Exhibit 10.30
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”).
I. RECITALS
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:
II.
DEVELOPMENT
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.
III.
COMMERCIALIZATION
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-tran
