Control Patent Assignment And Cross-license Agreem

Exhibit 10.33


CONTROL PATENT ASSIGNMENT


AND


CROSS-LICENSE AGREEMENT


This Control Patent Assignment and Cross-License Agreement ("Agreement") is made effective this 19th day of December, 2001 ("Effective Date") by and between Woodward Governor Company, a Delaware corporation having a principal place of business at 5001 N. Second Street, Rockford, Illinois 61125 USA (hereinafter referred to as "WGC") and Catalytica Energy Systems, Inc., a Delaware corporation having a principal place of business at 430 Ferguson Drive, Mountain View, California 94043-5272 (hereinafter referred to as "CESI").


WHEREAS WGC is the owner of and has the right to assign or grant licenses to certain patents and patent applications relating to control technology applicable to catalytic combustion for gas turbine engines;


WHEREAS WGC desires to assign the 793 Patent as defined herein and to grant CESI certain exclusive and non-exclusive rights with respect to certain other WGC patents;


WHEREAS CESI is the owner of and has the right to grant licenses to certain patent applications relating to control technology applicable to catalytic combustion for gas turbine engines; and


WHEREAS CESI desires to grant WGC certain non-exclusive rights with respect to CESI's patents;


NOW, THEREFORE, for and in consideration of the mutual covenants and agreements hereinafter expressed, the parties agree as follows:


1. DEFINITIONS


1.1 "793 Patent" means U.S. Patent No. 6,095,793, and all United States patent applications and foreign patent applications claiming priority from that patent, all patents issuing on any of the foregoing, and all divisions, continuations, renewals, reissues, reexaminations, and extensions of any of the foregoing owned by WGC or under which WGC has the right to grant licenses.


1.2 "CESI Improvement Patents" means any patents owned or controlled by CESI covering Improvements.


1.3 "CESI Patents" means all United States patents and foreign patents that CESI owns or under which CESI has the right to grant licenses during the term of this Agreement that contain inventions useful for control technology applicable to catalytic combustion for gas turbine engines. A list setting forth CESI Patents issued as of the Effective Date and pending patent applications (which if issued would be expected by CESI to become CESI Patents within the scope of this definition) is attached hereto as Exhibit D.
---------


1.4 "Field" means (a) gas turbine engines equipped with one or more Xonon Systems, and (b) control systems for such gas turbine engines.


1.5 "Improvements" means any and all improvements, modifications, enhancements, and refinements, whether patentable or unpatentable, in control technology for catalytic combustion for gas turbine engines.


1.6 "Payment and Royalty Termination Date" means 11:59pm Central Time on December 31, 2014.


1.7 "Sales" means all amounts invoiced on sales of WGC Control Systems not used primarily for developmental, research or test purposes.


1.8 "WGC Control System" means a WGC-provided control system for a Xonon System.


1.9 "WGC Improvement Patents" means any patents owned or controlled by WGC covering Improvements.


1.10 "WGC Patents" means all United States patents and foreign patents, excluding the 793 Patent, that WGC owns or under which WGC has the right to grant licenses during the term of this Agreement that cover inventions in control technology applicable to catalytic combustion for gas turbine engines that would be infringed by the practice of the inventions of the 793 Patent or WGC Improvement Patents.


1.11 "Xonon Control System" means a control system for a Xonon System-equipped gas turbine that, but for the license grant herein, would otherwise infringe a valid enforceable claim of the 793 Patent or WGC Improvement Patents.


1.12 "Xonon System" means a CESI catalytic combustion system for a gas turbine engine.


2. ASSIGNMENT AND LICENSE GRANT TO CESI


2.1 793 Patent. WGC hereby assigns to CESI the entire right, title
---------- and interest in and to the 793 Patent. WGC has executed the short-form assignment document attached hereto as Exhibit B, which CESI may file with the
--------- United States Patent and Trademark Office to record the assignment. WGC agrees to execute


customary assignment forms in order for CESI to record the assignment of pending foreign applications of the 793 Patent in the applicable foreign jurisdictions at CESI's request. WGC has listed on Exhibit C all payments required to be made,
--------- documents required to be submitted and all other actions required to be taken within the 60-day period following the Effective Date in order to maintain the 793 Patent. WGC agrees to deliver promptly the attorney files for the 793 Patent to the attorney or agent designated by CESI at CESI's request.


2.2 WGC Improvement Patents. Subject to the qualifications and
----------------------- reservations set forth herein, WGC hereby grants CESI a worldwide, exclusive, perpetual, irrevocable license, with rights to sub-license as herein set forth, under the WGC Improvement Patents to practice the methods described therein and to make, use, import, offer for sale and sell products in the Field. The worldwide exclusive, perpetual, irrevocable license of the previous sentence includes a non-exclusive license, with rights to sub-license as herein set forth, under any WGC Patents, limited to the extent that the WGC Patent would be infringed by operation under the grant in the previous sentence or operation under the 793 Patent in the Field. WGC reserves the right under the WGC Improvement Patents to make, use, import, offer for sale, and sell, WGC Control Systems.


2.3 Payments to WGC. CESI shall make payments to WGC in accordance
--------------- with the XONON MODULE PAYMENT TERMS attached hereto as Exhibit A. Such payments
--------- are consideration for the assignment of the 793 Patent and for information shared and assistance rendered to CESI prior to the Effective Date pertaining to control systems. CESI and WGC agree that the payments shall continue at the rate set forth in the XONON MODULE PAYMENT TERMS irrespective of whether a WGC patent application issues that becomes a WGC Improvement Patent or whether the 793 Patent or any patent assigned to CESI hereunder is declared invalid. CESI's payment obligations commence upon the Effective Date of this Agreement and will terminate on the Payment and Royalty Termination Date, or until the cumulative payments, royalties, license fees and license royalties and sub-license fees and sub-license royalties paid to WGC hereunder total US $15,000,000 (Fifteen Million US Dollars), whichever occurs first.


2.4 License and Sub-Licenses. CESI may grant sub-licenses under
------------------------ Section 2.2 only as described in this Section 2.4. Prior to granting a sub-license under Section 2.2 or a license under the 793 Patent to gas turbine manufacturers and third party controls systems manufacturers for the sole purpose of such sub-licensees or licensees developing, manufacturing, selling, offering for sale, using, importing or servicing a control system for Xonon-equipped gas turbines (each such sub-license or license, a "Control System License," and each such sub-licensee or licensee, a "Control System Licensee"), CESI shall first use reasonable efforts to make the potential Control System Licensee aware of the benefits of purchasing such controls systems from WGC. Each Control System License must be subject to the following conditions:


2.4.1 the Control System Licensee may not sub-license any rights granted under a Control System License to this Agreement; and


2.4.2 the Control System License will only apply to control systems, or components thereof, for use with Xonon Systems.


2.5 Nomination Process. Prior to granting a Control System License to
------------------ any third party control systems manufacturer:


2.5.1 CESI shall provide WGC with a letter from a gas turbine manufacturer nominating that third party control systems manufacturer to provide controls systems for that gas turbine manufacturer; and


2.5.2 such Control System License will only apply to controls systems provided by the nominated third party controls systems manufacturer to that gas turbine manufacturer.


2.6 Control System License Fees. For each gas turbine manufacturer and
--------------------------- third party controls systems manufacturer to whom CESI grants a Control System License, CESI will pay to WGC the sum of US $50,000 (Fifty Thousand US Dollars) upon the execution of that Control System License, plus a running payment of US $3,000 for each sale of a Xonon Control System under license. For the avoidance of doubt, where CESI has paid the US $50,000 Control System License fee for a particular gas turbine manufacturer or third party controls systems, no further license or sub-license fees will be required for additional Control System Licenses granted to that particular gas turbine manufacturer or third party controls systems manufacturer or to its affiliates, but running payments will continue to apply for such additional Control System Licenses.


2.7 Notification. WGC shall notify CESI when a WGC Patent issues which
------------ would be expected by WGC to become a WGC Improvement Patent. The notification shall occur within 2 months after a patent issues.


3. GRANT TO WGC.


3.1 CESI Patents and CESI Improvement Patents. Subject to the
----------------------------------------- qualifications and reservations set forth herein, CESI hereby grants WGC a worldwide, non-exclusive, perpetual, irrevocable license, with rights to sub-license as herein set forth, under the CESI Patents and CESI Improvement Patents to practice the methods described therein and to make, use, import, offer for sale and sell products in the Field.


3.2 793 Patent. CESI hereby grants WGC a worldwide, non-exclusive,
---------- royalty-free, perpetual, irrevocable license, with rights to sub-license as herein set forth, under the 793 Patent to practice the methods described therein and to make, use, import, offer for sale and sell products in the Field. If CESI decides not to pay maintenance fees for the 793 Patent, CESI shall notify WGC and offer WGC the option of paying such maintenance fees on CESI's behalf prior to the time such fees are due. In the event WGC elects to exercise such option and pays such maintenance fees, the amount of such fees paid by WGC will be counted towards WGC's US $2.0 million payment cap to CESI described in Section 3.3 below.


3.3 Payments to CESI.
----------------


3.3.1 In consideration for information shared and assistance rendered to WGC prior to the Effective Date pertaining to catalytic combustion, the licenses granted herein, and other consideration, the receipt and sufficiency of which is hereby acknowledged, WGC shall make payments to CESI calculated on the basis of an amount equal to one percent of the Sales of WGC Control Systems installed in conjunction with the installation of XONON catalytic modules for both new and retrofit turbines. Such payments will apply from the Effective Date of this Agreement throug ...