EXHIBIT 10.12
-------------
COLLABORATIVE COMMERCIALIZATION AND LICENSE AGREEMENT
among
CATALYTICA COMBUSTION SYSTEMS, INC.,
and
GENXON POWER SYSTEMS, LLC.,
and
GENERAL ELECTRIC COMPANY,
dated as of November 19, 1998
-1-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
COLLABORATIVE COMMERCIALIZATION AND LICENSE AGREEMENT
-----------------------------------------------------
THIS COLLABORATIVE COMMERCIALIZATION AND LICENSE AGREEMENT dated as of November
19, 1998 (this "Agreement"), is entered into among CATALYTICA COMBUSTION
SYSTEMS, INC., a Delaware corporation ("CCSI"), having a place of business
located at 000 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000, including its
affiliate, GENXON POWER SYSTEMS LLC., a Delaware limited liability company
("GPS"), also with offices at 000 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx
00000, and GENERAL ELECTRIC COMPANY, a New York corporation ("GE"), having a
place of business located at 0 Xxxxx Xxxx, Xxxxxxxxxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, CCSI has developed expertise and technology directed to its proprietary
XONON(TM) Combustion System in the field of catalytic combustion; and
WHEREAS, GE manufactures and sells heavy duty industrial gas turbines, and has
developed technology relating thereto; and
WHEREAS, CCSI and GE desire to design, develop and commercialize heavy duty
industrial gas turbine components employing catalytic combustion through the use
of various elements of the XONON Combustion System; and
WHEREAS, in addition to collaborating in the development and commercialization
of such components, GE, with CCSI's cooperation and assistance, will lead an
effort to obtain funding for such development and commercialization, in exchange
for certain considerations as more particularly described in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained in this Agreement, CCSI, GPS and GE hereby agree as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
For purposes of this Agreement, the terms defined in this Article 1 shall have
the respective meanings set forth below:
1.1. [*]
-2-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
1.2. "Affiliate" shall mean, with respect to any Person, any other Person which
---------
directly or indirectly controls, is controlled by, or is under common
control with, such Person. A Person shall be regarded as in control of
another Person if it owns, or directly or indirectly controls, at least
fifty percent (50%) of the voting stock or other ownership interest of the
other Person, or if it directly or indirectly possesses the power to
direct or cause the direction of the management and policies of the other
Person by any means whatsoever.
1.3. "Background" shall mean, with respect to Patents, Technical Information
----------
and Technology, that as to which a party has acquired or acquires prior to
the Effective Date or otherwise not (i) in connection with its work under
this Agreement, or (ii) from the other party.
1.4. [*]
1.5. "CCSI" shall mean Catalytica Combustion Systems, Inc. and/or its
----
affiliate, GENXON Power Systems, LLC.
1.6. "CCSI Technology" shall mean all Technology relating to the XONON
---------------
Combustion System, including Background and Commercialization Program
Technology which is now or hereafter may be owned by CCSI and/or possessed
by CCSI with rights to sublicense.
1.7. "Commercialization" shall mean the offering to sell, and/or the actual
-----------------
sale, of an item.
1.8. "Commercialization Phase" shall mean the second phase of the
-----------------------
Commercialization Program, during which the parties shall pursue
Commercialization of the Products, as more particularly described in
Article 7 below.
1.9. "Commercialization Plan" shall mean a plan in accordance with the outline
----------------------
attached to this Agreement as Exhibit B for the Commercialization of the
Products during the Commercialization Phase, including estimated funding
amounts and dates for certain milestones, as such plan may be modified
pursuant to the provisions of Section 5.1.3 below.
1.10. "Commercialization Program" shall mean the collaborative program of
-------------------------
research, development and Commercialization, to develop and adapt the
XONON Combustion System and/or XONON Modules to Gas Turbines, and to
supply GE with XONON Combustion System units and/or XONON Modules, for
incorporation into Gas Turbines to be sold to GE's customers, all as more
particularly described in the Development Workplan and the
Commercialization Plan. The Commercialization Program shall be divided
into a Technology Development Phase and a Commercialization Phase.
-3-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
1.11. "Commercialization Program Technology" shall mean Technology conceived
------------------------------------
during the Commercialization Program.
1.12. "Development Costs" shall mean the costs to GE or CCSI of performing its
-----------------
development obligations during the Technology Development Phase in
accordance with the Development Workplan, including without limitation
all costs of direct labor and benefits, raw materials, overhead, and all
other direct and indirect costs, fees and out-of-pocket and other
expenses incurred, paid or accrued by GE or CCSI, all as determined in
accordance with generally accepted accounting principles, consistent with
such party's internal cost accounting practices, allocated on a
reasonable and consistent basis and charged for the performance of such
activities.
1.13. "Development Funds" shall mean any and all amounts raised by the parties
-----------------
under Section 4.1 below or expended by GE under Section 4.2 below, for
the purpose of funding Development Costs.
1.14. "Development Workplan" shall mean the detailed work plan for the
--------------------
technological development of the Products during the Technology
Development Phase, which shall be (i) based on the Program Schedule and
Milestones attached as Exhibit A, and (ii) agreed upon by the parties on
or before December 15, 1998 and modified or updated by the parties on at
least an annual basis by mutual agreement on or before December 15th
preceding the year in question.
1.15. "Effective Date" shall mean the date of this Agreement as first set forth
--------------
above.
1.16. "Executive Committee" shall mean the joint committee composed of one
-------------------
representative of GE and one representative of CCSI as described in
Section 5.2 below.
1.17. "Gas Turbine(s)" shall mean the heavy duty industrial gas turbines rated
--------------
at greater than or equal to 70MW, both new and retrofit (that is,
installed).
1.18. "GE" shall mean General Electric Company acting through its GE Power
--
Systems business, including its Affiliates.
1.19. "GE Components" shall mean the fuel/air mixer package, the preburner and
-------------
other elements (excluding the XONON Module) supplied by GE that have
performance acceptable to operate with the XONON Module and equivalent to
performance offered by XONON Components.
1.20. [*]
-4-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
1.21. "Initial Term" shall mean the period commencing on the Effective Date and
------------
ending with either the first Gas Turbine test, or upon the first
anniversary of the Effective Date, whichever occurs first.
1.22. "Management Committee" shall mean the joint committee composed of two
--------------------
representatives of GE and two representatives of CCSI as described in
Section 5.1 below.
1.23. "Market Segments" shall mean all, and "Market Segment" shall mean any one
--------------- --------------
of, the following: the 7E Market Segment, the 7F Market Segment, and the
[*].
1.24. "Maximum GE Required Expenditure" shall mean, for each Market Segment,
-------------------------------
the maximum dollar amount that GE shall be required to expend under
Section 4.2 for the funding of the Technology Development Phase due to a
failure of the parties to raise sufficient funds from Third Parties with
respect to such Market Segment.
1.25. "Patents" shall mean patents (including patents of importation, patents
-------
of confirmation, patents of improvements, patents and certificates of
addition and utility models, as well as divisions, reissues,
continuations, continuations-in-part, renewals and extensions of any of
the foregoing) and applications therefore, and patents which may be
issued on such applications covering inventions with respect to which the
first application for patent anywhere was filed prior to the date of any
termination of the Agreement.
1.26. "Person" shall mean an individual, corporation, partnership, trust,
------
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
1.27. "Pre-Commercial Activities" shall mean activities with a Person regarding
-------------------------
an item, where such activity does not involve the sale or field testing
of the item.
1.28. "Products" shall mean the XONON Module, the XONON Components, and/or the
--------
XONON Combustion System.
1.29. "Program Schedule and Milestones" shall mean the schedule for the
-------------------------------
development milestones (GE "Tollgates") leading up to and including the
first gas turbine firing date at a customer site for each Market Segment
as set forth in Exhibit A which is attached to this Agreement.
1.30. "7E Market Segment" shall mean the worldwide market for the Products for
-----------------
GE Frame 7E Gas Turbines.
-5-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
1.31. "7F Market Segment" shall mean the worldwide market for the Products for
-----------------
GE Frame 7F Gas Turbines.
1.32. [*]
1.33. [*]
1.34. [*]
1.35. "Target Funding Amount" shall mean, for each Market Segment, the amount
---------------------
that the parties must raise, either from Third Parties or expended by GE
(totaling up to the Maximum GE Required Expenditure), in order to fund
the Technology Development Phase expenses with respect to such Market
Segment, as estimated in the Yearly Development Budgets for each Market
Segment.
1.36. "Technical Information" shall mean all technical information, know-how,
---------------------
manufacturing techniques, software and other copyrightable works,
engineering and other data, drawings, material and process
specifications, whether patented or unpatented, whether in written,
printed, oral or other form, relating to, in the case of GE, heavy duty
industrial gas turbines, and, in the case of CCSI, the XONON Combustion
System.
1.37. "Technology" shall mean Patents and Technical Information.
----------
1.38. "Technology Development Phase" shall mean the first phase of the
----------------------------
Commercialization Program, during which the parties shall cooperate in
the development of the Products in accordance with the Development
Workplan, as more particularly described in Article 3 below.
1.39. "Third Party" shall mean any Person other than CCSI, GE and their
-----------
respective Affiliates.
1.40. "Yearly Development Budget(s)" shall mean the budgets prepared by the
----------------------------
Management Committee and approved by the parties, concurrent with the
Development Workplan or updates thereof, pursuant to the provisions of
Section 3.1.1 below for each year during the term of the Technology
Development Phase, as the same may be modified pursuant to the provisions
of Section 5.1.3 below. The Yearly Development Budgets shall be approved
on or before each December 15 for the following year (except that the
Yearly Development Budget for calendar year 1999 shall include any
expenditures during 1998).
1.41. "XONON Combustion System" shall mean the XONON Module and XONON
-----------------------
Components.
-6-
1.42. "XONON Components" shall mean the fuel/air mixer package, the preburner,
----------------
and other elements supplied by CCSI to be agreed upon by the Parties,
such as combustor hardware components, which are necessary combustion
system modifications to enable optimum operation of the XONON Module.
1.43. "XONON Control Algorithm(s)" shall mean the logic developed by or on
--------------------------
behalf of CCSI (outside of the scope of work done pursuant to the
Agreement) as of the Effective Date hereof to provide necessary control
of the start up, operation, management and protection of the XONON
Combustion System or XONON Module in a Gas Turbine.
1.44. "XONON Module" shall mean the CCSI catalyst structure as used in Gas
------------
Turbines, including its container and supporting structure for fixing the
catalyst structure in the container, and replacement XONON Modules.
ARTICLE 2
---------
REPRESENTATIONS AND WARRANTIES
-------------------------------
2.1. Representations and Warranties. Each party hereby represents and warrants
------------------------------
to the other Party except to the extent that a deviation from a
representation or warranty would not have a material adverse effect on
the properties, business, financial, technological or other condition of
such party and would not materially adversely affect such party's ability
to perform its obligations under this Agreement, as follows:
2.1.1 Corporate Existence and Power. Such party (a) is a corporation
-----------------------------
duly organized, validly existing and in good standing under the
laws of the state in which it is incorporated; (b) has the
corporate power and authority and the legal right to own and
operate its property and assets, to lease the property and assets
it operates under lease, and to carry on its business as it is now
being conducted and (c) is in compliance with all requirements of
applicable law.
2.1.2 Authorization and Enforcement of Obligations. Such party (a) has
--------------------------------------------
the corporate power and authority and the legal right to enter
into this Agreement and to perform its obligations hereunder and
(b) has taken all necessary corporate action on its part to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. This Agreement has been
duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable
against such party in accordance with its terms.
-7-
2.1.3 Consents. All necessary consents, approvals and authorizations of
--------
all governmental authorities and other Persons required to be
obtained by such party in connection with this Agreement have been
obtained.
2.1.4 No Conflict. The execution and delivery of this Agreement and the
-----------
performance of such party's obligations hereunder (a) do not
conflict with or violate any requirement of applicable laws or
regulations and (b) do not conflict with, or constitute a default
under, any contractual obligation of such party.
2.2. Representations and Warranties of CCSI. CCSI hereby represents and
--------------------------------------
warrants to GE, as of the Effective Date, except to the extent that a
deviation from a representation or warranty would not materially
adversely affect either party's ability to perform its obligations under
this Agreement, as follows:
2.2.1 CCSI is the owner or co-owner of record of all patents,
copyrights, trademarks, service marks, logos, slogans, and trade
names (collectively, "Intellectual Property") for which
registrations have been issued to CCSI by the United States Patent
and Trademark Office or any similar office of a foreign country
with respect to the CCSI Intellectual Property.
2.2.2 CCSI (i) owns on an exclusive basis, or has the exclusive right to
use, all of the Products and the Technology relating to the
Products necessary to perform its obligations under this
Agreement, and (ii) has the exclusive right to sell and
commercialize, and license the sale and commercialization of, the
Products to the extent required to perform its obligations under
this Agreement, in each case without any limitations or
restrictions of any kind, and without known conflict or asserted
conflict with intellectual property rights of others.
2.2.3 Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement
will conflict in any way with, result in a breach of, constitute a
default under, or create in any party the right to terminate,
modify or cancel any agreement, contract, license, instrument or
other arrangement relating to the CCSI Intellectual Property.
2.2.4 CCSI has sufficient rights under the CCSI Intellectual Property to
permit CCSI to perform its obligations under the Agreement.
2.2.5 CCSI has not given or received any notice of any pending conflict
with, or infringement of, the rights of others with respect to any
CCSI Intellectual Property or with respect to any license of CCSI
Intellectual Property under which CCSI is licensor or licensee.
-8-
2.2.6 There are no pending causes of action, claims, actions, suits,
judgments, orders, decrees, rulings, charges, hearings or
investigations involving CCSI or the CCSI Intellectual Property
(collectively, "Legal Proceedings") or threatened Legal
Proceedings of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or any arbitrator which could impair CCSI's ability
to perform its obligations under this Agreement. There are no
interference, opposition or cancellation proceedings or
infringement suits pending, or to the knowledge of CCSI,
threatened with respect to the CCSI Intellectual Property. CCSI
is not subject to any judgment, order, writ, injunction or decree
of any governmental authority, and has not entered into or become
a party to any contract, which restricts or impairs its use of
the CCSI Intellectual Property or right to sell or commercialize,
and license the sale and commercialization of, the Products, as
contemplate by the Agreement.
2.2.7 CCSI has not entered into any consent or settlement agreement
with respect to any CCSI Intellectual Property and no claim has
been asserted and, to CCSI's knowledge, no claim is threatened or
contemplated by any person with respect to the validity of, or
CCSI' s ownership of or right to use, the CCSI Intellectual
Property, or any of the Patents relating to the CCSI Intellectual
Property.
2.2.8 CCSI has complied with its contractual obligations relating to
the protection of the CCSI Intellectual Property used pursuant to
licenses whereby CCSI has licensed CCSI Intellectual Property or
portions thereof to or from Third Parties.
2.2.9 None of the licenses or other rights granted by, contemplated to
be granted by, or claimed to have been granted by CCSI to any
person or entity conflict in any way with the licenses and other
rights granted by CCSI to GE under the terms of this Agreement
and the performance by CCSI of the transactions contemplated by
this Agreement.
2.2.10 CCSI has delivered to its legal counsel, Xxxxxx Xxxxxxx Xxxxxxxx
& Xxxxxx ("CCSI Counsel"), true and correct copies of all the
agreements of CCSI which relate to the CCSI Intellectual
Property, and redacted versions of such agreements are attached
as exhibits to the copy of CCSI Counsel's legal opinion of even
date herewith delivered to counsel for GE (provided that such
redacted versions shall not be delivered to GE).
2.2.11 Upon execution, this Agreement will be enforceable against CCSI
in accordance with its terms.
-9-
ARTICLE 3
---------
COMMERCIALIZATION PROGRAM
-------------------------
3.1. Technology Development Phase. The first phase of the Commercialization
----------------------------
Program shall be the Technology Development Phase, during which GE and
CCSI will pursue the technological development of the Products so as to
enable their Commercialization. GE and CCSI will conduct their respective
development efforts in accordance with the Program Schedule and Milestones
attached hereto as Exhibit A, the Development Workplan and the Yearly
Development Budgets approved by the Management Committee, as such
Development Workplan and Yearly Development Budgets may be modified by the
Management Committee under Section 5.1.3 below.
3.1.1 Preparation of Yearly Development Budgets and Development
---------------------------------------------------------
Workplans. Within sixty (60) days from the Effective Date and each
---------
October 1 thereafter during the Technology Development Phase, the
Management Committee shall jointly prepare the Yearly Development
Budget and Development Workplan for the next calendar year. CCSI
and GE shall approve such Yearly Development Budget and Development
Workplan with such changes as CCSI and GE mutually deem necessary,
prior to December 15, 1999 and each December 15 thereafter.
3.1.2 Technology Development Phase Activities. Consistent with the
---------------------------------------
Development Workplan, the Yearly Development Budgets, and any
directives issued by the Management Committee:
3.2.1.1. Conduct of Commercialization Program Activities. CCSI and
-----------------------------------------------
GE each shall conduct the Commercialization Program in a
sound scientific manner, and in compliance in all
material respects with all requirements of applicable
laws and regulations and all applicable good research and
manufacturing practices to attempt to achieve the
Development Workplan objectives efficiently and
expeditiously. CCSI and GE each shall proceed diligently
with the work set out in the Development Workplan by
using their respective good faith efforts to provide,
among others, the following resources: (a) allocation of
sufficient time, effort, equipment and facilities to the
Commercialization Program as each reasonably believes is
necessary carry out its obligations under the Development
Workplan and to accomplish the objectives thereof; and
(b) use of personnel with sufficient skills and
experience as are
-10-
required to carry out its obligations under the
Development Workplan and to accomplish the objectives
thereof.
3.2.1.2. Subcontracts. CCSI and GE each may subcontract portions
------------
of the Commercialization Program to be performed by it in
the normal course of its business without the prior
consent of the other; provided, however, that every
subcontracted party shall enter into a confidentiality
agreement with the subcontracting party in accordance with
Article 10 below and each party shall be fully responsible
for any activities of its subcontractors under this
Agreement.
3.1.3 Project Leaders. CCSI and GE each shall appoint a person (a
---------------
"Project Leader") to coordinate its part of the Commercialization
Program. The Project Leaders shall be the primary contacts between
the parties with respect to the Commercialization Program. Each
party shall notify the other within thirty (30) days after the date
of this Agreement of the appointment of its Project Leader and
shall notify the other party as soon as practicable upon changing
this appointment. A Project Leader may be, but shall not be
required to be, a member of the Management Committee.
3.1.4 Availability of Employees. Each party shall make its employees and
-------------------------
relevant reports of nonemployee consultants available, upon
reasonable notice during normal business hours, at each party's
respective places of employment to consult with the other party on
issues arising during the Commercialization Program and in
connection with any request from any regulatory agency, including
regulatory, scientific, and technical testing issues.
3.1.5 Quarterly Reports. GE and CCSI each shall keep the other informed
-----------------
of the progress of such party's research and development activities
under the Development Workplan during the Technology Development
Phase. Within thirty (30) days following the end of each quarter
during the term of the Commercialization Program, GE and CCSI shall
each prepare, and provide to the Management Committee, a written
summary report which shall describe the development activities
performed for by such party during such quarter. In addition, each
party shall respond informally to any reasonable inquiry from the
other party as to such progress and any other matters relevant to
the Commercialization Program.
3.2. Commercialization Phase. The second phase of the Commercialization
-----------------------
Program shall be the Commercialization Phase, during which GE and CCSI will
jointly pursue the Commercialization of the Products as developed during
the Technology
-11-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Development Phase. GE and CCSI will conduct their respective efforts in
accordance with the Commercialization Plan attached hereto as Exhibit B, as
such Commercialization Plan may be modified by the Management Committee
under Section 5.1.3 below, Article 7, and any other relevant terms of this
Agreement.
ARTICLE 4
---------
FUNDING OF THE TECHNOLOGY DEVELOPMENT PHASE
-------------------------------------------
4.1. Joint Efforts to Obtain Funding. GE and CCSI shall use best efforts to
-------------------------------
obtain, with respect to each Market Segment, funding from Third Parties
equal to or greater than the Target Funding Amount established in the
Yearly Development Budgets. GE shall determine from which Third Parties
such funding shall be accepted, and upon what terms; provided any material
adverse impact on CCSI is agreed to in advance by CCSI.
4.2. GE Required Expenditures. If the parties are unable to obtain, with
------------------------
respect to any Market Segment, funding equal to or greater than the Target
Funding Amount for such Market Segment on or before the date set forth in
the applicable Yearly Development Budget, then GE will fund the Development
Workplan in an amount equal to the difference between the Target Funding
Amount and the funding actually obtained from Third Parties, not to exceed
the following amounts (each, a "Maximum GE Required Expenditure") with
respect to each Market Segment:
Market Segment Maximum GE Required Expenditure
-------------- -------------------------------
7E Market Segment [*] in any 12-month period, each
such 12 month period starting on
the annual anniversary of the
Effective Date, not to exceed [*]
in the aggregate over the term of
this Agreement.
7F Market Segment [*] in any 12 month period, each
such 12 month period starting on
the annual anniversary of the
Effective Date, not to exceed [*]
in the aggregate over the term of
this Agreement.
[*] [*]
4.3. Failure to Obtain Target Funding. In the event the aggregate amount
--------------------------------
raised by the parties from Third Parties and expended by GE pursuant to
Sections 4.1 and 4.2 above with respect to any Market Segment is less than
the Target Funding Amount for such Market Segment, then the Parties shall
consider, in good faith, alternative funding arrangements which would
provide an equitable sharing of risks and
-12-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
benefits in view of any Development Cost overruns, and shall in good faith
pursue such alternative funding. In the event the parties are unable to
obtain or agree on alternative funding, then each will have its termination
rights under Section 13.2 below.
[*]
4.4. Funding Contributions by Customers of GE. The parties acknowledge that the
----------------------------------------
ability of the parties to obtain Commercialization Program funding from
customers of GE stems from the existing relationship between such customers
and GE and such customers' confidence in GE's ability to successfully
pursue the Commercialization Program. Accordingly, any funding obtained
from customers of GE shall be deemed to be funding provided by GE (except
that such customer funding shall not be counted toward the Maximum GE
Required Contribution), and shall constitute a material part of the
consideration being provided by GE for the performance of CCSI's
obligations under this Agreement.
ARTICLE 5
---------
MANAGEMENT OF THE COMMERCIALIZATION PROGRAM
-------------------------------------------
5.1. Management Committee.
--------------------
5.1.1 Composition of the Management Committee. The Commercialization
---------------------------------------
Program shall be conducted under the direction of the Management
Committee composed of two (2) named representatives of CCSI and two
(2) named representatives of GE. The CCSI representatives to the
Management Committee shall consist of the CCSI Project Leader and a
Vice President of CCSI. The GE representatives to the Management
Committee shall consist of the GE Project Leader and a General
Manager of GE. Each party shall appoint its respective
representatives to the Management Committee from time to time, and
may substitute one or more of its representatives, in its sole
discretion, effective upon notice to the other party of such change,
provided the replacements hold positions with the parties which are
consistent with the functional roles set forth above.
5.1.2 Meetings. The Management Committee shall meet at least semiannually
--------
during the term of this Agreement, on such dates and at such times
and places as agreed to by CCSI and GE, alternating between Mountain
View, California and Schenectady, New York, or such other locations
as the parties shall agree.
-13-
5.1.3 Committee Responsibilities. The Management Committee is responsible
--------------------------
for ensuring efficient and effective management of the
Commercialization Program, including the establishment and approval
of the Development Workplan, the Yearly Development Budgets and the
Commercialization Plan. Any approval, determination or other action
agreed to by a majority of the members of the Management Committee
shall be the approval, determination or other action of the
Management Committee.
5.2. Disagreements: Executive Committee. Within thirty (30) days after any
----------------------------------
acknowledged deadlock, all disagreements within the Management Committee
shall be submitted to the Executive Committee for resolution. GE's
representative to the Executive Committee shall be a functional vice
president. CCSI's representative to the Executive Committee shall be the
President of CCSI. Each party shall appoint its respective representatives
to the Executive Committee from time to time, and may substitute its
representatives, in its sole discretion, effective upon notice to the other
party of such change, provided the replacement holds a position and title
with the replacing party which is consistent with the functional role set
forth above.
5.3. Management Committee Reports. Within thirty (30) days following each
----------------------------
Management Committee meeting during the term of this Agreement, the
Management Committee shall prepare and provide minutes to each party which
shall include a reasonably detailed written summary report describing
collaboration activities and plans as well as any committee decisions.
5.4. Day-to-Day Control. Each party shall have day-to-day control over its
------------------
development and Commercialization activities, subject to compliance with
the Development Workplan and the Commercialization Plan.
ARTICLE 6
---------
CONTRIBUTION OF TECHNOLOGY AND LICENSE RIGHTS
---------------------------------------------
6.1. Technology Transfer. Promptly following the Effective Date and thereafter
-------------------
as such information becomes available, GE and CCSI each shall disclose to
the other party all Technical Information in its possession that is
relevant to the Commercialization Program, to the extent deemed necessary
by the disclosing party, in its reasonable discretion, to enable the other
party to perform its obligations and to conduct its activities contemplated
by this Agreement.
6.2. Licenses.
--------
6.2.1 License Under CCSI Technology. As partial consideration for GE's
-----------------------------
contribution to the Commercialization Program, CCSI hereby grants to
-14-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
GE for the term of this Agreement a paid up, worldwide license under
all CCSI Technology:
(a) to purchase the Products from CCSI for application to Gas
Turbines and the [*] and
(b) To use, sell and offer to sell the Products for Gas Turbines and
the [*].
[*]
6.2.2 [*]
6.2.3 License Under XONON Trademark. CCSI hereby grants to GE for the
-----------------------------
term of this Agreement, a royalty-free, non-exclusive, worldwide
license under CCSI's XONON trademark for GE's marketing and sales
activities related to the Products. In this regard, GE agrees to
market the XONON Modules and/or XONON Components under CCSI's XONON
trademark. This agreement on the part of GE to use the XONON
trademark does not require GE to use the trademark directly on any
gas turbine. In connection with this trademark license, GE agrees
that it will submit samples of all XONON trademark usage to CCSI for
approval prior to use in GE advertising, promotion and/or sales
activities and that GE will promptly discontinue any usage of the
XONON trademark which CCSI specifically objects to and so informs GE
in writing in a timely manner.
6.2.4 License for XONON Control Algorithms. CCSI hereby grants to GE for
------------------------------------
the term of this Agreement, a non-exclusive, royalty-bearing
worldwide license (with rights to sub-license) to copy, have copied,
use, sublicense and offer to sub-license the XONON Control
Algorithm(s) for use with the Products applied to Gas Turbines
(including any gas turbines employed in the [*]), at a royalty of [*]
for a paid up license for each gas turbine sold incorporating a XONON
Control Algorithm, [*].
6.2.5 License for Sale of GE Components. CCSI hereby grants to GE for
---------------------------------
the term of this Agreement, a non-exclusive, worldwide license to
make, have made, use, and sell and offer to sell GE Components
employing or otherwise based upon CCSI Background Technology for
incorporation into GE gas turbines and GE shall pay CCSI a royalty
of [*] for each gas turbine sold by GE incorporating a XONON module
and GE Components irrespective of whether CCSI Background Technology
is actually used in such GE Components, [*]. In connection with such
license, CCSI shall provide to GE any and all CCSI Background
Technology in CCSI's possession relevant to and useful in the
design, manufacture and use of
-15-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
GE Components, including, without limitation, the following: (i)
Computational Fluid Dynamics (CFD) models for analyzing and
designing aerodynamic mixers and preburners, flow fields and flow
paths to preclude recirculation zones; (ii) performance test data on
fuel/air mixers and preburners; (iii) fuel/air mixers and preburner
designs; and (iv) technical information, art, knowledge and training
to use CCSI Background Technology.
6.3. [*]
ARTICLE 7
---------
COMMERCIALIZATION
-----------------
The Commercialization of the Products shall be subject to the Commercialization
Plan attached hereto as Exhibit B and the provisions of this Article 7.
7.1. Supply Agreement. During the [*] Period provided in this Article 7, CCSI
----------------
shall supply all of GE's requirements for the Products for incorporation
into Gas Turbines, provided that CCSI can meet GE's quality, quantity and
schedule requirements, pursuant to the Purchase Terms and Conditions set
forth in Exhibit C. [*]
7.2. Purchase Terms. All GE purchases from CCSI of the Products shall be
--------------
subject to the Purchase Terms and Conditions as set forth on Exhibit C.
7.2.1 [*]
7.2.2 [*]
7.2.3 To assist CCSI in planning its manufacturing activities, GE shall
promptly provide CCSI with its best estimate of its requirements for
goods over the next annualized or consecutive twelve (12) month
period broken down by one (1) month periods. Further GE shall update
this twelve (12) month estimate on a calendar quarter basis, such
that CCSI receives a revised estimate of GE's requirements for the
goods for the next four (4) calendar quarters. If GE places any firm
orders which exceeds by more than fifty percent (50%) the rolling
twelve (12) month estimates, CCSI shall use all reasonable efforts
to fill such order but shall not be in breach for failure to do so
unless GE gives CCSI at least six months written notice of the
revised estimate.
7.2.4 For the purposes of Article 7 of Exhibit C, Terms & Conditions of
Purchase, GE and CCSI shall agree upon CCSI's process and control
-16-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
system and such agreed upon system shall be deemed acceptable to GE
for purposes of Article 7 of Exhibit C, Terms & Conditions of
Purchase.
7.3. [*]
7.4. [*]
7.5. [*]
[*] [*]
[*] [*]
[*]
7.6. Purchase of Products for Application to Smaller Turbines. As further
--------------------------------------------------------
consideration for GE's contribution to the Commercialization Program, GE
shall have the right to purchase from CCSI, on a non-exclusive basis (but
exclusive as to GE designed gas turbines), Products for application to GE
designed and manufactured gas turbines in the 2 to 70MW size range, and to
use, sell and offer to sell Products for such applications, subject to
reasonable purchase terms and conditions to be negotiated at the time, but
in any event at [*].
7.7. Alternative Products Source. If CCSI is unable to consistently meet GE's
---------------------------
requirements for Products from a quality, quantity or delivery standpoint,
CCSI shall promptly establish a second source of supply (as a vendor to
CCSI) with a Third Party manufacturer designated by CCSI and approved by
GE (which approval shall not be unreasonably withheld), solely for the
purpose of satisfying CCSI's obligations to supply Products to GE under
this Agreement.
ARTICLE 8
---------
ROYALTIES
---------
8.1. Royalties Upon Certain Terminations. In the event of a termination of
-----------------------------------
this Agreement by CCSI under Section 13.1, or 13.2 subparagraph (b)
including, in each case, any termination by individual Market Segment
under Section 13.6, and subject to any surviving terms of this Agreement,
if GE elects thereafter to continue to sell and offer to sell Products to
new customers, with respect to any such Market Segment, then CCSI shall
grant to GE a non-exclusive, royalty-bearing, irrevocable, worldwide
license under CCSI's Commercialization Program Technology, CCSI's
Background Technology and XONON Control Algorithms to
-17-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
sell and offer to sell Products and sublicense XONON Control Algorithms,
and GE shall pay to CCSI fees and royalties with respect to such Market
Segment, payable in the form of (a) a one-time fee in the amount set forth
below, payable upon the first sale of a gas turbine incorporating such
Product in such Market Segment; and (b) a royalty in the amount set forth
below for each subsequent sale of a gas turbine incorporating such Product
[*].
Market Segment [*] One-Time Fee Royalty Per Sale
-------------- ------------ ----------------
7F [*] [*] [*]
7E [*] [*] [*]
[*] [*] [*] [*]
8.2. Royalties on XONON Control Algorithms. If GE sublicenses the XONON Control
-------------------------------------
Algorithms in connection with its sales of Gas Turbines incorporating the
Products, then GE shall pay to CCSI the royalty provided in Section 6.2.4.
8.3. Royalties on Sale of GE Components Employing CCSI Technology. If XX xxxxx
------------------------------------------------------------
or leases GE gas turbines incorporating a XONON Module and GE Components,
GE shall pay to CCSI the royalty provided in Section 6.2.5.
8.4. Royalty Accrual. For purposes of royalty payments hereunder, GE Gas
---------------
Turbines or GE Components shall be considered sold when title is
transferred to a Third Party, or upon lease execution if leased to a Third
Party.
8.5. Royalty Payment. Any and all royalties accruing to CCSI under this
---------------
Agreement, shall be paid by GE within forty-five (45) days following the
end of each quarter year period of the calendar year during which the
royalties have accrued. In this regard, all monies due as royalty payments
under this Agreement shall be payable in the United States funds
collectible at par in San Francisco, California.
8.6. Royalty Accounting. GE shall within forty-five (45) days after the end of
------------------
each quarter year during which royalties are due under this Agreement
forward to CCSI a written statement showing the quantities of royalty
bearing GE Gas Turbine(s) or GE Components which have been sold (in U.S.
dollars) during each quarter year of this Agreement and a computation of
royalties payable thereon and shall accompany each statement by payment of
the amount due. If no sales of such royalty bearing Gas Turbines or
Component has been made during any reporting period, a statement to this
effect shall be required.
8.7. Royalty Records & Audits. GE shall use its best efforts to keep books and
------------------------
records accurately showing all GE gas turbines and/or GE Components sold
or leased by it
-18-
and subject to royalties under the terms of this Agreement. Such books and
records shall be open to inspection by an independent auditor acceptable
to GE at reasonable times, but not more frequently than once every twelve
months, for the purpose of verifying the accuracy of the quarterly reports
and the royalties due. The fees and expenses of the auditor performing
such an examination shall be borne by CCSI. These books and records shall
be preserved for at least two (2) years from the date of the royalty
payment to which they pertain.
ARTICLE 9
---------
PATENT INFRINGEMENT AND
TECHNOLOGY RIGHTS ENFORCEMENT ACTIONS
-------------------------------------
9.1. CCSI Indemnification. CCSI shall indemnify and hold GE, its Affiliates,
--------------------
customers and sublicensees harmless, and hereby forever releases and
discharges GE, its Affiliates, customers, and sublicensees, from and
against all liabilities, damages and expenses, including attorneys' and
experts' fees and costs, arising out of any claim of patent or copyright
infringement brought by a Third Party because of the manufacture, use or
sale of, or offer to sell, any Product supplied by CCSI to GE, its
Affiliates, customers or sublicensees, provided such use is in accordance
with Product or XONON Control Algorithm specifications and CCSI is
notified promptly of receipt of the Third Party claim and CCSI is given
full control of any defense against such claim. If as a result of the
claim, the use by GE of the Product or XONON Control Algorithm is
enjoined, then CCSI shall at its option (i) obtain the appropriate license
from the Third Party claimant to enable GE and its customers to continue
such Product or XONON Control Algorithm use, (ii) modify the Product or
XONON Control Algorithm so that it no longer is infringing, but still
satisfies agreed upon performance specifications, or (iii) replace the
Product or XONON Control Algorithm with a non-infringing Product or XONON
Control Algorithm which satisfies agreed upon performance specifications.
In the event CCSI is unable to eliminate the infringement by any of the
aforementioned measures, then CCSI and GE shall meet and agree on possible
alternatives which, as a last resort, shall include CCSI taking back any
infringing Product or XONON Control Algorithm and refunding the purchase
price for such Product or XONON Control Algorithm, subject to GE's
agreement which shall not be unreasonably withheld.
9.2. GE Patent Indemnification. GE shall indemnify and hold CCSI and its
-------------------------
Affiliates harmless and forever releases and discharges CCSI and its
Affiliates from and against all liabilities, damages and expenses,
including attorney's and experts fees and costs arising out of any claim
of patent infringement brought by a Third Party because of the
manufacture, use or sale of, or offer to sell, any GE Components
incorporating Technology licensed by CCSI to GE under Section 6.2.5 hereof
-19-
(other than claims based solely on Products supplied by CCSI) by GE, its
Affiliates, customers or sublicensees, provided CCSI notifies GE promptly
of receipt of the Third Party claim and GE is given full control of any
defense against such claim.
9.3. Enforcement of Patents and Other Technology Rights. CCSI shall, at its
--------------------------------------------------
sole expense, use its best efforts to enforce CCSI owned Patents and other
Technology rights relating to any Products purchased by GE against any
infringement of such Patents or unauthorized use or misappropriation of
such Technology rights by a Third Party of which CCSI becomes aware. GE
shall promptly notify CCSI if GE becomes aware of any such infringement or
Technology misappropriation. In the event such action includes the
bringing of a suit against such Third Party, GE shall provide such
assistance as CCSI shall reasonably request, provided that CCSI shall
reimburse GE for all reasonable expenses thereby incurred. All costs and
expenses, including attorney's fees of any lawsuit instituted by CCSI
shall be born by CCSI. The amount of recovery paid to CCSI shall belong to
and be the sole property of CCSI.
ARTICLE 10
----------
CONFIDENTIALITY
---------------
10.1. Nondisclosure and Use Obligations. Except as otherwise provided in this
---------------------------------
Article 10, during the term of this Agreement and for a period of ten (10)
years thereafter, all information of a confidential nature disclosed
pursuant to this Agreement by one party to another and, in the case of
documents, designated by the disclosing party by an appropriate stamp,
marking or legend as being confidential to the disclosing party shall be
used by the receiving party only for the purposes of this Agreement and
shall be maintained as confidential by the receiving party, using the same
safeguards as it uses to protect its own confidential information of a
similar character. The receiving party will not publish or disclose to
Third Parties any such received information of a confidential nature
without the prior express written consent of the disclosing party. The
foregoing obligations on use and disclosure of confidential information
shall not apply to any information which:
(a) is shown by objective evidence to be already in the possession of the
receiving party at the time of first receipt from the disclosing
party; or
(b) is shown by objective evidence to be developed independently by
employees of the receiving party who had not had access to the
confidential information; or
-20-
(c) is or becomes part of the public domain without breach of this
Agreement by the receiving party; or
(d) is made available by the disclosing party to a third party without
like obligations on disclosure; or
(e) is rightfully obtained by the receiving party from third person
without restriction or breach of this Agreement by the receiving
party; or
(f) in the case of documents, is not designated by an appropriate stamp,
marking or legend as being confidential to the disclosing party at
the time of disclosure.
Oral information disclosed by one party to the other shall be confirmed as
confidential by a written summary to be submitted by the disclosing party
to the receiving party within ten (10) days after the oral transmission
thereof. For purposes of this Article 10, information and data described
above shall be referred to as "Information".
10.2. Permitted Disclosures. To the extent it is reasonably necessary or
---------------------
appropriate to fulfill its obligations or exercise its rights under this
Agreement, (a) a party may disclose Information it is otherwise obligated
under this Article 10 not to disclose to its directors, officers,
employees, attorneys, accountants, consultants and sublicensees, on a
need-to-know basis on the condition that such Persons agree to keep the
Information confidential for the same time periods and to the same extent
as such party is required to keep the Information confidential; (b) a
party may disclose Information, described in Section 10.1 above, that it
is otherwise obligated under this Article 10 not to disclose to its
Affiliates and outside contractors, on a need-to-know basis on the
condition that such Persons agree to keep the Information confidential for
the same time periods and to the same extent as such party is required to
keep the information confidential; and (c) a party may disclose such
Information to government or other regulatory authorities to the extent
that such disclosure is required by applicable law, regulation or court
order, or is reasonably necessary to obtain patents and to commercially
market the Products, provided that the disclosing party shall provide
written notice to the other party and sufficient opportunity to object to
such disclosure or to request confidential treatment thereof.
10.3. Terms of this Agreement. CCSI and GE shall not disclose any terms or
-----------------------
conditions of this Agreement to any Third Party without the prior consent
of the other party, except as required by applicable law.
-21-
ARTICLE 11
----------
PUBLICATION
-----------
11.1. Notice of Publication. During the term of this Agreement, CCSI and GE
---------------------
each acknowledge the other party's interest in publishing certain of its
results to obtain recognition within the scientific and investment
communities and to advance the state of scientific knowledge. Each party
also recognizes the mutual interest in obtaining valid patent protection
and protecting business interests. Consequently, either party, its
employees or consultants wishing to make a publication (including any
oral disclosure made without obligation of confidentiality) relating to
work performed by such party as part of the Commercialization Program
(the "Publishing Party") shall transmit to the other party (the
"Reviewing Party") a copy of the proposed written publication at least
forty-five (45) days prior to submission for publication, or an outline
of such oral disclosure at least fifteen (15) days prior to presentation.
The Reviewing Party shall have the right (a) to propose modifications to
the publication for patent reasons or to protect or delete proprietary
information, and (b) to request a reasonable delay in publication in
order to protect patentable or proprietary information.
11.2. Timing of Publication. If the Reviewing Party requests such a delay, the
---------------------
Publishing Party shall delay submission or presentation of the
publication for a period of ninety (90) days to enable patent
applications protecting each party's rights in such information to be
filed. Upon the expiry of forty-five (45) days, in the case of proposed
written disclosures, or fifteen (15) days, in the case of proposed oral
disclosures, from transmission to the Reviewing Party, the Publishing
Party shall be free to proceed with the written publication or the
presentation, respectively, unless the Reviewing Party has requested the
delay described above.
11.3. Disclosure Regarding Agreement. Neither party shall make a press release
------------------------------
or other public disclosure of the fact that this Agreement has been
entered into or any details of its terms without the other party's prior
consent, unless such disclosure is required, on the advice of counsel, to
comply with any local, state or federal law or regulation, in which case
disclosure can be made upon prior written notice to the other party.
ARTICLE 12
----------
TECHNOLOGY AND PATENT RIGHTS
----------------------------
12.1. Ownership of Background Technology. The entire right, title and interest
----------------------------------
in all Background Technology shall be retained by the party owning it. To
the extent a
-22-
party is granted any right to use Background Technology under this
Agreement, the use of such Background Technology shall be limited to the
express purposes of this Agreement.
12.2. Ownership of Commercialization Program Technology. The entire right,
-------------------------------------------------
title and interest in all Commercialization Program Technology (a)
conceived by employees or others acting solely on behalf of CCSI or its
Affiliates shall be owned solely by CCSI, (b) conceived by employees or
others acting solely on behalf of GE or its Affiliates shall be owned
solely by GE. Inventions conceived during the term of this Agreement by
employees of CCSI and GE, or their respective Affiliates, shall be owned
jointly by CCSI and GE based on employees or agents of both parties being
named as inventors in accordance with laws of inventorship of the United
States (the "Jointly Owned Technology"). Such ownership rights of each
party with respect to the Technology are subject to the licenses granted
under Article 6 above and this Article 12. CCSI and GE each hereby
represents that all employees performing its obligations under this
Agreement shall be obligated under a binding written agreement to assign
to it, or as it shall direct, all Technology conceived by such employees.
12.3. Commercialization Program Technology Cross-Licenses.
---------------------------------------------------
12.3.1 GE License. In the event GE conceives inventions or exchanges
----------
Technical Information comprising improvements and/or modifications
to the XONON Module during the period of ten (10) years following
the Effective Date of this Agreement and/or if GE conceives, by
means of GE employees who had access to CCSI Technology, any
invention comprising an improvement or modification to the XONON
Module or develops Technology which is derived from CCSI owned
Technology, during such period, then GE shall grant to CCSI a non-
exclusive royalty-free, perpetual, world-wide, irrevocable license
(with unrestricted rights to sublicense) to make, have made, use,
sell, lease and/or export Products under both the aforesaid
Technical Information and any Patents which result from the
aforesaid inventions; said non-exclusive license being restricted
in field-of-use to Products for gas turbines employing catalytic
combustion, other than aircraft gas turbines of the type
manufactured by GE Aircraft Engines.
12.3.2 CCSI License. In the event CCSI conceives inventions or exchanges
------------
Technical Information comprising improvements and/or modifications
to the XONON Components or GE Components or any other portion of
the combustion system (excluding the XONON Module) during the
period of ten (10) years following the Effective Date of this
Agreement and/or if CCSI conceives, by means of CCSI employees who
had access to GE
-23-
Technology, any invention relating to the aforesaid XONON
Components or GE Components or any other portion of the combustion
system or develops Technology which is derived from GE owned
Technology, during such period, then CCSI shall grant to GE a non-
exclusive royalty-free, perpetual, world-wide, irrevocable license
(with unrestricted right to sublicense) to make, have, made, use,
sell, lease and/or export XONON Components, GE Components, and any
other portion of the combustion system (excluding the XONON
Module) under both the aforesaid Technical Information and any
Patents which result from the aforesaid inventions, said non-
exclusive license being restricted in field-of-use to gas turbines
employing catalytic combustion.
12.4. Patent Filing Procedure. In all cases, the inventing party shall retain
-----------------------
the sole right to determine whether or not Patent applications will be
filed, and whether Patents and Patent applications will be maintained, on
any such inventions which are conceived by its employees. With regard to
inventions conceived jointly by both parties during work under this
Agreement and Patents arising from such joint inventions which shall be
the joint property of GE and CCSI, each party shall be free to utilize
the same and to license third parties of its own choosing thereunder
without consultation with the other party, and without an accounting or
sharing of licensing income thereby received, if any. The parties agree
to select mutually acceptable Patent attorneys to file and prosecute
Patent applications based on such joint patentable inventions and to
share equally the cost of such services and expenses reasonably incurred
by such attorneys, including the payment of Patent maintenance fees, and
without further compensation, to give such attorneys all reasonable
assistance, to cause all necessary papers to be executed and do all
things that may reasonably be required to obtain and maintain Patents on
such joint inventions. Each party shall be kept fully advised of the
status of the prosecution of each such Patent application and shall be
consulted in advance with respect to the advisability of continuing said
prosecution in the event of any final rejection, appeal, interference, or
the like, and each party may, at any time by ten (10) days' notice to the
other party, elect not to continue to pays its share of such services and
expenses incurred after the date of said election with respect to any
such Patent or Patent application; provided, however, that the party
making such election shall, at the time of so notifying the other party,
immediately assign to the other party all rights to the Patent or Patent
application with respect to which the election is being made. Neither
party hereto shall be obligated to make any payments for or on account of
proceedings before any court or any other tribunal or agency in
connection with the maintenance or assertion of any Patents based on
joint inventions.
12.5. No Other Technology Rights. Except as otherwise provided in this
--------------------------
Agreement, under no circumstances shall a party, as a result of this
Agreement, obtain any
-24-
ownership interest or other right in any technology, know-how, patents,
pending patent applications or products of the other party, including
items owned, controlled or developed by the other, or transferred by the
other to such party at any time pursuant to this Agreement.
ARTICLE 13
----------
TERMINATION
-----------
13.1. Termination for Cause. Either party may terminate this Agreement for
---------------------
cause upon the occurrence of any of the following:
13.1.1 The other party shall (a) seek the liquidation, reorganization,
dissolution or winding up of itself (other than dissolution or
winding up for the purposes of reconstruction or amalgamation) or
the composition or readjustment of all or substantially all of
its debts, (b) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or
liquidator of itself or substantially all of its assets, (c) make
a general assignment for the benefit of its creditors, (d)
commence a voluntary case under the Bankruptcy Code, (e) file a
petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition
or readjustment of debts, or (f) adopt any resolution of its
Board of Directors or stockholders for the purpose of effecting
any of the foregoing; or
13.1.2 A proceeding or case shall be commenced without the application
or consent of the other party and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving
or ordering any of the following shall be entered and continue
unstayed in effect, for a period of ninety (90) days from and
after the date service of process is effected upon the other
party, seeking (a) its liquidation, reorganization, dissolution
or winding up, or the composition or readjustment of all or
substantially all of its debts, (b) the appointment of a trustee,
receiver, custodian, liquidator or the like of itself or of all
or substantially all of its assets, or (c) similar relief under
any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or readjustment of debts; or
13.1.3 Except as otherwise provided in Article 15 below, upon or after
the breach of any material provision of this Agreement, if the
breaching party has not cured such breach within ninety (90) days
after notice thereof from the other party, this Agreement shall
terminate for cause, at the option of the other party, upon the
expiration of such ninety (90) day cure
-25-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
period. Notwithstanding the foregoing, GE shall have the right to
terminate this Agreement for cause upon thirty (30) days notice
if GE has terminated any three (3) purchase orders due to CCSI
material default in performing those purchase orders during any
twelve (12) month period.
In addition, GE may terminate this Agreement for cause in
accordance with Article 16 due to an assignment of this
Agreement, or a transfer of control of CCSI, to a Competing
Manufacturer.
13.1.4 In the event that either GE or CCSI elects to terminate this
Agreement under the provisions of this Section 13.1 or Section
13.2, the other party shall have the right, within thirty (30)
days of receipt of a termination notice, to request binding
arbitration on the issue. In such event, CCSI and GE shall agree
on an independent arbitrator to review the relevant evidence and
render a decision on whether termination is justified under the
circumstances. The site of arbitration shall be New York, NY if
requested by CCSI and in San Francisco, CA if requested by GE,
unless otherwise agreed. Both parties shall use all reasonable
efforts to select the independent arbitrator and complete the
arbitration within sixty (60) days after the notice of request
for arbitration. The decision of the arbitrator shall be final
and binding, and the non-prevailing party shall pay all of the
costs of the arbitrator. If arbitration is requested hereunder,
in no event shall any remedies provided in this Agreement and
triggered by default under this Section 13.1 be implemented until
after the decision of the arbitrator has been rendered.
13.2. Termination Without Cause. Either party shall have the unilateral right
-------------------------
to terminate this Agreement by giving written notice to the other party
(a) at any time, if the parties are unable, after best efforts, to raise
funds from Third Parties within a Market Segment in at least an amount
equal to the difference between (i) the Target Funding Amount for such
Market Segment, and (ii) the Maximum GE Required Contribution for such
Market Segment, excluding the [*], or (b) after the end of the Initial
Term, upon the terminating party's written notice to the other party of
significant technical issues which indicate that the technical objectives
of the Commercialization Program are not achievable or cannot be achieved
within the timetable established in the Development Workplan or any
extension thereof agreed to by the parties; with GE having the right to
terminate under (b) above only if the technical issues relate to the
XONON Module or XONON Components, and CCSI having the right to terminate
under (b) above only if the technical issues relate to the GE Components.
13.3. Consequences of Termination -- CCSI Not in Default. In the event this
--------------------------------------------------
Agreement is terminated by GE under Section 13.2, or by CCSI under
-26-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
Section 13.1: (a) CCSI shall have no obligation to make improvements to
the XONON Combustion System available to GE beyond those developed in the
Commercialization Program prior to such termination; [*], and (e) if GE
elects to pursue its options under Section 8.1, GE shall pay CCSI the
predetermined royalty or fee as provided therein.
13.4. Consequences of Termination -- GE Not in Default. In the event this
------------------------------------------------
Agreement is terminated by CCSI under Section 13.2, or by GE under
Section 13.1: (a) GE's licenses under CCSI Technology pursuant to Article
6 shall continue in effect and CCSI shall promptly arrange with GE for a
Third Party source of supply (as a vendor to CCSI) of the XONON
Combustion System using the procedure set forth in Section 7.7 above
which assures GE of a continuing and uninterrupted source of supply for
the XONON Modules and/or XONON Components, and [*]. Further, if GE
terminates under Section 6.3 above because of failure on the part of CCSI
to pay [*], CCSI shall immediately set up and license, at CCSI's cost, a
Third Party source of Product under the procedure set forth in Section
7.7 above except in this case the Third Party shall be a vendor to GE,
provided the Third Party license is limited to manufacture and sale of
Products solely to GE at the Discount Price and not to Third Parties. In
the event the Third Party source of supply established above under clause
(a) as a vendor to CCSI fails to supply GE with Product in a timely
fashion pursuant to this Agreement, then GE shall, upon written notice to
CCSI, also have the right to have a Third Party Product vendor to GE
established pursuant to the procedure set forth in the preceding
sentence.
13.5. Effect of Termination. Termination of this Agreement shall not relieve
---------------------
the parties of any obligation accruing prior to such termination. The
provisions of Sections 9.1, 9.2 and this 13.5, and Articles 10
[Confidentiality], 11 [Publication], 12 [Technology and Patent Rights]
and 14 [Indemnity], in addition to those rights and obligations
specifically noted in Section 13.3 or 13.4, to the extent applicable,
shall survive the termination of this Agreement. Each party shall bear
its own termination costs. There will be no liquidated damages.
13.6. Termination by Market Segment. Any right to terminate this Agreement
-----------------------------
under this Article 13 may, at the election of the party seeking to
terminate, be exercised as to one or more individual Market Segments as
specified in such party's written notice of termination. In such event,
this Agreement shall continue in full force an effect with respect to the
remaining Market Segments.
-27-
ARTICLE 14
----------
INDEMNITY
---------
14.1. Direct Indemnity. Each party shall indemnify and hold the other party,
----------------
its Affiliates and sublicensees harmless, and hereby forever releases and
discharges the other party, its Affiliates and sublicensees, from and
against all claims demands, liabilities, damages and expenses, including
attorneys fees and costs (all "Liabilities") arising out of any breach of
a representation or warranty contained in Section 2 hereof, negligence,
recklessness or intentional wrongful acts or omissions of the
indemnifying party, its Affiliates or sublicensees in connection with the
work performed by such party during the term of this Agreement except in
each case to the extent such Liabilities resulted from negligence,
recklessness or intentional wrongful acts or omissions of the other
party. Neither party shall be liable to the other for any indirect,
incidental or consequential damages arising out of any terms or
conditions in this Agreement or with respect to the performance thereof.
14.2. Procedure. A party (the "Indemnitee") that intends to claim
---------
indemnification under this Article 14 shall promptly notify the other
party (the "Indemnitor") of any Liability or action in respect of which
the Indemnitor or any of its Affiliates intend to claim such
indemnification, and the Indemnitor shall have the right to participate
in, and, to the extent the Indemnitor so desires, jointly with any other
Indemnitor similarly noticed, to assume the defense thereof with counsel
selected by the Indemnitor. The indemnity obligations under this Article
14 shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld
unreasonably. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 14, but
the omission so to deliver notice to the Indemnitor will not relieve it
of any liability that it may have to any Indemnitee otherwise than under
this Article 14. The Indemnitor may not settle the action or otherwise
consent to an adverse judgment in such action that diminishes the rights
or interests of the Indemnitee without the express written consent of the
Indemnitee. The Indemnitee, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the
investigation of any action, claim or liability covered by this
indemnification at Indemnitor's expense.
-28-
ARTICLE 15
----------
EXCUSABLE DELAY
---------------
Neither party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this Agreement for failure or delay
in fulfilling or performing any term of this Agreement to the extent, and for so
long as, such failure or delay is caused by or results from causes beyond the
reasonable control of the affected party including but not limited to fire,
floods, embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party. The foregoing shall be subject to
the delayed party using reasonable efforts to mitigate the adverse consequences
of such delay.
ARTICLE 16
----------
ASSIGNMENT
----------
This Agreement may not be assigned or otherwise transferred, nor, except as
expressly provided hereunder, may any right or obligations be assigned or
transferred by either party without the consent of the other party; provided
further, however that (i) each party may assign its rights and interests, and
delegate its obligations, hereunder, effective upon written notice thereof, to
any Affiliate, and (ii) either party may assign its rights and interests, and
delegate its obligations, hereunder, effective upon written notice thereof, to
any Third Party which acquires all or substantially all of the assets of CCSI or
GE, as the case may be, or which is the surviving third party in a merger or
consolidation with CCSI or GE as the case may be, if such Third Party assumes
all of the obligations of CCSI or GE, as the case may be, hereunder. Subject to
the foregoing, any reference to CCSI or GE hereunder shall be deemed to include
the successors thereto and assigns thereof. Notwithstanding anything to the
contrary contained in this Article 16, if, without GE's prior written consent,
either (a) CCSI assigns or otherwise transfers its rights and interests under
this Agreement to any Competing Manufacturer (defined below) including any
transfer by merger or asset sale; or (b) any Competing Manufacturer purchases or
otherwise obtains a controlling ownership interest (defined as 50% or more
ownership interest) in CCSI; then this Agreement shall terminate upon GE's
election and written notice thereof to CCSI, and such termination shall be
deemed a termination for cause under Section 13.1, resulting in the consequences
to the parties described in Section 13.4. For the purposes of this Agreement,
"Competing Manufacturers" shall mean only companies that design, manufacture and
sell gas turbines of greater than 2 MW for power generation or mechanical drive
applications. Further, in the event the assignment or transfer of rights under
clause a) above or the sale or transfer of controlling interest under clause b)
above are to a company (other than a Competing Manufacturer) that designs,
manufactures and sells gas turbines of greater than 2 but less than 70MW for
power
-29-
generation or mechanical drive applications (herein "Other Turbine
Manufacturer") then the Parties hereby agree that GE has the right after good
faith consideration of any CCSI concerns, to Terminate under Section 13.1 with
consequences set forth in Section 13.4. Notwithstanding the foregoing, GE may
assign its rights and obligations with respect to intellectual property to GE
Power Systems Licensing, Inc., a wholly-owned subsidiary of GE.
ARTICLE 17
----------
SEVERABILITY
------------
Each party hereby acknowledges that it does not intend to violate any public
policy, statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or
association of countries. Should one or more provisions of this Agreement be or
become invalid, the parties shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the parties would have entered into this Agreement with
such provisions. In case such provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
parties would not have entered into this Agreement without the invalid
provisions.
ARTICLE 18
----------
MISCELLANEOUS
-------------
18.1. Notices. Any consent, notice or report required or permitted to be given
-------
or made under this Agreement by one of the parties to the other shall be
in writing, delivered personally or by facsimile (and promptly confirmed
by personal delivery, U.S. First class mail or courier), U.S. first class
mail or courier, postage prepaid (where applicable), addressed to such
other party at its address indicated below, or to such other address as
the addressee shall have last furnished in writing to the addressor and
(except as otherwise provided in this Agreement) shall be effective upon
receipt by the addressee.
If to CCSI: Catalytica Combustion Systems, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Attention: President
If to GPS: GENXON Power Systems, LLC
000 Xxxxxxxx Xxxxx
-00-
Xxxxxxxx Xxxx, XX 00000
Attention: President
If to GE: GE Power Systems
0 Xxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Attention: VP, Power Plants
18.2. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
18.3. Agreement Limited to Express Terms. Except as otherwise expressly
----------------------------------
provided in this Agreement, the parties agree that the Commercialization
Program contemplated herein, and any discussions or communications
between the parties relating thereto, shall not restrict either party's
right to take whatever future actions such party unilaterally determines
to be in its best interest, including the right to undertake similar
programs or relationships with Third Parties covering subjects related to
the matters covered herein and neither the holding of any discussions
between the parties, nor the exchange of any information shall diminish
or restrict in any way the right that any party has to market, lease,
sell or otherwise make available its products and services to any
customer or Third Party.
18.4. Entire Agreement. This Agreement contains the entire understanding of the
-----------------
parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made
are expressly superseded by this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly
executed by both parties.
18.5. Headings. The captions to the Articles and Sections hereof are not a part
---------
of the terms but are merely guides or labels to assist in locating and
reading the Articles and Sections hereof.
18.6. Independent Contractors. It is expressly agreed that CCSI and GE shall be
------------------------
independent contractors and that the relationship between the two parties
shall not constitute a partnership, joint venture or agency. Neither CCSI
nor GE shall have the authority to make any statements, representations
or commitments of any kind, or to take any action or undertake any
obligation, which shall be binding on the other party, without the prior
consent of the other party.
18.7. Waiver. The waiver by either party of any right hereunder or the failure
------
to perform or of a breach by the other party shall not be deemed a waiver
of any
-31-
other right hereunder or of any other breach or failure by said other
party whether of a similar nature or otherwise.
18.8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-32-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
AGREED FOR AND ON BEHALF OF AGREED FOR AND ON BEHALF OF
GENERAL ELECTRIC COMPANY CATALYTICA COMBUSTION
SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------------- --------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. Xxxxx
-------------------------------- --------------------------
Title: VP Power Plants Title: Chief Executive Officer
-------------------------------- --------------------------
AGREED FOR AND ON BEHALF OF GENXON
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------
Title: President
--------------------------------
Witness: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------
Title: GM-GT Product Management
--------------------------------
Witness: /s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
--------------------------------
Title: Director, Marketing CCSI
--------------------------------
-33-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
EXHIBIT A
---------
PROGRAM SCHEDULE AND MILESTONES
-------------------------------
[*]
-34-
THE SYMBOL "[*]" IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS
BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
EXHIBIT B
---------
COMMERCIALIZATION PLAN
----------------------
Time to Market Focus of Commercialization Program
-------------------------------------------------
Basic Principles
----------------
Customer requirements drives market timing
Development compatible with GE's NPI Tollgate process
Program Targets
---------------
[*] Market [*] [*] Estimated
Segments/ Program Budgets (3)
Turbines ($ million)
-------- -----------
[*] PGT10 or Other [*] [*] [*] [*]
[*]
[*]
[*] 7E [*] [*] [*] [*]
[*]
[*]
[*] 7F [*] [*] [*] [*]
[*]
[*]
______________________
[*]
(2) To first engine firing which includes 2 full size test combustors and 1
full combustor set (10 combustors for a 7E and 14 combustors for a 7F), but
excludes costs for installation and appropriate field testing. The cost
will be site specific - very preliminary estimate of [*]. Field testing is
estimated at 2 months.
(3) Assumes that both GE and CCSI will pursue parallel "Component" paths
through the Preliminary Design Phase (includes prototype test hardware),
and GE will select a "Component" path to go forward to Final Design Phase.
-35-
EXHIBIT C
---------
TERMS & CONDITIONS OF PURCHASE
------------------------------
1. APPLICABLE TERMS AND CONDITIONS. Purchaser and Seller agree that the
following statement shall be printed on the front of any Purchase Order or
Contract for the sale of XONON Modules or XONON Components (herein referred to
individually or collectively as the "Product" or "Products" or "Goods"): "The
purchase and sale of the Products set forth in this Purchase Order shall be
subject to the Terms and Conditions of Purchase attached as Exhibit C to the
Collaborative Commercialization and License Agreement (the "CCLA"), dated
November 19, 1998, between Catalytica Combustion Systems, Inc., (the "Seller")
and General Electric Company (the "Purchaser"). Any other terms and conditions
included in this Purchase Order or in any acknowledgment of this Purchase Order
shall not be applicable to this purchase and sale of Products.
2. PRICES AND PAYMENTS. Unless otherwise stated on the face of this Purchase
Order, Seller shall invoice Purchaser for one hundred percent (100%) of the
purchase price within thirty (30) days after delivery. Purchaser shall remit
full payment of the purchase price to Seller by wire transfer within forty five
(45) days of receipt of Seller's invoice. All prices specified here in are firm
and shall not be subject to change, and includes all federal and state income
taxes and payroll taxes. Seller's invoice shall separately state any local
sales, use, VAT or other types of local taxes and duties applicable to the goods
furnished to the Purchaser. No extra charges of any kind will be allowed unless
specifically agreed to in writing by the Purchaser. Purchaser shall be entitled
at all time to set-off any amount owing, excluding disputed claims, at any time
from Seller to Purchaser against any amount payable at any time by Purchaser in
connections with this between Purchaser and Seller.
3. DELIVERY, RISK OF LOSS, TITLE TRANSFER, DELAY. Products manufactured in the
United States shall be delivered to Purchaser FOB Seller's factory. Unless
otherwise stated on the face of this Purchase Order, Purchaser shall be
responsible for risk of loss and all transportation and insurance costs after
delivery. Unless otherwise stated on the face of this Purchase Order title shall
pass to Purchaser upon placement of the goods on the trucks or other transit of
Purchaser's designated carriers. Goods delivered to Purchaser in advance of the
delivery schedule may be returned to Seller at Seller's expense.
Seller shall use all reasonable efforts to meet any delivery schedule specified
by Purchaser, provided Purchase Orders are placed in a timely fashion and
contain all necessary information including but not limited to a full
description of the goods ordered, the quantity ordered and requested delivery
dates. All Purchase Orders shall be placed as firm orders for goods setting
forth the quantities of goods required and the requested delivery date(s).
Purchaser shall endeavor to place purchase orders not later than one
-36-
hundred and twenty (120) days prior to the requested delivery date. Provided
Purchaser has complied with the foregoing one hundred and twenty (120) day prior
notification, and except to the extent caused by an Excusable Delay as defined
in Article 15 of the CCLA, Seller shall be liable for liquidated damages for
failure to achieve delivery on or prior to Purchaser's designated delivery date
at the rate of 0.5% of the purchase price allocable to the delayed goods per day
(beginning with the fifteenth (15) day after the delivery date). Seller's
liquidated damages shall not exceed ten percent 10% of Purchase Order purchase
price. Purchaser shall waive such liquidated damages if Purchaser's contract
with its customer does not include a provision for delay liquidated damages
between Purchaser and its customer or if Seller is able to remedy its delay at
its sole cost such that Purchaser does not incur any delay liquidated damages to
its customer arising out of the delay of the Products. If Seller is more than
sixty (60) days late, Purchaser shall have the right to terminate this Purchase
Order.
4. PURCHASER'S PROPERTY. Unless otherwise agreed in writing, all tools,
equipment or material of every description furnished to Seller by Purchaser or
specially paid for by Purchase, and any replacement thereof, or any materials
affixed or attached thereto, shall be and remain the personal property of
Purchaser. Such property and, whenever practical, each individual item thereof,
shall be plainly marked or otherwise adequately identified by Seller as the
property of the Purchaser and shall be safely stored separate and apart from
Seller's property. Seller shall not substitute any property for Purchaser's
orders. Such property, while in Seller's custody or control, shall be held at
Seller's risk, shall be kept insured by Seller at Seller's expense in an amount
equal to the replacement cost with loss payment to Purchaser and shall be
subject to removal at Purchaser's written request, in which event Seller shall
prepare such property for shipment and shall redeliver to Purchaser in the same
condition as originally received by Seller, reasonable wear and tear excepted,
all at Seller's expense.
5. DRAWINGS. Unless otherwise specifically agreed in writing by Purchaser, any
check or approval of drawings by Purchaser will be for Seller's convenience and
will not relieve Seller of its responsibility to meet all requirements of this
order.
6. CHANGES. Subject to the order scheduling requirements in Article 7.2.3 of
the CCLA and Article 3 above, the Purchaser may at any time, in writing, make
changes within the general scope of this Purchase Order in any one or more of
the following: (a) drawings, designs or specification where the goods to be
furnished are to be specially manufactured for the Purchaser in accordance
therewith, but not Seller's specifications which the parties have mutually
agreed upon under the CCLA as being applicable to this Purchase Order, or other
mutually agreed upon specifications; (b) method of packing; (c) time of
delivery; (d) the amount of Purchaser's furnished property; or (e) quality. If
any such changes causes an increase or decrease in the cost of, or the time
required for the performance of any work under this Contract, whether changed or
not changed, an equitable adjustment shall be made in the Contract Price or
delivery schedule, or both,
-37-
and the Purchase Order shall be modified in writing accordingly. Notification to
Purchaser of any Claim by the Seller for adjustment under this clause must be
asserted within thirty (30) days from the date of receipt by the Seller of the
notification of change. Any change to this order shall be authorized only by a
duly executed Purchase Order amendment.
7. INSPECTION. (a) All goods (which term throughout this order includes
without limitation raw materials, components, intermediate assemblies, tools and
end products) shall be subject to inspection and test by the Purchaser and its
Customer, (where GE is required under its contracts with its Customers to
provide inspection rights at Seller's facility, then Seller's agreement will not
be required) at all reasonable times and places, including the place of
manufacture; (b) If any inspection or test is made on the premises of Seller or
its supplier, Seller, without additional charge, shall provide all reasonable
facilities and assistance for the safety and convenience of the inspectors in
the performance of their duties and Purchaser shall comply with Seller's
premises, security and safety rules; (c) acceptance or rejections of the goods
shall be made as promptly as practical after delivery, except as otherwise
provided in this order, but failure to inspect and accept or reject goods or
failure to detect defects by inspection, shall neither relieve Seller from
responsibility for such goods as are not in accordance with the order
requirements nor impose liabilities on Purchaser thereof; (d) Seller shall
provide and maintain an inspection and process control system mutually
acceptable to Purchaser and Seller covering the goods hereunder. Records of all
inspection work by Seller shall be kept complete and available to Purchaser
during the performance of this order and for such longer periods as may be
specified in this order, not to exceed five (5) years after order date. Seller
will allow representative of Purchaser and Purchaser's customers reasonable
access to the facilities involved in performing this order for purposes of
reviewing the status and progress of production, subject to compliance with
Seller's facility security and safety rules. If during the course of any
inspection in Seller's factory, Purchaser finds that any of the goods are
defective or otherwise not in conformity with the requirements of this Purchase
Order or the CCLA, including any drawings or specifications, Seller shall remedy
such non conformity at its own expense by reperforming any nonconforming service
or replacing any non conforming goods.
8. WARRANTIES. Seller warrants that all goods sold will be free of any claims
of any nature and by any third person and that Seller shall convey clear title
to Purchaser. Seller further warrants that the Products supplied by Seller to
Purchaser shall perform in accordance with agreed upon specifications and shall
be free from defects (a) in materials and workmanship, whatever the origin; (b)
in design having regard to the state of the art at the time of the order and
including defects arising from the choice of materials and / or parts; (c) in
manufacturing process; and (d) arising from non-suitability for the use for
which it was intended. This warranty shall take effect from the date of
acceptance of the Products by Purchaser and shall remain in force until the
earliest of the following to occur: (i) the gas turbine in which the Products
have been installed achieve 8000
-38-
operating hours; (ii) forty eight months from Start-Up; or (iii) sixty (60)
months after the delivery of the Products to Purchaser. Start-Up means the time
when the equipment installation is complete and the gas turbine in which the
Product has been installed is first synchronized to the grid. Purchaser's sole
remedy in the event of any breach of this warranty shall, at Seller's option, be
the replacement or repair in a timely fashion of the defective Product. Seller
shall make replacement Products available and pay transportation, taxes, custom
duties and insurance to the site where the gas turbine is located. Any repaired
or replaced Product shall be warranted for 8000 operating hours, provided that
in no event shall Seller's warranty obligation extend beyond seventy two (72)
months from the delivery of the initial Product.
Purchaser shall notify Seller of obvious defects within sixty (60) days of
delivery and of latent defects within thirty (30) days of discovery.
The warranties set forth in this section shall not apply to any claims, problems
or defects which are the result of normal wear and tear, mishandling, misuse,
neglect or improper testing and repair by other than CCSI or its authorized
representatives.
THE EXPRESS WARRANTIES PROVIDED HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL OTHER WARRANTIES
ARE HEREBY DISCLAIMED AND EXCLUDED BY SELLER.
9. SUSPENSION; TERMINATION FOR CONVENIENCE. Purchaser may, at any time, by
written notice to Seller and termination for convenience, suspend performance of
the work. Said notice of suspension shall specify the date of suspension and
the estimated duration of the suspension. Upon receiving any such notice of
suspension, Seller shall promptly suspend further performance of the work to the
extent specified, and during the period of such suspension shall properly care
for and protect all work in progress and materials, supplies, and equipment
Seller has on hand for performance of the work. Purchaser may at any time
withdraw the suspension of performance of the work as to all or part of the
suspended work by written notice to Seller specifying the effective date and
scope of withdrawal, and Seller shall resume diligent performance of the work
for which the suspension is withdrawn on the specified effective date of
withdrawal, subject to then existing contracts and commitments.
Purchaser may terminate all or any part of this Purchase Order at any time by
providing written notice to Seller.
If this Purchase Order is canceled or terminated for the convenience of
Purchaser or suspended upon the direction of Purchaser for other than Seller
fault, in either case when there is less than 120 days until the scheduled
delivery date, Purchaser shall be responsible for, and shall pay Seller for
Product-in-process on a percent of completion
-39-
basis, established on a proportional basis, where fifty (50%) completion is
assumed on day one hundred and twenty (120) and one hundred (100%) completion is
assumed on day thirty (30) in each case prior to the scheduled delivery date as
a result of such cancellation, termination or suspension, plus any uncancelable
commitments made by Seller, but not to exceed the amount of the Purchase Price
allocable to the terminated portion of this Purchase Order. Purchaser shall pay
undisputed amounts to Seller within thirty (30) days after Seller provides
Purchaser with an invoice.
10. DEFAULT. Except in instances of Excusable Delay as defined in Article 15
of the CCLA, Purchaser may by written notice of default to Seller, terminate
this Purchase Order, in whole or in part (a) if Seller is greater than sixty
(60) days late in delivering the Products, at least twice in any given twelve
(12) month period, or (b) if Seller fails to comply with any of the material
terms and conditions of this Purchase Order and upon receipt of written notice
from Purchaser does not commence corrective action within ten (10) days and cure
such default within sixty (60) days. Upon termination, Purchaser may procure
goods similar in function to the Products, such as SCR or DLN components, and,
subject to the Limitation of Liability set forth below, Seller shall reimburse
Purchaser such costs Purchaser incurs in excess of the Purchase Price.
As an alternative remedy, and in lieu of termination for default, Purchaser may
in its sole discretion, elect to extend the time for delivery and/or waive other
deficiencies in Seller's performance in which case an equitable adjustment in
the Purchase Price shall be negotiated.
11. INDEMNITY AND INSURANCE - WORK ON SELLER'S PREMISES. Each Party (the
"Indemnifying Party") shall indemnify and hold harmless the other party, its
affiliates, officers, directors, agents and employees (the "Indemnified
Parties") against any losses resulting from any third party claim for death or
personal injury or damage to third party tangible real or personal property to
the extent such claim arises from the Indemnifying Party's negligence, gross
negligence or willful misconduct.
Seller shall take all reasonable precautions to prevent the occurrence of any
injury to persons or to property during the progress of work, and, except to the
extent that any such injury or damage is due solely and directly to Purchaser,
shall defend and indemnify Purchaser against any claim which may result in any
way from any act or omission of the Seller, its agents, employees, or
subcontractors. Seller shall maintain comprehensive general liability
(including contractual liability coverage insuring the liabilities assumed
above). Automobile Liability and Employers and Employers Liability insurance
with limits as reasonably required by Purchaser, as well as appropriate Workers
Compensation Insurance as well protect Seller from all claims under any
applicable Workers Compensation and Occupational Disease Act. Seller shall
furnish to Purchaser, upon written request, a Certificate of Insurance completed
by its insurance carrier(s) certifying that insurance coverages are in effect
and will not be canceled or materially changed until
-40-
ten days after prior written notice has been delivered to the purchaser as
required by Purchaser.
12. LIMITATION OF LIABILITY. The total liability of Seller, on all claims of
any kind, whether in contract, warranty, indemnity, tort (including negligence),
strict liability, or otherwise, arising out of the performance or breach of this
Purchase Order shall not exceed two (2) times the Purchase Price.
In no event, whether as a result of breach of contract, warranty, indemnity,
tort (including negligence), strict liability, or otherwise, shall either party
or their respective subcontractors or suppliers be liable for loss of profit or
revenues or for any special, consequential, incidental, indirect or exemplary
damages.
13. PROPER BUSINESS PRACTICES. Seller shall comply with all laws dealing with
improper or illegal payments, gifts or gratuities, and Seller agrees not to pay,
promise to pay or authorize the payment of any money or anything of value,
directly or indirectly to any person for the purpose of illegally or improperly
inducing a decision or obtaining or retaining business in connection with this
Order.
14. COMPLIANCE WITH LAWS General. Seller agrees to comply with the applicable
provisions of any federal, state, provincial or local law or ordinance and all
lawful orders, rules, and regulations issued thereunder. In addition, Seller
shall comply with Good Industry Practices, including the exercise of that degree
of skill, diligence, prudence and foresight which can reasonably be expected
from a competent Seller who is engaged in the same type of manufacture under
similar circumstances in a manner consistent with all applicable requirements
and with all applicable general recognized international standards. No forced
or prison labor may be used in manufacturing the products to be supplied under
this contract. If forced or prison labor is determined to have been used in the
manufacture of the products supplied hereunder the Purchaser shall have the
right to immediately terminate the contract without further compensation to the
Seller.
Provisions applicable to orders for work to be performed, goods to be produced,
or services to be rendered within the United Stated. (a) Seller shall comply
with any provisions, representations or agreements or contractual clauses
required thereby to be included or incorporated by reference or operation of law
in the contract resulting from acceptance of this order and dealing with: (i)
Equal Opportunity (Executive Order 11246 as amended by Executive Orders 113575
and 10286 and applicable regulations promulgated pursuant thereto); (ii)
Employment of Veterans (Executive Order 11701 and applicable regulations
promulgated pursuant thereto); (iii) Employment of the Handicapped (Executive
Order 11758 as amended by Executive Order 11867 and applicable regulations
promulgated pursuant thereto); (iv) Employment Discrimination Because of Age
(Executive Order 11141 and applicable regulations promulgated pursuant thereto);
and (v) Utilization of Disadvantaged and Business Enterprises (Executive Order
-41-
11625. Public Law 95-507 and applicable regulations promulgated pursuant
thereto). (b) Seller certifies that with respect to orders which exceed $10,000
it is in compliance with the requirements for nonsegregated facilities set forth
in 41 CFR Chapter 60-1.8. (c) Seller warrants that each chemical substance
constituting or contained in goods sold or otherwise transferred to Purchaser
hereunder is on the list of chemical substances compiled and published by the
Administrator of the Environmental Protection Administration pursuant to the
Toxic Substances Control Act (P.L. 92-573) as amended, and the Federal Hazardous
Substances Act (P.L. 92-5 16) as amended and lawful standards and regulations
thereunder. (d) In accepting this order Seller represents that the goods to be
furnished hereunder were or will be produced in compliance with the requirements
of the Fair Labor Standards Act of 1938, as amended, including Section 12(a) and
Seller shall insert a certificate to that effect on all invoices submitted in
connection with this order.
Provisions applicable to orders for goods or materials, the destination of
which, final or intermediate, is in the United States. Seller warrants that
each chemical substance constituting or contained in goods sold or otherwise
transferred to Purchaser hereunder is on the list of chemical substances
compiled and published by the United States Administrator of the Environmental
Protection Administration pursuant to the Toxic Substances Control Act (P.L. 92-
573) as amended, and the Federal Hazardous Substances Act (P.L. 92-516) as
amended and lawful standards and regulations thereunder.
Provisions applicable to orders for goods from outside the United States, to be
delivered DEQ, FAC or DAF (INCO TERMS 1990) at point of entry to the United
States. Seller warrants that all sales made hereunder are or will be made at
not less than fair value under the United States Anti-dumping Law (19 U.S.C.
SEC. 160o ct set.), and Seller will indemnify, defend and hold Purchaser
harmless from and against any costs or expenses (including, but not limited to,
any anti-dumping duties which may be imposed) arising out of or in connection
with breach of this warranty.
Provisions applicable to orders for goods from outside the United States, to be
delivered within the United States. Seller agreed that Purchaser will not be a
party to the importation of the goods, that the transaction(s) represented by
this order will be consummated subsequent to importation and that Seller will
neither cause nor permit Purchaser's name to be shown as "importer of record" on
any customs declaration. If Seller will be the importer of record to the United
States, Seller shall provide Purchaser with Customs Form 331 entitled
"Certificate of Delivery" properly executed as well as Customs Form 7501 "Entry
Summary" and a copy of Seller Invoice.
Provisions applicable to technical data provided to Seller from within the
United States. Seller hereby assures the Purchaser that all technical data
received from Purchaser will not be exported from the United States or re-
exported from Seller's country without the express written concurrence to such
export by Purchaser.
-42-
15. PACKING, PRESERVATION AND MARKING. Packing, preservation and marking
requirements will be in accordance with the specification drawing or as
specified on the Purchaser Order. If none specified, use the best commercially
accepted practice.
16. GOVERNING LAW. This order shall in all respects be governed by and
interpreted in accordance with the substantive law of the State of New York,
U.S.A. excluding its conflicts of law provisions. The Parties hereby exclude
the application of the United Nations Convention on Contracts for the
International Sale of Goods.
17. DISPUTE RESOLUTION. Purchaser and Seller shall attempt amicably to resolve
any controversy, dispute or difference arising out of this Order, failing which
either party may initiate litigation. Litigation arising from this Order may be
brought only in the United States District Court for the Southern District of
New York or, if such court lacks subject matter jurisdiction, in the Supreme
Court of the State of New York in and for New York County. The Parties hereby
submit to the jurisdiction of said courts, and waive any defense of forum non
conveniens.
18. YEAR 2000 COMPLIANCE WITH DATE PROCESSING REQUIREMENTS. In addition to any
other warranties and representations provided by Supplier to Purchaser, whether
pursuant to this purchase order, by law, equity, or otherwise, Seller
represents, warrants and covenants that Seller shall use all reasonable efforts
to insure that (a) any product(s) and/or service(s) provided by Seller hereunder
including, without limitation, each item of hardware, software, or firmware; any
system, equipment, or products consisting of or containing one or more thereof;
and any and all enhancements, upgrades, customizations, modifications,
maintenance and the like ("Products/Services") shall be Year 2000 Compliant at
the time of delivery and at all times thereafter and in all subsequent updates
or revisions of any kind, and (b) Seller's supply of the Products/Services to
Purchaser shall not be interrupted, delayed, decreased, or otherwise affected by
dates prior to, on, after or spanning January 1, 2000. For purposes of this
purchase order, the term "Year 2000 Compliant" means that (1) the
Products/Services accurately process, provide and/or receive date data
(including without limitation calculating, comparing, and sequencing), within,
from, into, and between centuries (including without limitation, the twentieth
and twenty-first centuries, the last year of a century (e.g. 1999) and the first
year of the next century (e.g. 2000), and leap year calculations, and (2)
neither the performance nor the functionality nor Seller's supply to Purchaser
of the Products/Services will be affected by dates prior to, on, after, or
spanning January 1, 2000. Moreover, Seller convenants and agrees all reasonable
steps shall be taken to insure that the design of said Product/Services to
ensure compliance with the foregoing warranties, representations and covenants
shall include, without limitation, date data century recognition, calculations
that accommodate same century and multi-century formulae and date values, and
date data interface values that reflect the century. In particular, but without
limitation, (i) no value for current date will cause any error, interruption, or
decreased performance in the operation of such
-43-
Products/Services, (ii) all manipulations of date-related data including, but
not limited to, calculating, comparing, sequencing, processing and outputting)
will produce correct results for all valid dates, including when used in
combination with other products, (iii) date elements in interfaces and data
storage will specify the correct century to eliminate date ambiguity without
human intervention, including leap year calculations, (iv) where any date
element is represented without a century, the correct century will be
unambiguous for all manipulations involving that element, (v) authorization
codes, passwords, and zaps (purge functions) should function normally and in the
same manner prior to, on, after and spanning January 12, 2000, including,
without limitation, the manner in which they function with respect to expiration
dates and CPU serial numbers. No obligation of Seller under this purchase order
shall be excused by reason of the failure of Seller's or any other person's
Products/Services to be Year 2000 Compliant, nor shall such occurrence(s) be
deemed a force majeure event. As used in this purchase order, the words "date"
and "dates" shall be deemed to include "time".
In the event of breach of this warranty, in addition to any other remedies
Purchaser may have, whether pursuant to this purchase order, by law, equity or
otherwise, Purchaser shall, at its option, be entitled to repair or replacement
of any non-compliant Products/Services, at no cost to Purchase, within sixty
(60) days after notice of breach from Purchaser to Seller.
Notwithstanding anything in this purchase order to the contrary, the period of
the representations, warranties and covenants set forth in this section shall
extend at least until January 31, 2001. Any statute of limitations that might
be applicable to Seller's Year 2000 Compliant warranty and representation shall
not accrue or begin to run until the later of January 31, 2001 or the time when
such statute of limitations would otherwise accrue or begin to run, and, with
respect to any claim based on any failure of the Products/Services to be Year
2000 Compliant, Seller shall not assert any defense based on or alleging the
passage of time from the effective date of this purchase order to January 31,
2001.
19. WAIVER. No claim or right arising out of a breach of this Contract can be
discharged in whole or in part by a waiver or renunciation of the claim or right
unless the waiver or renunciation is supported by consideration and is in
writing signed by the aggrieved party. The failure of Purchaser to enforce at
any time or for any period of time any of the provisions hereof shall not be
construed to be a waiver of such provisions or of the right to Purchaser
thereafter to enforce each and every such provision.
20. ENTIRE AGREEMENT. This Purchase Order and the CCLA with such documents as
are expressly incorporated herein by reference, is intended by the parties as a
final expression of their Agreement with respect to such terms as are included
herein, and is intended also as complete and exclusive statement of the terms of
their Agreement. No course of prior dealings between parties and no usage of
the trade shall be relevant to determine the meaning of this Agreement even
though the accepting or acquiescing party
-44-
has knowledge of the performance and opportunity for objection. The invalidity,
in whole or in part, of any of the foregoing articles or paragraphs of this
Purchase Order shall not affect the remainder of such article or paragraphs or
any other article or paragraphs of this Purchase Order.
-45-
