Exhibit 10.64
SECOND AMENDED AND RESTATED
FUEL CELL PRODUCT OPERATING AGREEMENT
BY AND AMONG
ECO FUEL CELLS, LLC, H POWER CORP. AND H POWER ENTERPRISES OF CANADA, INC.
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This Second Amended and Restated Fuel Cell Product Operating Agreement
(this "Agreement") is made this 10 day of April 2002, by and among ECO Fuel
Cells, LLC, a Delaware limited liability company, with its principal offices at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("ECO Fuel Cells"), H Power
Corp., a Delaware corporation, with its principal offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and H Power Enterprises of Canada, Inc., a Canadian
corporation with its principal offices located in Montreal, Province of Quebec
(together with H Power Corp., "H Power"). ECO Fuel Cells and H Power are
individually referred to herein as "Party" and collectively as the "Parties".
WHEREAS: Energy Co-Opportunity, Inc. ("ECO") was formed on behalf of its member
rural electric Cooperatives to provide them with assistance as they diversify
into new products and services;
WHEREAS: ECO and its member Cooperatives wish to build on their long-standing
reputation for providing innovative energy solutions and reliable customer
services;
WHEREAS: ECO formed ECO Fuel Cells, to assist ECO's members in creating new
business opportunities in distributed power generation provided by Fuel Cell
Power Systems (as defined herein);
WHEREAS: H Power is a technological leader in commercializing low-power Fuel
Cell systems with a highly-skilled management and technical team and has been
developing high-power Fuel Cell systems for various uses, including stationary
power applications;
WHEREAS: The Parties entered into a Fuel Cell Product Operating Agreement on
July 29, 1999, (as modified and amended on August 25, 1999 and as subsequently
amended and restated on March 9, 2000 (the "Operating Agreement") in order to
create a strategic relationship in which ECO Fuel Cells agreed to purchase,
market and service H Power Corp's Fuel Cell Power Systems in exchange for
exclusive marketing, distribution and servicing rights in all those areas in the
United States now served by rural electric Cooperatives; and
WHEREAS: The Parties entered into a Memorandum of Agreement, dated December 12,
2001 (the "Memorandum of Agreement" or "MOA"), pursuant to which, among other
things: i) the Parties reaffirmed their support for each other in the
development and marketing of Fuel Cell
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Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment. The omitted materials have been filed separately with
the Securities and Exchange Commission.
Page 1 of 28
Products (as defined herein); ii) ECO Fuel Cells, in consideration for the
payment of $2.1 million, among other things (a) relinquished to H Power certain
of its Exclusive Rights under Article 3.A.1. of the Operating Agreement, (b)
agreed that, with certain exceptions, H Power shall no longer be bound by or
subject to the non-competition covenants set forth in Article 3.A.4.(a) of the
Operating Agreement, and iii) the Parties agreed to amend and restate the
Operating Agreement and negotiate and enter into various support agreements; and
WHEREAS: The Parties desire to further amend and restate the Operating Agreement
as hereinafter set forth, in order: i) to further encourage the marketing of H
Power's Fuel Cell Products (as defined herein); ii) to provide the Parties with
additional marketing and distribution opportunities; and iii) to explore other
products and services offered by H Power including new Fuel Cell products and
applications;
NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the Parties hereby agree as follows:
ARTICLE 1. PURPOSE AND DEFINITIONS.
The purpose of this Agreement is to reaffirm the close relationship
between ECO, ECO Fuel Cells and H Power, whereby H Power will use its best
efforts to develop, design and manufacture Fuel Cell Power Systems that meet
ECO's Cooperative Members' reasonable requirements, as well as Other Fuel Cells
(defined below). ECO and ECO Fuel Cells will purchase Fuel Cells (defined below)
exclusively from H Power and market them, all in accordance with the terms of
this Agreement. For the purpose of this Agreement the following definitions
shall apply:
"Cooperative(s)" are rural electric cooperatives, their
affiliates, subsidiaries and associations.
"Cooperative Member(s)" are any rural electric Cooperative and
members of ECO's corporate family, including corporate affiliates of
both.
"Fuel Cell Power System(s) for Stationary Applications (also
called "Fuel Cell Power Systems" herein) shall mean fuel cell system(s)
from 1kW to 25kW (of all types except for direct methanol fuel cells),
manufactured by H Power, that are affixed and hard-wired to the
premises or facility for the purpose of providing primary or backup
electric power for the premises or facility or their appurtenances.
Each Fuel Cell Power System listed under Schedule A to ship after
January 1, 2002, shall meet the specifications in Schedule C attached
hereto, and such other specifications to which the Parties may agree in
writing, be ready for installation to customers' lines and shall
contain all the electronic and mechanical and other components required
for normal operation, including if necessary, but not limited to, the
following: reformer, H2 purification unit, H2 storage unit, heat and
water management system, batteries, controls and a power management
system; as well as all subsystems, components, sub-components, parts
and accessories for the Fuel Cell Power Systems.
"Fuel Cell(s)" are proton exchange membrane fuel cells up to
25kW.
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"Fuel Cell Product(s)" are Fuel Cell Power Systems and Other
Fuel Cells taken together.
"Licensed Member(s)" are ECO's Cooperative Members that have
been assigned exclusive or non-exclusive Distribution Rights to the
Fuel Cell Products by ECO Fuel Cells under Article 3.
"Other Fuel Cell(s)" means all other H Power Fuel Cell
products other than Fuel Cell Power Systems, but does not include
"Specialty Fuel Cell Products."
"Specialty Fuel Cell Product(s)" are fuel cell products that
are designed and sold by H Power as a component or sub-system for use
in equipment such as but not limited to, vehicles, portable computers,
or other types of equipment.
ARTICLE 2. COOPERATION BETWEEN THE PARTIES.
In view of the purpose set forth above and because the Parties believe
that their individual strengths can create valuable synergies to achieve their
mutual goals, they believe that it is important to cooperate with each other in
the following areas:
A. INFORMATION SHARING. H Power will share with ECO Fuel Cells,
market and technical data on the Fuel Cell Products in test
and in the field, and ECO Fuel Cells will, and will require
the Licensed Members to share with H Power information they
may receive or develop with respect to field operation of the
Fuel Cell Products. In response to requests, H Power agrees to
advise ECO Fuel Cells of sales information, including volumes,
types of units and purchasers and information developed on
competitors' products and strategies and other information
available to it that could assist ECO Fuel Cells in marketing
and servicing the Fuel Cell Products and in training Licensed
Members to market and service the Fuel Cell Products. Both
Parties shall otherwise be responsive to requests from the
other for information pertinent to the purposes of this
Agreement.
B. FUEL CELL PRODUCTS THAT MEET COOPERATIVES' NEEDS. H Power
recognizes that it is important to meet the needs of the
Licensed Members with respect to quantity, quality, design,
price, serviceability and other standards for the Fuel Cell
Products that are the subject of this Agreement. To this end,
the Parties agree to cooperate with each other so as to enable
H Power to develop, design and manufacture Fuel Cell Products
that meet these needs.
C. FIELD-TESTING. ECO Fuel Cells will use its best efforts: 1. to
place that number of Alpha, Beta, and pre-commercial Fuel Cell
Product test units in the field with the Licensed Members in
various Territories (as defined below) as specified in
Schedule A; and 2. to arrange for the Licensed Members to
monitor Fuel Cell Product performance and otherwise assist H
Power in field testing the units in order to improve the Fuel
Cell Products.
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D. WAREHOUSING. ECO Fuel Cells will encourage the Licensed
Members to make available warehouse facilities for H Power's
use in order to facilitate the distribution of the Fuel Cell
Products to ECO Fuel Cells and the Licensed Members.
Reasonable cost-based fees may be negotiated by ECO Fuel Cells
or Licensed Members for such services.
E. MARKETING, ADVERTISING, AND COMMUNICATION MATERIALS. ECO Fuel
Cells and H Power will work together in a spirit of
cooperation to produce effective marketing, advertising and
communication materials with respect to the Fuel Cell Products
that are the subject of this Agreement ("Marketing
Materials"). Each Party will bear its own Marketing Materials
costs and will own the Marketing Materials for which it pays,
except as otherwise provided by the Parties. Each Party grants
the other the right to use its Marketing Materials for the
purposes of this Agreement.
ECO Fuel Cells and the Licensed Members shall be required to
prominently display in their Marketing Materials which refer
to the Fuel Cell Products the following phrase, "an H Power
System", or such other words or phrases to which the Parties
may hereafter agree. Additionally, H Power shall have the
right to have its name, or the same or similar words and
phrases utilized in ECO's, ECO Fuel Cells' and the Licensed
Members' Marketing Materials, prominently displayed on the
Fuel Cell Products.
ECO, ECO Fuel Cells and the Licensed Members shall have the
right to display their name in their respective Marketing
Materials and have such name affixed on the Fuel Cell
Products, provided that H Power's name is also displayed per
the immediately preceding paragraph.
F. TRAINING AND SERVICING. ECO Fuel Cells may provide information
and recommendations to H Power with respect to appropriate
training for Fuel Cell Product installers and service
personnel, and H Power agrees to consider all such information
and recommendations submitted to it.
G. PRODUCTS PROVIDED. H Power shall provide the following
products and services by the dates specified in Schedule A (as
well as other products specified there):
1. Fuel Cell Power Systems that heat water in addition
to generating electricity; and
2. H Power shall develop Fuel Cell Power Systems with
the necessary controls and other equipment to allow
full integration and interface with the electric
transmission and distribution grid, including
delivering electric power into the grid; and
3. Other Fuel Cells.
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H. ADDITIONAL COOPERATION. The Parties shall cooperate with each
other to execute such additional documents and take such
additional actions as are necessary to carry out the
provisions of this Agreement.
ARTICLE 3. GRANT AND ACCEPTANCE OF DISTRIBUTION RIGHTS.
A. TERRITORY AND TRANSFER OF DISTRIBUTION RIGHTS.
1. DISTRIBUTION RIGHTS.
▇. ▇▇▇▇▇ OF NON-EXCLUSIVE RIGHTS. Except as set
forth in clause b. below, H Power grants to
ECO Fuel Cells the non-exclusive right to
sell, distribute, lease, finance, service,
and otherwise handle the Fuel Cell Products
(except for Specialty Fuel Cell Products
designed and sold by H Power as a component
or sub-system for use in equipment such as,
but not limited to, vehicles, portable
computers, or other types of equipment) as
provided below (the "Distribution Rights").
These Fuel Cell Products are to be sold to
ECO Fuel Cells and its Licensed Members on
such terms and conditions as are agreed to
by the Parties; provided that they shall
always receive best pricing on Fuel Cell
Power Systems and they shall never pay more
for Other Fuel Cells than others pay for
similar quantities or levels of service,
except that for Other Fuel Cells, U.S. and
foreign government contract pricing is
excluded from this provision. ECO Fuel
Cell's Distribution Rights shall apply to
all of the United States except as otherwise
specifically provided for in this Agreement.
ECO Fuel Cell's and its Licensees' sales of
Fuel Cell Power Systems and Other Fuel Cells
shall be credited against ECO Fuel Cell's
Fuel Cell Products purchase obligations
hereunder.
b. EXCLUSIVE AGREEMENTS. Either H Power or ECO
Fuel Cells may initiate exclusive agreements
for Fuel Cell Products. However, before such
exclusive agreements are finalized, they
shall be brought to the other Party for
discussion and approval by that other Party,
which approval shall not be unreasonably
withheld or delayed, except in the following
situations:
i. Where H Power has initiated, or
intends in the future to initiate,
an agreement for a "National
Account" for Other Fuel Cells it
need not bring it to ECO Fuel Cells
for discussion and approval but
shall notify ECO Fuel Cells within
thirty (30) days of such
discussions to prevent a
duplication of efforts by the
Parties.
ii. For the purposes of this Agreement,
a "National Account" includes, but
is not limited to, the national
accounts of telecommunications
companies (such as Lucent and
Motorola) for systems that power
telecommunications equipment,
either as the primary power source
or as a backup thereto. However, a
National
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Account does not include any
account that will distribute, sell
or handle Fuel Cell Products to or
for a retail customer, such as
providing Fuel Cell Products to a
local business office of Lucent or
Motorola.
iii. The Parties recognize that H Power
currently has pending an exclusive
agreement for Other Fuel Cells in
Virginia, Delaware, Maryland, West
Virginia and the District of
Columbia. The Parties shall work
together constructively to find an
appropriate role for ECO Fuel
Cells' Cooperatives in this
agreement.
iv. Specialty Fuel Cell Products are
excluded from the above
requirements in this section b.
Notwithstanding the above, in all cases each Party
shall report to the other Party within thirty (30)
days of execution, any exclusive agreements that have
been executed.
c. DISTRIBUTION AGREEMENTS. ECO Fuel Cells has entered
into numerous Distributive Generation Products and
Fuel Cell Licensing Agreements ("Distribution
Agreements") under which exclusive distribution
rights for H Power's Fuel Cell Power Systems have
been granted to Licensed Members and other parties,
(the "Licensees"). Licensees shall be notified by ECO
Fuel Cells that ECO Fuel Cells wishes to cancel and
renegotiate their Distribution Agreements and convert
them to non-exclusive Distribution Agreements. If the
Licensee nevertheless desires to continue with an
Exclusive Distribution Agreement, then H Power's
obligations shall continue and shall be no greater
than under the existing or pending Distribution
Agreement as of the date hereof. Any existing,
pending as of the date of this Agreement, or
renegotiated exclusive Distribution Agreements are
called "Grandfathered Distribution Agreements"
herein. ECO Fuel Cells shall provide a list of
Grandfathered Distribution Agreements to H Power once
they have been renegotiated but not later than March
31, 2002. Otherwise, all obligations and liabilities
of H Power with respect to Distribution Agreements
shall be assumed by ECO Fuel Cells and H Power shall
have no further obligations thereunder. No fees shall
be paid to H Power for those Licensees that have
selected or will select the "Fuel Cell Distribution
Option" or who select a Non-Exclusive Option as
defined in the Distribution Agreement.
d. DISTRIBUTION AGREEMENT FEES. Regarding those ECO Fuel
Cell Licensees that continue with a Grandfathered
Distribution Agreement, ECO Fuel Cells shall pay the
OHU fees to H Power that are specified in Article
3.B. of this Agreement within sixty (60) days after
the Commercial Date.
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e. TESTING AGREEMENTS. In addition, ECO Fuel Cells shall
be responsible for renegotiating the "Fuel Cell
Testing Agreements Between the Cooperatives and ECO
Fuel Cells" (the "Testing Agreements") with its
Licensees. All obligations and liabilities of H Power
with respect to these Testing Agreements (including,
but not limited to, those set forth in Attachment 3
thereto) shall be assumed by ECO Fuel Cells and H
Power shall have no further obligations thereunder.
It is anticipated that the Parties will continue a
Fuel Cell testing program and new Fuel Cell testing
agreements will be executed on such terms as are
agreed to by the Parties.
2. ECO FUEL CELLS' ASSIGNMENT RIGHTS. It is ECO Fuel Cells'
intention to assign to Cooperative Members all or some of the
Distribution Rights granted herein. ECO Fuel Cells intends to
work with Cooperative Members to develop marketing
arrangements, which may result in several different
strategies. Therefore, to provide ECO Fuel Cells with the
necessary marketing and corporate structure flexibility, ECO
Fuel Cells shall have the right to assign, sell, license, or
otherwise transfer, all or any part of the Distribution Rights
to ECO, Licensed Members or to any other entity affiliated
with them. All assignments of Distribution Rights by ECO Fuel
Cells shall be in writing and consistent with this Agreement.
ECO Fuel Cells shall inform H Power in writing forty-five (45)
days prior to effecting any assignment pursuant to the terms
hereof.
3. NON-COMPETITION.
a. H Power agrees that in any Territory where ECO Fuel
Cells or its Licensee has exclusive rights from a
Grandfathered Distribution Agreement or any exclusive
agreement entered into after the date of this
Agreement, it will not sell the Fuel Cell Products
either directly or knowingly indirectly for use in
the Territory except to ECO Fuel Cells or to the
Licensee.
b. ECO Fuel Cells agrees that it will not sell the Fuel
Cell Products either directly or knowingly indirectly
for use outside the United States; or to any future
exclusive Licensee of H Power, except as may
otherwise be provided in the license terms.
c. This paragraph c. applies only to Grandfathered
Distribution Agreements.
i H Power agrees that it will not sell the
Fuel Cell Products either directly or
knowingly indirectly for use in the
"Territory" (defined below) except to ECO
Fuel Cells or to Licensed Members.
ii ECO Fuel Cells agrees that it will not sell
the Fuel Cell Products either directly or
knowingly indirectly for use outside the
Territory. "Territory" is defined as all of
the counties or part thereof in the
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United States (including the District of
Columbia; and areas that are not a part of
any county, such as Arlington, VA) in which
Cooperative Members were providing energy
services as of August 15, 1999 (including,
but not limited to electricity, natural gas,
propane and other fuels), as set forth in
Schedule B of this Agreement. ECO Fuel Cells
also agrees that it will not sell Fuel Cell
Power Systems that compete with H Power's
Fuel Cell Power Systems; that it will not
sell such Fuel Cell Power Systems (unless
otherwise agreed to by the Parties) in
counties of Cooperative Members to which no
Distribution Rights have been assigned; and
that it will include the terms set forth in
this paragraph in all assignments of
Distribution Rights to Cooperative Members.
iii In the event that ECO Fuel Cells or the
Licensed Members are able to purchase from
third parties Fuel Cell Power Systems that
are: (1) comparable or superior in quality
and performance to H Power's Fuel Cell
Products; (2) at Unit prices that are at
least [*] H Power's Unit prices; and (3) on
terms and conditions that otherwise are
comparable to H Power's terms and
conditions, then ECO Fuel Cells shall so
notify H Power in writing of such event and
if H Power does not, within 30 days after
receipt of said notice from ECO Fuel Cells,
[*], ECO Fuel Cells and the Licensed Members
may purchase those Fuel Cell Power Systems
from third parties and the restrictions
against selling fuel cells that compete with
H Power as set forth in paragraph ii) above
shall not apply. Thereafter, if the Licensed
Members that maintain Grandfathered
Distribution Agreements [*] H Power during
any subsequent [*] then the exclusive rights
granted under such Grandfathered
Distribution Agreements shall terminate and
all Territory under those distribution
agreements shall convert to non-exclusive
status.
d. DIRECT SALES. Because of ECO Fuel Cell's expertise in
distributive generation products and services, and
because ECO Fuel Cell's electric Cooperative
customers are also ECO Fuel Cell's owners, H Power
agrees that ECO Fuel Cells will be its preferred
provider of Fuel Cell Products to the U.S. electric
Cooperative industry. Therefore, H Power agrees not
to enter into any agreement with a U.S. Cooperative
(including its affiliate, or a Cooperative
association) to sell as a distributor,
sub-distributor, marketer, or sales representative of
H Powers' Fuel Cell Products, except as may otherwise
be provided under this Agreement.
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* Confidetial
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However, ECO's members and ECO Fuel Cell's Licensees
shall have the option of purchasing Fuel Cell
Products from any H Power distributor,
sub-distributor, sales representative or similar
sales entity of their choice. H Power shall not make
direct sales to Cooperatives except through this
Agreement, or through its existing third party
distribution associates' independent sales efforts.
ECO Fuel Cell's Licensees (but not ECO or ECO Fuel
Cells) that do not elect to retain or enter into a
Grandfathered Distribution Agreement shall have the
right to sell Fuel Cell Products other than H
Power's. Both ECO Fuel Cells and ECO, however, will
exclusively purchase Fuel Cells from H Power.
e. Notwithstanding anything to the contrary contained in
this Agreement (including all schedules, appendices
and exhibits hereto), subject only to H Power's
compliance with its covenants and agreements
contained herein, ECO Fuel Cells will purchase or
will arrange to have Licensed Members purchase Fuel
Cell Products totaling $81,186,000 as provided in
Article 4.A. below.
4. FAIR PRICING.
In no event shall ECO Fuel Cells or Licensed Members
pay more for any of H Power's Fuel Cell Power
System(s) and services under this Agreement than
others pay for similar quantities or levels of
service.
B. PAYMENTS UPON ASSIGNMENT OF DISTRIBUTION RIGHTS BY ECO FUEL
CELLS TO ECO'S COOPERATIVE MEMBERS. This paragraph only
applies to Grandfathered Distribution Agreements in which the
Licensee has selected the Territory Purchase Option. ECO Fuel
Cells has assigned or intends to assign its Distribution
Rights to ECO's Cooperative Members on a county by county
basis (the District of Columbia and other areas, e.g.,
Arlington, VA, that are not a part of any county will be
treated as a county for this purpose). All or part of a county
may be assigned. The Cooperative Member to which the
Distribution Rights have been assigned shall be deemed to be a
"Licensed Member". For exclusive Territory only, within sixty
(60) days after the Commercial Date, ECO Fuel Cells will make
a one time payment of [*] to H Power for each Occupied Housing
unit within each assigned county, or portion thereof, as
reflected in (a) the Census of Population and Housing,
published by the U.S. Bureau of the Census, or (b) if updated
census statistics are published by the U.S. Bureau of the
Census before a particular sale of Distribution Rights occurs,
then the latest statistics available for Occupied Housing
units in that area; except that, within Schedule B
Territories, the amount will be [*] for each Occupied Housing
unit in any area in which ECO's Cooperative Members were not
providing electric service as of August 15, 1999. If a portion
of a county is purchased, the payment shall be the greater
amount of: (a) a reasonable determination by ECO Fuel Cells
and H Power of the percentage of the assigned county being
purchased and multiplying that percentage by the number of
Occupied Housing units in that county according to the latest
census data; or (b) the total number of the Licensed Member's
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* Confidetial
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customers that receive electric, natural gas or propane
service in the area purchased (without any double counting of
any customer) as reflected in the books and records of the
Licensed Member as of the time of the assignment. This number
shall be verified in writing by the independent auditors of
the Licensed Member at its next regular audit, and such
writing shall be provided to H Power and ECO Fuel Cells
C. OTHER H POWER PRODUCTS. H Power, upon written application by
ECO Fuel Cells, will give favorable consideration to granting
to ECO Fuel Cells and its Licensed Members distribution rights
to H Power products or services other than Fuel Cell Products,
on an individual product or service basis. It shall be in H
Power's sole discretion whether or not to grant such rights.
In the event rights are granted by H Power, then ECO Fuel
Cells or Licensed Members shall not pay more to H Power for
those products to which rights have been granted than others
pay for similar quantities or levels of those products or
services.
D. IMPROVEMENTS. Any new or improved Fuel Cell Products, design,
concept, or other invention (in whole or part thereof) made or
developed by H Power, jointly by H Power with others, or
jointly by H Power and ECO Fuel Cells in the course of
creation, development, distribution or operation of the Fuel
Cell Products, will be promptly and completely disclosed to
ECO Fuel Cells by H Power. The foregoing sentence is intended
to include services and methods of operation. H Power will
always make available to ECO Fuel Cells, at no greater than
the same cost made available to any others, all improvements
(in whole or part) to the Fuel Cell Products, all improved
Fuel Cell Products, any accessories for the Fuel Cell
Products, and any distribution or operational improvements.
E. TRAINING. H Power and ECO Fuel Cells may develop a standard
program of training, to be held at H Power's expense at
mutually agreed upon intervals and locations. If so, travel
and living expenses incurred by ECO Fuel Cells, and Licensed
Members' personnel attending training seminars shall be the
full responsibility of ECO Fuel Cells and the Licensed
Members. The training seminars shall cover the sale, care,
maintenance and use of the Fuel Cell Products. Extra training,
beyond the standard program, shall be provided by H Power on a
consulting basis for an additional, reasonable charge.
ARTICLE 4. FUEL CELL PRODUCT PURCHASES.
A. PURCHASES. ECO Fuel Cells will purchase or will arrange to
have Licensed Members purchase Fuel Cell Products from H Power
for an aggregate purchase price of $81,186,000, in accordance
with the delivery schedule set forth in Schedule A. Fuel Cell
Products meeting the specifications of Schedule C and defined
as "Commercial Units" in Schedule A are "Commercial Units" for
the purposes of this Agreement. The Parties shall consult with
one another and mutually agree to review and update Schedules
A and C on a quarterly basis. Any changes in Schedules A and C
shall be agreed to by both Parties.
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Notwithstanding any other provisions in this Agreement;
1. If ECO Fuel Cells fails to purchase the Fuel Cell
Products as required by Schedule A, and those Fuel
Cell Products meet Schedule C requirements, H Power
shall so notify ECO Fuel Cells in writing; and if not
cured within fifteen (15) days, this shall constitute
a "breach of any other material term or condition"
for the purposes of Article 15.B and H Power shall
have the right to terminate this Agreement, following
that Article's cure and other provisions.
2. If any of the following events occur, ECO Fuel Cells
shall notify H Power in writing, and if not cured
within fifteen (15) days, such events shall be
considered a "breach of any other material term or
condition" for the purposes of Article 15.B, and ECO
Fuel Cells shall have the right to terminate this
Agreement following that Article's cure and other
provisions.
a. If H Power fails to comply with the terms of
Schedules A and/or C, or fails to produce
the first five (5) Commercial Units that
meet Schedule C specifications, by December
31, 2002; or
b. If H Power fails to provide to ECO Fuel
Cells the following "Quarterly Report." By
the fifteenth day after the close of each
calendar quarter during the term of the
Agreement, H Power shall provide to ECO Fuel
Cells a written Quarterly Report on the
status of the design, engineering,
performance, production, and sales of Fuel
Cell Products and products by others that
compete with such Fuel Cell Products.
c. This Quarterly Report shall include, but not
be limited to, information related to H
Power's and the Fuel Cell Products'
performance under Schedules A and/or C, in
such detail as ECO Fuel Cells shall require.
Such Quarterly Report at minimum shall
include:
i. progress on the Fuel Cell Products
meeting the specifications in
Schedules A and C;
ii. a summary of the field results of
any units installed and operated;
iii. delivery/shipping schedules, prices
and price trends, and improvements
or development problems in the Fuel
Cell Products;
iv. competitive analyses and
intelligence information on
stationary and portable products
that compete with Fuel Cell
Products;
v. developments that may result in any
acceleration or delay of Fuel Cell
Products and/or other changes in
Schedules A and C; and
vi. such other information as the
Parties may agree to include.
3. Any material false statement in such Quarterly
Reports (except, that as to information on fuel cell
products that compete with H Power's, H Power shall
only be required to provide information to ECO Fuel
Cells to the best of H Power's knowledge and belief).
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The Parties shall consult with one another and mutually agree to
review and update Schedules A and C on a quarterly basis. July 1,
2006 shall be called the "Commercial Date" herein.
Alpha units, Beta units and all other Fuel Cell Products
previously purchased or to be purchased by ECO Fuel Cells shall be
credited toward ECO Fuel Cell's purchase obligations under this
Agreement including Schedule A. Future Beta units shall have the
minimum specifications and delivery times as agreed to by the
Parties within twenty (20) days after the execution of this
Agreement and ECO Fuel Cells shall pay for shipment of them to
locations selected by ECO Fuel Cells.
B. INSPECTION.
1. DURING ALPHA AND BETA FUEL CELL PRODUCT STAGES.
During Alpha and Beta Fuel Cell Products stages, such
Fuel Cell Products may be shipped to ECO Fuel Cells
or the Licensed Members in single units or larger
quantities. Purchasers shall have a reasonable
opportunity to inspect the Fuel Cell Products for
compliance with the standards in Schedule C.
Therefore, once a Fuel Cell Product is received, the
purchaser will have thirty (30) days in which to
inspect the Fuel Cell Product for defects and to
notify H Power in writing of such defects.
2. FOLLOWING ALPHA AND BETA FUEL CELL PRODUCTS STAGES.
At such time as any individual Fuel Cell Product has
passed through its Alpha and Beta stages and is
commercialized, the purchaser of such Fuel Cell
Product will have seven (7) calendar days from
receipt in which to inspect the Fuel Cell Product for
any visible defects in the packaging for the units
and to notify H Power in writing of such defects.
3. DEFECTS. If the Fuel Cell Product is damaged or
otherwise does not pass inspection and H Power has
received written notice of such fact within the time
periods set forth in Subparagraphs 1. and 2. above,
whichever may be applicable, then H Power will have
thirty (30) days to cure the problem at its own
expense (including shipping, servicing, parts, labor
and all other expenses). Notwithstanding the payment
requirements as set forth in Paragraph C, immediately
hereinbelow, the purchaser need not pay for a Fuel
Cell Product that does not pass inspection until the
Fuel Cell Product is repaired, replaced or shown to
be operable by H Power to the purchaser's reasonable
satisfaction. H Power is not responsible for any
obvious external shipping damage that has not been
reported within the time requirements for valid
freight damage claims or other standard commercial
freight damage claims practices in effect in the
location where the Fuel Cell Product has been
delivered.
C. PAYMENTS FOR FUEL CELL PRODUCTS.
Page 12
1. DURING ALPHA AND BETA FUEL CELL PRODUCT STATES.
During Alpha and Beta stages, invoices submitted by H
Power to ECO Fuel Cells and the Licensed Members for
Fuel Cell Products purchased from H Power shall be
paid within sixty (60) days of the date of the
invoices unless otherwise agreed to by the Parties.
Any invoices or portions thereof, not paid within
this 60-day period are subject to interest at the
rate of 1.5% per month. Should ECO or a Licensed
Member fail to pay any amounts due to H Power within
the prescribed sixty (60) days, and the failure is
not cured within fifteen (15) days after written
notice of such failure, H Power may commence
collection procedures or judicial action, at law or
in equity, to collect such sums, damages, costs,
liabilities and expenses, including court costs and
reasonable attorney's fees.
2. FOLLOWING ALPHA AND BETA FUEL CELL PRODUCT STAGES.
Following the Alpha and Beta Fuel Cell Product
stages, and after the Commercial Date, then invoices
submitted by H Power to ECO Fuel Cells and the
Licensed Members for Fuel Cell Products purchased by
them shall be paid within thirty (30) days of the
date of the invoices unless otherwise agreed to by
the Parties. Any invoices or portions thereof, not
paid within this 30-day period are subject to
interest at the rate of 1.5% per month. Should ECO
Fuel Cells or Licensed Members fail to pay any
amounts due to H Power within the prescribed thirty
(30) days, and the failure is not cured within
fifteen (15) days after written notice of such
failure, H Power may commence collection procedures
or judicial action, at law or in equity, to collect
such sums, damages, costs, liabilities and expenses,
including court costs and reasonable attorneys' fees.
In the event of two (2) or more consecutive failures
to make timely payments, or in the event of three
failures in any preceding twelve (12) month period, H
Power shall have the right to require the defaulting
purchaser to prepay for all other purchases made.
3. ROYALTY PAYMENTS. ECO Fuel Cells and the Licensed
Members shall be entitled to deduct from the per Unit
invoice price an amount equal to the per Unit royalty
payment, if any, for license of the [*] U.S. Patent.
Should the royalty payments be a lump sum or upfront
payment, the per Unit royalty shall be calculated
based on projected sales for the period of four
years, or as the parties may otherwise agree.
4. PAYMENTS DUE ECO FUEL CELLS FROM H POWER. The same
payment procedures outlined above shall apply for any
payments that are to be made by H Power to ECO Fuel
Cells.
5. FAILURE TO DELIVER. If 1. H Power fails to deliver
Fuel Cell Products and services within the time
specified in Schedule A, Fuel Cell Products and
Purchases; and 2. a purchase order has been issued by
ECO Fuel Cells or a Licensed Member and accepted by H
Power (which acceptance shall not
-------------
* Confidetial
Page 13
be unreasonably withheld); and 3. failure to deliver
is not cured to ECO Fuel Cells' satisfaction within
30 days (unless otherwise agreed to by the Parties),
then H Power shall pay, upon demand, to ECO Fuel
Cells a late fee of [*], of the price of such late
Unit, not to exceed [*] of the Unit price, in
addition to any other damages.
ARTICLE 5. FUEL CELL PRODUCT PERFORMANCE.
In order to maintain the excellent reputation rural electric
Cooperatives have for quality and service to their customers/owners, it is
essential that any Fuel Cell Products H Power sells to ECO Fuel Cells or the
Licensed Members meet the performance standards contained in the attached
Schedule C, Performance Standards.
ARTICLE 6. PUBLIC COMMUNICATIONS.
ECO Fuel Cells will have the right to review, in advance, published
materials (in any medium) prepared by H Power or at its direction, that are
distributed to the public by H Power, that discuss ECO, ECO Fuel Cells, ECO's
Cooperative Members, or the National Rural Utilities Cooperative Finance
Corporation (CFC). Once the language in such materials has been agreed to, such
approval will not be required for subsequent materials using substantially
similar language. ECO Fuel Cells agrees to provide similar review and consent
privileges to H Power for materials it publishes discussing H Power.
ARTICLE 7. TERM.
This Agreement will be effective on the date specified in the first
paragraph of the Agreement and will remain in effect for a period of ten (10)
years following the Commercial Date . ECO Fuel Cells shall have an option to
renew this Agreement with the same terms for an additional ten (10)-year term
provided it notifies H Power in writing that it is exercising its option to
renew at least eighteen (18) months prior to the expiration of the initial term.
ARTICLE 8. INTELLECTUAL PROPERTY.
A. H POWER'S TRADEMARKS, LICENSE AND LITERATURE.
1. H POWER'S REPRESENTATIONS. H Power represents and
warrants to ECO Fuel Cells that to the best of its
knowledge, neither the Fuel Cell Products nor ECO
Fuel Cells (in connection with performing marketing,
distribution, and services as authorized by H Power
and by this Agreement) infringes any patent,
copyright, any other party's trade secret, and
trademark of any person. H Power further represents
and warrants to ECO Fuel Cells, that to the best of
its knowledge, it is not using any unauthorized trade
secrets or confidential or proprietary information
owned by any third party in developing the Fuel
-------------
* Confidetial
Page 14
Cell Products, or in assisting ECO Fuel Cells in
marketing, installing and servicing the Fuel Cell
Products, unless the trade secrets and confidential
information had been previously developed by H Power
on its own accord. H Power further represents and
warrants that neither H Power nor any company or
individual performing services or developing the Fuel
Cell Products is under any obligation to assign or
give any development work done to any third party. H
Power further warrants that it shall have in force
valid assignment agreements with any of its employees
or subcontractors who may perform services or
development of the Fuel Cell Products.
By January 1, 2004, H Power shall provide to ECO Fuel
Cells an opinion of counsel as to whether the Fuel
Cell Products infringe any intellectual property
rights. ECO shall receive a copy of such opinion
letter. If infringement is suggested, H Power shall
cure. Such opinion shall be in sufficient detail that
H Power could rely on it to avoid a charge of willful
infringement.
2. LICENSE OF REQUIRED INTELLECTUAL PROPERTY. H Power
hereby grants to ECO Fuel Cells and the Licensed
Members the right to utilize, reproduce and
distribute H Power literature relating to the
marketing, use and maintenance of the Fuel Cell
Products. Such literature may include, but not be
limited to, training manuals, maintenance manuals,
Fuel Cell Product use instructions, and warranties.
All technical and other proprietary information
furnished to ECO Fuel Cells and the Licensed Members
shall be utilized solely for the purposes of the
Distribution Rights granted in this Agreement and not
for any other purposes.
To the extent that any other intellectual property
rights of H Power are needed for ECO Fuel Cells, the
Licensed Members, or their subcontractors to market,
install and service Fuel Cell Products or carry out
the intent of any part of the Agreement, H Power
grants to all of them a non-exclusive license in the
intellectual property to be used solely for the
purposes of this Agreement.
3. ECO FUEL CELLS' TRADEMARK RIGHTS. Subject to the
provisions in Article 2.E. hereof, ECO Fuel Cells
will have the right to determine and own a name,
logo, and other marks ("Marks") under which the Fuel
Cell Products will be sold, assigned, licensed, or
otherwise distributed to Licensed Members and others
in the territories to which ECO Fuel Cells has or may
obtain Distribution Rights under this Agreement. ECO
Fuel Cells may obtain trademark protection for its
Marks and will notify H Power at least thirty (30)
days prior to placing any ▇▇▇▇ in commerce or filing
for any trade or service ▇▇▇▇ protection.
ARTICLE 9. MANUFACTURER'S INDEMNIFICATION AND HOLD HARMLESS.
Page 15
A. Subject to the provisions in section B of this Article 9, H
Power will indemnify, defend, hold harmless ECO, ECO Fuel
Cells, and (Licensed Members but only under the Grandfathered
Distribution Agreements) for any loss, liability, damages,
demands, cost, judgment, award, expense, or claims, including
reasonable attorney fees, which may at any time be suffered or
incurred by ECO Fuel Cells, or Licensed Members arising out of
the use, operation or failure to operate, repair, and
maintenance of the Fuel Cell Products and accessories, or
arising out of the use of marketing and promotional material
prepared by H Power, designations, names, brands, insignia, or
trademarks which identify the Fuel Cell Products, accessories
or components thereof, or by reason of or in consequence of
defects or design flaws in the Fuel Cell Products or
accessories, or arising out of any claim of infringement of
intellectual property rights or misappropriation of
proprietary rights, use, operation or failure to operate,
repair and maintenance, or components thereof, or by reason of
or in consequence of defects or design flaws in the Fuel Cell
Products or accessories, or arising out of any claim of
infringement of intellectual property rights or
misappropriation of proprietary rights, or arising out of any
claim for damages in connection with the use by anyone of any
Fuel Cell Product or accessory except not the extent that any
such claim is based upon the alleged gross negligence,
including the unauthorized warranties, of ECO, ECO Fuel Cells,
Licensed Members, or their distributors, subcontractors or
sublicensees. In the event royalty damage, or punitive damage
payments are payable to Humboldt State University Foundation,
its assignee or Lichen on account of U.S. Patent 5,879,826 to
▇▇▇▇▇▇ et al., entitled Proton Exchange Membrane Fuel Cell,
such payments will be borne exclusively by H Power.
B. The provisions of Article 9.A. above, shall apply only to:
1. ECO and ECO Fuel Cells in their respective companies'
capacities, (including their successors,
representatives, subrogees, and assigns, provided
that they are Cooperative Members); for example, H
Power will continue to indemnify, etc. ECO and ECO
Fuel Cells for claims, etc. relating to the
infringement of intellectual property rights relating
to this Agreement for any Fuel Cell Products covered
by this Agreement; and
2. Grandfathered Distribution Agreements (as defined in
Article 3.A.1.c. of this Agreement) but only to the
extent that Licensed Members retain their exclusive
rights thereunder (see Article 3.A.3.c) and
3. First sales by ECO or ECO Fuel Cells but only to
their Cooperative Members and not to any resales by
those Cooperative Members.
IN ALL OTHER CASES ARTICLE 9.A. DOES NOT APPLY AND ONLY THE
STANDARD H POWER MANUFACTURER'S WARRANTY, REMEDIES AND
LIMITATIONS ON DAMAGES, SHALL APPLY TO ANY FUEL CELL PRODUCT
SALES THAT ARE MADE AFTER THE EFFECTIVE DATE OF
Page 16
THIS AGREEMENT. SUCH WARRANTY SHALL BE REASONABLY COMPETITIVE
WITH OTHER MANUFACTURERS' WARRANTIES FOR REASONABLY SIMILAR
PRODUCTS.
ARTICLE 10. ENVIRONMENTAL LIABILITIES.
A. As used in this Agreement, "hazardous material" means: (1) any
chemical, substance, material, mixture, contaminant or
pollutant, now or hereafter defined as a "hazardous substance"
under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended from time to time, and all
regulations thereunder, as amended from time to time; (2)
petroleum, crude oil, or any fraction thereof; (3) any
pollutant, contaminant, special waste or toxic substance now
or hereinafter listed, defined by or subject to regulation
under any federal, state or local statute, ordinance, rule,
regulation, standard, policy, guidance, permit, order,
administrative or judicial decision or pronouncement,
previously, currently, or hereafter in effect, as amended from
time to time, pertaining to health, safety, or the
environment, including without limitation, natural resources,
environmental regulation, contamination, pollution, cleanup,
or disclosure.
B. Subject to the provisions in section C of this Article 10, H
Power agrees to indemnify, hold harmless, and defend ECO, ECO
Fuel Cells and their successors, representatives, subrogees,
assigns, customers and all Licensed Members from any
liability, claim, demand, cause of action, suit, loss, damage,
injury, expense, cost, settlement or judgment of any kind or
nature including but not limited to demands, fines,
remediations, or penalties asserted by any governmental
entity, as a result of the treatment, storage, disposal,
handling, spillage, leakage, or presence in any form in soils,
surface waters, groundwater, air, or property, of any wastes
or "hazardous materials" directly caused by Fuel Cell Products
or operations, unless such actions are caused by the willful
conduct of ECO Fuel Cells or its Licensed Members.
C. The provisions of Article 10. B. above shall apply only to:
1. ECO and ECO Fuel Cells in their respective companies'
capacities (including their successors,
representatives, subrogees, and assigns, provided
that they are Cooperative Members); and
2. Grandfathered Distribution Agreements (as defined in
Article 3.A.1.c. of this Agreement) but only to the
extent that Licensed Members retain their exclusive
rights thereunder (see Article 3.A.3.c); and
3. First sales by ECO or ECO Fuel Cells but only to
their Cooperative Members and not to any resales by
those Cooperative Members.
IN ALL OTHER CASES, ARTICLE 10.B. DOES NOT APPLY. HOWEVER, H
POWER SHALL PROVIDE APPROPRIATE WARNING LANGUAGE WITH ITS FUEL
CELL PRODUCTS REGARDING THE TREATMENT, STORAGE,
Page 17
DISPOSAL, HANDLING, SPILLAGE, LEAKAGE, OR PRESENCE OF ANY
"HAZARDOUS MATERIALS."
ARTICLE 11. GENERAL REPRESENTATIVES, WARRANTIES AND COVENANTS.
A. PERFORMANCE AND MERCHANTABILITY. H Power warrants that the
Fuel Cell Products will be built in a workmanlike manner and
that the Fuel Cell Products will perform according to
Performance Standards in Schedule C. H Power will correct any
errors or discrepancies in the Fuel Cell Products that are
identified by ECO Fuel Cells, the Licensed Members or by H
Power as soon as possible after ECO Fuel Cells or a Licensed
Member informs H Power of any breach of this warranty. H Power
further warrants that the Fuel Cell Products have been
designed by H Power without reliance on ECO, ECO Fuel Cells or
Licensed Members and are provided to ECO, ECO Fuel Cells and
Licensed Members with appropriate warnings and instructions.
H Power expressly warrants that the Fuel Cell Products are
merchantable and fit for the particular purpose for which they
are designed, and these warranties and H Power's remedies and
limitations on damages with respect thereto, will be extended
to the end users of the Fuel Cell Products; however this
paragraph applies only to the following:
1. ECO and ECO Fuel Cells in their respective companies'
capacities (including their successors,
representatives, subrogees, and assigns, provided
that they are Cooperative Members); and
2. Grandfathered Distribution Agreements (as defined in
Article 3.A.1.c. of this Agreement) but only to the
extent that Licensed Members retain their exclusive
rights thereunder (see Article 3.A.3.c); and
3. First sales by ECO or ECO Fuel Cells but only to
their Cooperative Members and not to any resales by
those Cooperative Members.
B. AUTHORITY. Each Party represents and warrants to the other
that it has provided truthful answers to due diligence
questions and has all requisite power and authority: 1. to
execute, deliver and perform this Agreement and all
agreements, documents and instruments executed and delivered
by each in connection with it; and that it has no conflicting
arrangements or agreements with any other party; 2. to own,
lease or operate its property and assets; and 3. to carry on
its business as presently conducted.
C. LIABILITIES. Each Party represents to the other that to the
best of its knowledge, there is no outstanding or threatened
judgment, litigation or proceeding of any type involving or
affecting the transactions described in this Agreement, except
as previously disclosed in writing to the other Party on or
before the date hereof.
D. LEGAL COMPLIANCE. Each Party represents that the other Party
has fulfilled all of its obligations under the Operating
Agreement. Each Party shall comply with all
Page 18
governmental (whether international, federal, state,
municipal, or otherwise) statutes, laws, rules, regulations,
ordinances, codes, directives and orders or any such
governmental agency, body, or court applicable to it,
including, but not limited to, environmental, worker safety,
codes and standards, and hazardous materials.
E. AUDIT. Each Party at its own expense, shall have the right to
audit the other's books and records at reasonable times and
places, for information that is directly related to the
subject matter of this Agreement.
ARTICLE 12. INSURANCE.
H Power agrees to maintain the following minimum levels of
insurance: personal liability: $2,000,000; property liability:
$1,000,000; directors and officers liability: $2,000,000;
product liability: $10,000,000 and shall include ECO and ECO
Fuel Cells as named insureds. H Power shall provide ECO Fuel
Cells at closing with copies of the applicable policies
covering these lines and written proof from carriers that such
policies are in force. ECO and ECO Fuel Cells agree to carry
appropriate insurance at levels that are acceptable to H Power
and shall include H Power as named insured.
ARTICLE 13. CONFIDENTIALITY.
The Parties shall hold in confidence all provisions of this
Agreement and all information provided by either Party to the
other in connection with it. The Parties agree that all
information related to this Agreement, not otherwise known to
the public, is confidential and proprietary and is not to be
disclosed to third persons (other than to affiliates,
officers, directors, employees and agents of the Parties, each
of whom is bound by this provision) without the prior written
consent of the other Party, except:
A. At the written direction of the other Party;
B. To the extent necessary to comply with law (including, without
limitation, the disclosure requirements of the U.S. securities
laws and any mandatory requirements of the NASDAQ Stock
Market, Inc. or NASD) or valid order of a court of competent
jurisdiction, in which event the party shall notify the other
Party as promptly as practicable (and, if possible, prior to
making any disclosure) and shall use its reasonable discretion
in determining whether to seek confidential treatment of the
information;
C. As part of its normal reporting or review procedures to its
parent company, Board of Directors, its auditors and its
attorneys who agree to be bound by this provision;
D. In order to enforce any rights pursuant to this Agreement;
Page 19
E. To obtain appropriate insurance, provided the insurance
company agrees in writing to be bound by this provision;
F. To obtain financing, provided that any person or entity
providing financing agrees in writing to be bound by this
provision.
All provisions in this Agreement relating to the
confidentiality of information shall survive the
termination, expiration, cancellation or rescission
of this Agreement for a period of five (5) years
thereafter.
ARTICLE 14. ARBITRATION.
Except as otherwise provided in Article 4.C. herein, the
Parties agree that any and all controversies or claims arising
out of or relating to this Agreement, or any alleged breach
hereof, shall be resolved by binding arbitration as prescribed
herein, if both Parties agree. In that event, the Parties
shall mutually agree upon one or more arbitrator(s), not to
exceed three, who will conduct the arbitration under the then
current rules of the American Arbitration Association ("AAA"),
unless otherwise provided herein. The arbitrator(s) will be
selected in accordance with AAA procedures from a list of
qualified arbitrators maintained by AAA. The arbitration will
be conducted in Washington, D.C. and all expedited procedures
prescribed under AAA rules will apply. Unless the Parties
otherwise agree, the proceedings will be completed within
forty-five (45) days of the Parties' receipt of notice of
arbitration. Each Party will bear its own costs and attorney's
fees and disbursements; and shall share equally the costs of
the arbitrators.
ARTICLE 15. TERMINATION.
Either Party may terminate this Agreement under the following
circumstances:
A. If the other Party hereto shall become bankrupt or insolvent
or shall file any debtor relief proceedings, or if there shall
be filed in Court against the other Party legal proceedings in
bankruptcy or insolvency or reorganization or for the
appointment of a receiver or trustee of all or a portion of
such other Party's property, or if the other Party makes an
assignment for the benefit of creditors or petitions for or
enters into an agreement for debtor relief, the other Party
immediately shall notify the Party; and if such proceedings
are not dismissed within a period of one hundred and fifty
(150) days after the institution thereof. Any warranties and
guarantees made to the terminating Party shall still survive
such termination.
H Power Corp. acknowledges and agrees that ECO Fuel Cells has
assigned all of its right, title and interest in and to the
Agreement to the National Rural Utilities Cooperative Finance
Corporation ("CFC"), and that upon the occurrence of an event
of default under the Agreement by ECO Fuel Cells, CFC shall
have the right, but not the obligation, to exercise and
perform all of the rights and obligations of ECO Fuel Cells
under the Agreement.
Page 20
B. Except for failure to perform due to force majeure events, in
the event that the other Party breaches any other material
term or condition of this Agreement and fails to cure such
breach within sixty (60) days after receipt of written notice
of the breach from the non-breaching Party, the non-breaching
Party may terminate this Agreement upon sixty (60) days'
advance written notice. In the event that either Party
terminates, CFC shall immediately be notified in writing by
the terminating Party.
ARTICLE 16. OTHER.
A. NOTICES. All notices or other documents that are required by
this Agreement shall be in writing, and shall be personally
served upon the Parties entitled thereto or mailed, postage
prepaid, by certified or registered mail, or sent via
established and reliable courier or overnight service (e.g.,
FedEx), or by FAX or other electronic or telecommunications
transmission in written form (with telecommunications
confirmation of receipt in a clearly legible copy) to the
recipient's business addressed to such person at the address
specified in this Agreement, or address later specified by
written notice by and to the Parties. Any notice or other
communication by this method shall be deemed given at the time
of sending or certification, except for a notice changing a
Party's address, which shall be deemed given at the time of
receipt.
B. GOVERNING LAW. This Agreement, including any arbitration,
shall be governed, construed, and interpreted in accordance
with the internal laws of the Commonwealth of Virginia
(without giving effect to principles of conflicts of law).
C. WAIVER. Any waiver by either Party of a breach of this
Agreement shall not operate as a waiver of any other
provision. The failure of a Party to insist upon strict
adherence to any term of this Agreement shall not be
considered a waiver or deprive that Party of the right
thereafter to insist on strict adherence to that term or any
other term of the Agreement. Any waiver must be in writing.
D. SEVERABILITY. Nothing contained in this Agreement shall be
construed to require the commission of any act contrary to
law, and wherever there is any conflict between any provision
of this Agreement and any law, such law shall prevail;
provided however, that in the event of any such conflict, the
provisions of this Agreement shall be curtailed and limited
only to the extent necessary to permit compliance with the
minimum legal requirement, and no other provisions shall be
affected thereby and all other provisions shall continue in
full force and effect.
E. TAXES. Each Party is solely and entirely responsible for
payment of any and all taxes (including, but not limited to,
income, real property, personal property and gross receipts
taxes) and contributions to government programs, that are
applicable or related to the systems, operations, facilities
and/or customers of such Party.
F. PARTY'S RELATIONSHIP. Neither Party by this Agreement makes
the other Party its legal representative or agent. In
addition, neither Party shall assign this Agreement to
Page 21
any other third party, without the other Party's written
permission, except that ECO Fuel Cells may assign it to a
Cooperative Member.
G. FORCE MAJEURE. Any failure of delay of performance shall not
be deemed a breach of this Agreement if it results from any
acts of God, civil disorders, insurrections, riots, or wars,
Year 2000 failures, terrorism, weather, fire, flood, national
emergencies declared after the date of this Agreement,
government order or regulation, blockade, embargo, strike,
work stoppage or similar causes beyond the reasonable control
of the Parties.
H. INTEGRATION OF AGREEMENT PROVISIONS. All Schedules and any
other attachments to this Agreement are incorporated as part
of this Agreement. This Agreement supercedes all previous and
contemporaneous understandings, commitments and
representations, whether oral or written, including the prior
Operating Agreement and the MOA, concerning the subject matter
hereof. Each Party acknowledges that the other Party has not
made any representations other than those provided in this
Agreement.
I. CUSTOMS DUTIES. H. Power will be responsible for any customs
documentation, labeling, processing, duties, charges, and
taxes related to the importation of goods by H Power into the
U.S. market in connection with this Agreement.
J. MODIFICATION. This Agreement may be modified only by a written
instrument signed by the Parties.
K. NO RIGHTS IN THIRD PARTIES. Except as to Grandfathered
Distribution Agreements, nothing contained in this Agreement
shall be construed as giving rise to any rights to enforce its
provisions to any person or entity not a Party to this
Agreement under any legal theory.
L. COUNTERPARTS. This Agreement and any document or instrument
required or permitted hereunder, may be executed in
counterparts, each of which shall be deemed an original and
all of which together shall constitute but one and the same
instrument.
Page 22
IN WITNESS WHEREOF, the undersigned hereby execute this Agreement.
Attest: ECO FUEL CELLS, LLC
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------ ----------------------------------
Title: President/ CEO
-------------------------------
Page 23
Attest: H POWER CORP.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------- ----------------------------------
Title: Chief Financial Officer
-------------------------------
Attest: H POWER ENTERPRISES OF CANADA, INC.
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------- ----------------------------------
Page 24
SCHEDULE C
FUEL CELL PRODUCTS PERFORMANCE STANDARDS
FOR BETA AND RESIDENTIAL COGENERATION UNIT (RCU)
(COMMERCIAL UNITS ALSO SHALL MEET OR EXCEED THESE STANDARDS)
--------------------------------------------------------------------------------------------------------------------
JAN-02 NOV-02 FEB-03 JAN-04 JUL-05 DEC-07
====================================================================================================================
====================================================================================================================
EARLY
DESIGNATION VERSION 2 VERSION 3 VERSION 4 COMMERCIAL COMMERCIAL COMMERCIAL V2
--------------------------------------------------------------------------------------------------------------------
Net Output, LPG 4.5 4.5 4.5 4.5 4.5 4.5
--------------------------------------------------------------------------------------------------------------------
Net Output, NG 4.0 4.0 4.0 4.5 4.5 4.5
--------------------------------------------------------------------------------------------------------------------
Grid Connect No Yes Yes Yes Yes Yes
--------------------------------------------------------------------------------------------------------------------
LPG System efficiency (4kW) [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
NG System efficiency (4 kW) [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
Cogen efficiency [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
Peak Total efficiency, LPG [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
Peak Total efficiency, NG [*] [*] [*] [*] [*] [*]]
--------------------------------------------------------------------------------------------------------------------
Min ambient temperature (F) -▇▇ -▇▇ -▇▇ -▇▇ -▇▇ -▇▇
--------------------------------------------------------------------------------------------------------------------
Max ambient temperature (F) 104 104 104 110 115 115
--------------------------------------------------------------------------------------------------------------------
MTBF (hrs) [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
Minor service (hrs) [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
Major service (hrs) [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
Lifetime (yrs) [*] [*] [*] [*] [*] [*]
--------------------------------------------------------------------------------------------------------------------
Installation Time (days) 2 2 2 1 1 1
--------------------------------------------------------------------------------------------------------------------
1. OTHER SPECIFICATIONS
UNIT RATING: 10 kWe for 15 minutes
Able to start equipment with motor peaks up to 20 kWe
SYSTEM PERFORMANCE: LPG (at 4.5 kWe)
[*] fuel to electricity efficiency with minimum load of 1 kW
[*] in cogeneration mode
NG (at 4.0 kWe)
[*] fuel to electricity efficiency with minimum load of 1 kW
[*] in cogeneration mode
COGENERATION: Water connections provided for heat recovery
Page 1
OUTPUT VOLTAGE: 120/240 VAC, 60 Hz
NOISE: 65 dBa or less @ 1 meter
PHYSICAL CHARACTERISTICS: W: 4ft X H: 4 ft X D: 4 ft.
LOCATION: Suitable for outdoor installation
POWER QUALITY: IEEE 519
START UP: Autonomous
FUEL TYPE: Propane or Natural Gas
WATER CONSUMPTION: Maximum of 0.75 Gallons/hour, tap water
INSTALLATION: On prefabricated slab
AUTONOMY: Fully autonomous, always grid independent
OPERATION MODES: Stand-alone: system provides all the power.
Grid connected: system provides all the power with the possibility of switching
to the grid all the load through an automatic or manual transfer switch.
PROTECTIONS: Overload protection with relay output for load shedding capability
2. CODES AND STANDARDS
UNITS SHALL COMPLY WITH THE FOLLOWING CODES AND STANDARDS
o A.G.A./CGA, UL Listing
o IEEE 929
o IEEE P1547
o UL 1741
o NFPA 853
o ASME PTC-50
o IEEE 519
o ANSI Z21.83
3. GRID COMPATIBILITY
The commercial RCU shall be able to operate either independently of, or
concurrently with, the electric grid. The power conditioning system and
interconnection equipment shall conform with all applicable codes and
standards.
Page 2
4. INSTALLATION, START-UP AND TRAINING
Units are factory tested before shipping and ready for connections.
o INSTALLATION & START UP:
- Included on site initial setting, start-up and commissioning
as necessary, byH Power, anywhere in the US during the test
program
- Outside installation only
o TECHNICAL ASSISTANCE:
- continuous phone assistance (regular hours, working days).
- Regularly scheduled visits during test program (frequency to
be determined based on initial product performance in the
field).
Units are installed parallel to the grid. In the case of failure during the
testing period, the customer will not suffer from a loss of power because power
is then drawn from the grid. A local technician under H Power guidance or a H
Power technician can then start with troubleshooting.
o TRAINING:
- On site,one to two days during commissioning period
- One or two days seminar at a central location up to 3
times/year
o MANUALS: Installation, Operation and Maintenance manuals included,
RS-232 interfacing and fault diagnostics provided.
o REMOTE MONITORING: Included in Alpha units.
5. SAFETY FEATURES:
[ ] Hydrogen leak detectors that shut-off RCU and close gas valves.
[ ] Natural Gas or propane leak detector with interlocks.
[ ] Shut-off valve device on fuel line
[ ] Automatic shut-off system on fresh water inlet of the steam boiler.
[ ] Automatic shut-off system in case of failure of hydrogen utilization
into the stack.
[ ] Water heater (boiler) is CGA/A.G.A. approved. It is a commercial
product from Lennox Industries or equivalent. Therefore it already
includes standard safety features as required locally and nationally
(relief valves, high temperature limits, Codes and Standards (relief
valves, high temperature limits, flame detection, etc.).
Page 3
Compliance with all Schedule C Standards shall be verified by an independent
third party, if requested by ECO Fuel Cells, LLC. Other Fuel Cell Products shall
be added to this Schedule as their specifications become available.
SCHEDULE C
RESIDENTIAL COGENERATION UNIT SPECIFICATION DEFINITIONS
NET OUTPUT - the maximum continuous output of the RCU within the
parameters of the system specification (temperature,
elevation, etc).
GRID CONNECT - the ability of the RCU to interact directly with the
electric grid.
SYSTEM EFFICIENCY - the conversion efficiency of fuel energy to electricity
at a load point of 4 kW.
COGEN EFFICIENCY - the percentage of input fuel energy that may be
reclaimed as useful heat.
PEAK TOTAL EFFICIENCY - the highest theoretical total efficiency (electric +
cogen) that can be obtained by the RCU.
AMBIENT TEMPERATURE - the temperature of the air surrounding the RCU.
MTBF - the average time, over a large sample population, that a
unit will operate between unplanned shutdowns. Achieving
a particular MTBF is dependent upon adherence to a
strict maintenance schedule.
MINOR SERVICE - the replacement of deionizing cartridges and a
preventative maintenance check. By 2006, the homeowner
shall replace the deionizer cartridges every 6 months,
an operation that will take less than 10 minutes. Each
12 months a qualified technician will inspect the unit
to perform any necessary preventative maintenance.
MAJOR SERVICE - the expected replacement interval for components such as
a stack, blowers, compressors, etc.
LIFETIME - the theoretical limit on the life of the unit, generally
based on the lifetime of the reformer vessel. This does
not correspond to the length of time before the unit
becomes obsolete.
INSTALLATION TIME - the length of time it takes to completely commission a
unit, from groundbreaking to system operation.
Page 4
--------------------------------------------------------------------------------
This Schedule A details the schedule and volumes of H Power's Fuel Cell Products
(including Alpha, Beta, Commercial Units and Other Fuel Cells as defined in the
Operating Agreement) to be purchased by ECO Fuel Cells. The number of Units may
change, but EFC shall be given credit toward its Fuel Cell Product purchase
obligations under the Operating Agreement, for the dollar amount of all
purchases of any Fuel Cell Products.
--------------------------------------------------------------------------------
SCHEDULE A, FUEL CELL PRODUCT PURCHASES
ALPHA & BETA UNITS
------------------------------------------------------------------------------------------------------------------------------------
SHIPMENT DATE ALPHA UNITS ALPHA UNITS BETA UNITS
X-FACTORY MTL. PRODUCT TYPE PROPANE NATURAL GAS PROPANE
------------------------------------------------------------------------------------------------------------------------------------
Shipped as of 2/28/01 Residential Co-Generation Unit [*] [*] [*] [*]
Shipped as of 2/28/01 Residential Co-Generation Unit [*] [*] [*] [*]
Shipped May 2001 Residential Co-Generation Unit [*] [*] [*] [*]
Shipped June 2001 Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
====================================================================================================================================
SUB-TOTAL [*] [*] [*]
------------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHIPMENT DATE BETA UNITS TOTAL PRICE TOTAL
X-FACTORY MTL. NATURAL GAS UNITS USD DOLLARS
-------------------------------------------------------------------------------
Shipped as of 2/28/01 [*] [*] [*] [*]
Shipped as of 2/28/01 [*] [*] [*] [*]
Shipped May 2001 [*] [*] [*] [*]
Shipped June 2001 [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
[*] [*] [*] [*] [*]
===============================================================================
[*] [*] [*] [*]
-------------------------------------------------------------------------------
COMMERCIAL UNITS
--------------------------------------------------------------------------------------------------------------------------------
SHIPMENT DATE
X-FACTORY MTL TOTAL PRICE $ ECO
CALENDAR QUARTER PRODUCT TYPE UNITS USD PURCHASE
================================================================================================================================
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
================================================================================================================================
================================================================================================================================
CALENDAR YEAR
--------------------------------------------------------------------------------------------------------------------------------
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
[*] Residential Co-Generation Unit [*] [*] [*] [*]
================================================================================================================================
SUB-TOTAL [*]
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
CALENDAR YEAR
--------------------------------------------------------------------------------------------------------------------------------
[*] Portable and Mobile Units see note [*]
[*] Portable and Mobile Units [*]
[*] Portable and Mobile Units [*]
[*] Portable and Mobile Units [*]
[*] Portable and Mobile Units [*]
================================================================================================================================
SUB-TOTAL $ [*]
================================================================================================================================
TOTAL $ [*]
--------------------------------------------------------------------------------------------------------------------------------
ROUNDED TO: $ 81,186,000
--------------------------------------------------------------------------------------------------------------------------------
Note June 2002 - EPACv2 (500W) [*]
-------------
* Confidential
