This Cooperation Agreement involves
Title: JOINT COOPERATION AGREEMENT
Industry: Biotechnology and Drugs Sector: Healthcare
JOINT COOPERATION AGREEMENT
This Joint Cooperation Agreement (the or this “Agreement”) is made and entered into as of the 6 day of June, 2005 (the “Effective Date”) by and between Luna Energy LLC, 309 North Knollwood Drive, Blacksburg Virginia, and its Affiliates (“LE”), and Luna Technologies, Inc., 2020 Kraft Drive, Blacksburg, Virginia (“LT”).
A. LE is a limited liability company owned by Baker Hughes Oilfield Operations, Inc., a California Corporation, that develops, manufactures, sells, and installs sensing systems for the oil and gas industry.
B. LE has developed and owns certain distributed sensing technology referred to by LE as distributed discrete sensing (“DDxS”).
C. LE intends to further develop DDxS for use in the oil and gas industry.
D. LT is a company that develops, manufacturers, and sells fiber optic instrumentation systems for use in the fiber optic telecommunications industry.
E. LT possess technology that is used for fiber optic telecommunication industry products, and has recently developed new fiber optic instrumentation technology that is applicable to both fiber optic telecommunication instrumentation and fiber optic sensing systems, all of which are applicable to both fiber Bragg grating-based (“FBG-based”) and Rayleigh backscatter-based distributed sensing applications (“RB-based”).
F. LE and LT desire to work together in order to develop and/or improve LT instrumentation products, new LT sensing products, and new LE DDxS products (the “Project”).
NOW THEREFORE , in consideration of the premises and the mutual covenants and promises hereinafter set forth, LE and LT (referred to herein at times singularly as “Party” or collectively as the “Parties”) hereby agree as follows:
A. OBJECTIVE . The Parties, through this Agreement, will work together to:
1. Complete a DDxS instrument (optical frequency domain reflectometer (“OFDR”)-based) FBG sensing system that is insensitive to vibrations along the sensing fiber, has immunity to polarization fading, and can be successfully demonstrated at both 1 km and 6 km sensing lengths;
2. Develop methods to reduce data set sizes and signal processing algorithms;
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3. Investigate the use of low cost scanning lasers in the completed DDxS instrument;
4. Complete a prototype commercial DDxS instrument suitable for oil and gas industry sensing application and for LT test and measurement and sensing applications.
5. Develop the necessary related hardware and software associated with the foregoing; and
6. Investigate the use of the developed hardware and software to RB-based sensing.
B. LENGTH . The development phase under this Agreement shall commence on the Effective Date and shall end twelve (12) months thereafter, unless extended by mutual agreement of the Parties (“Development Term”). To guide the Parties through the Development Term, there are seven distinct milestones (singularly “Milestone” and collectively “Milestones”) that must be reached, each of which is described below. Certain payments (as described below) will be made by LE to LT when LE determines, in its sole reasonable discretion, that a Milestone has been met. In order for the Parties to move from one milestone to the next all earlier Milestones must be met (i.e., in order to move from Milestone two, all requirement of Milestone one must be met, and in order to move on to Milestone three, all requirements of Milestones one and two must be met, and so forth).
C. MILESTONE LENGTHS . Each Milestone will have a time limit set for completion, which may be extended up to two (2) months upon mutual agreement (except for Milestone 1), provided, however, the entire Development T m may not, without the express written permission of LE, be extended beyond fifteen (15) months. Should it be anticipated that a time limit for a Milestone may not be met, notice of such must be given by LT to LE as soon as practicable. The Milestone time limits are as follows:
1. Milestone 1: Within five (5) business days following the Effective Date (this milestone may not be extended);
2. Milestone 2: Within two (2) months after the Effective Date;
3. Milestone 3: Within one (1) month after the completion of Milestone 2;
4. Milestone 4: Within one (1) month after the completion of Milestone 3;
5. Milestone 5: Within two (2) months after the completion of Milestone 4;
6. Milestone 6: Within three (3) months after the completion of Milestone 5; and
7. Milestone 7: Within three (3) months after the completion of Milestone 6.
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D. MILESTONE PAYMENTS . Once LE reasonably determines that a Milestone has been completed, LE will pay a non-recurring engineering fee to LT under the following schedule (no other payments shall be due from LE unless otherwise agreed in writing):
1. Milestone 1: $50,000;
2. Milestone 2: $30,000
3. Milestone 3: $75,000;
4. Milestone 4: $100,000;
5. Milestone 5: $50,000;
6. Milestone 6: $30,000; and
7. Milestone 7: $90,000
E. MILESTONES REQUIREMENTS . Each Milestone will have distinct requirements that must be met and as are described as follows:
1. Milestone 1 (access to applicable software code and knowledge transfer): LT will provide to LE access, support, and use of software previously developed and related to polarization diverse and vibration tolerant sensing instruments. This will include, but will not be limited to, code relating to correction of polarization effects and polarization alignment techniques, calibration techniques, algorithms for correcting non-ideal properties of system components, efficient use of Fourier transform algorithms, handling and display of large data sets, and algorithms to account far laser jitter.
2. Milestone 2 (FPGA pinout): An FPGA design will be completed to the point of having a stable pinout configuration. A document specifying the point configuration will be delivered to LE. LE will begin specific board design and layout based upon the provided pinout configuration.
3. Milestone 3 (demonstration of one (1) km sensing length and delivery of prototype system): A system based on the then current LT hardware platform capable of polarization diverse and vibration tolerant measurements over one (1) km lengths will be demonstrated. The delivered system will be used in a test (to be specified by LE at a later time) at a facility designated by LE to quantify vibration tolerance capability. The subject system will be delivered by LT to LE and will have a form factor such that it will be convenient to transport and use off site.
4. Milestone 4 (demonstration of vibration tolerant six (6) km sensing length): A system based upon any convenient hardware platform (e.g. Gage A/D boards) capable of polarization diverse and vibration tolerant measurements over six (6) km lengths will be demonstrated. The system will be used in a test (to be specified by LE at a later time) at a facility designated by LE to quantify vibration tolerance capability. Evaluation of low cost scanning laser(s) will also be performed.
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5. Milestone 5 (delivery of FPGA design): The final FPGA design, which is anticipated to include delay registers, numerically controlled oscillators (“NCO’s”), hardware multipliers, digital low-pass filters (“LPF’s”), and interferometer based sampling will be delivered to LE by LT along with all relevant design drawings, specifications, calculations and descriptions.
6. Milestone 6 (design/system prototype review): LT will participate with LE in a detailed review of the performance systems built, suggest changes to the systems, and participate with LE (or its designate(s)) in any redesign that may be necessary as a result of the detailed review.
7. Milestone 7 (delivery of all developed algorithms): LT will deliver to LE signal processing algorithms and data set reduction techniques that will facilitate a commercially viable system design. Moreover, all algorithms developed to implement the polarization insensitive and vibration tolerant six (6) km sensing instrument will be delivered to LE along with any descriptions required for proper use. This will include all software executables, source code, dated documentation and Gerber files associated with all Milestones not already provided.
F. CONTRIBUTIONS OF LT . During the Development Term LT will make the following contributions toward meeting the Milestones:
1. Hardware and Software:
a. Existing LT OFDR hardware and software for use in the demonstrations required in Milestones 3 and 4; and
b. LT grants to LE a royalty-free, sub-licensable, non-transferable (except to a purchaser of all or substantially all of the business or assets of LE), non-exclusive license, during the Development Term, to use the schematics, Gerber files, mechanical drawings, and software used in the final instrumentation prototype design referenced in Section II.G.
2. Designs and Know-How: LT OFDR designs and know-how existing as of the Effective Date will be used to reduce to practice the vibration and polarization improvements in the demonstrations required in Milestones 3 and 4 and to develop the hardware and software requirements for the system design.
3. Personnel: The following individuals employed by LT will devote the following amounts of time to the project (provided, however, any replacements to the listed individuals must be approved in writing by LE, which approval shall not be unreasonably withheld):
a. Mark Froggatt will devote during the Development Term at least fifty percent (50%) of his work time at LT toward completing the Milestones;
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b. Dawn Gifford will devote during the Development Term at least thirty percent (30%) of her work time at LT on: (i) technical oversight of work performed to complete the Milestones; and (ii) direct participation in the work necessary to complete Milestones 2, 4, and 6;
c. Brian Soller will devote during the Development Term at least thirty percent (30%) of his work time at LT on: (i) technical oversight of work performed to complete the Milestones; and (ii) direct participation in the work necessary to complete Milestones 2, 4, and 6;
d. Matt Wolfe will devote during the Development Term at least fifty percent (50%) of his work time at LT an software customization, development of hardware and software requirements, and FPGA design necessary to complete the Milestones; and
e. Ryan Jones will devote during the Development Term at least ten-fifteen percent (10-15%) of his work time at LT providing technician support necessary to complete the Milestones.
G. CONTRIBUTIONS OF LE . During the Development Term LE will make the following contributions which shall be reasonably appropriate for the completion of the Milestones:
1. Materials: Upon approval of LE (in its sole discretion), LE will purchase all materials external to LT and LE necessary for completion of the Milestones.
2. Hardware: Necessary amplifier and optical detector hardware, the data acquisition hardware (for Milestone 2), low cost lasers from Iolon (custom-modified for use with the low cost laser study).
3. Designs: Existing LE amplifier and optical detector designs, previously and newly developed frequency analysis (“FFT”) accelerator hardware designs and associated know-how.
4. Test Facilities: Access to test facilities necessary to perform development and Milestone testing. In addition LE will provide thermal chambers, environmental monitoring instrumentation and data acquisition systems adequate in scope to complete all necessary testing.
5. Prototype: At the end of the Development Term (should all Milestones be met), LE will provide to LT the prototype electronics for two instrumentation units. More specifically, LE will provide two prototype electronic assemblies which will be in the form of populated printed circuit boards with software loaded into them at the request of LT (the “LE Prototypes”).
6. Engineering Resources: Analog and digital electronics design, software development/programming, and mechanical design engineering, including the majority of the required engineering design tools required for the Project. It is contemplated that LE shall contribute approximately one (1) man-year of technical support to the Project.
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7. Personnel: It is anticipated that LE will provide technical support during the Development Term through the following individuals employed by LE (provided, however, any replacements to the listed individuals will be at the reasonable discretion of LE):
a. Brooks Childers will devote during the Development Term up to seventy-five percent (75%) of his work time at LE toward completing the Milestones;
b. Monte Doherty will devote during the Development Term up to ninety percent (90%) of his work time at LE toward completing the Milestones;
c. Prasad Ramakrishna will devote during the Development Tern up to sixty percent (60%) of his work time at LE toward completing the Milestones; and
d. Sam Zerwekh will devote during the Development Term up to ten percent (10%) of his work time at LE toward completing the Milestones.
A. POST DEVELOPMENT TERM . At the conclusion of the Development Term, and if all Milestones have been met to the satisfaction of LE, each Party will be responsible for its own actions in regard to optimizing the resulting designs, hardware, and software for incorporation into commercial products and the manufacture of those products
B. LT OBLIGATIONS.
1. LT shall automatically grant to LE at the conclusion of the Development Term, and if all Milestones have been met to the reasonable satisfaction of LE:
a. A perpetual, royalty-bearing, non-sublicensable (except as set forth in the following sentence), non-transferable (except to a purchaser a f all or substantially all of the business or assets of LE), non-exclusive license in the Downstream Field to Existing LT IP, Recently Developed LT IP, and Newly Developed LT IP to manufacture, have manufactured, use, sell, offer for sale or import Licensed Products (“Non-Exclusive License”)). LE may sublicense its rights hereunder only with the prior written consent of LT, and only upon terms reasonably satisfactory to LT, including terns that are at least as protective of the Existing LT IP, Recently Developed LT IP, and Newly Developed LT IP as are set forth in this Agreement; and
b. A perpetual, royalty-bearing, non-sub-licensable (except as set forth in the following sentence), non-transferable (except to a purchaser of all or substantially all of the business or assets of LE), exclusive license, convertible to non-exclusive as per Section III.C.2. below, in the Upstream Field to Existing LT IP, Recently Developed LT IP, and Newly Developed LT IP to manufacture, have manufactured, use, sell, offer for sale or import Licensed Products (“Exclusive License”)). LE may sublicense its rights hereunder only with the prior written consent of LT, and only upon terms reasonably satisfactory to LT, including terms that are at least as protective of the Existing LT IP, Recently Developed LT IP and Newly Developed LT IP as are set forth in this Agreement.
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2. In conjunction with the license grant provided in Section III.B.1 above, LT will provide LE with copies of applicable schematics, Gerber files, mechanical drawings, and software used in the LE DDxS instrumentation prototype, which materials shall be used only within the scope of the licenses granted in such section or of other licenses mutually agreeable to the parties.
C. LE OBLIGATIONS.
1. In regard to both the Exclusive and Non-Exclusive Licenses, LE will pay to LT a royalty of two and one half percent (2.5%) of Net Revenue (as defined in Section VI.P) through the calendar year 2017 (“Royalty Payments”). The Exclusive License shall remain exclusive only if (a) LE pays the following amounts to LT regardless of the actual amount of Royalty Payments (“Guaranteed Payments”), and (b) LE has not breached the term of this Agreement, including the payment provisions:
a. $20,000 for the calendar year 2007;
b. $40,000 for the calendar year 2008;
c. $60,000 for the calendar year 2009;
d. $80,000 for the calendar year 2010;
e. $100,000 for the calendar year 2011; and
f. $120,000 for each calendar year 2012 through 2017.
2. Notwithstanding the provisions in C.1. above, LE reserves the right to terminate the exclusivity of the Exclusive License, converting it instead to non-exclusive, upon six (6) months notice to LT, which will have the effect of terminating LE’s obligation to make to LT all not yet earned Guaranteed Payments. Moreover, should the aggregate amount of Royalty Payments in any calendar year exceed the Guaranteed Payment for the same year, all of the excess amount over the Guaranteed Payment will be credited toward the Guaranteed Payment for the following (and subsequent, as necessary) calendar year. For example, should the total amount of Royalty Payments for the calendar year 2008 be $50,000, LT will receive the entire $50,000, but the $10,000 over the $40,000 Guaranteed Payment for 2008 will be used to meet the Guaranteed Payment amount for 2009 (which, therefore, would be reduced from $60,000, to $50,000 (i.e., reduced $10,000)). The foregoing shall not relieve LE of the obligation to make Royalty Payments on sales or license of Licensed Products (i) under the Exclusive License through the effective date of such termination, and (ii) under the Non-Exclusive License so long as such license remains in effect.
3. LE hereby grants to LT a royalty-free, non-sublicensable (except as set forth in the following sentence), non-transferable (except to a purchaser of all or substantially all of the business or assets of LT), non-exclusive license to Newly Developed LE IP to manufacture, have manufactured, use, sell, offer for sale or import Licensed Products outside the Upstream Field. LT may sublicense its rights hereunder only with the prior written consent of LE, and only upon terms reasonably satisfactory to LE, including tams that are at least as protective of the Newly Developed LE IP as are set forth in this Agreement,
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4. LE grants to LT a royalty-free, perpetual, sub-licensable, non-transferable (except to a purchaser of all or substantially all of the business or assets of LT), non-exclusive license (i) to use the schematics, Gerber files, mechanical drawings, and software used in the LE DDxS instrumentation prototype, and (ii) to use the LE Prototype delivered pursuant to Section II.G.5.
5. With respect to any royalty payments hereunder, LE agrees to pay to LT for each and every Licensed Product sold by LE calculated at a royalty rate described above.
6. All payments of royalties under this Agreement shall be made in United States dollars to LT at the address designated in Section VI.I. The amounts payable pursuant hereto shall be converted to United States dollars at the official foreign exchange rate in effect on the last day of the calendar semester (6 months) for which the payments are made.
7. LE shall furnish LICENSOR, within forty-five (45) days following the last day of each calendar quarter during the continuance of this Agreement, a report in writing, indicating for the quarter in question a listing of the number of Licensed Products sold by LE, indicating: the number of Licensed Products sold; the applicable Net Revenue; and the royalty due therefor, calculated in accordance with the provisions herein.
8. Each such report shall be accompanied by payment in fill of the royalties due to LT.
9. LE shall keep records for up to three (3) years from the date of any reports issued or payments made hereunder in sufficient detail to verify dl such reports and payments due LT under this Agreement. LE agrees to allow an independent third party, acceptable to b