TECHNOLOGY
DEVELOPMENT AND LICENSE AGREEMENT
THIS TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT ("Agreement") is
made
effective as of this 1st day of January, 2007 ("Effective Date") by and
between
XsunX, Inc.,
a Colorado Corporation ("XsunX"), and Sencera, LLC, a North
Carolina Limited
Liability Company
("Sencera").
XsunX and Sencera are
herein
referred to individually as a "Party" and collectively as the
"Parties."
R E C I T A L S
A. WHEREAS, Sencera has developed and continues to develop
technologies
and processes pertaining to a unique plasma deposition source for
the coating of
large-area substrates
with highly engineered thin film coatings. Sencera
believes that its
high-density plasma
source is capable of depositing certain
coatings, including
silicon, at superior rates, low temperatures and high
quality levels,
making it attractive for use in solar cells. Sencera has
developed its own
intellectual
property and also has
rights to certain
other
intellectual property related to this technology;
B.
WHEREAS, XsunX has
developed and continues to develop technologies and
processes for
semi-transparent
and opaque solar cells and photovoltaic
technologies, solar
cell panels,
and methods of
manufacture
relating to the
same. XsunX has intellectual property rights under U.S. Patent
Nos. 6,180,871;
6,320,117; 6,509,204;
6,488,777;
6,258,408;
6,472,622;
and U.S.
Provisional
Application No. 60/536,151;
C.
WHEREAS, Sencera desires to grant, and XsunX desires to receive, a
license under
its technology to XsunX for use in certain commercialization
efforts by XsunX;
D.
WHEREAS, Sencera
wishes to borrow from XsunX, and XsunX desires to loan
to Sencera the sum of $1,500,000 to be applied to the costs of the
development
effort the parties intend to undertake herein, in accordance with
the terms of a
Secured Loan Agreement
to be executed
contemporaneously with
the execution of
this Agreement; and
E.
WHEREAS, XsunX is interested in exploring the viability of
Sencera's
technology for its
future thin film
silicon solar cell
products. Sencera is
likewise interested in developing its technology for application in
solar cells.
NOW,
THEREFORE,
in consideration of
the mutual promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of
which
are hereby acknowledged, the Parties hereto agree as follows:
1.
DEFINITIONS
Unless otherwise
provided herein, capitalized terms used but not
otherwise specifically
defined herein shall
have the meanings ascribed to them
in this Agreement,
"days" shall mean
calendar days, "including" shall mean
"including without
limitation," and the following terms shall have the meanings
stated below:
<PAGE>
1.1
"Agreement"
shall mean this Technology Development and License
Agreement, including
the exhibits attached
hereto, which are incorporated by
reference herein.
1.2
"Confidential Information" shall mean any and all information: (a)
that
is conveyed or presented in oral or written or other tangible form, (b) that in
the case of written or other tangible form is marked with a legend such as or
similar to "CONFIDENTIAL INFORMATION" or "PROPRIETARY
INFORMATION,"
including
the owner's name or, in the case of oral information, is so denoted at the time
of disclosure and (c) that (i) relates to a Party's business plans, production
processes, inventions,
discoveries or any
other aspect of a Party's business,
and/or (ii)
belongs to third parties and was obtained by a Party under
restrictions on
disclosure
and/or use in which
case such information
may be
marked as being confidential or proprietary to such third parties. Such
information may
include, by way of example, know-how, algorithms, software
programs, schematics,
processes,
source documents, materials, contracts,
customer information,
financial information,
personnel information, product
development,
engineering, strategic
and tactical
plans, sales and marketing
plans, and business plans.
1.3
"Field of Use A" shall mean the field of deposited solar cells.
1.4
"Field of Use B" shall mean the field: (a) as claimed in U.S.
Patent
Nos. 6,180,871;
6,320,117; 6,509,204;
6,488,777; 6,258,408; 6,472,622; and (b)
as claimed in U.S.
Provisional
Application No. 60/536,151; and (c) for use in
semi-transparent photovoltaic devices, multi-terminal photovoltaic
devices, and
cassette-based roll-to-roll manufacturing equipment.
1.5
"Improvement" shall
mean (a) with respect to Sencera Technology, any
new or modified
product or process
that performs the same function as the
Licensed Products or
Licensed Process or
Licensed Intellectual
Property in a
better or more economical way ("Sencera Improvement"); and (b) with respect to
XsunX Technology, any
new or modified product or process that enables the XsunX
Technology to perform in a better or more economical way ("XsunX
Improvements").
1.6
"Licensed Intellectual Property" shall mean Sencera
Technology including,
but not limited to,
all patents and patent
applications
(including the Licensed Patents), trademarks, trademark applications,
designs,
copyrights, copyright
applications,
inventions, know-how,
trade secrets, mask
works, technical
information,
drawings,
data, computer programs, testing
specifications and procedures and the like; and all Sencera
Improvements.
1.7
"Licensed Patents" shall mean the patents and patent applications
described in Exhibit A
attached hereto,
as well as (i) all
pending and issued
divisions,
continuations,
continuations-in-part, reissues, reexaminations,
substitutes and
extensions
thereof; (ii) all foreign patents and patent
applications relying
for priority on any of the foregoing including all pending
and issued
divisions,
continuations,
continuations-in-part, reissues,
reexaminations,
substitutes and extensions thereof; and (iii) and all pending
and issued
divisions,
continuations,
continuations-in-part, reissues,
reexaminations, substitutes and extensions thereof relating to
Improvements.
<PAGE>
1.8
"Licensed Products" shall mean any and all products manufactured
utilizing
methodologies or
processes that utilize any aspect of the
Licensed
Intellectual Property.
1.9
"Licensed Process" shall mean any methodologies or processes that
utilize any aspect of the Licensed Intellectual Property.
1.10
"Licensed Territory" shall mean worldwide.
1.11
"Phase" shall mean an individual task or set of tasks to be
completed
by a Target Date as set forth herein.
1.12
"Royalty" shall mean the payment by a Party of a certain
amount of
revenues earned from the exploitation of any or all of the Licensed
Intellectual
Property as set forth herein.
1.13
"Sencera Technology"
shall mean all existing technology of Sencera in
existence as of the Effective Date of this Agreement, and any and
all technology
and intellectual property, including any Licensed Products or
Licensed Process,
conceived or developed during the Term.
1.14
"Target Date" shall mean the date by which
a Phase is intended to be
completed.
1.15
"XsunX Technology"
shall mean all
existing technology of XsunX in
existence as of the Effective Date of this Agreement including U.S. Patent Nos.
6,180,871; 6,320,117;
6,509,204;
6,488,777;
6,258,408;
6,472,622;
and U.S.
Provisional Application No. 60/536,151.
2. DEVELOPMENT -
PHASE II
2.1
Development.
In accordance
with the terms of this
Section 2, Sencera
shall, at its cost
(funded with proceeds of the loan from XsunX or otherwise),
lead a joint
development program
with XsunX to develop a Licensed Process that
will produce silicon material at deposition rates expected to
produce cells at a
cost of less than $1 USD per Watt in Phase III below; specifically rates of >90
Angstrom-meters per
minute (> 15 Angstroms per second equivalent static rate)
for the manufacture of thin film solar cells and other technology in accordance
with the Sencera Development Plan, a copy of which is attached
hereto as Exhibit
B and incorporated
herein by reference,
said development phase referred to
herein as ("Phase II"). Sencera will, in addition to the reporting
requirements
in the Development Program, provide XsunX with periodic reports on
the status of
efforts undertaken in
connection with this
Phase II, at least as frequently as
once each month, and with access to key technical personnel and records
reflecting such
activity upon reasonable request, and provide sample material
for independent XsunX use in conjunction with reports or when
available.
2.2
Target Date. The Target Date to complete Phase II is August 31,
2007.
<PAGE>
3. DEMONSTRATION
- PHASE III
3.1
Demonstration. Sencera
and XsunX shall,
pursuant to terms as shall be
mutually agreed,
jointly design and
build a production
demonstration tool
to
demonstrate rate and cost scaling for use in joint marketing
production hardware
and processes;
target cost is less than $1 (USD) per peak watt, said
demonstration phase
referred to herein as ("Phase III"). Sencera will, in
addition to the reporting requirements in the Development Program,
provide XsunX
with periodic reports
on the status of efforts undertaken in connection with
this Phase III, at least as frequently as once each month, and with access to
key technical
personnel and records
reflecting such
activity upon
reasonable
request.
3.2
Costs. During this
Phase III, XsunX and Sencera will share equally all
Non-Refundable
Engineering (NRE) and
build costs for equipment related to the
scale-up and
implementation
of Sencera Technology for the production of
high-rate Plasma Enhanced Chemical Vapor Deposition (PECVD) silicon
solar cells.
3.3
Target Date. The Target Date to complete Phase III is August 31,
2008.
4. JOINT
MARKETING - PHASE IV
4.1
Joint Marketing.
XsunX and Sencera shall, subject to successful
completion of the Development Phases, jointly and, pursuant to
terms as shall be
mutually agreed, determine and implement a plan to market and sell
equipment and
processes for high-rate deposited silicon solar cells, said joint marketing
phase referred to
herein as ("Phase IV"). Each of XsunX and Sencera shall
have
the right to independently market or sell such equipment and
processes, as well.
4.2
XsunX shall, subject to its reasonable discretion enter into a
sublicense agreement with any third party wanting to obtain the
right to use the
Licensed Process. The
sublicense agreement
shall require that each sublicensee
pay a Royalty to use the Licensed Process. The Royalty shall be based on an
energy production
basis. The Royalty
shall be paid directly to XsunX but XsunX
agrees to share the Royalty with Sencera in accordance with the following terms
and conditions:
If cell manufacturing costs are less than $1 per peak
watt,
Sencera's portion of
the Royalties
shall be one half
(50%) of the
Royalties
actually received and
collected from a
licensee by XsunX for the production of
solar cells that employ the Licensed Process; provided, however,
that in no case
shall the minimum be less than $ 0.15 per peak watt of manufactured cell
capacity.
4.3
The Royalty rate or
basis may be revised if: (a) Sencera licenses the
Licensed Process to
another licensee under
more favorable terms than the terms
of the present
Agreement, in which
case XsunX shall be entitled to the same or
better terms;
(b) an objective industry pricing index (such as
www.solarbuzz.com)
indicates that the present structure is not supported by the
market which shall be indicated by the average retail price of a
solar PV module
falling below $3.00 per peak watt; or (c) both Parties agree to a
modification.
<PAGE>
4.4
XsunX shall sublicense for and pay to Sencera a Royalty: (a) at the
end
of the first twelve month period commencing six months after the end of
Phase
II, a minimum annual
payment equivalent to the Royalty that
would be due from
the licensing
of 25 MW annual
solar cell manufacturing capacity using the
Licensed Process;
and (b) commencing one year after the
commencement
of the
period define
