and 5 hereof.
4. OBLIGATIONS OF EIA and/or LTI
4.1 Test Site Selection, Preparation and System Installation. EIA shall,
along with its assigned mining experts, prepare the feasibility test
site(s) in accordance with site specifications required by PSI and
agreed to with EIA and its mining experts. PSI will deliver the GPR
system to EIA and be present for the installation and tests at the
feasibility test site(s). EIA, PSI and its mining experts shall
install the GPR system immediately following its receipt in accordance
with instructions provided by PSI and with the assistance of PSI
personnel as required.
4.2 Use. EIA and/or LTI agrees that it will use the GPR system and any
modifications thereto provided by PSI during the system feasibility
test period only for its own internal use and will not offer for sale
or otherwise offer or deliver to any third party the GPR system. The
GPR system, and all performance data and test results relating to the
GPR system shall be considered Confidential Information of PSI under
Section 9 hereof, and shall not be used, disclosed or published except
as permitted under Section 9.
4.3 Testing. During the technology feasibility test period, EIA and its
assigned mining experts agree to run such tests with PSI as may be
requested by and have been agreed to with PSI as set forth in
Schedules A and B hereto and any other tests deemed necessary by EIA
and its mining experts for evaluation of the GPR system technology
feasibility.
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4.4 Mining Expert Manager. EIA shall designate a "Mining Expert Manager"
as the key contact for each site(s) during the feasibility test
period. Such Mining Expert Manager shall provide PSI written reports
on all test and performance results of the GPR system including, but
not limited to performance of the GPR system technology. Such written
reports shall be submitted within two weeks following the test period,
and the Mining Expert Manager shall meet and discuss with PSI
personnel the performance of the GPR system technology at PSI's
request.
4.5 Error Notice. EIA's Mining Expert Manager shall notify PSI of any
failure, error or other malfunction of any part of the GPR system
within twenty-four (24) hours of such occurrence, if PSI personnel are
not at the test site.
4.6 Modifications. EIA and its Mining Expert Manager(s) agree to promptly
implement such modifications and changes that PSI may make to the GPR
system during the feasibility test period, as they are provided by
PSI, subject to the provisions of Section 5.2. Except as otherwise
specified in this Agreement or at the written direction of PSI, EIA or
its Mining Expert Manager shall not alter or modify any GPR system
during the feasibility test period without PSI's prior written
approval.
4.7 Access. During the feasibility test period, EIA and its Mining Expert
Manager will grant PSI full and free access to test fields and sites
with the GPR system, to allow PSI to perform under this Agreement, at
such reasonable times as may be required by PSI.
4.8 Ownership. EIA and/or LTI hereby irrevocably assigns to PSI all of its
right, title and interest in and to any and all technology, know-how
and other information incorporated into the GPR system alone or
jointly with others in connection with the development of the GPR
system or any modification of or improvement to the GPR system which
EIA and/or LTI or its mining experts may propose or make during the
feasibility test period (collectively, the "Product Technology"), and
all copyrights, trade secrets, patent rights and other intellectual
property rights relating to Product Technology. EIA and/or LTI agrees
to, and to cause its employees, agents and consultants to sign,
execute and acknowledge documents and perform such acts as may be
reasonably necessary to perfect the foregoing assignment and to
obtain, enforce and defend intellectual property rights within the
Product Technology.
4.9 Publications. EIA agrees that during and after the term of this
Agreement, EIA shall make no announcement or publication concerning
the GPR system or this Agreement without the prior written consent of
PSI, which shall not be unreasonably withheld or delayed.
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5. OBLIGATIONS OF PSI
5.1 Technical Assistance. PSI will provide EIA such technical assistance
as PSI may deem necessary to properly place, install and operate the
GPR system at the GPR system technology feasibility test site(s). PSI
will provide EIA with the applicable support and documentation for the
use, operation and testing of the GPR system.
5.2 Modifications. During the feasibility test period, PSI will consult
with EIA and/or LTI regarding the performance of the GPR system and
will evaluate the test data and error reports provided by EIA and its
mining experts. PSI will undertake to make such modifications and
improvements to the GPR system as deemed appropriate by PSI and
provide the same to EIA and/or LTI; provided, however, PSI is not
obligated to make any specific modifications or improvements; and
provided further that if such modifications result in a substantial
cost to PSI, in PSI's sole opinion, the parties hereto shall negotiate
an additional fee to cover additional non-recurring engineering
expenses.
6. NO WARRANTY
6.1 Warranty. EIA and/or LTI understands and agrees that because the GPR
system is new technology, it may contain design errors and other
defects, and that there is no guarantee that such errors and other
defects will be corrected or a marketable product produced and
released. The expressed purpose of this feasibility test is to
demonstrate PSI's GPR system technology in mining and petroleum
applications, and there is no guarantee that these tests will produce
positive results. FOR THE FOREGOING REASONS, THE GPR SYSTEM
TECHNOLOGY, IS OFFERED HEREUNDER "AS IS." PSI MAKES AND EIA AND/OR LTI
RECEIVES NO WARRANTIES IN CONNECTION WITH THE GPR SYSTEM TECHNOLOGY OR
MODIFICATIONS OR IMPROVEMENTS THERETO, DELIVERED HEREUNDER, EXPRESS,
IMPLIED, STATUTORY OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR
COMMUNICATION BETWEEN EIA AND/OR LTI AND PSI. PSI SPECIFICALLY
DISCLAIMS ANY IMPLIED WARRANTY OF NONINFRINGEMENT, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. No representation or other
affirmation of fact, oral or written, including, but not limited to,
any statement regarding capacity, suitability for use or performance,
whether made by PSI's employees or otherwise, which is not contained
in this Agreement, shall be deemed to be a warranty by PSI for any
purpose, or give rise to any liability of PSI whatsoever to produce a
functional GPR system feasibility test.
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7. TERMINATION
7.1 Termination of Feasibility Test Period. Unless earlier terminated
under Section 7.3 below, the obligations of EIA and/or LTI and PSI
during the feasibility test period shall terminate upon the last day
of the feasibility test period.
7.2 Breach by EIA and/or LTI During Feasibility Test Period. In the event
that EIA and/or LTI breaches any material obligation during the
feasibility test period, and such breach is not remedied within thirty
(30) days after notice thereof by PSI, PSI may at its option terminate
this Agreement.
7.3 Effect of Termination. If this Agreement is terminated pursuant to
Section 7.2 above, PSI shall not be obligated under Section 2.3 above
to provide EIA and/or LTI with the stated terms and conditions
following formal release of the GPR system.
7.4 Survival. Notwithstanding any termination of all or part of this
Agreement, the following provisions shall survive: Section 4.9
(Ownership), Section 4.10 (Publications), Section 6 (No Warranty);
Section 7 (Termination); Section 8 (Limited Liability); Section 9
(Confidentiality); and Section 10 (Other Provisions).
8. LIMITED LIABILITY
PSI's TOTAL AGGREGATE LIABILITY ARISING OUT OF THIS AGREEMENT, WHETHER
FOR BREACH OF CONTRACT OR TORT OR OTHERWISE, SHALL NOT EXCEED THE
AMOUNTS RECEIVED BY PSI FROM EIA AND/OR LTI HEREUNDER. IN NO EVENT
WILL PSI BE LIABLE FOR ANY DAMAGES, INCLUDING LOST PROFITS, COST OF
COVER OR OTHER SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES
ARISING FROM THE USE OF ANY PRODUCT OR ACCOMPANYING DOCUMENTATION,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY. THIS LIMITATION WILL
APPLY EVEN IF PSI HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE,
AND IN THE EVENT OF ANY FAILURE OF ESSENTIAL PURPOSE.
9. CONFIDENTIALITY
9.1 Confidential Information. As used herein, "Confidential Information"
means all information regarding the GPR system and modifications
thereto, including without limitation all test data and information
with respect to the use, installation and operation of the GPR system
or modifications thereto, whether received from PSI or developed by
EIA and/or LTI, and regardless of the presence or absence of any
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copyright or other proprietary legends. Confidential Information shall
also include the terms and conditions of this Agreement. EIA and/or
LTI agrees that both during and after the term of this Agreement, EIA
and/or LTI will not use any Confidential Information except in
accordance with the provisions and for the purposes of this Agreement,
and will not disclose any Confidential Information to any third party
without the prior written consent of PSI. EIA and/or LTI shall treat
Confidential Information with at least the same degree of care as EIA
and/or LTI uses for its own most confidential information, but in no
case less than reasonable care, and shall require all employees with
access to Confidential Information to have executed a non-disclosure
agreement, acknowledging the confidential and proprietary nature of
the Confidential Information and agreeing not to disclose the
Confidential Information or to use the Confidential Information or any
portion thereof, for any purpose other than as set forth herein.
Except as expressly provided herein, nothing contained in this
Agreement shall grant or be construed as granting to EIA and/or LTI or
its associates any title, right or interest, by license or otherwise,
to any Confidential Information, or to any invention or any
intellectual property rights based on any Confidential Information.
9.2 Exception. Notwithstanding the foregoing, Confidential Information
shall not include any information to the extent that such information
is (i) publicly available and generally known prior to this Agreement,
(provided that EIA and/or LTI shall not be excused for any
unauthorized disclosure it makes prior to such Confidential
Information becoming publicly known), (ii) rightfully received by EIA
and/or LTI from a third party without accompanying confidential
obligations, (iii) independently developed by EIA and/or LTI without
any use of Confidential Information, as documented by written
evidence, or (iv) disclosed pursuant to court order, regulator,
subpoena or other form of legal process. A copyright notice in and of
itself shall not constitute or evidence a publication or public
disclosure.
9.3 Breach. EIA and/or LTI acknowledges and agrees that any breach of its
obligations under this Section 9 will cause irreparable harm to PSI.
Accordingly, EIA and/or LTI agrees that in the event of a breach or
threatened breach of this Section 9, in addition to any remedy at law
to which PSI is entitled, PSI shall be entitled to obtain appropriate
equitable relief.
10. OTHER PROVISIONS
10.1 Independent Contractors. The relationship of the parties hereto are at
this point independent contractors, and neither party is an employee,
agent, partner or joint venturer of the other, except as described in
EXHIBIT I.
10.2 Governing Law and Jurisdiction. This Agreement shall be governed by
and construed under the law of the State of California without regard
to conflict of laws
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provisions. The federal and state courts of Santa Xxxxx County,
California shall have exclusive jurisdiction and venue to adjudicate
any dispute arising out of this Agreement. Each party hereto expressly
consents to the personal jurisdiction of the courts of California and
service of process being effected upon it by registered mail sent to
the address set forth at the beginning of this Agreement.
10.3 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof and
merges all prior discussion between them. No modification of or
amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless set forth in writing signed by
officers of both parties hereto.
10.4 Notices. All notices or other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be
considered as duly given on (a) the date of delivery, if delivered in
person, by nationally recognized overnight delivery service or by
facsimile or (b) three days after mailing, if mailed from within the
continental United States by registered or certified mail, return
receipt requested to the party entitled to receive the same, if to
PSI, c/o Xxxxxx Xxxx, 000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
facsimile number (000) 000-0000, if to EIA, c/o Xxxxxxx X. Xxxxxxx,
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
facsimile number (000) 000-0000, and if to LTI, c/x Xxxxx X.
Xxxxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000,
facsimile number (000) 000-0000. Any party may change his or its
address by giving notice to the other party stating his or its new
address. Commencing on the 10th day after the giving of such notice,
such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted
to be given pursuant to this Agreement.
10.5 Force Majeure. Nonperformance of either party will be excused to the
extent that performance is rendered impossible by strike, fire, flood,
governmental acts or orders or restrictions, failure of suppliers, or
any other reason where failure to perform is beyond the control and
not caused by the negligence of the non-performing party.
10.6 Assignment and Binding Effect. EIA and/or LTI may not transfer or
assign its rights or obligations under this Agreement without the
prior written consent of PSI. Subject to the foregoing sentence, this
Agreement will be binding upon and inure to the benefit of the parties
hereto, their successors and assigns.
10.7 Partial Invalidity. If any provision of this Agreement is held to be
invalid by a court of competent jurisdiction, then the remaining
provisions will nevertheless remain in full force and effect. The
parties agree to re-negotiate in good faith any term held invalid and
to be bound by the mutually agreed substitute provision.
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10.8 No Waiver. The failure of either party to enforce at any time any of
the provisions of the Agreement, or the failure to require at any time
performance by the other party of any of the provisions of this
Agreement, will in no way be construed to be a present or future
waiver of such provisions, nor in any way affect the validity of
either party to enforce each and every such provision thereafter.
10.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of
which together will constitute one instrument.
10.10 Headings. The heading of the several sections of this Agreement are
intended for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this
Agreement.
10.11 No License. Except as explicitly set forth herein, nothing contained
in this Agreement shall be construed as granting or conferring by
implication, estoppel or otherwise, any license or right under any
patent, trademark, copyright or other proprietary right, whether now
existing or hereafter obtained, and no such license or other right
shall arise from this Agreement or from any acts or omissions in
connection with the execution of this Agreement or the performance of
the obligations of the parties hereunder. In support of the intent
expressed in the Joint Venture Letter of Intent and Term Sheet
contained in EXHIBIT I, the GPR system license agreement shall be
included in the formal joint venture business agreement between PSI
and LTI, to be negotiated in good faith substantially in the form of
EXHIBIT I and executed before 1 Sep 96.
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IN WITNESS WHEREOF, duly authorized representatives of the parties have
executed this Agreement as of the date first set forth above.
POWER SPECTRA, INC. LandRay Technology, Inc.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------- ---------------------------
Signature Signature
Xxxxxx X. Xxxxx Xxxxxxx X. Xxxxxxx
Chairman, CEO EIA/LTI Principal
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxxx
EIA/LTI Principal
By: /s/ Xxxxxxx Rhode
---------------------------
Xxxxxxx Rhode
EIA/LTI Principal
By: /s/ Xxxxxxx X. Xxx Xxxx
---------------------------
Xxxxxxx X. Xxx Xxxx
EIA/LTI Principal
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EXHIBIT I
LETTER OF INTENT & PRELIMINARY TERM SHEET
6 Jun 96
Power Spectra, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Gentlemen:
We are pleased to submit this letter of intent in which European Industries
(EI), through the efforts of Messrs. Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx
Rhode, and Xxxxxxx Xxx Xxxx, would assist a newly formed corporation, NewCo, a
Delaware Corporation, in obtaining capital for its business. NewCo, organized
with the expressed intent of being an operating company, is a joint venture of
Power Spectra (PSI) and EI established for the expressed purposes of developing
PSI Ground Penetrating Radar (GPR) systems for use in mining, mineral oil, and
gas, and land-based archeological applications. Specifically, NewCo has
expressed an interest in retaining EI to act as its Managing Agent to assist
with the private placement of common stock in the approximate amount of
$3,550,000.
Although the final terms of the stock offering are subject to further
negotiations between NewCo and EI, the parties agree that the starting point for
such good faith negotiations are contained in the attached exhibit titled NewCo,
A Joint Venture Company, dated 6Jun96 (see attached). This exhibit details the
letting of development contracts to PSI from NewCo, as follows: the first
$50,000 of which would be paid to PSI upon signing of this agreement for a four
month option to raise an additional $500,000; the $500,000 would be paid to PSI
to prove the feasibility of a PSI impulse generator based GPR; and, given proof
of the mineralogical capabilities of this PSI GPR technology EI would then raise
the remaining $3,000,000 for PSI to develop the mineralogical GPR prototype. In
addition, it is our mutual understanding that NewCo still needs to be
incorporated and that this process needs to be fairly complete prior to EI
committing the final $3,000;000 in resources to this transaction.
Prior to the $500,000 financing EI and PSI each own 50% of NewCo, conditional on
EI raising the $500,000. Following the $500,000 financing, which could result in
giving up about 20% of NewCo to the new investors, EI and PSI shares, in this
event, would be about 40% each. EI will receive, upon successful completion of
the $3,000,000 offering, an estimated equity position of a 25% ownership in
NewCo. PSI will also receive an equity position of a minimum, non-dilutable 25%
ownership in NewCo and the rights to manufacture all radar equipment and systems
used by NewCo. Both EI and PSI (as well as any new investorst will be co-owners
of all equipment in NewCo.
If you agree that this letter of intent states the essential facts of our
discussion, please execute and return one copy to us by 6Jun96. Upon receipt,
we will complete and forward to you a Summary of Proposed Terms that will
outline in detail. the terms and conditions of this transaction.
We look forward to assisting you and participating in the growth of this new
venture.
Sincerely,
Xxxxxxx X. Xxxxxxx, Xx.
Principal, European Industries
The foregoing agreement is approved and accepted.
Power Spectra, Inc.
By: /s/ Xxxxxx X. Xxxxx
--------------------------
Xxxxxx X. Xxxxx
Its: Chairman and C.E.O.
Date: 6Jun96
June 6, 1996 Page 1
NewCo, A Joint Venture Operating Company
for
Ground Penetrating Radar Applications
to
Detect and Identify Buried Resources and Materials
1. Parties:
a. Power Spectra, Inc., a California Corporation, having principal offices
at 000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000, XXX.
b. European Industries (EI), functioning through the efforts of Messrs.
Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Rhode and Xxxxxxx Xxx Xxxx.
2. Opportunity
a. There are hundreds of private corporations, organizations and
governments throughout the world whose interests and responsibilities
include mining, mineral, and oil & gas exploration. Given proof of the
applicability of PSI impulse generator technology in ground penetrating
radar applications, the market opportunity is at least hundreds of
millions, if not billions, of dollars annually.
3. Proposed Solution:
a. The Parties form a joint venture, NewCo, a Delaware Corporation and
operating company, to develop and market ground penetrating radar
system(s) capable of locating and identifying minerals and oil & gas
formations.
b. NewCo provides vehicle(s) for operational deployment of systems
developed in (a) above, with NewCo retaining title to all systems and
platforms.
c. Major benefit and primary purpose of NewCo would be system capability
to locate and identify surface and subsurface mineral deposits and
formations from a variety of platforms.
4. Contributions of the parties:
a. Power Spectra
1. Develops, designs and markets a family of products that use
proprietary high speed semiconductor devices which generate
extremely rapid, high power electromagnetic impulses. PSI's
products emit very high power signals in extremely short time
intervals, and deliver much more peak strength over a broader
frequency spectrum than conventional pulsed transmitters, without
increasing input power.
2. Believes that its unique proprietary technology is years ahead of
the competition. The combination of patent law and trade secrets,
imposes significant barriers to entry by competitors.
3. Has worked for a number of years with the US Army Research
Laboratory on ground penetrating radar. Power Spectra's transminer
technology was
Power Spectra Proprietary
June 6, 1996 Page 2
recently lauded by US Army Research Laboratories in a press release
stating that through use of the technology, the Army was for the
first time able to image anti-personnel mines composed primarily of
plastic from operational altitudes (about 150 feet above ground).
4. Has a network of specialist individuals and organizations available
to provide a systems solution.
b. European Industries
1. Provides financial backing for systems development.
2. Has access to government functionaries whose roles encompass a
broad array of interests within their countries.
3. Provides management to run location and mapping services of the
operational radar systems for mineralogical applications.
5. Operational Detail:
a. In return for a minimum non-dilutable 25% ownership in NewCo through
the financing described in 5.b. (dilution may occur after full
developmental funding, see 5.b., or if PSI has a cost overrun above
those costs shown in 5.b.):
1. PSI agrees to grant to NewCo an exclusive world wide commercial
license (with transferable rights by NewCo) for use of its ground
penetrating radar for mining, mineral, or petroleum exploration and
exploitation. "Transferable rights," as used here, means NewCo has
the rights to sub-license or negotiate additional agreements or
joint ventures as necessary in these exclusive markets to develop
its business (e.g., in the Peoples Republic of China all business
is executed through "Trade Corporations" who are full participants
in the business enterprise).
2. The parties further agree to negotiate in good faith specific
additional opportunities that may arise in archeological
exploration.
b. NewCo will issue development contract(s) to PSI to develop the ground
penetrating radar for use by NewCo operations, as follows:
1. Phase I: NewCo will, within one week of signing this agreement,
transfer $50,000 to PSI for a four month option to raise $500,000.
2. Phase II: The additional $500,000 will be paid to PSI to prove the
mineralogical capabilities of impulse synthetic aperture radar
(Such proof of technology will be determined by mining interest
experts). If technical feasibility is not satisfactorily proven at
the end of Phase II, any rights granted under this agreement revert
to PSI.
3. Phase III: After PSI successfully proves 5.b.2. above, NewCo will
raise $3,000,000 within six months for PSI to develop the prototype
mineralogical finding radar. In the event considerably more than
$3,000,000 is required, PSI and EI/NewCo shall ratably share any
dilution from that point forward.
c. EI will recruit and provide management and personnel for NewCo
operations.
d. NewCo enters into contracts with various governmental agencies and
corporations or organizations world wide with interests in mining,
mineral, and oil & gas exploration and exploitation.
Power Spectra Proprietary
June 6, 1996 Page 3
e. Should NewCo choose not to participate in any given business
opportunity, assuming a reasonable time period for evaluation and
participation, then the right to pursue that opportunity reverts to
PSI.
f. Intellectual Property, in the form of proprietary information,
technical data, invention concepts, patents, copyrights, trade secrets,
software (in the form of source code and object code), know-how and
show-how may be developed in the performance of research and
development within the scope of this agreement. PSI shall own and
retain all rights, title and interest in any developed Intellectual
Property.
g. Details relating to minimum royalties, time limits for development, and
other normal and typical contractual terms will be contained in the
legal agreement between EI and PSI in the formation of NewCo. h. The
NewCo Board of Directors will be comprised of representatives from EI,
PSI and the new investors.
Power Spectra Proprietary.
SCHEDULE B
GPR TECHNOLOGY FEASIBILTY TESTING SCHEDULE
[PROPOSED TEST SCHEDULE]
FEASIBILITY STUDY SCHEDULE
[GRAPHIC OMITTED]
SCHEDULE A
GROUND PENETRATING RADAR (GPR) PROTOTYPE SYSTEM CONCEPT
[Describe Proposed GPR System]
An Example Strawman System
Mineral and Ore Identifying Radar 6/17/96
Power Spectra Inc.
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Premise
Advances in ground-penetrating radar will enable radar systems with significant
utility to the mining and geology industries. Specification of such a radar
awaits detailed studies and tests. In the interim, however, it is useful to
define an example radar on a frame of knowledgeable guesswork. This informs the
reader regarding early stages of concept planning, and points out those emerging
areas of ground-penetrating radar (GPR) technology that enable such concepts.
Interpretation of the concepts presented herein beyond these caveats would be
premature.
Possible Operating Modes and Platforms
A mineralogy-oriented GPR could take on a number of formats, with the radar
based on borehole or tunnel measurements, ground operation, or even airborne. Of
these, the airborne option will be used in this discussion. Airborne,
low-frequency electromagnetic (EM) measurements for geological studies is
already a useful reality. A helicopter is selected as the operating platform.
One possible alternative would be a large, slow aircraft such as a DC-3.
Selected Strawman Characteristics
A side-looking, synthetic-aperture radar (SAR) is envisioned. This would be an
ultra-wideband impulse system with an output spectral peak at 10 MHz. Peak
transmitter power would be in the 100-MW range. With this power, and with
favorable soil conditions, the radar could penetrate several hundred meters into
the ground.
The antenna for this radar would be quite large, and may force the use of a
large, fixed-wing aircraft over the more flexible helicopter. Suppression of the
antenna back lobe may be a major problem.
The aircraft would fly at an altitude of between 500 and 1000 feet. Aircraft
cruise speed would be 120 knots. The radar would view the ground below and to
the side of the aircraft. Spatial resolution of the processed radar data would
be on the order of 50 feet. The imaged swath would be at least 1000 feet wide,
providing an area coverage of over 20 square miles per hour. Data would be
processed in real time on board the aircraft, and the in-flight operator would
be presented with rolling radar images updated several times per second. All
data would be recorded and referenced to position using on-board GPS and a
computerized geographical information system (GIS) database. The entire system
would be autonomous and capable of operating anywhere in the world.
Review of Enabling Technologies
The proposed strawman system has not been realizable until recently, although
the
phenomenology of radar interaction with various soils in minerals at the
selected operating frequency is well understood. Enabling technologies that have
emerged within the last three years include:
1. High power impulse generators, light in weight, based on solid-state
technology, and compatible with the airborne platform.
2. High speed transient digitizers, also compatible with the platform, capable
of acquiring and digitizing the radar return data at an adequate rate.
3. Computational algorithms to deconvolve the received radar returns into 3-D
images.
4. High speed, compact, and low cost digital computers and specialized digital
signal processing modules.
Note on Competing Technologies
An alternative ultra-wideband radar sensor would use stepped-frequency or chirp
techniques. The advantage of the Power Spectra impulse approach is relatively
small size and low cost for the same performance. This is expected to be
important, both for economic reasons, and to be able to use a reasonable
airborne platform.
A stepped-frequency system will be easier to deal with in terms of
electromagnetic interference to other spectrum users. In the selected frequency
range, commercial radio and television stations will not be affected, nor will
navigation aids. What will primarily be affected are various civilian and
military mobile hf communications gear. Given the remote nature of most mining
operations, and the fact that constant operation in any one area is not
necessary, the lighter, lower cost impulse approach appears to be the
appropriate choice.
