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Joint Development Agreement

 

This JOINT DEVELOPMENT AGREEMENT, made and entered into as of the date last
executed, by and between Northrop Grumman Systems Corporation, a Delaware
corporation, acting through its Information Systems Sector, Defense Systems
Division, with a place of business at 201 Electronics Blvd., Huntsville, Alabama
35824 (hereinafter “Northrop Grumman”) and Cirque Energy, Inc., with a place of
business at 243 W. Congress St, Suite 350, Detroit, MI 48226 (hereinafter
referred to as “CIRQUE”).

 

Northrop Grumman has certain technical knowledge and trade secrets that were
used by Cirque Energy, Inc., a subcontractor, to create a conceptual Deployable
Gasification Unit (DGU) capability on behalf of Northrop Grumman. Now, Northrop
Grumman wishes to continue technology development for the DGU and towards this
end, desires to use the capabilities of Cirque Energy in order to realize a
working DGU prototype for testing and demonstration. In consideration for Cirque
Energy to fund and develop a test unit, NG wishes to permit its Intellectual
Property to be used by Cirque Energy; and provided a prototype is a success and
the device is deemed viable, a division of responsibilities, obligations and
customer sales privileges is contemplated and is discussed within Exhibit A.

 

WITNESSETH:

 

WHEREAS, Both Parties are working on a Mobile Energy / Power Generation
Initiative to develop a Deployable Gasification Unit (DGU) capable of producing
electricity at tactical field locations or in support of disaster relief and
humanitarian assistance operations (hereinafter referred to as the “Program”);
and

 

WHEREAS, Both Parties desire to construct a working prototype of a Deployable
Gasification Unit (DGU) to demonstrate such a capability is not only feasible,
but more efficient than existing tactical power generation when relating output
power to input fuel rates; and

 

WHEREAS, Northrop Grumman has certain rights and ownership, capabilities and
certain know-how regarding a Deployable Gasification Unit (DGU), whereby
Northrop Grumman has invested significant research and development funding and
labor to design a tactical DGU capable of converting waste byproducts into
electricity using largely off-the-shelf technology and components.

 

WHEREAS, Northrop Grumman further conceptually developed and documented the DGU
design in the “Proof of Concept Study” dated December 7, 2012 (Exhibit C) with
CIRQUE as a subcontractor to Northrop Grumman in order to establish the
requirements for the Program, and the Parties agreed that the Intellectual
Property documented in the proof of concept study (Exhibit C) are owned by
Northrop Grumman; and

 

WHEREAS, CIRQUE has certain capabilities and expertise in the area of energy
development as it relates to the procurement, processing and transporting of
biomass materials from multiple waste environments (including landfills),
material handling and feedstock preparation systems necessary for both Static
and Mobile Systems of various types of gasification technologies; with the most
recent advancements in gasification technology including; demonstration units,
technical papers and research that are necessary to meet the requirements for
the Program; and

 

 

 

 

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WHEREAS, CIRQUE has resources to fund the manufacturing and test of a working
Prototype DGU and support demonstrations; and

 

WHEREAS, neither Northrop Grumman nor CIRQUE individually possesses all of the
capabilities, resources, expertise or existing capacity to address all of the
requirements of the Program without assistance from each other; and

 

WHEREAS, the combination of the capabilities, resources, expertise and existing
capacity of Northrop Grumman and CIRQUE should result in a working DGU prototype
best meeting the technology identified in Exhibit C which supports the Program;
and

 

WHEREAS, Northrop Grumman and CIRQUE desire to form a Joint Development
Agreement that is not in derogation of the applicable antitrust laws and does
not prejudice the Program in any way with respect to any action it may take in
procuring goods or services on the basis of awarding of contracts on a
leader/follower or other type basis; and

 

WHEREAS, Northrop Grumman and CIRQUE may need to exchange significant
proprietary and sensitive information in the process of CIRQUE manufacturing and
testing the prototype for the Program, which exchange of information would not
be possible if Northrop Grumman and CIRQUE were working with other companies in
support of the Program;

 

NOW, THEREFORE, Northrop Grumman and CIRQUE hereby agree as follows:

 

1.Definitions

 

1.1.“Agreement” shall mean this Joint Development Agreement, together with
Exhibit A, Exhibit B, Exhibit C, and other documents incorporated by reference
and any amendments thereto.

 

1.2.“Parties” shall mean Northrop Grumman and CIRQUE collectively, and “Party”
shall refer to either Northrop Grumman or CIRQUE individually.

 

2.Activities

 

2.1Each Party will exert all reasonable efforts to develop a DGU prototype which
will meet the details (including cost objectives) of Exhibit C.

 

2.2CIRQUE will lead the design, manufacturing, development, testing, site
location (including transportation thereof), and prototype development and
demonstration process. This will include involvement by Northrop Grumman as they
desire.

 

 

 

 

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2.3CIRQUE will cooperate with Northrop Grumman by providing such assistance as
may be required during the manufacturing of the DGU Prototype, including, but
not limited to: (i) furnishing a status within reasonable timeframes of CIRQUE
established goals and achievements of those goals (to include testing and test
results); (ii) assuring the availability of management, pricing, and technical
personnel for potential program related meetings; (iii) submitting a Rough Order
of Magnitude estimate for the material required to manufacture the DGU; and (iv)
a written manufacturing process that was utilized for the prototype to make it a
repeatable process for production. CIRQUE will provide 100 percent (100%) of the
funds required to accomplish the above and demonstrate to Northrop Grumman the
DGU Prototype.

 

2.4In consideration for CIRQUE to fund and develop a test unit, Northrop Grumman
wishes to permit its Intellectual Property to be used by CIRQUE for DGU
development. Further, if the DGU Prototype is determined acceptable and suitable
by Northrop Grumman, Exhibit A hereof shall be used as the basis to draft
additional agreements for the DGU.

 

2.5.The Parties recognize that, during the term of this Agreement, conditions
relating to the Program may change such as to dictate a change in the scope of
the work set forth in Exhibit A or in the continuation of the Program by either
Party.

 

Therefore, prior to any revisions to Exhibit A by Northrop Grumman, CIRQUE will,
upon request, enter into good faith negotiations with Northrop Grumman to revise
Exhibit A hereof to increase, decrease or clarify the work hereunder. Northrop
Grumman agrees not to initiate such request, unless it has a good faith belief
that such is necessary, and will in such event advice CIRQUE of the basis for
such belief. In the event, after such Northrop Grumman request, the Parties are
unable to reach mutual agreement as to an appropriate revision to Exhibit A,
either Party may, upon ten (10) days prior notice to the other Party, terminate
this Agreement, unless within such ten (10) day period Northrop Grumman
withdraws the request or mutual agreement upon a revision is reached.

 

3.Exclusivity of Agreement

 

In view of the close cooperation which shall be required, the expenditures which
shall be incurred and the necessity to exchange confidential and proprietary
business and technical information for the purpose of this Agreement, CIRQUE
agrees that during the term of this Agreement, CIRQUE shall not participate in
any manner in the design, manufacture, assembly, test and commission of a
prototype gasifier unit similar in specification, design or intent, or any part
thereof, by itself or by any third party, relating to or competitive with the
Program, or provide any services, data, information or other assistance to any
third party in furtherance thereof or enter into any agreement with any third
party for the provision of services or equipment relating to or competitive with
the Program.

 

 

 

 

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4.Acceptance & Suitability of DGU Prototype

 

Provided the DGU Prototype is determined to be commercially viable by Northrop
Grumman, Exhibit A hereof is provided to document additional agreements for the
DGU.

 

Either Party will, in the event of an acceptable and suitable DGU Prototype,
accept a subcontract to perform work and render services in accordance with this
Agreement and Exhibit A hereto, subject to mutual agreement on prices and other
terms and conditions. In the event mutually acceptable prices and other
subcontract terms and conditions or a Letter Subcontract cannot be negotiated by
the Parties within a reasonable time, and in any event within 60 days after
award of a contract to a Party, the other Party shall have the right, upon ten
(10) days prior notice to terminate this Agreement and make other arrangements
for the performance of the work in Exhibit A, in which case the rights and
obligations of both Parties under this Agreement will terminate pursuant to
Article 5.4 below. This right is in addition to other rights the Parties may
have hereunder or under applicable law.

 

Any such resulting subcontract or changes to this agreement, shall be subject to
applicable laws, regulations and required or reasonably implied flow-down terms
and conditions of the contract, mutual agreement on pricing and other
subcontract terms and conditions, and prior approval of Customer, if required.

 

5.Termination

 

This Agreement and all rights and duties hereunder, will terminate upon the
first of the following events to occur:

 

5.1.Any material change to CIRQUE capabilities or other attributes (e.g., size
status; financial stability) that is significant to the basis on which Northrop
Grumman has entered into this Agreement, as reflected in the recitals to this
Agreement;

 

5.2.The failure of the CIRQUE to provide the effort defined in Article 4, above,
or provide such assistance in a timely manner or of acceptable quality;

 

5.3.Mutual consent of both Parties by execution of a rescission agreement;

 

5.4.Ten days after the issuance of the written notice required by Article 4 when
the Parties fail to consummate a subcontract as contemplated herein;

 

5.5.Written notification of a decision by either Party not to continue with the
Program;

 

5.6.A filing of a bankruptcy petition or other material adverse financial change
by either Party;

 

 

 

 

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5.7.A written determination by Northrop Grumman that an actual or potential
Organizational Conflict of Interest (OCI) for either Party pursuant to Article
24 has failed to be mitigated;

 

5.8.A written determination that either Party is ineligible to receive an award
by the Government by being listed on the Consolidated List of Debarred,
Suspended and Ineligible Contractors; or

 

5.9.The expiration of two (2) years from the effective date hereof, provided,
however, if the Program is still under consideration by Northrop Grumman senior
management upon the expiration of the (2) year period, this Agreement shall
continue in force until terminated pursuant to one of the foregoing conditions.

 

6. Proprietary Information

 

During the course of this Agreement, the Parties shall disclose and protect all
proprietary and/or sensitive information in accordance with the Non-Disclosure
Agreement executed between the Parties, which is attached as Exhibit B and is
hereby incorporated herein. As a result of the execution of this Agreement, the
Parties further agree that Northrop Grumman may disclose information disclosed
under such Non-Disclosure Agreement to the U.S. Government in furtherance of the
Program, subject to the appropriate restrictive legends set forth in the FAR or
DFARS, and, on a need-to-know basis, to their other subcontractors and potential
subcontractors on the Program subject to the same restrictions on use and
disclosure as are set forth in the Non-Disclosure Agreement. The obligations of
the Non-Disclosure Agreement shall survive the expiration or termination of this
Agreement.

 

7.Classified Information

 

To the extent the obligations of the Parties hereunder require the handling or
the access to classified U.S. Government security information; the same shall be
subject to the requirements of the Department of Defense National Industrial
Security Program Operating Manual (NISPOM).

 

8.Intellectual Property

 

Intellectual property developed under this agreement shall remain the property
of the originating Party. All rights, title and interest in the technology and
documentation, and any right, title or interest to any intellectual property
rights in the DGU as expressed within Exhibit C shall remain at all times with
Northrop Grumman, and CIRQUE obtains only the rights expressly set forth in this
Agreement.

 

CIRQUE recognizes and agrees that any modifications, alterations, revisions,
upgrades, changes, adaptations, and/or improvements to the baseline DGU system
and/or technology (not including CIRQUE/CIRQUE “Auger Gasifier” and “Syngas
Scrubber”) is considered under the ownership of and the intellectual property of
Northrop Grumman.

 

 

 

 

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CIRQUE recognizes and agrees that at no time during prototype and/or product
development does Northrop Grumman release any of its rights to CIRQUE in the
engineering or design of hardware and/or software which includes the effort
necessary to meet specific mission objectives, specifications, or performance
requirements to provide a capability that did not previously exist.

 

CIRQUE recognizes and agrees that all Northrop Grumman intellectual property is
provided "as-is," without any express or implied warranty. In no event shall
Northrop Grumman be held liable for any damages arising from CIRQUE use of the
Northrop Grumman intellectual property.

 

In the event of joint development, the Parties shall establish their respective
rights in the intellectual property by negotiations between the Parties. Each
Party shall grant to the other Party the right to use its intellectual property
necessary for the other Party to support the prototype development and
demonstration. It is recognized and agreed that the Parties may be required to,
and shall, grant licenses or other rights to inventions, data, software and
information as specified in United States (U.S.) Government Solicitations or as
required by law. Such rights, which shall be identified in any resulting
subcontract, shall not exceed those required by the U.S. Government contract.

 

9.Expenses

 

Except as otherwise set forth herein, or as may be mutually agreed by the
Parties, and except for the compensation which may be paid to the Parties in
accordance with any such contracts and subcontracts, each Party shall bear all
of its own risks and expenses incurred in connection with this Agreement and the
Program referred to herein including, without limitation, its marketing, sales
and proposal activities.

 

10.Relationship

 

The cooperation of the Parties contemplated by this Agreement is for the purpose
of complementing their respective capabilities for the Program objectives. This
Agreement shall not constitute, create, or in any way be interpreted as a
partnership, joint venture or formal business organization of any kind. This
Agreement does not establish any relationship of principal or agent; and neither
Party shall have any power or authority to accept on behalf of the other any
offer, agreement, or contract, or to make, incur, contract or create any claim,
promise, guarantee, debt, obligation, expense or liability of any kind
whatsoever in the name of, on behalf of or for the account of the other Party.
Nothing in this Agreement shall be construed as providing for the sharing of
profits and losses of either or both of the Parties. Except to the extent of a
breach of this Agreement, neither Party shall acquire, by virtue of this
Agreement, any liability to the other Party for expenses, risks or liabilities
incurred by the other Party.

 

 

 

 

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11.Scope of Agreement

 

This Agreement shall relate only to the Program specified herein, and nothing
herein shall be deemed to:

 

11.1.Confer any right or impose any obligation or restriction on either Party
with respect to any other program effort or marketing activity at any time
undertaken by either Party hereto, jointly or separately; or

 

11.2.Preclude either Party hereto from soliciting or accepting a contract or
subcontract from any third party contractor (or subcontractor of any tier) under
any other program or under this Program after termination of this Agreement; or

 

11.3.Limit the rights of either Party to promote, market, sell, lease, license
or otherwise dispose of its standard products or services, except where such
would conflict with the obligations of the Party under this Agreement.

 

12.Condition on Obligations

 

The obligations of either Party hereunder, including without limitation the
obligations to prepare and submit any proposal and to award or accept any
subcontract, are subject to the following conditions:

 

12.1.There shall be no litigation or proceeding pending or threatened against
the Party or any of its officers or employees (i) which is for the purpose of
enjoining or otherwise restricting the activities contemplated by this
Agreement, or otherwise claiming that any such activity is improper, (ii) which
would adversely affect the rights and/or capabilities of the Party in respect of
such activities, or (iii) which, in the judgment of an officer of either Party,
would make the continuation of such activities inadvisable.

 

12.2.Prior to the submission of any proposal or the award of any subcontract,
there shall have been no material adverse change in the financial condition or
operational capabilities of either Party relating to the activities contemplated
by this Agreement, and there shall not have been any occurrence, circumstance or
combination thereof which might reasonably be expected to result in any material
adverse change in the ability of either Party to perform the work covered by
such proposal or contemplated subcontract.

 

12.3.In the event of any occurrence or circumstance as set forth in Articles
12.1 and 12.2 above, each Party shall provide written notice to the other within
ten (10) working days of knowledge of such occurrence or circumstance.

 

13.Indemnity

 

The employees of Northrop Grumman and CIRQUE shall obey all pertinent rules and
regulations of the other Party while on the premises of the other Party,
including those relating to the safeguarding of classified information. Each
Party agrees to indemnify and save harmless the other Party from and against all
claims for damage to, or loss of use of, the other Party’s tangible property;
and injury or death of any of the other Party’s employees or agents, to the
extent any such damage, injury or death is caused by any negligent act or
omission to act of the indemnifying Party’s employees or agents in connection
with performance under this Agreement.

 

 

 

 

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14.Compliance with Law

 

The Parties shall comply with all federal, state and local laws and regulations
including Executive Orders of the President of the United States applicable to
the effort contemplated under this Agreement. Technical data exchanged hereunder
may be subject to U.S. export control laws and regulations. Accordingly, the
Parties shall not transfer technical data received under this Agreement to any
foreign person, country, foreign subsidiary or parent corporation, without
specific authorization from the disclosing Party and pursuant to an appropriate
U.S. Government agency license.

 

15.Governing Law

 

This Agreement shall be construed in all respects in accordance with, and any
dispute arising hereunder shall be governed by, the substantive and procedural
laws of Virginia except, however, that choice of law provisions shall not
apply.  The Parties waive any right to a jury trial.

 

16.Disputes

 

The Parties will attempt in good faith to resolve through good faith
negotiations of any dispute, claim or controversy arising out of or relating to
this Agreement. If the Parties are unable to resolve such dispute, claim or
controversy through good faith discussions at the Program level, higher level
management representatives from each Party shall meet and attempt to resolve the
dispute. Parties may exercise any right available under the law if the disputes
cannot be resolved through good faith negotiations. No provision of this
Agreement shall prevent either Party from exercising any right available under
the law if (a) good faith efforts to resolve the dispute have been unsuccessful,
or (b) interim relief from a court or other adjudicative body is necessary to
prevent serious and (or) irreparable injury.

 

17.Limitation of Liability

 

Neither Party shall be liable to the other for any indirect, incidental, special
or consequential damages, however caused, whether as a consequence of the
negligence of the one Party or otherwise.

 

18.Publicity

 

No releases shall be made to the news media or the general public relating to
this Agreement without the prior written approval of the other Party, which
approval shall not be unreasonably withheld. The Parties further agree that news
releases made by either of them shall recognize the participation and
contributions of the other Party.

 

 

 

 

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19.Non-solicitation of Employees

 

Northrop Grumman’s obligations and commitments under this Agreement, including
the non-solicitation provision below, apply only to its Information Systems
Sector, Defense Systems Division (DSD).

 

The parties agree that during the term of this Agreement and for a period of one
(1) year after the expiration or termination of this Agreement, neither party
shall, without the advance written consent of the other, actively solicit for
employment any person or persons employed by the other who is working on or with
respect to the parties contract and/or subcontracts under the Program. The hire
of individuals responding to general public marketing and recruiting
advertisements and events shall not be a violation of this provision; only
active, targeted solicitation is prohibited.

 

20.Assignments

 

Neither Party shall assign or transfer any of its rights or obligations
hereunder in whole or part without the prior written consent of the other Party,
except to another U.S. corporate division or affiliate of the Party so long as
sufficient assets, personnel and other resources necessary to perform the
obligations hereunder remain available. Any consent required under this clause
shall not be unreasonably withheld.

 

21.Severability

 

If any provision of this Agreement or part of such provision is or becomes
invalid or unenforceable, then the remaining provisions hereof shall continue to
be effective. Nothing in this Agreement shall be construed as requiring any
Party to take any action which is prohibited under any applicable governmental
laws or regulations, or as prohibiting any Party from complying with such laws
or regulations.

 

22.Waivers

 

No waiver by a Party of any of its rights or remedies shall be construed as a
waiver by such Party of any other rights or remedies that such Party may have
under this Agreement.

 

23.Notices

 

All notices or communications (other than normal business communications)
required by this Agreement or desired to be given hereunder, shall be in writing
addressed as follows, and given by certified or registered mail, return receipt
requested, or an overnight mail service that confirms delivery and shall be
deemed to be given when received.

 

 

 

 

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If To: Northrop Grumman:

Northrop Grumman Systems Corporation,

201 Electronics Blvd.

Huntsville, AL 35824

Attention: Carl V. Ehler

 

If To: CIRQUE:

Cirque Energy, Inc.

243 W. Congress St, Suite 350

Detroit, MI 48226

  Attention: Richard L. Fosgitt, PE

  

24.Entire Agreement

 

This Agreement contains the entire understanding between the Parties and is the
complete and exclusive expression of the Agreement between the Parties with
respect to the Program.  This Agreement supersedes all prior or contemporaneous
communications, agreements or understandings between the Parties on the subject
matter of this Agreement.  A modification to this Agreement may only be made in
writing and must be signed by authorized representatives of both Parties.

 

The Parties hereto, by and through their duly authorized representatives,
execute this Agreement.

 

CIRQUE ENERGY, INC.   By     Name Joseph L. DuRant   Title CEO   Date November
13, 2013         NORTHROP GRUMMAN SYSTEMS CORPORATION   DEFENSE SYSTEMS DIVISION
(DSD)   By     Name     Title     Date