Seattle-based Principle Power, a company focused on offshore wind energy, announced today it has received a $750,000 grant from the U.S. Department of Energy to develop water power technologies. Principle Power is working with the National Renewable Energy Lab and Marine Innovation and Technology on the project, which seeks to incorporate wave energy generation into the company’s floating support structures for wind turbines.

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Seattle-based Cray, the supercomputing company, announced today it has signed a multi-year contract with the Korea Meteorological Administration worth more than $40 million. Cray (NASDAQ: CRAY) will deliver a next-generation supercomputer (capable of more than 600 trillion calculations per second), as well as service and support, to the Seoul-based weather forecasting and climate research organization. Delivery and acceptance of the supercomputer are expected in 2010.

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The big news of the week was Microsoft’s sale of Razorfish to Publicis (see directly below), but there were a few other important deals in software, biotech, and energy.

—Microsoft’s online advertising subsidiary, Seattle-based Razorfish, was bought by French marketing firm Publicis for approximately $530 million, as Bob reported. The payment is expected to include cash and Publicis Groupe treasury shares. In addition, Microsoft and Publicis have entered into a five-year strategic alliance whereby Publicis clients can purchase display and search advertising from Microsoft on favorable terms. Microsoft (NASDAQ: MSFT) originally acquired Razorfish in its 2007 purchase of aQuantive.

—Bellevue, WA-based Confirma, a medical imaging software firm, has been acquired by Merge Healthcare, a Milwaukee, WI-based health IT provider, for about $22 million, as Eric reported. Merge will incorporate Confirma’s MRI software into its IT offerings for doctors.

—Vancouver, BC-based Tekmira (TSX: TKM) formed a two-year partnership with Cambridge, MA-based Alnylam Pharmaceuticals to develop new particles to deliver RNA-interference drugs to diseased cells deep in the body, as Ryan reported. Financial terms of the deal weren’t given. Alnylam is funding the research effort and has exclusive rights to new discoveries, while Tekmira can use the discoveries for some of its own RNAi treatment programs.

—Seattle-based EnerG2 won $21.3 million in federal stimulus funding from the U.S. Department of Energy to build a new manufacturing plant in Albany, OR. The University of Washington energy-storage spinout is developing nano-scale materials to make better ultracapacitors for electric and hybrid vehicles and other applications.

—A few more terms of the Microsoft-Yahoo search deal, in which Yahoo will use Bing as its search engine and will control ad sales for five years, were spelled out in a filing with the SEC. Microsoft (NASDAQ: MSFT) will pay Yahoo $50 million a year for three years to cover transition and implementation costs. It will also hire 400 Yahoo employees, plus another 150 to assist with the transition. Yahoo (NASDAQ: YHOO) can opt out of the deal if it isn’t approved within a year, or if Microsoft and Yahoo’s combined share of the search market dips below an undisclosed percentage.

—Seattle-based Oncothyreon (NASDAQ: ONTY), a developer of cancer drugs, raised $15 million by securing commitments from investors to buy new shares and warrants, as Luke reported. Last week, the company said a small group of lung cancer patients showed long-lasting responses after taking Stimuvax, the immune-boosting vaccine therapy Oncothyreon is co-developing with Germany-based Merck KGaA.

—Seattle-based WatchGuard Technologies, a network security company, acquired Toronto-based BorderWare Technologies, an e-mail and Web security firm, as Eric reported. Financial terms were not given. WatchGuard plans to use BorderWare’s technology to make its security software more comprehensive and competitive.

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In the past week, companies have been releasing their financial results for the second quarter. There’s a mix of good and bad news from Seattle’s public tech companies weathering the economic storm, with surprisingly positive news from some quarters.

—Bellevue, WA-based metasearch developer InfoSpace announced its revenue was $43.8 million for the quarter, up 14 percent from the same period last year. InfoSpace (NASDAQ: INSP) now has $208.3 million in cash and securities. This was better than analysts had expected from InfoSpace, which has undergone some significant growth recently, including a new charity search website Xconomy previously wrote about.

—Good news was also reported by Seattle-based supercomputer manufacturer Cray (NASDAQ: CRAY), which turned a profit with $62.7 million in revenue last quarter, up 34 percent from the same period last year. Cray’s success has a lot to do with recent, lucrative contracts the company has landed. Xconomy recently profiled Cray here.

—Things were less positive for Seattle-based digital media company RealNetworks (NASDAQ: RNWK), which reported $135.7 million in second-quarter revenue, an 11 percent decrease from last year. For this quarter, RealNetworks had a net loss of $188.3 million. The company said it hopes to show some improvement for the second half of the year.

—Online diamond retailer Blue Nile (NASDAQ: NILE) also reported a slight decrease in revenue. The Seattle-based company posted net sales of $69.9 million, a decrease of 5.2 percent from the same period last year, although sales are continuing to increase slightly from year-to-year for the company.

—Slightly more cheerful news was posted by embedded device software developer Bsquare (NASDAQ: BSQR). The Bellevue, WA-based company earned $16.1 million in revenue, up 5 percent from the second quarter of 2008. The company announced last month it will start working with Coca-Cola to create the Coca-Cola Freestyle software-driven fountain dispenser.

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A new draft bill that would limit but not outlaw noncompete agreements in employment contracts in Massachusetts is being floated by two members of the state’s House of Representatives.

The bill combines elements of separate bills introduced earlier this year by Representatives William Brownsberger of the 24th Middlesex district and Lori Ehrlich of the 8th Essex district. Brownsberger told Xconomy this morning that the new bill is intended in part to head off objections among business leaders to his earlier bill, which would have outlawed noncompete agreements altogether.

Many employers in the state believe that noncompete agreements are needed to keep employees from leaving with company secrets and starting directly competitive businesses. Some venture capitalists and technology executives, on the other hand, argue that the agreements punish budding entrepreneurs and harm the local economy, by forcing employees either to stay with their current companies and forego starting new ventures, or to abandon Massachusetts for places like California, where noncompete agreements are unenforceable.

The compromise bill, which adopts much of the language in Ehrlich’s first bill, will likely be heard by the House Committee on Labor and Workforce Development this fall. Unlike Brownsberger’s original proposal, it allows companies to require workers to sign noncompete agreements as a condition of employment. But it creates incentives for employers to limit the terms of these agreements to 6 months, down from the 12 months in typical employment contracts today. It also cuts out restrictions that judges in contract dispute cases might see as overreaching—and it automatically awards attorneys’ fees to employees in such cases.

For employees who make less than $100,000 a year but more than $50,000, the bill limits the acceptable rationale for enforcing noncompete agreements to just two: protecting trade secrets or confidential information. And for employees who make under $50,000 a year, the bill makes noncompete agreements unenforceable for any reason.

At this point, Brownsberger’s earlier blanket proposal to outlaw noncompete agreements—a proposal endorsed by a coalition of venture capital partners, company executives, and industry associations—would seem to be dead in the water. But the new proposal would still bring significant changes to Massachusetts employment law, and probably has a much greater chance of surviving the coming legislative debate.

“We got a very positive response [to the earlier bill] from the VC community and from employees who had had bad experiences, but we got a very negative response, particularly from smaller businesses and many of the smaller high-tech companies,” Brownsberger says. “Companies are very emotional about this issue and feel very strongly that we were taking away from them protections that are vital to their survivability. So we listened carefully to those concerns and attempted to craft a bill that would improve the venture climate, provide employees with some real relief from overreaching noncompete agreements, yet at the same time allow businesses—particularly small businesses—to protect what they feel is vital to their survival.”

The Brownsberger-Ehrlich bill appeases employers by preserving most of the existing legal levers available to them when enforcing noncompete agreements in court. A noncompete agreement should be seen as valid, the bill says, whenever it’s needed to protect an employer’s trade secrets, confidential information such as product development plans and marketing strategies, or “goodwill,” meaning customer relationships.

But there are exceptions in the bill: the goodwill argument can’t be applied to employees making under $100,000, and employees making under $50,000 are exempted altogether. To keep employers from imposing draconian terms, the bill would award attorney’s fees to employees in any cases where a judge finds that the employer has overreached. And the bill explicitly scraps a legal argument sometimes used to keep ex-employees from going to work for competing companies, even in the absence of a signed noncompete agreement: the “inevitable disclosure doctrine,” under which courts presumed that any departing employee would betray trade secrets.

“What we’ve done in the final legislation is give employers very strong incentives to draft only the most reasonable noncompete agreements,” says Brownsberger, who represents a district including Belmont, north Cambridge, and east Arlington. What’s considered reasonable? The bill spells that out, too: “Number one, they can be no more than 6 months in duration,” Brownsberger says. “Number two, …Next Page »

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Five researchers from the University of Washington and Washington State University, Vancouver, working together with Washington companies, received a total of $376,454 in state funding through Washington Technology Center, according to an announcement today.  The university researchers are working with property data solutions company Data Data in Vancouver; biomaterials firm Healionics in Redmond; pressure instrumentation manufacturer Paine Electronics in East Wenatchee; nanostructure material builder Modumetal in Seattle; and medical simulator developer Simulab, also in Seattle.

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SpectraWatt, a Hillsboro, OR-based maker of photovoltaic cells, received a $500,000 contract from the National Renewable Energy Laboratory yesterday.  Part of the American Recovery and Reinvestment Act, the contract is for the company to develop ways of improving solar cells without changing current manufacturing processes.  SpectraWatt was one of 13 companies to receive money from NREL, the ultimate goal being to speed up the commercialization of solar energy technologies.

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Bingen, WA-based Insitu, a developer of unmanned aircraft systems, announced today it has received a one-year, $30 million contract from the Canadian government to provide technologies to support Canadian forces’ operations in Afghanistan. The contract, which includes two additional one-year options, specifically calls for small unmanned aerial vehicles for intelligence, surveillance, and reconnaissance. Insitu was acquired by Boeing (NYSE: BA) for about $400 million last summer.

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The United States Navy announced today that it has awarded a $146 million contract to Cambridge, MA-based Charles Stark Draper Laboratory for work on guidance systems to extend the life of the Trident II, a submarine-launched nuclear missile developed by Lockheed Martin in the 1980s. About 12 percent of the work will occur at Draper’s Cambridge facility, 10 percent in Pittsfield, MA, and the remainder in Florida and Minnesota. The Navy said it didn’t solicit competing bids for the contract.

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Lionbridge Technologies (NASDAQ: LIOX), the Waltham, MA-based translation services company whose financial performance we questioned in a profile last May, announced yesterday that it has obtained several new multi-year contracts that should shore up revenues by $25 to $30 million a year. The company said it had won contracts with a provider of power services and systems, a maker of manufacturing process optimization software, a broadband communications company, and an online employement provider, among other companies. Lionbridge did not name the new clients.

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The recent downturn in the economy is having—and will continue to have—a significant impact on the ability of many companies to raise money and fund continued growth. This in turn will have significant ramifications on exit strategy. Luckily, for some at least, there are still potential buyers out there with sufficient cash to fund acquisitions. The Wall Street Journal, for example, reported that Oracle CEO Larry Ellison said at the company’s October shareholder meeting, “Acquisitions that we have been looking at for some time may now be more attractive.” As the current economic conditions are likely to move M&A towards a buyer’s market, potential targets should be asking themselves what they can do to make themselves more attractive and to make it easier for a buyer to close the deal.

Let’s face it—many smaller companies don’t spend a lot of time or resources getting their houses in order. They are focusing their primary efforts on R&D and marketing and sales, as they should. But if at some point a potential buyer is interested enough in your business to take a look at you, it would be in your best interest to be prepared as an organization. This includes the formalities related to the business’s legal existence and its relationships with other parties such as customers, vendors and employees.

At the top of the list are corporate organization documents (e.g., charter, bylaws and stock records), corporate administrative records (e.g., shareholder and board minutes and resolutions), contracts (of both the vendor and customer varieties), and employee and contractor agreements. A company has to ask itself: If a buyer knocked on the door tomorrow and wanted to start due diligence, could I find all of these documents? Are they up to date? Has everything been properly signed and dated?

The inability to produce these materials for due diligence could cause a buyer to worry about the state of the business. A lack of shareholder and board minutes books can call into question whether the company’s actions have been conducted with all necessary approvals. A buyer needs to be able to rely on the fact that all prior actions taken by the company or its officers were properly authorized. Without this knowledge, the buyer faces a risk that some prior actions could be challenged. For example, the buyer wants to be assured that critical material contracts have been properly handled.

Improperly maintained stock records prevent proper determination of the various ownership stakes in the company. A buyer needs to know exactly who owns what, which will ordinarily determine how the money is divvied up when the deal closes. Without this information, the buyer doesn’t really know what it is buying and runs a significant risk of becoming embroiled in an ownership dispute involving founders, investors and other stockholders.

Failure to organize properly signed contracts can have numerous ramifications. Do you have all necessary rights to the intellectual property used in your business? Do you own it? A careful review of your contracts with vendors and licensors will be necessary to make this determination.

The buyer will also want to verify that your employees and consultants have signed agreements confirming that the company owns (in the case of employees) or at minimum has sufficient license rights (in the case of contractors and licensors) to all intellectual property used in the business. If it takes a few weeks to find these documents and get them to the buyer’s due diligence team, the team may rightfully wonder whether you have a handle on things.

Demonstrating to a buyer that your company has adequate contracting practices for customer deals is equally important. Your (and eventually the buyer’s) ability to recognize revenue – and the timing of revenue recognition—will be highly dependent on the existence of properly signed and dated contracts. A serious buyer will very likely want …Next Page »

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It might have won a gold medal for longest-running contract dispute. Finally, though, it’s over—or so it seems. San Diego defense contractor SAIC said yesterday the Greek government has formally accepted the sophisticated “command and control” security network the company installed for the 2004 Summer Olympic Games. The company also known as Science Applications International Corp. said the price tag for its marathon installation is approximately $322 million.

Troubles with the contract prompted the secretive research and engineering conglomerate to postpone its IPO from December 2005 until October 2006. Negotiations to resolve the dispute dragged on for years, and even yesterday’s announcement was puzzling.

The Greek government, which refused to pay for the project until SAIC fixed technical problems, publicly announced it was satisfied with the work in March 2007. Perhaps that was just a negotiating tactic. SAIC declined comment at that time, saying it had not seen documents. The company remained silent about the issue until yesterday.

In its announcement yesterday, SAIC said the Command, Control, Communications, Coordination and Integration system was designed to address the public safety and security needs of the Greek police, fire brigades, coast guard and ambulance service.

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The Navy’s Space and Naval Warfare Systems Center in Charleston, SC, has awarded a $17 million task order to SAIC, the San Diego defense contractor, to support a training program for countering IEDs, or improvised explosive devices. The program trains Marine Corps engineers to defuse roadside bombs and other booby-traps, and in using electronic warfare countermeasures to jam signals intended to trigger IEDs.

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It turns out that DARPA, the Pentagon’s R&D funding agency, awarded two biofuel development contracts last week, and both went to San Diego companies. As we reported, the Defense Advanced Research Projects Agency awarded a $19.5 million contract to a consortium headed by General Atomics. Yesterday, the Pentagon said DARPA also awarded a $14.9 million contract to SAIC, the engineering and research company. Both contracts call for developing economical methods for making JP-8 grade jet fuel from algae.

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Many Massachusetts companies require new employees to sign agreements saying that if they leave, they won’t go to work for a competitor for at least a year. The idea behind these non-compete agreements is to prevent a company’s competitors from gaining access to trade secrets and key personnel. But there’s a growing chorus of entrepreneurs, venture investors, labor-rights activists, and others saying that the agreements are unfair to employees. They not only make it harder for workers to switch jobs, the argument goes, but they retard innovation, and make Massachusetts a less attractive place to work than California, where a statute makes non-competes illegal and employees can switch employers and start new companies at will, as long as they respect traditional confidentiality agreements.

Now the debate is about to make its way anew to Beacon Hill. State Representative Will Brownsberger of Massachusetts’ 24th Middlesex district, which includes Belmont, north Cambridge, and east Arlington, says he plans to introduce a bill in the upcoming legislative session that would abolish non-compete agreements in the Bay State.

Brownsberger says he’s primarily interested in shielding average laborers from the effects of the agreements. Often, he says, these are low-level service workers such as telephone representatives who probably don’t have any valuable trade secrets, but are nonetheless prevented by the agreements from seeking other positions inside their industries. “I’m concerned that these agreements are often entered into by employees who are at a substantial bargaining disadvantage, and that they end up inhibiting those employees from making appropriate job changes,” Brownsberger told me yesterday.

But he says he also worries that non-compete agreements in Massachusetts may steer talented engineers and other innovators toward other states where they feel they will have more freedom to pursue their work. “I am concerned that these agreements in Massachusetts may be a barrier to recruitment of the best technology talent,” he says.

Brownsberger is drafting the bill—which he plans to file in the Massachusetts House of Representatives in mid-January—with help from employment lawyers and from Caroline Huang, a Belmont resident and speech scientist who has become active on the issue recently. “I’ve always felt it was unfair,” Huang says. “I approach this as a labor rights issue.” (Caroline Huang is the sister of Greg Huang, who is Xconomy’s Seattle editor.)

Huang says she first encountered a non-compete agreement back in 1990, when joining her first employer, Dragon Systems. (The maker of a well-known speech recognition system called NaturallySpeaking, Dragon was later acquired by Lernout & Hauspie, whose assets were eventually acquired by ScanSoft, which later changed its name to Nuance.) “It bothered me, because I was worried about getting my next job,” says Huang. “We are very specialized in my field, being speech scientists, and we need to work in speech. I signed it, but my recollection is that I felt very boxed in.”

And, in fact, the non-compete agreement came back to haunt her. After leaving her position at Dragon, Huang went without work for several months, then took a job at a text processing company rather than risk violating the agreement by looking for work with other speech companies. “The agreement seemed very broad, and I was in no mood to see where the limits were,” she says. “They were telling me that I could not work for a direct or indirect competitor, whether it was for compensation or not, in any business that competed with their current business, even with a business being planned. It was very hard to tell what was still in speech that would not have fallen under this.”

Much later—last fall, in fact—Huang says she began to notice that other people were talking and writing about the effects of non-compete agreements. One of these was Bijan Sabet, a general partner at Boston’s Spark Capital who believes the agreements hurt business in Massachusetts; a year ago, Sabet announced that Spark was dropping …Next Page »

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San Diego defense contractor SAIC said today NASA has awarded the company a technology services contract to support its Constellation program at Florida’s Kennedy Space Center. The company, also known as Science Applications International Corp., said the contract could be worth as much as $69 million over the next five years if all options are exercised. The Constellation program, which intends to return astronauts to the moon by 2020, calls for developing technologies needed to open the lunar frontier.

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Redmond, WA-based Microvision, a mobile imaging and display company, announced it has been awarded a $750,000 contract to begin developing a high-definition, see-through eyewear display. The name of the customer was not disclosed. The wearable display is designed to be full-color and transparent to the surroundings.

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Bedford, MA-based iRobot (NASDAQ: IRBT), which makes small robots for home and military applications, announced today that it has secured six grants totaling $4.4 million under the Pentagon’s Small Business Innovative Research program. The grants, which are aimed at making iRobot’s Packbot and small unmanned ground vehicle (SUGV) robots easier to use and at developing ways to coordinate ground robots and unmanned aerial vehicles, are coming from the U.S. Army Tank Automotive Research, Development and Engineering Center, the U.S. Army Armament Research, Development and Engineering Center, the Office of Naval Research and the U.S. Army Research Office.

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Lexington, MA-based defense and aerospace giant BAE Systems said today that the U.S. Army has placed a $66 million order for thermal weapon sights used on rifles, machine guns, and mounted weapons. BAE’s thermal sights include sophisticated electronic infrared sensors that allow soldiers to spot targets even if they’re obscured by darkness, foliage, or camouflage. Part of a five-year indefinite-delivery/indefinite-quantity contract, the order increases BAE Systems’ total thermal weapon sight contracts to more than $400 million.

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Hillsboro, OR-based TriQuint Semiconductor has announced it has won a 21-month, $4.5 million contract from the Office of Naval Research to manufacture high-power, high-frequency gallium arsenide amplifiers. The technology is used in radar, electronic warfare, and communications applications. TriQuint (NASDAQ: TQNT) is a maker of integrated circuits for communications, defense, and aerospace.

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