Exhibit 10.31
NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY "[****]" ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST, AND HAVE BEEN OMITTED FROM THIS EXHIBIT.
COMPLETE, UNREDACTED COPIES OF THIS EXHIBIT HAVE BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION AS PART OF THIS COMPANY'S CONFIDENTIAL TREATMENT
REQUEST.
CORPORATE ALLIANCE AGREEMENT
This CORPORATE ALLIANCE AGREEMENT ("Agreement") is entered into on June 12,
2001, by and between QUANTUM TECHNOLOGIES WORLDWIDE, INC., a Delaware
corporation ("Quantum") and wholly-owned subsidiary of IMPCO Technologies, Inc.,
a Delaware corporation ("IMPCO"), and GENERAL MOTORS CORPORATION, a Delaware
corporation ("GM"). Quantum and GM are sometimes referred to herein,
individually, as a "Party," and collectively, as the "Parties."
RECITALS
A. Quantum designs, develops and manufactures advanced gaseous storage
and handling systems and sub-systems for Fuel Cell Systems, for use in
transportation, mobile, stationary, portable and infrastructure applications
(the "Market").
B. In addition to designing, developing and manufacturing the foregoing
systems and sub-systems, Quantum has the capability of integrating them into
Fuel Cell Systems and providing installation, permitting, customer service and
customer support services (collectively, the "Business").
C. GM designs and develops, among other things, Fuel Cell Systems for
which the Business may be applicable.
D. The Parties are interested in cooperating with one another and working
together to advance and commercialize, on a global basis, the Business in the
Market.
E. In furtherance of the effort of the Parties to advance and
commercialize, on a global basis, the design, development, manufacturing,
integration and marketing of Quantum gaseous storage and handling systems in
support of GM Fuel Cell Systems, the Parties desire to enter into this
Agreement.
F. Concurrently with and as a condition to entering into this Agreement,
the Parties are entering into a certain Master Technical Development Agreement
(the "Development Agreement"), a copy of which is attached hereto as Exhibit
"A."
G. Also concurrently herewith and as a condition to entering into this
Agreement, the Parties are entering into a certain Stock Transfer Agreement
("STA"), a copy of which is attached hereto as Exhibit "B," whereby Quantum
agrees to transfer to GM, and GM agrees to acquire, shares of Quantum's Series A
common stock, and a certain Registration Rights Agreement ("RRA"), a copy of
which is attached hereto as Exhibit "C."
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H. The Development Agreement, the STA, the RRA, and this Agreement shall
together operate to establish the terms of the Parties' corporate alliance.
Unless otherwise specifically defined herein, defined terms appearing herein
shall have the same meanings ascribed to them in the Development Agreement.
I. Following the execution of the agreements referred to in the foregoing
Recitals, and before the acquisition of Quantum Series A common stock by GM
pursuant to the STA (the "STA Closing"), IMPCO and Quantum intend to effectuate
a tax-free spin-off of Quantum in full compliance with all of the requirements
of Section 355 of the Internal Revenue Code of 1986, as amended ("IRC"). The
Parties hereby acknowledge that the terms set forth in this Agreement and the
transactions contemplated thereby are intended in their application to meet the
requirements of IRC Section 355, and hereby agree to cooperate with one another
and to conduct the transactions contemplated herein in such a manner as to
achieve that objective.
J. This Agreement shall become effective as of the STA Closing (the
"Effective Date"), it being explicitly understood by the Parties that the STA
Closing is conditioned upon the above-referenced tax-free spin-off having been
consummated.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE I
MATERIALITY OF RECITALS
-----------------------
The Parties hereby acknowledge and agree that the foregoing recitals are
intended to constitute the agreement of the Parties hereto and are deemed to be
a material part of this Agreement.
ARTICLE II
OBLIGATIONS OF THE PARTIES
--------------------------
The Parties wish to enhance, expand and promote the Business for
application in the Market and, in furtherance of such purpose, hereby agree as
follows:
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[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
2.1 Covenants of GM.
---------------
(a) Support. GM shall actively support Quantum in the performance of
-------
Quantum's duties hereunder and under the Development Agreement by providing
Quantum access to the GM customer base for the GM Fuel Cell Systems.
(b) Endorsement. GM shall publicly endorse Quantum by using
-----------
reasonable efforts to introduce and recommend Quantum to its customer base for
the GM Fuel Cell Systems as a source of the Business, and as a recommended
partner for the design and supply of gaseous storage and handling systems and
sub-systems.
(c) Directed Research and Development. In furtherance of the
---------------------------------
objectives of this Agreement, GM shall use its expertise and knowledge of the
Market to direct such research and development to be performed by Quantum as
shall be determined appropriate best to enhance the Business and speed its
commercialization in the Market, particularly in the areas of advanced gaseous
storage, handling, control and integration with Fuel Cell Systems. It is
understood and agreed that the cost of resources committed to be expended by
Quantum to perform such directed research and development, as calculated in a
manner consistent with Quantum's customary budgeting procedures, shall equal but
not exceed the aggregate amount of [****] dollars ($[****]) in any one (1)
calendar year unless otherwise mutually agreed by the Parties in writing.
(d) Guidance. As part of the collaborative efforts of the Parties
--------
under this Agreement, GM shall provide Quantum with guidance in the following
areas, among others, to enhance resource and skill sets:
1. The evaluation of future technology, testing procedures and
general marketing proposals;
2. Fuel Cell System requirements for steady state and transient
operation, and the gaseous storage and handling interface and performance
targets to satisfy those requirements;
3. The evaluation of resource and facility needs; and
4. The coordination of personnel and research and development,
which may include the sharing or exchange of staff and resources as determined
by the Commercial or Technical Teams (as appropriate).
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[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
2.2 Covenants of Quantum.
--------------------
(a) Affirmative Covenants.
---------------------
1. Quantum shall use all commercially reasonable efforts to
comply with the commitment to perform and fund the research and development as
directed by GM pursuant to Section 2.1(c) hereof, in accordance with the terms
of the Development Agreement.
2. Quantum shall, no later than the Effective Date, cause one
(1) individual nominated by GM to be appointed to the Quantum Board of Directors
(the "Board") to sit as a voting member of the Board and one (1) individual
selected by GM to be appointed to sit on the Board in an "ex officio" non-voting
capacity. Thereafter during the term of this Agreement, Quantum shall name one
(1) individual nominated by GM to its proposed slate of directors to be
presented to the Quantum stockholders for election at the appropriate meetings
of stockholders, and GM shall designate a successor for the "ex officio" seat as
necessary.
3. Quantum shall use all reasonable efforts to assure that GM
shall receive all the benefits of an existing stockholder under any
anti-takeover plan or program which Quantum may adopt, be it through amendment
of its Certificate of Incorporation and/or its Bylaws to include additional
provisions deemed to have an anti-takeover effect, or otherwise.
4. Quantum shall acquire from its parent company, IMPCO,
certain intellectual property as shall be agreed upon by the Parties including
but not limited to US5775599, US5809970, US5887799, US5775309, US6041762,
US6161783 and the foreign counterparts thereof, if any, and shall obtain
sufficient rights in any intellectual property retained by IMPCO to permit
Quantum to perform its obligations under the Transactional Agreements (as
defined in the STA), and to market products worldwide without conflicting with
any such IMPCO-retained intellectual property.
5. Quantum shall budget the expenditure of [****] dollars
($[****]) per calendar year for GM directed research and development as
described in Section 2.1(c) hereof. Quantum shall fund such $ [****] annually
unless a lesser amount is agreed to by the Parties for any particular year.
(b) Negative Covenants.
------------------
1. Quantum shall not pledge, hypothecate or otherwise encumber
the Quantum-Owned Technology or Jointly-Owned Technology (as defined in the
Development Agreement) except in the ordinary course of business as may be
required by commercial lenders; provided, however, that no such
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encumbrances shall have the effect of limiting or restricting in any fashion the
ability of GM to acquire, license or use the Quantum-Owned Technology or
Jointly-Owned Technology as provided in this, and in the Development Agreement,
without the prior written approval of GM having been obtained.
2. Quantum shall not grant any exclusive license to the
Quantum-Owned Technology or Jointly-Owned Technology to third parties, without
the prior written approval of GM having been obtained.
3. Quantum shall not offer to sell, or sell, any shares of its
capital stock in a private placement (an offering not constituting a bona fide,
firmly underwritten public offering of shares of Common Stock registered under
the Securities Act of 1933, as amended) without the prior written consent of GM;
provided, however, that such prohibition shall not be applicable to the issuance
or sale of shares of Common Stock (or options therefor) to employees, directors
and consultants for the primary purpose of soliciting or retaining their
services.
ARTICLE III
-----------
BUSINESS DEVELOPMENT ACTIVITIES
-------------------------------
3.1 Joint Efforts. The Parties shall work together to develop and share
-------------
sourcing and marketing strategy in connection with the enhancement and
commercialization of the Business.
3.2 Joint Research and Development. GM and Quantum shall use their best
------------------------------
efforts to jointly develop Statements of Work for product research and
development as further set forth in the Development Agreement.
3.3 Commercial Team. Within ten (10) business days of the Effective Date,
---------------
each Party shall assign one (1) member ("Member") to a joint commercial steering
team to meet and cooperate to define and manage the efforts associated with this
Agreement ("Commercial Team"). The Members shall include business development
representatives with sufficient authority and experience to make recommendations
with respect to the usefulness, marketability, and all inter-related business
development opportunities relating to the Projects defined in the Development
Agreement or any other aspect of the Business which the Members deem
appropriate. Either Party may replace its Member in its sole discretion upon
notice to the other Party. Each Party shall bear its own costs and expenses
related to the Commercial Team. At least the first meeting of the Commercial
Team shall be face-to-face.
(a) The Commercial Team shall, among other things, consider and
determine, where appropriate, the marketability of specific Projects (as
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defined in the Development Agreement). Prior to any commercial release thereof,
the Members shall determine a marketing plan addressing distribution rights for
the given Project, customer support obligations, joint business development
efforts, identification of strategic marketing opportunities and distribution
channels, promotions and press releases, packaging, and product endorsement
opportunities.
(b) At the first meeting of the Commercial Team, to be held at a time
and location as mutually agreed, the Members shall discuss the current state of
the Market and the Business, and perform an initial assessment as to the
associated market conditions ("Commercial Roadmap"). From time to time, the
Commercial Team may modify the Commercial Roadmap as deemed necessary.
(c) If the Commercial Team Members cannot reach a decision on a
particular issue, including modifications to the Commercial Roadmap, senior
managers of Quantum and GM will meet and negotiate in good faith to resolve the
issue within a reasonable period of time. If the issue is not resolved within
thirty calendar (30) days, the Commercial Roadmap will remain unchanged.
Notwithstanding the foregoing, neither Party shall be required to implement a
decision of the Commercial Team if such decision may reasonably result in legal
liability for such Party.
3.4 Trademarks. No rights to use GM or Quantum trademarks or trade dress
----------
are granted under this Agreement. Any such rights shall only be granted pursuant
to the terms of a written license agreement executed by each of the Parties.
3.5 Joint Communication Strategy. The Parties hereto shall consult and
----------------------------
cooperate with each other as to the form and substance of any press release or
other public disclosure related to this Agreement, the transactions contemplated
hereby or the subject matter hereof. Quantum agrees to submit to GM for its
prior review and approval any press release or similar document or disposition
designed for public consumption which mentions GM. Notwithstanding the
foregoing, nothing in this Section 3.5 shall be deemed to prohibit Quantum or GM
from making any disclosure necessary in order to satisfy such Party's disclosure
obligations imposed by law.
3.6 Sourcing and Production. The Parties agree that there are no
-----------------------
pre-commitments on sourcing or production from either Party. GM purchases from
Quantum of advanced gaseous storage and handling systems or other related
automotive components will be concluded on the then standard GM Purchase Order
terms and conditions, and all such purchases will be contingent upon Quantum
maintaining competitiveness with regard to Quality, Service, Technology and
Price ("QSTP"). In the event Quantum fails to compete
-6-
successfully with other products or services performing the same, similar or
substitute functionality, GM is free to purchase the competitive product and to
refrain from making purchases from Quantum. Where Quantum is supplying
components for GM production vehicles, standard automotive industry access
rights as detailed in the GM Purchase Order will apply.
3.7 Distribution.
------------
(a) Distribution by GM. GM shall have the right to distribute
------------------
products and technology in accordance with the rights provided in the
Development Agreement, subject to the following restrictions: (i) all such
products shall be distributed under agreements that shall not adversely affect
Quantum's rights and protections agreed upon in the Development Agreement and
this Agreement; and (ii) to distribute any Quantum software included in such
products in object code form only as an integral part of the relevant system.
(b) Distribution by Quantum. Quantum shall have the right to
-----------------------
distribute products and technology in accordance with the rights provided in the
Development Agreement, subject to the following restrictions: (i) all such
products shall be distributed under agreements that shall not adversely affect
GM's rights and protections agreed upon in the Development Agreement and this
Agreement; and (ii) to distribute any GM software included in such products in
object code form only as an integral part of the relevant system.
(c) Customers. GM shall provide software and hardware support to its
---------
customers, including products purchased from GM's distributors; and Quantum
shall provide software and hardware support to its customers, including products
purchased from Quantum's distributors.
(d) Agreements with Distributors and Original Equipment Manufacturers
-----------------------------------------------------------------
("OEM"). Each Party shall negotiate the terms and conditions of its own
-------
distribution agreements and OEM agreements. Each Party agrees, however, that
such agreements will be written agreements, and will include all of the
provisions contained herein which relate to confidentiality, production, and
distribution.
(e) Packaging. Each Party is free to package the products as it so
---------
chooses, so long as it does not choose packaging that contains "Objectionable
Material." Objectionable Material, for purposes of this Agreement, means any
content or representation that is obscene, offensive, defamatory, libelous,
dangerous, derogatory or discriminatory toward any individual, group or
organization, or an infringement of the intellectual property rights of any
Party or any third party.
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[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
ARTICLE IV
REVENUE SHARING PAYMENTS
------------------------
4.1 Sales by Quantum for [****] Applications. Beginning on the [****]
----------------------------------------
anniversary of the Effective Date, Quantum shall pay to GM a percentage of the
gross revenues derived from its sale of gaseous storage, handling and control
products for Fuel Cell Systems for [****] applications accounted for in
accordance with generally accepted accounting principles, in accordance with the
following table:
--------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****]through
the year [****]
--------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****] through
[****]
--------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****] through
[****]
--------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****] through
[****]
--------------------------------------------------------------------------------
4.2 Sales by Quantum for [****] Applications. Beginning on the [****]
----------------------------------------
anniversary of the Effective Date, Quantum shall pay to GM a percentage of the
gross revenues derived from its sale of gaseous storage, handling and control
products for Fuel Cell Systems for [****] applications, accounted for in
accordance with generally accepted accounting principles, in accordance with the
following table:
----------------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****] through the year
[****]
----------------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****] through [****]
----------------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****] through [****]
----------------------------------------------------------------------------------------
[****] percent ([****]%) of gross revenues received for years [****] through [****]
----------------------------------------------------------------------------------------
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[****] - CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
4.3 Final Revenue Sharing Payment. At year [****], Quantum will pay to
-----------------------------
GM the present value of future revenue sharing payments that would otherwise be
payable to GM on an annual basis. Such future payments assume an income stream
to GM of [****]% of Quantum Fuel Cell System-related gross revenues in
perpetuity. Valuation methodology and assumptions (which must be reasonable,
theoretically sound, and consistent with industry practice), will be determined
in the year [****] by GM and Quantum. In the event the Parties do not agree on a
fair present value, the Parties will jointly select and pay for an independent
valuation from a third party whose valuation will be binding.
4.4 Payment Detail. For revenue sharing payments that Quantum is obligated
--------------
to make to GM, such payments shall be payable annually within forty-five (45)
calendar days following the end of the fiscal year in which the gross revenues
serving as the basis therefor were received. Quantum shall provide a report with
each payment stating: (a) the number of Fuel Cell System-related products sold
during the fiscal year for which payments are owed, and (b) a description of the
products sold; and (c) a calculation of the payment due.
4.5 Books, Records, and Audit. Quantum shall keep complete and accurate
-------------------------
records which support the payments called for in this Article IV. These records
shall be retained for a period of at least three (3) years from the date of the
applicable payment or report, notwithstanding the expiration or other
termination of this Agreement, the Development Agreement or of any Statement of
Work. GM or its designated accounting firm shall have the right to examine and
audit, not more than once a year unless the preceding audit revealed a
discrepancy, and during normal business hours, all such records and such other
records and accounts as may contain, under recognized accounting practices,
information bearing upon the amount of payments due to GM hereunder.
4.6 Taxes. All payments required by this Article IV are exclusive of any
-----
and all federal, state, local and foreign taxes, duties, excises, fees, levies
and assessments that may be imposed by any taxing authority on the payments or
the gross revenues on which they are based. Each Party agrees to bear and be
responsible for, and to pay directly to the appropriate taxing authority, all
such taxes, duties, excises, fees, levies and assessments for which such Party
is legally responsible.
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ARTICLE V
TERM OF AGREEMENT; TERMINATION
------------------------------
5.1 Term. This Agreement will commence on the Effective Date and will
----
remain in effect for ten (10) years unless earlier terminated pursuant to
Section 5.2 ("Termination of Agreement"). At the end of the initial term, this
Agreement will renew, subject to mutual consent of the Parties, for consecutive
three (3) year terms, unless terminated in accordance with Section 5.2.
5.2 Termination of Agreement.
------------------------
(a) This Agreement may be terminated at any time by mutual consent of
the Parties.
(b) This Agreement may be terminated by either Party, only if the
other Party commits a material breach of this Agreement and such breach is not
cured within thirty (30) business days after the nonbreaching Party has given
the breaching Party written notice sufficiently describing the nature of the
breach.
(c) Notwithstanding Section 5.2(b), either Party may terminate this
Agreement effective immediately and without liability upon written notice to the
other Party if any one of the following events occurs: (a) the other Party files
a voluntary petition in bankruptcy or otherwise seeks protection under any law
for the protection of debtors; (b) a proceeding is instituted against the other
Party under any provision of the U.S. Bankruptcy Code or equivalent legislation
of a foreign jurisdiction which is not dismissed within ninety (90) calendar
days; (c) the other Party is adjudicated bankrupt; (d) a court assumes
jurisdiction of the assets of the other Party under a federal reorganization act
or equivalent legislation of a foreign jurisdiction; (e) a trustee or receiver
is appointed by a court for all or a substantial portion of the assets of the
other Party; (f) the other Party becomes insolvent, ceases or suspends business;
or (g) the other Party makes an assignment of the majority of its assets for the
benefit of its creditors.
5.3 Effect of Termination. In the event of the termination or abandonment
---------------------
of this Agreement as provided herein, this Agreement shall become void and have
no further effect, and each Party shall pay all of its own expenses incurred in
connection herewith, without any liability on the part of any Party or its
directors, officers or stockholders, except for agreements as to
confidentiality, and such other provisions reasonably expected to survive
termination, including all provisions identified as surviving in the Development
Agreement, the STA and the RRA; provided, however, that if any Party willfully
fails to perform its obligations hereunder, the other Party shall have the right
to seek legal and
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equitable remedies as available under applicable law. Moreover, provided that GM
shall have met its obligations under the Development Agreement, the Stock
Transfer Agreement and this Agreement, Quantum shall then have the continuing
obligation to make revenue sharing payments pursuant to Article IV hereof
following termination of this Agreement.
ARTICLE VI
RIGHT OF FIRST REFUSAL
----------------------
6.1 GM's Right of First Refusal. In the event that Quantum proposes to
---------------------------
sell, assign, transfer or otherwise convey ("Transfer") all or part of the
Quantum-Owned Technology or Jointly-Owned Technology to any third party or
parties, then Quantum shall offer to GM the right to purchase such Quantum-Owned
Technology or Jointly-Owned Technology (hereinafter the "Offered Technology") on
the same terms (or terms as similar as reasonably possible) and conditions as
set forth in a written notice of the proposed Transfer (hereinafter the
"Transfer Notice"). The Transfer Notice shall include (i) a description of the
Offered Technology, (ii) the identity of the prospective transferee(s), (iii)
the consideration and the material terms and conditions upon which the proposed
Transfer is to be made, and (iv) the expected closing date for the Transfer. The
Transfer Notice shall also include a copy of any written proposal, term sheet or
letter of intent or other agreement relating to the proposed Transfer, and
Quantum shall certify that it has a good faith belief that a binding agreement
for the Transfer is obtainable on the terms described in, or attached to, the
Transfer Notice. Upon written notice by GM within twenty (20) business days of
its receipt of the Transfer Notice, GM may notify Quantum in writing of its
desire to purchase the Offered Technology from Quantum at the same price, and
upon the same terms (or terms as similar as reasonably possible) as described in
the Transfer Notice, and Quantum shall transfer the Offered Technology to GM
pursuant to such terms.
6.2 Transfer Period. If the Offered Technology is not purchased by GM
---------------
pursuant to Section 6.1, Quantum shall be entitled for a period of sixty (60)
calendar days thereafter to complete the proposed Transfer of the Offered
Technology upon the terms and conditions specified in the Transfer Notice. If
Quantum has not so transferred the Offered Technology during such period,
Quantum shall not thereafter make a Transfer of the Offered Technology without
again first offering such assets to GM in the manner provided in Section 6.1.
6.3 Valuation of Property. Should the purchase price specified in the
---------------------
Transfer Notice be payable in property other than cash or evidences of
indebtedness, GM shall have the right to pay the purchase price in the form of
cash equal in amount to the value of such property. If Quantum and GM cannot
agree on such cash value within twenty (20) business days after GM's receipt of
the
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Transfer Notice and by the time GM notifies Quantum of its intent to
purchase the Offered Technology pursuant to Section 6.1 above, the valuation
shall be determined by an independent appraisal firm selected and approved by
Quantum and GM, which approval shall not be unreasonably withheld. The cost of
such appraisal shall be borne by GM. The appraisal shall be completed and the GM
purchase closed within thirty (30) business days thereafter. If the time for the
closing of GM's purchase has expired because the determination of the value of
the purchase price offered by the prospective transferee(s) has not been timely
received, then such closing shall be continued and held on or before the fifth
(5th) business day after such valuation shall have been made pursuant to this
Section 6.3.
ARTICLE VII
RIGHT TO PURCHASE
-----------------
7.1 Right to Purchase. In the event of any decision by Quantum to
-----------------
discontinue the Business or otherwise upon any liquidation, dissolution or
winding up of Quantum, whether voluntary or involuntary, under the dissolution
provisions of the Delaware General Corporation Law ("DGCL") ss. 275 et seq., or
any successor statute, Quantum shall give notice to GM of such decision, and GM
shall have the right to purchase the Quantum-Owned Technology and/or the
Jointly-Owned Technology on the terms and conditions approved by the Board in
accordance with the provisions of Section 7.2 below.
7.2 Determination of Fair Market Value of the IP. The Parties hereby agree
--------------------------------------------
that the fair market value of such Quantum-Owned Technology and Jointly-Owned
Technology (hereinafter the "Technology FMV") shall be determined by an
independent appraisal firm with proven expertise in the field of valuation of
intellectual property chosen and paid for by GM and approved by the Board, which
approval shall not be unreasonably withheld. Such valuation shall be binding
upon the Parties with regard to the exercise of GM's right to purchase under
this Article VII.
7.3 Exercise of Right. In order properly to exercise its right to purchase
-----------------
hereunder, GM shall have ten (10) business days after determination of the
Technology FMV to decide whether to purchase such Quantum-Owned Technology
and/or Jointly-Owned Technology and, if it decides to do so, the transaction
shall close within an additional twenty (20) business days subject to the
requirement for any regulatory, judicial or other third party approvals.
(a) In the case of a proposed dissolution, if GM does not purchase
the Quantum-Owned Technology and/or Jointly-Owned Technology as provided herein,
Quantum shall be entitled to discontinue the Business or to
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pursue dissolution proceedings to the extent it has the right to do so under the
DGCL.
(b) Notwithstanding the foregoing, if the proposed dissolution has
not commenced within ninety (90) calendar days of GM's refusal to purchase the
Quantum-Owned Technology and/or Jointly-Owned Technology, GM's rights under this
Article VIII shall be revived.
7.4 Right to Purchase in Event of Insolvency. In the event Quantum is
----------------------------------------
deemed by a court of competent jurisdiction to be insolvent, either (a) because
the sum of its debts is greater than all of its property at fair valuation; (b)
because it is unable to pay its debts as they become due; and/or (c) because it
is the subject of a voluntary or involuntary petition under the United States
Bankruptcy Code (11 U.S.C. Sections 101 et seq.) which is not dismissed within
sixty (60) calendar days, or the subject of an assignment for benefit of
creditors, receivership, service of a writ of attachment or replevin with
respect to a material part of its property, or the subject of an appointment of
a custodian, keeper, conservator or trustee over Quantum or part or all of its
assets, or the subject of a regulatory seizure, conservatorship or receivership
or foreclosure of a material part of its property, then GM shall be given the
opportunity to purchase the Quantum-Owned Technology and Jointly-Owned
Technology subject to all necessary or appropriate regulatory and judicial
approvals, at the value as determined in accordance with the applicable and
appropriate regulatory and/or judicial procedures.
ARTICLE VIII
DISPUTE RESOLUTION
------------------
8.1 Agreement to Arbitrate. Any claim, controversy or dispute arising out
----------------------
of or with respect to this Agreement, the Development Agreement, the STA, and/or
the RRA, or the breach hereof or thereof, on which an amicable understanding
cannot be reached (each, a "Dispute"), to the maximum extent allowed by
applicable law and irrespective of the type of relief sought, shall be submitted
to binding arbitration as set forth below. Such arbitration shall be heard and
conducted in Orange County, California, and shall be conducted expeditiously and
confidentially in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA"), as such rules shall be in effect on
the date of delivery of a written demand for arbitration (an "Arbitration
Demand"), with the exception that the arbitrators may not award any punitive or
exemplary damages, and except as such rules may be otherwise inconsistent with
the express provisions of this Article VIII.
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8.2 Notice of Dispute; Preliminary Resolution Procedures. Prior to
----------------------------------------------------
submission of a Dispute to the binding arbitration procedure described in
Section 8.3 below, the Parties shall attempt to resolve the Dispute as follows:
(a) In the event a Party believes it has a Dispute subject to
arbitration hereunder, such Party shall notify the other Party in writing of the
nature of such Dispute (the "Dispute Notice").
(b) The Parties shall attempt to settle the Dispute by referring it
to the Commercial Team assisted, as it sees fit, by members of the Technical
Team described in the Development Agreement. Such team shall meet to negotiate
resolution of the Dispute within fifteen (15) business days of the date of the
Dispute Notice.
(c) In the event the Commercial Team does not agree upon a resolution
to the Dispute within fifteen (15) business days following its meeting, the
Parties shall further attempt to settle the Dispute by referring it to their
respective senior management teams ("Senior Management"). Senior Management
shall meet to negotiate the resolution of the Dispute within forty-five (45)
business days of the date of the Dispute Notice.
(d) In the event Senior Management does not agree upon a resolution
to the Dispute within fifteen (15) business days following its meeting, either
Party may initiate arbitration as set forth in Section 8.3 below.
8.3. Initiating Arbitration. In order to initiate arbitration, a Party
----------------------
shall file an Arbitration Demand on the form and pursuant to the procedures
prescribed by the AAA, provided that at least one (1) copy of the Arbitration
Demand must be sent to the other Party hereto. Within fifteen (15) business days
of delivery of the Arbitration Demand, each Party shall appoint one (1)
arbitrator. If a Party does not select an arbitrator, the selected arbitrator
shall serve as the sole arbitrator. If both Parties select arbitrators, the
selected arbitrators shall, within fifteen (15) business days of their
appointment, appoint an additional arbitrator. In the event that the arbitrators
selected by the Parties are unable to agree upon the selection of the additional
arbitrator after reasonable efforts within such fifteen (15)-day period, a list
of seven (7) qualified and available individuals, who do not reside or primarily
do business in the states of California and/or Michigan, shall be requested from
the AAA. Each Party shall take turns striking one (1) individual from the list
with the last remaining individual being the additional selected arbitrator.
Once selected, the arbitration panel shall meet as expeditiously as possible,
select a chairman, schedule the arbitration hearing, and notify the Parties in
writing of the date, time and place of the hearing.
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8.4. Effect. All conclusions of law reached by the arbitrators shall be
------
made in accordance with the internal laws of the state of Delaware without
regard for its conflict of laws doctrine. Any award rendered by the arbitrators
shall be accompanied by a written opinion setting forth the findings of fact and
conclusions of law relied upon in reaching their decision. The award rendered by
the arbitrators shall be final, binding and non-appealable, and judgment upon
such award may be entered by any court having jurisdiction thereof. The Parties
agree that the existence, conduct and content of any such arbitration shall be
kept confidential and that no Party shall disclose to any third party any
information about such arbitration, except as may be required by law or for
financial reporting purposes in each Party's financial statements.
8.5. Costs. Each Party shall pay the fees of its own arbitrator, attorneys,
-----
expenses of witnesses and all other expenses in connection with the presentation
of such Party's case. The remaining costs of the arbitration, including, without
limitation, fees of the additional arbitrator(s), costs of records or
transcripts, the fee required to file the demand for arbitration and other
administrative fees, shall be borne fifty percent (50%) by Quantum and fifty
percent (50%) by GM.
ARTICLE IX
CONFIDENTIALITY
---------------
9.1 Definition of Confidential Information. Confidential Information shall
--------------------------------------
mean documents and hardware disclosed by a Party which are directly related to
the purpose of this Agreement and which the disclosing Party deems confidential.
9.2 Handling of Confidential Information. During the term of and pursuant
------------------------------------
to this Agreement, the Parties, to the extent of their right and willingness to
do so, may exchange Confidential Information relating to the purpose of this
Agreement. A Party receiving such Confidential Information agrees to take
reasonable efforts to avoid disclosure thereof to third parties, subject to the
provisions and exceptions of this Agreement, for a period of three (3) years
from the Effective Date of this Agreement. Reasonable efforts shall mean efforts
which are equivalent to those which the receiving Party uses to protect its own
Confidential Information of a similar nature, related to the purpose of this
Agreement. In order to be deemed Confidential Information subject to the
requirements of this Article IX, the information must be identified as such with
a conspicuous marking which refers to this Agreement by title and Effective Date
as follows:
"This document/hardware is to be protected from disclosure to
third parties,
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pursuant to the Corporate Alliance Agreement between Quantum
Technologies Worldwide and GM dated June 12, 2001."
9.3 Disclosure of Confidential Information. Confidential Information
--------------------------------------
disclosed by a Party shall remain the property of that Party and shall be
returned, at the request of the disclosing Party, upon the termination of this
Agreement, or upon earlier request of the disclosing Party.
9.4 Confidentiality of Alliance Agreement. Each Party agrees that the
-------------------------------------
terms and conditions of this Agreement shall be treated as confidential and that
neither Party will disclose the terms or conditions of this Agreement to any
third party without the prior written consent of the other Party, provided,
however, that each Party may disclose the terms and conditions of this
Agreement, to the extent necessary: (a) as required by any court or other
governmental body; (b) as required by law; (c) in confidence to legal counsel of
the Parties, accountants, and other professional advisors; (d) in confidence, to
banks, investors and other financing sources and their advisors; (e) in
connection with the enforcement of this Agreement or rights under this
Agreement; or (f) in confidence, in connection with an actual or prospective
merger or acquisition or similar transaction. With respect to disclosure
required by a court or governmental order, the disclosing Party shall provide
prior notification of such impending disclosure to the non-disclosing Party. All
reasonable efforts to preserve the confidentiality of the terms of this
Agreement shall be expended by the disclosing Party in complying with such an
order, including obtaining a protective order to the extent reasonably possible.
Any SEC filings required by law shall be made after any sensitive information in
the Agreement has been accorded confidential protection under applicable SEC
rules and regulations.
ARTICLE X
NOTICES
-------
All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) on
the date of service if served personally on the Party to whom notice is to be
given, (b) upon confirmation of receipt by fax by the Party to be notified, (c)
one business day after deposit with a reputable overnight courier, prepaid for
overnight delivery and addressed as set forth in (d), or (d) upon confirmation
of receipt if mailed by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
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If to Quantum: QUANTUM TECHNOLOGIES WORLDWIDE, INC.
00000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxxxxx, President
with a copy to: XXXXXXX COIE
0000 00/xx/ Xxxxxx, Xxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Facsimile: 310-788-3399
Attn: Xxxxxxx X. Xxxxx III
If to GM: GENERAL MOTORS CORPORATION
000 Xxxxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
MC 482-625-D81
Facsimile: 313-667-3188
Attn: General Counsel
Any Party may change its address for purposes of this Article by giving the
other Party written notice of the new address in the manner set forth above.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Export. Each Party agrees that it will not export, or attempt to
export, from any country any technical data received hereunder or the product
produced by use of such technical data, without first obtaining all necessary
licenses and consents under any applicable treaties, statutes and regulations,
including, without limitation, the Export Administration Act of 1979, as
amended, any successor legislation, and the Export Administration Regulations
issued by the Department of Commerce, International Trade Administration, or
Office of Export Licensing. Each donor Party will notify the receiving Party of
any technical information, data or hardware that the donor Party supplies and
knows to be controlled information/data/hardware under any of the aforesaid
treaties, statutes and regulations.
11.2 Governing Law and Forum Selection. This Agreement shall be governed
by Delaware law, excluding its conflict of laws rules. With the
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exception of either Party's right to enforce its proprietary rights through
injunctive relief, and consistent with the Parties' obligations to submit
disputes to arbitration pursuant to the terms of Article VIII hereof, all
disputes arising out of this Agreement shall be subject to the exclusive
jurisdiction and venue of the California state and federal courts located in
Orange County, California, and the Parties consent to the personal and exclusive
jurisdiction and venue of these courts. The Parties expressly disclaim the
application of the United Nations Convention on the International Sale of Goods
to this Agreement.
11.3 Attorneys' Fees. In the event of any action, suit or proceeding,
including arbitration, between the Parties hereto, each Party shall be
responsible for its own costs and attorneys' fees.
11.4 Waiver. The delay or failure of a Party to exercise any right, power,
remedy, or privilege hereunder or failure to strictly enforce any breach,
violation, default, provision or condition shall not impair any such right,
power, remedy or privilege nor shall it constitute a waiver thereof or
acquiescence thereto. Any waiver, permit, consent, or approval of any kind
regarding any breach, violation, default, provision or condition of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. No partial waiver of any such right,
power, privilege, breach, violation, default, provision, or condition on any one
occasion shall preclude any other or further exercise thereof or constitute a
waiver thereof or acquiescence thereto on any subsequent occasion unless clear
and express notice thereof in writing is provided.
11.5 Assignment. This agreement shall not be assigned by either Party
without the prior written approval of the other Party except to the successor in
ownership by sale, merger, consolidation or divestiture of all or substantially
the whole of the relevant business (i.e. Fuel Cell Systems for GM and gaseous
storage and handling equipment for Quantum) of the Party wishing to make the
assignment. The Agreement will be binding upon and inure to the benefit of each
Party's authorized successors and permitted assigns.
11.6 Captions. All Section captions and headings are for reference only and
shall not be considered in interpreting or construing this Agreement.
11.7 Severability. If any provision of this Agreement is declared invalid,
illegal, or unenforceable by any tribunal, then such provision shall be deemed
automatically adjusted to conform to the requirements for validity as declared
at such time and, as so adjusted, shall be deemed a provision of this Agreement
as though originally included herein. In the event that the provision deemed
invalid, illegal or unenforceable is of such a nature that it cannot be so
adjusted, the provision shall be deemed deleted from this Agreement as though
the provision had never been included herein. If any provision or portion of
this Agreement is
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held to be unenforceable or invalid, the Parties agree to negotiate, in good
faith, a substitute valid provision which most nearly effects the Parties'
intent in entering into this Agreement. In either case, the remaining provisions
of this Agreement shall remain in full force and effect. WITHOUT LIMITING THE
FOREGOING, IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION
OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF
WARRANTY OR EXCLUSION OF DAMAGES IS INTENDED BY THE PARTIES TO BE SEVERABLE AND
INDEPENDENT OF ANY OTHER SUCH PROVISION. FURTHER, IN THE EVENT THAT ANY REMEDY
HEREUNDER IS DETERMINED TO HAVE FAILED OF ITS ESSENTIAL PURPOSE, ALL LIMITATIONS
OF LIABILITY AND EXCLUSIONS OF DAMAGES SHALL REMAIN IN EFFECT.
11.8 Independent Contractors. The Parties are each independent contractors
and neither Party shall be, nor represent itself to be, the franchiser, joint
venturer, franchisee, partner, broker, employee, servant, agent, or legal
representative of the other Party for any purpose whatsoever. Neither Party is
granted any right or authority to assume or create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
Party, or bind the other Party in any matter or thing whatsoever, including but
not limited to, the right or authority to obligate the other Party to accept or
deliver any order, or to sell or refuse to sell to any potential customer.
11.9 Remedies Cumulative. All remedies, either under this Agreement or by
law or otherwise afforded to any Party, shall be cumulative and not exclusive or
alternative and shall be in addition to all remedies given hereunder or now or
thereafter existing, at law or in equity, by statute or otherwise. The election
of any one or more remedies by any Party shall not constitute a waiver of the
right to pursue other available remedies.
11.10 Injunctive Relief. The Parties acknowledge that any breach of the
provisions of this Agreement relating to proprietary rights of either Party may
cause irreparable harm and significant injury to an extent that may be difficult
to ascertain. Accordingly, each Party agrees that the other Party will have, in
addition to any other rights or remedies available to it at law or in equity,
the right to seek injunctive relief to enjoin any breach or violation of such
sections.
11.11 Force Majeure. Either Party shall be excused from any delay or
failure in performance hereunder, except the payment of monies, caused by reason
of any occurrence or contingency beyond its reasonable control, including but
not limited to, acts of God, earthquake, floods, lightning, labor disputes and
strikes, other labor or industrial disturbances, riots, war, acts of the public
enemy, insurrections, embargoes, blockages, regulations or orders of any
government,
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agency or subdivision thereof, shortages of materials, rationing, utility or
communication failures, casualty, novelty of product manufacture or other
unanticipated product development problems, and governmental requirements. The
obligations and rights of the Party so excused shall be extended on a day-to-day
basis for the period of time equal to that of the underlying cause of the delay;
provided that such Party shall give notice of such force majeure event to the
other Party as soon as reasonably possible.
11.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but taken together
shall constitute one and the same document.
11.13 Entire Agreement. This Agreement and the other agreements, documents,
exhibits, and writings attached and/or delivered pursuant hereto or concurrently
herewith, including without limitation, the Development Agreement, the STA and
the RRA referenced therein (and specifically excluding purchase orders), contain
and constitute the sole, complete and entire agreement and understanding of the
Parties concerning the matters contained herein and therein and may not be
altered, modified or changed in any manner except by writing duly executed by
the Parties. No statements, promises or representations have been made by any
Party to another, or are relied upon, and no consideration has been or is
offered promised, expected or held out, other than as stated in this Agreement
or the other agreements and documents referenced herein. No Party is relying on
any representations other than those expressly set forth herein or therein. No
conditions precedent to the effectiveness of this Agreement exist, other than as
may be expressly provided herein.
IN WITNESS WHEREOF, the Parties to this Agreement have duly executed it as
of the day and year first above written.
Quantum: GM:
QUANTUM TECHNOLOGIES
WORLDWIDE, INC., a Delaware corporation GENERAL MOTORS CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxxxx X. Xxxxx
------------------------------ ------------------------------
Name: Xxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxx
Title: President and CEO Title: Vice President, GM
Research & Development
and Planning
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