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0 • <br />o Letter from Whitewater's patent attorney stating his <br />opinion of how Whitewater's design did not infringe on <br />AAA's patents as well as speaking to the possibility of <br />an injunction being placed against the City. <br />In addition, Whitewater was advised that they would have to be <br />licensed to do business in Texas and their registered agent would <br />have to be designated. Whitewater offered an Indemnity Clause for <br />inclusion in a contract if executed which specified that the <br />Indemnity would be governed by the laws of Canada and the City <br />advised that the Indemnity, if accepted, would have to be governed <br />by the laws of Texas. <br />During the same period, AAA was requested to provide to the City a <br />letter stating AAA's position on this project, including relief or <br />injunction against the City, AAA's position regarding litigation <br />in the matter and a detail outline of cost comparison of the <br />public bids and related alternates. <br />Response <br />Whitewater provided the following in response to the City's <br />request: <br />o Letter of opinion from their patent attorney <br />o Whitewater financial statements <br />The attorney's letter which comprised 15 pages did not clearly <br />indicate that the Whitewater design did not infringe on AAA's <br />patents. It introduced a number of side issues which may prove <br />valid over some period of time in Federal Court. The financial <br />statements were examined by City Staff and were found to be almost <br />a year old and to be unaudited. The information presented on the <br />financial statements, in Staff's opinion, appeared insufficient <br />for Whitewater to withstand a law suit and protect the City's <br />rights guarded by the proposed indemnity clause. The information <br />presented also appeared insufficient for Whitewater to perform the <br />contract in a responsible manner. <br />Notice of Intent to Award <br />Staff met with the City Attorney and discussed the matter in <br />detail. As a result, Staff informed Whitewater by letter that the <br />City proposed to award a contract to AAA and invited Whitewater to <br />appear and give evidence concerning their responsibility as a <br />bidder. In particular, three areas of evidence were required to <br />be presented. <br />o Current, audited and certified financial statements <br />o Letter from a corporate surety, licensed to do business <br />in Texas, with power of attorney attached, committing to <br />issue a performance and payment bond in the full amount <br />of the contract price <br />o Evidence of Whitewater's ability to perform this project <br />without violating or infringing upon lawful patent rights <br />of other parties <br />-2- <br />