Cooperation Agreement (hereinafter the “Agreement”)
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(hereinafter
the “Agreement”)
is
made and entered into this 29th day of September 2008, by and among
Kraft
Elektronikai
Zártkörűen Működő Részvénytársaság
Headquartered
in Xxxxxxxx 0000, Kőérberki
út 36
-
hereinafter referred to as “Kraft”–
BudaSolar
Technológiai
Korlátolt Felelősségű Társaság.
Headquartered
in Xxxxxxxx 0000, Xxxxxxx-Xxxxx Xxxxxx út 29-33
-
hereinafter referred to as “BudaSolar”
-
Xxxxxx
Xxxxxxxx,
an
individual (“Krafcsik”)
Xxxxxx
Xxxxxxx,
an
individual (“Xxxxxxx”).-
and
Headquartered
in Haddonfield, New Jersey
-
each of
the above individually referred to as a “Party”
and
collectively referred to as “Parties”
-
Preamble
A. The
Parties have entered into a share exchange agreement, dated September 29, 2008
regarding the contemplated acquisition of 100% of the share capital and quotas
of BudaSolar by Kraft and the transfer by Solar Thin Films, Inc. (the owner
of
100% of the share capital of Kraft) of 40% of the shares in Kraft to the
stockholders of BudaSolar (the “Stock
Exchange Agreement”).
B. This
Agreement shall regulate the relationship and cooperation between the Parties
during the interim period until the closing of the transaction described in
the
Stock Exchange Agreement. If for any reason the transactions contemplated by
the
Stock Exchange Agreement shall not be consummated, this Agreement shall continue
in force and effect until terminated by either Kraft or BudaSolar, subject
at
all times to the provisions of Section 7 of this Agreement.
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§
1 Subject Matter of the Agreement
BudaSolar
agrees to provide Kraft with technical and consultancy services and
cooperate
in
the area of improvements to the Kraft single product line consisting of
equipment and components that are used to manufacture amorphous silicon solar
panels or modules (the “Products”).
§
2 The Services
(1) In
addition to the specific services contemplated by Section 1 above,
BudaSolar
shall provide the following specific services to Kraft that are set forth in
this Section 2 (collectively, with Section 1, the “Services”):
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(a)
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BudaSolar
will provide intellectual property, technology and personnel to complete
all Products of Kraft which are not equipped with operative software,
hardware, or otherwise
completed; .
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(b)
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BudaSolar
shall provide intellectual property, technology and personnel to
improve
all of the Products, including providing the missing equipment to
meet the
requirements of 6MWp/year factory throughput;
and
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(c)
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BudaSolar
shall adjust the photo voltaic process recipes for 6% PV
efficiency.
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Kraft
shall make the Products and its technical description available to
BudaSolar.
(2) The
Parties may send out proposals to potential customers regarding the sale of
the
Products on the letterhead of Kraft (to the extent deemed solely a Kraft Product
as described below) and on the letterhead of both Kraft and BudaSolar (to the
extent deemed a joint Product, as described below). That means in particular
that
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(a)
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Kraft
will offer and sell the 6MW line of Products solely as a Kraft
product
and under the Kraft name (which name shall be changed from Kraft
to STF
Technologies Ltd., as provided in the Stock Xxxxxxxx Xxxxxxxxx);
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(b)
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For
so long as the Stock Exchange Agreement shall remain in force, prior
to
the closing under the Stock Exchange Agreement, BudaSolar will offer
and
sell the 6MW line of Products solely as a Kraft Product and under
the
Kraft name with a clear declaration
that it is produced by Kraft with Kraft’s know how (which name shall be
changed from Kraft to STF Technologies Ltd., as provided in the Stock
Exchange Agreement). In the event that the Stock Exchange Agreement
shall
terminate and the transactions contemplated thereby shall not be
completed, BudaSolar may offer and sell the 6MW line of Products
as a Buda
Solar Product, under the BudaSolar name and produced with BudaSolar
knowhow;
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(c)
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Kraft
will offer and sell the 36MW line of Products as a BudaSolar Product
with
a clear declaration that it was produced using BudaSolar’s know how. In
such connection, except for selling agents currently existing on
the date
of this Agreement, Kraft will act as exclusive selling agent regarding
the
36 MW line of Products of BudaSolar and shall entitled to receive
a 5%
agent’s commissions of the gross sales price of each sale 36 MW line of
Products. Prior to the sale of any 36MW line of Products, Kraft and
Buda
Solar shall enter into a sales agency agreement that shall be mutually
acceptable to the Parties. In the event that the Stock Exchange Agreement
shall terminate and the transactions contemplated thereby shall not
be
completed, such selling agency relationship shall thereafter automatically
become non-exclusive.
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(3) BudaSolar
shall be obliged to inform Kraft without delay of the details of any order
received by it from third parties regarding all Products. Kraft shall promptly
inform BudaSolar of any order received by it that requires the application
of
this Agreement.
(4) BudaSolar
shall provide technical support during the installation and training and
start-up function for all Products sold in accordance with the terms of the
purchase
agreement with the customer and the agreement of the Parties regarding each
particular order. If any of the Parties receives an order from a customer,
both
Parties will work together in good faith on a deal by deal basis to perform
such
orders. The Parties agree to provide each other with their own relevant
scientific, technical and commercial information, as far as this is necessary
for the proper fulfilment of the orders. Both Parties will use their best
efforts and apply their own knowledge and experience in order to achieve the
best possible result.
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(5) It
is
expressly understood by and between the Parties that a material
inducement
for
Kraft to pay the Royalties contemplated by Section 4(2) of this Agreement is
that the aggregate of the total Services to be provided by BudaSolar to Kraft
under this Agreement shall include the transfer to Kraft of all knowledge,
intellectual property and proprietary or confidential software, data and other
information as shall be sufficient to enable Kraft to provide Products to its
customers following the termination of this Agreement without the assistance
of
BudaSolar or its personnel.
(6) BudaSolar
shall be entitled to the unlimited usage right of the know-how handed over
to it
by Kraft on the basis of the present agreement (e.g. 2§ (1)(d)). The Parties
agree and declare that the remuneration payable to BudaSolar as set out in
the
present agreement was agreed considering the handing over of the right to use
such know-how.
§
3 Confidentiality
(1) The
Parties mutually undertake to treat as confidential both the information
received
from the other Party and the know-how and other knowledge developed during
the
operation of this contract.
(2) Such
information shall serve exclusively for the Parties’ own use within this
Agreement. The Parties shall subject their employees and subcontractors to
corresponding obligations; the provision of such information shall in each
case
require the prior written approval by the other Party.
§
4 Remuneration
(1)
Services
Fee. For
its
Services under this Agreement, BudaSolar shall be entitled charge Kraft a fee
for its know-how and the expertise of BudaSolar personnel (the “Service
Fees”).
Such
Service Fee shall be shall equal the sum of (a) the actual costs and expenses
incurred by BudaSolar (including personnel and materials), plus (b) forty
percent (40%) of the net earnings and profits before taxes that are derived
by
Kraft under (i) the existing contracts as at the date of this Agreement that
are
set forth on Attachment
A
to this
Agreement. The amount of the Service Fees payable in connection with any
additional contracts entered into by Kraft shall be as the Parties hereto may
mutually agree upon.
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Under
the
terms of the Stock Exchange Agreement and this Agreement, BudaSolar shall
utilize all or an appropriate portion of the “Deposit”
(as
that term is defined in the Stock Exchange Agreement) as payment and prepayment
of such Service Fees. In the event that for any reason, the transactions
contemplated by the Stock Exchange Agreement shall not be consummated, to the
extent that the total Deposit paid by Solar Thin Films, Inc. to BudaSolar under
the Stock Exchange Agreement shall exceed
the
aggregate amount of the Services performed prior to the date of such
termination, based on the Service Fees set forth herein or as the Parties may
otherwise agree. Following the termination of the Stock Exchange Agreement,
this
Agreement shall nonetheless continue and Buda Solar shall continue to perform
the Services for Kraft until such time as the US dollar value all Services
performed from the date of this Agreement (based on the Service Fees set forth
herein or as the Parties may otherwise agree) shall equal the total amount
of
the Deposit paid under the Stock Exchange Agreement.
(2) Royalty. Subject
at all times to BudaSolar having provided all of the Services in compliance
with
the provisions of Section 2 of this Agreement, including Section 2(5) above,
in
addition to its Service Fees, BudaSolar shall be entitled to receive a royalty
equal to three percent (3%) of the net sales price received in cash by Kraft,
as
and when received by Kraft, as a royalty with respect to each order for the
6MW
line of Products sold by Kraft. Such royalties shall be evidenced by copies
of
the invoice provided to the customer. Notwithstanding the foregoing, the
aggregate amount of the royalties payable by Kraft under this Agreement to
BudaSolar shall not exceed USD $4,000,000.00 (in words USD four million). The
payment of the royalties is due within 30 days from the receipt by Kraft of
each
payment from the customer for the 6MW line of Products, as, when and if received
by Kraft (ie. 3% of each such payment). BudaSolar shall have the right to an
annual audit (at the expense of BudaSolar) of Kraft’sales and payment receipts
for the 6MW line of Products for so long as royalties shall be payable
hereunder.
(3) No
Other Payments.
BudaSolar shall not be entitled to the reimbursement of any further amounts,
any
fees of and costs or expenses incurred by BudaSolar, its employees or
subcontractors in course of performing this Agreement other than the Service
Fees and the 3% royalty described above.
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§
5 Intellectual Property Rights
(1) This
Agreement leaves unchanged the legal situation with respect to the
patents,
patent applications, copyrights, trademarks, drawings, technology, know-how,
or
other intellectual property rights (collectively, “Intellectual
Property”)
of
each Party as may exist at the time of signing this Agreement. Any and all
know-how, design, data, information of the Parties – including the design
and features of 6 MW/annum standard amorphous silicon (“a-Si”)
line
of Product owned by Kraft and the design and features of automated 36 MW/annum
production line or Product owned by BudaSolar – shall stay in the ownership
of the relevant Party and shall be deemed confidential and all other Parties
shall avoid their infringements. Any unauthorized disclosure or usage of
Intellectual Property owned by the other Party by any Party shall be deemed
as
breach of this Agreement unless expressly set forth in the present
Agreement.
(2) Each
of
Kraft and BudaSolar reserve the right of disposal of its Intellectual Property
provided to the other Party during for the purposes of this Agreement, and
therefore each of Kraft and BudaSolar shall be entitled to use such Intellectual
Property only for the performance of the services under this Agreement unless
otherwise set forth in the present Agreement; and shall not be entitled to
make
them public or disclose them to third persons.
(3) The
Parties shall claim employees’ inventions for themselves in accordance with
statutory provisions and file patent applications for such inventions within
a
reasonable time, as far as they relate to the subject of the Agreement and
have
been made during the term of the Agreement.
(4) The
invention and the corresponding patent shall belong to that Party whose
employees – obliged by their employment agreement to work on solutions in
the area of the invention - are the inventors. If employees of both Parties
are
involved in an invention, the invention and the corresponding patent shall
belong to the Parties jointly, the mutual share being agreed upon by the
Parties.
(5) Each
Party shall bear the costs of the patents filed in its own name. In all other
cases the costs between the Parties shall be divided in accordance with their
shares in the respective invention.
(7) The
grant
of a license to third parties shall in any case require the prior written
approval of the other Party to the extent that patents owned by both Parties
are
involved.
(8) Each
Party undertakes to defend its Intellectual Property rights at its own costs
against attacks by third parties.
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§
6 Non-solicitation, non-circumvention
(1) During
the term of this Agreement the Parties will not either directly or
indirectly
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(a)
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recruit
or hire or attempt to recruit or hire any employee, consultant, or
independent contractor of the other Party, or
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(b)
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solicit
or endeavor to entice away from the other Party any person or entity
with
which the other Party has a business or contractual relationship,
or
attempt to reduce or alter any business arrangements between the
other
Party and any such person or
entity.
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(2) The
Parties will not in any way whatsoever, directly or indirectly, circumvent
or
attempt to circumvent each other or any of the parties involved in any of the
transactions the Parties are desirous of entering into.
(3) Any
violation of this Section of the Agreement is enforceable by a penalty of USD
$50,000.00 per incident. Compensatory damages in excess to such penalty amount
may be claimed by the non-breaching Party.
§
7 Duration of the Agreement
(1) This
Agreement shall enter into force on the date of its execution by the
Parties.
(2) This
Agreement shall terminate and expire with Closing as defined in the Stock
Exchange Agreement. This Agreement shall also terminate and expire upon thirty
(30) days prior written notice by either Kraft or BudaSolar in case the Closing
as defined in the Stock Exchange Agreement is not realized by February 15,
2009.
(3) During
the duration of this Agreement termination by either Party shall be only
possible if expressly provided for under the Stock Exchange
Agreement.
(4) All
of
the Parties may mutually agree in writing at any time to terminate this
Agreement.
(5) Notwithstanding
the foregoing provisions of this Section 7, unless otherwise agreed in writing
by all of the Parties, this Agreement shall automatically be extended for such
additional period as BudaSolar shall be performing Services as provided in
Section 4(1) above. In addition, Kraft’s obligation to pay the royalty payments
contemplated by Section 4(2) above shall survive termination of this
Agreement.
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§
8 Changes of the Agreement
Changes
of this Agreement shall be made in writing and signed by both Parties to be
valid.
§
9 Severability
If
any
provision of this Agreement is or becomes partially or wholly invalid or
unenforceable,
the validity of the remaining provisions of this Agreement shall not thereby
be
affected. In the place of the invalid or unenforceable provision, such a legally
admissible provision shall be deemed to have been agreed as corresponds to
what
the Parties would have intended or which would have been agreed by the Parties
according to the meaning and purpose of this Agreement, if they had been aware
of the invalidity or unenforceability of the relevant provision.
§
10 Governing law and jurisdiction
(1) The
Parties shall make a diligent effort to settle amicably all disagreements in
conjunction with this Agreement. If an amicable agreement is not reached, all
disputes
arising in connection with this Agreement shall be finally settled by the
Permanent Court of Arbitration in Budapest established next to the Hungarian
Chamber of Commerce and Industry. The Court of Arbitration may also decide
with
binding effect on the validity of this arbitration clause. The Arbitration
Court
proceeds according to its own Rules. Three arbitrators shall be appointed.
The
language of arbitration shall be English.
(2) This
Agreement is subject to Hungarian law.
The
balance of this page intentionally left blank - signature page
follows
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Date:
September 29, 2008
KRAFT
ELEKTRONIKAI ZÁRTKÖRŰEN MŰKÖDŐ RÉSZVÉNYTÁRSASÁG
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By:
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/s/
Xxxxx X. Xxxxx
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Xxxxx
X. Xxxxx, President
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BUDASOLAR
TECHNOLÓGIAI
KORLÁTOLT FELELŐSSÉGŰ
TÁRSASÁG
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By:
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/s/
Xxxxxx Xxxxxxxx
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Xxxxxx
Xxxxxxxx, Managing
Director
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/s/
Xxxxxx Xxxxxxxx
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Xxxxxx
Xxxxxxxx
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/s/
Xxxxxx Xxxxxxx
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Xxxxxx
Xxxxxxx
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By:
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/s/
Xxxxx X. Xxxxx
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Xxxxx
Xxxxx, Chief Executive
Officer
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