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EXHIBIT 10.5
VERSION WITH CONFIDENTIAL TERMS EXCLUDED
MANUFACTURING AND LICENSE AGREEMENT THIS MANUFACTURING AND
LICENSE AGREEMENT (the “Agreement”) is made and entered
into as of December 17, 2008 (the “Effective Date”) by
and between OPEN ENERGY CORPORATION, a Nevada corporation
(“Licensor”), having a principal place of business at
514 Via de la Valle, Suite 200, Solana Beach, California 92075, and
WUXI SUNTECH POWER CO., LTD., a corporation organized under the
laws of the People’s Republic of China
(“Suntech”) having a principal place of business at
17-6 Chang Jiang South Road, New District Wuxi, China 214028.
1. Definitions
and Grant of License.
1.1 “Affiliate”
means, with respect to either party, any other party that, directly
or indirectly controls or is controlled by or is under common
control with such party. For purposes of this
definition, “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of
management or policies of such party through the ownership of
voting securities.
1.2 “Licensor
Technology” means all Technology provided by Licensor to
Suntech pursuant to this Agreement.
1.3 “Ancillary
Technology” means all tooling, test equipment, test programs
and fixtures that Licensor provides to Suntech hereunder.
1.4 “Confidential
Information” means all non-public information that the party
disclosing the information (the “Disclosing Party”)
designates at the time of disclosure as being confidential, or if
disclosed orally or visually is identified as such prior to
disclosure and summarized, in writing, by the Disclosing Party to
the receiving party (the “Receiving Party”) within
thirty (30) days,, without limitation, the terms and conditions of
this Agreement and the Disclosing Party’s trade secrets,
know-how, inventions, techniques, processes, algorithms, software
programs, schematics, designs, contracts, customer lists, financial
information, sales and marketing plans and business
information. Confidential Information does not include
information which (i) is or becomes generally available to the
public other than as a result of disclosure by the Receiving Party
or any of its Representatives or (ii) is already available to, or
becomes available to, the Receiving Party on a non-confidential
basis from a source other than Disclosing Party or any of its
Representatives; provided, that such source is not bound by a
confidentiality agreement with, or other contractual, legal or
fiduciary obligation of confidentiality to, Disclosing Party or any
other party with respect to such information.
1.5 “Derivative(s)”
means any improvement, modification, correction, variation,
enhancement or revision relative to any Intellectual Property
Rights applicable to the Products.
1.6 “Intellectual
Property Rights” means copyright rights (including, without
limitation, the exclusive right to use, reproduce, modify,
distribute, publicly display and publicly perform the copyrighted
work), trademark rights (including, without limitation, trade
names, trademarks, service marks, and trade dress), patent rights
(including, without limitation, the exclusive right to make, use
and sell), pending patent rights, trade secrets, moral rights,
right of publicity, authors’ rights, contract and licensing
rights, goodwill, Technology, Specifications (only as it refers to
Licensor Intellectual Property) and all other intellectual property
rights as may exist now and/or hereafter come into existence and
all renewals and extensions thereof, regardless of whether such
rights arise under the law of the United States or any other state,
country or jurisdiction. 1
VERSION WITH CONFIDENTIAL TERMS EXCLUDED
1.7 “Manufacturing
Facility” means Suntech’s manufacturing facility in
Wuxi, Jiangsu Province, People’s Republic of China.
1.8 “Products”
means the products identified on Exhibit A hereto, and any
Derivatives thereof.
1.9 “Specifications”
means the functional and performance specifications (including,
without limitation, bills of materials, schematic diagrams, parts
and assembly drawings) relating to the testing and manufacturing of
each Product as provided by Licensor.
1.10 “Suntech
Materials” means the photovoltaic panels and other Suntech
inventory (excluding the Licensor Materials) incorporated into the
Products.
1.11 “Suntech
Technology” means the Technology provided by Suntech to
Licensor pursuant to this Agreement and all Derivatives thereof,
specifically excluding that technology defined as Licensor
Technology.
1.12 “Technology”
means all technical information and/or materials, including,
without limitation, ideas, techniques, designs, sketches, drawings,
models, inventions, know-how, processes, apparatus, methods,
equipment, algorithms, software programs, data, software source
documents, other works of authorship, formulae and information
concerning engineering, research, experimental work, development,
design details and specifications.
1.13 “Trademarks”
means the trademarks, trade names and service marks adopted by
Licensor or Suntech, as the case may be, or their licensors from
time to time.
1.14 Licenses
Granted. Subject to full and timely payment of all
amounts properly due under this Agreement, Licensor hereby grants
to Suntech an exclusive, nontransferable, world-wide,
royalty-bearing license, without the right to sublicense, under the
Intellectual Property Rights associated, solely internally and
solely for the purpose of making, having made, using, selling, and
offering for sale Products (including any Derivative thereof and
any similar or new generation products designed to be integrated
into or affixed to membrane and similar flat roofing material, and
any similar or new generation products ) limited to the geographic
area specified on Exhibit B (the
“Territory”). . Licensor expressly reserves
its own right to improve, modify, develop and create Derivatives of
the Products, provided that, such Derivatives shall be subject to
this Agreement and the license granted hereby. 2
VERSION WITH CONFIDENTIAL TERMS EXCLUDED
2. Manufacturing
Obligations.
2.1 Manufacturing. Suntech
agrees to manufacture the Products, upon the terms and conditions
of this Agreement. Suntech shall manufacture such
Products in accordance with normal and customary quality
requirements for a high quality contract manufacturer and in
accordance with the applicable Specifications. Suntech
agrees to reserve production capacity (measured in
Megawatts) for manufacture of the Products in at least the amounts
corresponding to the quantity of Products the sale of which would
generate at least the Minimum Royalty for each
applicable period set forth in Section 3.4, provided that the
Products have, in the case of North American sales, either UL or
CSA certification, and, in the case of European sales, IEC
certification.
2.2 Testing.
Suntech will only ship Products which have been tested successfully
according to its normal procedures. Suntech will perform
final testing of all Products at the Manufacturing Facility.
2.3 Ancillary
Technology. Licensor, with consent of Suntech, may
furnish Ancillary Technology to Suntech for use solely in the
manufacture and testing of the Products. Suntech will
not at any time use the Ancillary Technology for any other purposes
or for any third parties or in any manner other than in performing
Suntech’s obligations under this Agreement. Suntech
acknowledges that any Ancillary Technology furnished to Suntech
hereunder has been provided without additional consideration for
Suntech’s convenience and Licensor specifically disclaims any
and all warranties with respect to the Ancillary Technology, which
shall be furnished, if at all, with all faults.
2.4 Identification. The
Products shall include Suntech labels of its own choosing and on
the product label the statement “Powered by Open Energy
Technology” or similar phrase incorporating Licensor’s
corporate name and/or designated mark. To the extent
Suntech’s website describes the Products in reasonable
detail, Suntech shall include a similar statement on that section
of its website which describes the Products.
2.5 License
to Suntech Technology. To the extent that Suntech
provides any Suntech Technology to Licensor, Suntech hereby grants
to Licensor a royalty-free license to use the Suntech Technology
provided to Licensor in connection with the development and testing
of the Products.
2.6 Restrictions. Except
as expressly set forth above, each party retains all of its
Intellectual Property Rights. No license is granted by
Licensor to make, use or sell any other products under the Licensor
Intellectual Property Rights or to make, use or sell any products
for any other purpose. Except as provided for in this
Agreement, Suntech will not disclose Licensor’s Intellectual
Property Rights to any third party. Suntech will not
modify or reverse engineer any Licensor Technology.
2.7
Marketing. Notwithstanding any of the above, each
party may use the other party’s name, tradenames, trademark,
and other related intellectual property, including photographs or
other copyrighted works, solely for the purpose of marketing or
promotional materials. To the extent that a party has
guidelines governing use of such property, the other party shall
abide by such governing rules, except to the extent that prior
permission is required by such governing rules. 3
VERSION WITH CONFIDENTIAL TERMS EXCLUDED
3. Responsibilities
of the Parties.
3.1 Royalties. Suntech
shall pay royalties to Licensor as specified in the attached
Exhibit C (the “Royalties”), for each Product
manufactured in accordance with this Agreement. The
Royalties with respect to a Product shall accrue upon its sale in
accordance with the Agreement. Royalties shall be
payable to Licensor on or before the fifteenth (15th) day of the
calendar month immediately following each calendar quarter in which
the Royalties accrued. All Royalties are in U.S. dollars
and payment shall be made in U.S. dollars. To the extent that
Licensor has defaulted on any other payments under any other valid
agreement or order with Suntech, Suntech may offset the Royalties
owed under this Agreement by 75% until such time as such default
amounts are completely repaid.
3.2 Royalty
Statements. Suntech shall furnish to Licensor, on or
prior to the fifteenth (15th) day of the calendar month immediately
following each calendar quarter, a full and complete statement,
showing the number of each type of Product manufactured during the
calendar quarter in question, the total wattage for each such
Product, the total gross sales revenues for each such
Product, the amount of royalties due with respect to
such gross sales revenues, the quantities of each Product on hand
and in transit as of the end of the month, and the name and address
of each wholesaler or other party to which Suntech has sold the
Products during the month. There shall be a breakdown of
sales of Products by country, and all figures and monetary amounts
shall first be stated in the currency in which the pertinent sales
were actually made. If several currencies are involved
in any reporting category, that category shall be broken down by
each currency. Next to each currency amount shall be set
forth the equivalent amount stated in U.S. dollars as of the date
of the applicable transaction, and the rate of exchange used in
making the required conversion calculation.
3.3 Records
and Audit Rights. Suntech shall keep complete and
accurate books of accounts and records covering all transactions
relating to the licenses hereby granted and the sale and/or
distribution of Products. Licensor and its
duly authorized representatives shall have the right, not more than
two (2) times per year and upon reasonable notice and during
reasonable hours, to audit such books of account and records with
respect to the subject matter and terms of this
Agreement. All books of account and records of Suntech
shall be kept available to Licensor for at least three (3) years
after the expiration or termination of this
Agreement. If such audit reveals that the payments made
to Licensor for the period audited are at least five percent (5%)
less than the amount actually payable to Licensor for such period,
Suntech shall reimburse Licensor for all reasonable costs
associated with such audit.
3.4 Minimum
Take. During calendar year 2010, Suntech will sell a
quantity of Products such that Royalties would be
payable in respect of at least the following amounts on a worldwide
basis (the “Minimum Royalty”) during such years:
2010
[***] Megawatts January-June 2010
[***] Megawatts July-December 2010
2011-2013 [***] Omitted Term 4
VERSION WITH CONFIDENTIAL TERMS EXCLUDED For each
of years 2011, 2012 and 2013, Suntech and Licensor shall attempt to
reach agreement on a worldwide Minimum Royalty applicable to such
years on or prior to the date that is ninety (90) calendar days
prior to the first day of each year. Factors that the
parties shall consider in negotiating such Minimum Royalties shall
include [***]. If the parties are unable to reach agreement
regarding the Minimum Royalty for any such annual period, then the
Minimum Royalty shall equal [***]. In the event that Suntech
fails to sell Products in an amount to generate at least the
Minimum Royalty for any of the periods listed above, then the
license granted to Suntech in Section 1 of this Agreement shall
become non-exclusive, and Licensor shall be free to license any of
the Intellectual Property Rights covered hereby to any other
party. In the event that Suntech affirmatively decides
to cease commercialization of the Products subsequent to December
2010, Licensor shall have the right to amend this Agreement upon
thirty (30) days written notice to Suntech to be non-exclusive,
which notice shall state with specificity the source of
Licensor’s belief that commercialization of the Products has
ceased and Licensor’s intent to amend this Agreement.
3.5 Testing
and Certifications. Suntech shall use commercially
reasonable efforts to cause the Products to be tested and certified
pursuant to IEC guidelines as soon as reasonably practicable, and
pursuant to all other such applicable standards and
regulations of the various local, state, federal and international
markets in which the Product will be sold or
distributed. Suntech shall use commercially reasonable
efforts to cause Product sales in Europe within calendar 2009,
subject to the prior receipt of applicable IEC certification as
described above in this Section 3.5.
4. Marketing. The
Parties shall have the responsibilities as set forth on Exhibit B
attached hereto.
5. Quality
Assurance.
5.1 Quality
Standards. Suntech will manufacture the Products in
accordance with the quality requirements, standards and
expectations as is usual and customary.
5.2 Quality
Issues. Suntech agrees to use reasonable commercial
efforts to inform Licensor of any quality issues concerning the
production of the Products as soon as possible after discovery
thereof.
6. Engineering
Changes
6.1 ECOs. Licensor
may, upon advance written notice to Suntech, submit engineering
change orders (“ECOs”) for changes to the
Products. ECOs will include documentation of the change
to effectively support an investigation of the impact of the
engineering change. Suntech will review the ECO and
report to Licensor within twenty (20) business days of
Suntech’s receipt of the ECO. If the ECO affects
the manufacturing costs or timing of the Products or otherwise
affects the price or manufacturing process of the affected
Products, the parties agree to negotiate in good faith an equitable
adjustment to the price and/or delivery timing of the affected
Products prior to implementation of the change. The
parties agree that twenty (20) business days is a reasonable time
period to permit Suntech to evaluate ECO impact regarding potential
excess manufacturing costs and price. Suntech may in its
sole discretion decide to reject any ECO that it reasonably
believes will adversely effect its obligations under this
Agreement. [***] Omitted Term
5
VERSION WITH CONFIDENTIAL TERMS EXCLUDED
6.2 No
Changes. No changes will be made to the Products without
Licensor’s prior written consent and no approved change will
be made effective prior to the date approved by Licensor in
writing. Suntech will not change or modify the processes
for the Products without Licensor’s prior written
consent. For the avoidance of doubt, to the extent any
such approved change or modification, to the extent it shall
constitute intellectual property, shall be deemed Licensor
Intellectual Property Rights, subject to Section 7 below.
7. Ownership.
7.1 Ownership
by Licensor. As between Licensor and Suntech, Licensor
will own all right, title, and interest in and to Specifications,
Ancillary Technology and the Licensor Technology and all
Intellectual Property Rights therein. Licensor represents and
warrants that it has full and exclusive right and ownership in the
Licensor Technology, Licensor Trademarks, Specifications, Ancillary
Technology and Licensor Intellectual Property
Rights. During and after the term of this Agreement,
Suntech shall, and shall cause its respective personnel to, from
time to time as and when requested by Licensor in accordance with
this Section 7 and at the Licensor’s expense, but without
further consideration, execute any or all papers and documents and
perform any or all other acts necessary or appropriate, in the
reasonable discretion of the Licensor, to evidence or further
document the Licensor’s ownership of such Intellectual
Property Rights and Derivatives.
7.2 Ownership
by Suntech. As between Suntech and Licensor, Suntech
will own all rights, title and interest in and to the Suntech
Technology and all Intellectual Property rights therein. Suntech
represents and warrants that it has full and exclusive right and
ownership in the Suntech Trademarks, Suntech Technology and Suntech
Intellectual Property.
8. Sales
to Licensor Suntech agrees to sell Product to Licensor (or
any affiliate or designee thereof) on the terms set forth on
Exhibit D hereof; provided, that, Licensor shall not be permitted
to sell Product in Europe during the term of this Agreement. For
the avoidance of doubt, the purchase of Product by Licensor or its
affiliate or designee shall not generate Royalties consistent with
any other sales of Product hereunder. 6
VERSION WITH CONFIDENTIAL TERMS EXCLUDED
9. Confidential
Information.
9.1 Confidentiality
Obligations. Each party acknowledges that in the course
of the performance of this Agreement, it may obtain the
Confidential Information of the other party. The
Receiving Party will, at all times, both during the term of this
Agreement and at all times thereafter, keep in confidence and trust
all of the Disclosing Party’s Confidential Information that
it received. The Receiving Party will not use the
Confidential Information of the Disclosing Party other than as
necessary to perform its obligations or exercise i
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