EXHIBIT 6.40
COOPERATION AGREEMENT
between
Yamar Electronics Ltd.
(hereinafter referred to as "Yamar")
and
IQ Battery R & D GmbH
(hereinafter referred to as "iQ")
INDEX
1. BASIC ELEMENTS OF CONTRACT
1.1 Preamble
1.2 Cooperation
1.3 Framework agreement and precedence
1.4 Transfer of rights and duties
1.5 Definitions
2. CONTENT OF PERFORMANCES
2.1 Performances by Yamar
2.1.1 Provision of the DC-bus
2.1.2 Marketing support
2.2 Performances by iQ
2.2.1 Further development
2.2.2 Development know-how
2.2.3 Series manufacture
2.3 Reciprocal performances
2.4 Property rights
2.5 Development results
3. SECURING OF PERFORMANCES
3.1 Exclusive collaboration
3.2 Secrecy and data protection
3.3 Duties relating to information
3.4 Involvement of third parties
3.5 tax, customs duty and embargo provisions
4. EXECUTION OF CONTRACT
4.1 Term of contract/notice of termination
4.2 Winding up of contract
5. FINAL PROVISIONS
5.1 Choice of law/place of jurisdiction
5.2 Mediation
5.3 Place of performance
5.4 Written form
5.5 Severance clause
6. SCHEDULES
1
-2-
1. BASIC ELEMENTS OF CONTRACT
1.1 PREAMBLE
Yamar has developed software and hardware for transferring data in electrical
cables of vehicles. iQ has developed software and hardware for an improved
"intelligent car battery system".
The iQ battery gathers and processes data in a chip. iQ is looking for
possibilities of transmitting this data to other vehicle components, in
particular the on-board computer. For this reason, the parties intend to
integrate Yamar's software and hardware into the iQ battery system.
In order to he able to exploit the respective products jointly in series
manufacture, it is necessary that:
- iQ shall integrate Yamar's software and hardware into its battery
concept;
- Yamar shall supply iQ with its software and hardware in the context of
series production of the battery.
By the present contract, Yamar grants iQ the right to use its software and
hardware for integration into the battery system. Further, this contract shall
lay out the framework for the planned further cooperation between both parties.
The details of the further cooperation shall be laid down in separate
implementation agreements.
1.2 Cooperation
Achievement of contractual success shall require a close collaboration between
iQ and Yamar. Both parties declare, in the context of the provisions of the law,
their unrestricted willingness to take mutual account of one another, provide
comprehensive information, give precautionary advice against risks and
protection against disruptive influences by third parties. A link under company
law between the parties is not thereby intended. This agreement does not
authorize either party to represent or bind the other. Neither party shall be
entitled to represent or bind the other without the specific written and signed
authorization by the other.
1.3 Framework agreement and precedence
This contract is the basis for the future cooperation in so far as not otherwise
agreed in the individual agreements to be concluded.
1.4 Transfer of rights and duties
Any transfer of rights and duties under this contract shall only be possible
with the express written and signed approval of the other party (subject to
section 8 below).
1.5 Definitions
The following definitions are agreed:
- Dc-bus:
-3-
The software and hardware for the transmission of data in electrical wires as
developed by Yamar.
- iQ-B:
The intelligent battery system developed by 1Q.
- DC-iQ:
The final product planned through integration of the DC-bus into the iQ-B by iQ.
2. CONTENT OF PERFORMANCES
2.1 Performances by Yamar
2.1.1 Provision of the DC-bus
Yamar shall pass to iQ for test and development purposes "evaluation boards" and
"evaluation software" relating to the DC-bus.
Yamar shall inform iQ as to all changes to the hardware and software of the
DC-bus and shall supply iQ with the respectively latest, revised version of the
DC-bus.
2.1.2 Marketing support
iQ shall be entitled, for marketing purposes, to demonstrate the DC-bus arid
DC-iQ to third parties, in particular automobile manufacturers, and to make the
same available for test purposes, in so far as iQ shall have previously
concluded with such third parties a confidentiality and non-impairment
agreement.
2.2 Performances by iQ
2.2.1 Integration of DC-BUS with iQ-B
iQ shall integrate the DC-bus into the iQ-B with the aim of producing a
combination of the two products (DC-iQ) which is ready for series manufacture.
The costs involved in such integration will be on the account of iQ.
2.2.2 Development know-how
iQ shall notify Yamar of all technical results arising during development of the
DC-iQ and shall make available to Yamar copies of all data arising during the
test and development work.
2.2.3 Series manufacture
If iQ shall succeed in integrating the DC-bus into the iQ-B system and in
marketing the DC-iQ arising therefrom as a series product, iQ shall purchase the
DC-buses from Yamar which are required for production of the DC-iQ.
-4-
Details shall be laid down in a separate production and supply contract.
iQ may not manufacture the DC-bus nor allow or enable any body else to
manufacture it, except if Yamar will unreasonably refuse to supply the products
(DC-bus or DC-iQ), but only for iQ's own use, and subject to payment of a
reasonable royalty as percentage of the DC-iQ sales.
2.3 Reciprocal performances
The parties shall reciprocally support one another in marketing the DC-bus, iQ-B
and DC-iQ. For each transaction which one party shall conclude (at its option)
an a result of arrangement by the other party, the arranging party shall receive
commission. The commission shall be calculated on the basis of total turnover
from the respective transaction and shall amount to the following:
- For engineering or development contracts 4.5%
- For the aggregate product sales:
Up to 1 million $: 3%
Between 1 and 2.5 million $: 2%
Over 2.5 million $: 1%
2.4 Property eights
Yamar holds; the property rights or pending applications for the same as listed
in detail in
Schedule 1.
iQ holds the property rights or pending applications for the same an listed in
Schedule 2.
Yamar shall own the exclusive rights to the DC-bus technology and know-how,
whether or not included in its patents and applications, and whether or not such
patents are valid. iQ shall likewise own the exclusive rights to the iQ
technology and know-how.
In so far as required within the framework of this contract, or a contract
concluded on the basis of this contract, the parties shall allow each other to
use such property rights, the software which is respectively to be made
available within the framework of product development, and the secret know-how
which each party possesses, and to base their own developments thereon. Except
that either party may only use the technology or know-how of the other for the
DC-iQ project and products as provided by this agreement.
-5-
2.5 Development results
Each party is and shall remain owner of the property rights and copyright
(background property rights) which they shall acquire outside the development
project.
If inventions shall come into being in the framework of the contractual
collaboration, which inventions may lead to property rights, then exclusively
that party shall be entitled to file for property rights whose staff or agents
have created the invention.
The parties shall inform one another on a reciprocal basis as to property rights
which have been filed for registration.
If, within the framework of the contractual work, Inventions shall come into
being in which staff or agents of both parties are involved, then the parties
shall be deemed to be joint inventors and a separate agreement shall be reached
on a case by case basis as to which of them shall file for registration of any
property rights and where, as well as who shall bear the costs thereof, and who
has which eights therein. Any granting of licence to third parties shall be
undertaken jointly - in so far as not otherwise agreed. Except that any
invention or development related to the DC-bus; shall belong to Yamar, and any
invention or development related to iQ-B shall belong to iQ, notwithstanding the
party who developed or invented it. Inventions related to the integration of the
DC-bus to the iQ-B shall belong to iQ. The know-how created within the framework
of the further development referred to at para. 2.2.1 shall be at the disposal
of both parties for all types of use free of charge.
3. SECURING OF PERFORMANCES
3.1 Exclusive collaboration
In view of the considerable prior investments of both parties with regard to
development of the DC-iQ, exclusive collaboration in the production, supply and
distribution of the DC-iQ is planned. Both parties are aware that the actual
structure of production and supply contracts must comply with the provisions of
the law, in particular cartel law.
On this basis, Yamar shall only offer for sale or sell batteries, which are
vehicle batteries, based on the iQ-B technology. Yamar will be free to use the
DC-BUS with batteries developed or manufactured or sold by other third party
provided that such third party refuse to use iQ batteries and have their own
technology and do not use iQ-B technology.
iQ shall only offer for sale such "DC-Power Line-communication Technology" in
the vehicle battery market as shall be based on the DC-bus technology.
These restrictions relate to the market for all SLI batteries
(Starting-Lighting-Ignition).
3.2 Secrecy and data protection
With regard to all documents and information previously exchanged or which may
be exchanged in the future, as well as knowledge acquired as to fundamentals,
working methods, production, new development, improvements and other details
which they shall receive for the purpose of or
-6-
during the course of execution of this contract or the implementation agreements
linked thereto, Yamar and iQ shall use the same only for the purpose of
executing these contracts and shall maintain secrecy with regard thereto. This
shall apply in particular to the source codes of the software used by each party
as well as all parts of the development documentation, which must be set up and
maintained at least in accordance with the standards which the respective party
shall apply to securing its own know-how and industrial property rights. This
shall apply as long as and in so far as the same shall not have become generally
known (without the fault of the respective party). All documents shall be kept
securely and at the end of this contract shall be returned or destroyed without
any copies being retained. The legal duties with regard to data protection must
be observed. Both contracting parties may at any time demand information as to
the measures taken and shall have a right of inspection with regard to relevant
records, such as log books, rights of access, attendance lists, etc.
Such duties shall continue to exist also after the and of the contract. Any
breaches by staff or vicarious agents of a contracting party shall be attributed
to the respective party, irrespective of its fault therein.
3.3 Duties relating to information
Within the framework of this project, both parties shall reciprocally pass to
each other all materials, items and information and grant all rights of access
which shall be necessary for the swiftest possible realization of the aims of
the cooperation, as well as in order to be able to assess the respective status
of the project from technical, commercial and legal perspectives.
In this regard, both parties shall be entitled to receive copies, documents and
technical documentation, as well as to enter those premises in which project
documents are stored.
If information relevant to the project cannot be separated from other
information, either party may demand that a third party or publicly appointed
and sworn expert under a duty to maintain professional confidentiality shall be
informed who shall not be linked either professionally or personally with either
of the two parties. Such third party shall obtain the relevant information and
pass the same on while maintaining confidentiality relating to information not
relevant to the project. The costs of the third party shall be borne by the
party who shall request engagement of the same. All information within the
framework of this project shall be kept secret in accordance with the same
standards as the know-how arising.
3.4 Tax, customs duty and embargo provisions
Both parties undertake to observe the relevant tax, customs duty and embargo
provisions and to ensure that in particular no joint tax liability for taxes not
paid shall arise so as to be due from the other party,
4. EXECUTION OF CONTRACT
4.1 Term of contract/notice of termination
This contract shall enter into force upon signature hereof and shall be
initially concluded for 2 years. The parties shall decide by mutual agreement
upon any extension to the contract.
-7-
Ordinary notice of termination in respect of the contract shall be possible at
the earliest following a two-year contractual term. The notice period shall be 8
months.
4.2 Winding up of contract
Further to winding up and/or notice of termination in respect of this contract
or an implementation agreement, both parties shall immediately return to one
another all items received and pass on all information which is relevant to them
from a technical, commercial or legal perspective in so far as they shall have a
contractual claim thereto. The general duties of protection and provision of
cautionary advice shall be observed also further to termination of the contract.
If data is administered in the EDP system, it shall be deleted further to prior
advice to the other contractual party.
5. FINAL PROVISIONS
5.1 Choice of law/place jurisdiction
All business relations between iQ and Yamar shall be subject exclusively to the
law of the Federal Republic of Germany. Place of jurisdiction shall be either
Munich or Tel Aviv, depending on the registered office of the Defendant.
5.2 Mediation
Before taking any dispute before the courts, the parties shall attempt to solve
all problems which may arise in implementing contracts on an amicable basis
through negotiation.
If the parties shall not succeed in removing their differences of opinion within
60 days of commencement of negotiations, the parties shall implement a mediation
procedure pursuant to the procedural rules, by way of
Schedule 3.
being the mediation procedure rules of the Gesellachaft fur Wirtschaftsmediation
und Konfilktmanagement e.V. (gwmk). The same shall apply if relevant discussions
shall not have been commenced within 30 days of receipt of a request to one
party to participate in amicable negotiations.
This agreement shall not prevent either party from bringing summary proceedings
before a court, in particular proceedings for attachment or an interlocutory
injunction.
5.3 Place of performance
Place of performance for deliveries of goods and provision of services shall be
the office which shall be contractually agreed as the performance address, and
in the event of doubt this shall be Unterhaching. Place of performance for
payments shall be the place of the payment office indicated in the invoice,
-8-
5.4 Written form
Any amendments or additions to this contract must be in writing and signed by
the authorized officer of the respective party, whereby this requirement as to
the written form shall itself only be revocable in writing and signed as
aforesaid.
5.5 Severance clause
In the event that any individual terms of this contract or any individual
agreements made on a subsidiary basis hereto shall be wholly or partially
invalid, this shall not affect the validity of the other terms. Both contracting
parties shall undertake to replace the invalid term by a provision which shall
come as close as possible in economic intent to the invalid term which it
replaces and which for its part shall be valid.
5.6 Construction
This contract fully reflects the whole agreement of the parties in the subject
matter hereof.
6. Assignment
6.1 This agreement may not be assigned except as part of the enterprise of the
respective party related to the subject matter of this agreement.
6.2 Neither party shall delegate or otherwise transfer the performance of its
undertakings hereunder.
6.3 Neither party may license or otherwise allow or enable the use of the
technology or know-how of the other to any third party.
6.4 Any license or subcontracting by iQ to manufacture the DC-iQ products by
others shall be conditional on the manufacturer's undertaking to purchase
the DC-buses and DC-iQs from Yamar pursuant to section 2.2.3 above.
7. Trademarks and Tradenames
The DC-iQ products shall designate the inclusion of the DC-bus technology by
stating on the packaging and in any advertisement - "DC-BUS included". Subject
thereto neither party may use the trademark or tradename of the other whether
registered or not.
8. SCHEDULES
Schedule 1 List of patents and technology of iQ
Schedule 2 List of patents and technology of Yamar
Schedule 3 Procedural rules of the Gesellschaft fur Wirtschaftsmediation
und Konfliktmanagement e.V.
-9-
Unterhaching, dated 19/10/99 Tel Aviv, dated 19/10/99
/s/ [Illegible] /s/ [Illegible]
---------------------------------- ----------------------------------
iQ Battery
Research & Development GmbH Yamar Electronics Ltd.
