Confidential Treatment has been
Requested for Portions of this
document, Deleted portions are
marked with an asterisk
AGREEMENT
by and between
ENERGY RESEARCH CORPORATION (ERC)
and
MTU MOTOREN-UND TURBINEN-UNION FRIEDRICHSHAFEN GmbH (MTU)
This Agreement is made and entered into this 16th day of July, 1998 (the
Effective Date) by and between ERC and MTU.
WHEREAS
ERC and MTU presently are parties to the License Agreement of September 29, 1989
(the CELL LICENSE AGREEMENT), which remains in full force and effect, and
ERC has developed "Balance of Plant" ("BOP") technologies for its compact Direct
Fuel Cell power plant design including 4 (four) vertical stacks in a container,
and
MTU has developed BOP technologies for its compact fuel cell power plant design
including 1 (one) horizontal stack(s) in a container, and
ERC and MTU both wish to obtain the mutual benefits and technological advantages
of a cross-license between the Parties by sharing their respective BOP
technologies, including technical efforts, designs, patents and know how
developed or to be developed by each, and
ERC and MTU both wish to obtain the mutual benefits and technical advantages, of
a cross-selling of BASE MODULES, and
ERC and MTU both understand and agree that the BOP technologies which are the
subject matter of this BOP license are not included in the existing CELL LICENSE
AGREEMENT, and
ERC warrants, represents and agrees that it has the capacity and authority to
grant the BOP license hereunder and to be bound by the terms of this agreement,
and
MTU warrants, represents and agrees that it has the capacity and authority to
grant the BOP license hereunder and to be bound by the terms of this agreement.
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THEREFORE
In consideration of the mutual covenants contained herein, ERC and MTU agree as
follows:
Article I - Definitions
1 . The term "BALANCE OF PLANT" or "BOP" shall mean all subsystems necessary
for operation and generation of electrical power by Molten Carbonate Fuel
Cells (but excluding fuel cell technology included in the CELL LICENSE
AGREEMENT) in one or more stacks and including, but not limited to base
modules, fuel pre-treatment, boilers, water recovery, fuel exhaust burner,
inverter, control system, utility interface and start-up and stand-by
equipment,
2. The term "BOP KNOW HOW" shall mean any and all information, whether or not
patented or patentable, of ERC and MTU in respect of BOP which presently
and/or during the life of this Agreement are or may be useful in the
design, development, manufacture and/or use of the BOP and are known to,
possessed or acquired by ERC and/or MTU during the life of this Agreement,
subject to any third party confidentiality agreements.
3. The term "ERC BASE MODULE" shall mean 4 (four) vertical stacks in a
container.
4. The term "MTU BASE MODULE" shall mean 1 (one) horizontal stack(s) in a
container, known as the "Hot Module".
Article II - BOP Cross License
1. ERC and MTU each grant to the other a non-exclusive BOP license to sell,
use, make or have made, use and/or practice their respective BOP KNOW HOW
(the "BOP LICENSES")
2. Sub-licenses of ERC's or MTU's BOP KNOW HOW may only be granted upon prior
written approval by MTU or ERC respectively.
3. The BOP LICENSE granted herein by MTU to ERC is a non-exclusive license for
end use in the territories of USA, Canada and Mexico.
4. The BOP LICENSE granted herein by ERC to MTU is a non-exclusive license for
end use in the territories of Western Europe, Eastern Europe, the Middle
East, South America and Africa.
5. The BOP LICENSE territories as defined herein are subject to
reconsideration upon request of ERC or MTU after the initial term of this
agreement.
6. The BOP LICENSES granted herein may not be assigned by either party without
prior written approval of the other party.
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Article III - BOP Cross Selling
1. It is understood by the Parties that the BOP LICENSES are based on and
include the cross- selling of ERC's and MTU's BASE MODULES.
2. For the first 10 (ten) units (approximately 2.5 megawatt installed
capacity), under the BOP LICENSE, ERC commits to purchase and MTU commits
to sell its MTU BASE MODULE at a { *** } basis.
3. For the first unit (approximately 1 megawatt installed capacity) under the
BOP LICENSE, MTU commits to purchase and ERC commits to sell its ERC BASE
MODULE at { *** } basis.
4. Once the installed capacity defined in Article III, paragraphs 2 and 3
above has been reached or exceeded, both Parties will continue to purchase
the other Party's BASE MODULE and retain the obligation to sell their BASE
MODULE to the other Party provided the offers will be competitive
especially regarding key parameters, including but not limited to price,
terms of payment, quality, lead time and overall reliability of the
supplier.
5. The Parties always intend to reach cost efficiency to the extent possible
and grant each other preferential treatment as licensees. The parties will
continuously inform each other regarding the parameters of competitiveness
in order to reach the target of cross selling / cross purchasing.
6. In the event either party believes the other Party's base module is not as
competitive as it could be with alternative sources, that Party has the
obligation to notify the other Party under the notice provisions herein.
Upon receiving notice, both parties will meet and try to resolve
competitiveness issues within 30 (thirty) days. If there is no agreement,
then an outside expert firm to be agreed upon by the Parties will review
the competitive issues during the next 30 (thirty) days.
If the outside expert firm confirms that either Party is non-competitive then
the other party has the right to purchase, make or have made the base
module of the non-competitive Party under this license agreement unless the
non-competitive Party chooses to sell their Base Module to the other Party
at competitive terms and conditions (right of first refusal). If the
non-competitive Party does not exercise their right of first refusal, the
other Party is obligated to sell the non-competitive Party upon their
request this base module at those competitive terms and conditions that
could not be offered by the non-competitive Party.
If the outside expert firm confirms that either party is competitive, both
Parties will continue to retain the obligation to buy/sell.
7. Both parties are obligated to provide normal and reasonable warranties on
workmanship and materials and fitness for purpose, but are not obligated to
provide performance warranties on the BASE MODULE; details to be fixed by
mutual terms and conditions of sale.
8. Both Parties are obligated to fully divulge their cost information upon
request by the other Party. Either Party, can request the other Party's
outside audit firm to attest to the cost information, but must pay the
audit cost thereof:
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Article IV - Payments
1. ERC shall pay to MTU a royalty of { *** } U. S. Dollars { *** } for each
kilowatt of Rating of any power plant which utilizes the licensed BOP made
by or for ERC, used by, sold by or for ERC or leased by ERC and/or any
sub-licensee to ERC
This payment shall be adjusted by the increase in the United States
Consumer Price Index (CPI) from May, 1998 to the date of each sale, based
on the ratio of the CPI as of May, 1998 compared to the CPI at the month of
the sale. This adjustment shall be subject to a limit of increase per year
of 7%.
2. MTU shall pay to ERC a royalty of { *** } U. S. Dollars { *** } for each
kilowatt of Rating of any power plant which utilizes the licensed BOP made
by or for MTU, used by, sold by or for MTU or leased by MTU and/or any
sub-licensee to MTU.
This payment shall be adjusted by the increase in the United States Consumer
Price Index (CPI) from May, 1998 to the date of each sale, based on the
ratio of the CPI as of May, 1998 compared to the CPI at the month of the
sale. This adjustment shall be subject to a limit of increase per year of
7%.
3. In case ERC resp. MTU does not purchase the other Party's BASE MODULE under
Article III of this Agreement, ERC shall pay to MTU and MTU shall pay to
ERC an increased royalty of { *** } U.S. Dollars { *** } for each kilowatt
of Rating of any power plant which utilizes the other Party's licensed BOP.
This payment shall be adjusted according to the rules set forth in Article IV
clause 1 resp. clause 2.
4. MTU is not committed to pay to ERC a royalty under this Agreement to the
extent MTU is obligated to pay ERC a royalty under the existing CELL
LICENSE AGREEMENT for its BASE MODULE.
Article V - BOP KNOW HOW
1. Each Party shall provide the other Party all information embodying BOP KNOW
HOW during the life of this Agreement upon a time schedule and in
accordance with the other Party's requirements as mutually agreed by the
Parties.
2. Both Parties agree to control and treat as secret and proprietary any BOP
KNOW HOW which is received from the other Party.
Both Parties will develop and implement such procedures as may be required
to prevent the intentional or negligent disclosure to third parties of BOP
KNOW HOW communicated to each other. The following shall not be considered
or treated as secret and proprietary under this provision:
2.1 BOP KNOW HOW that has been or become published or generally known to
the trade or others without breach or fault of one or both of the Parties,
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2.2 BOP KNOW HOW received prior to the disclosure of the other Party
legally by a Party from any third party who, to the best of that Party's
knowledge, after reasonable inquiry, did not obtain same by breach of any
obligation owed to the other Party, and who imposes no obligation of
secrecy on the other Party with respect to such BOP KNOW HOW
3. Any rights of a Party related to its BOP KNOW HOW remain with the
respective Party regardless of any contributions of the other Party to
finalizing the commercial design of the compact fuel cell power plant of
the respective Party.
Article VI - Records, Reports and Notices
ERC and MTU shall keep separate records of sales and use of licensed BOP KNOW
HOW and shall report to the other Party on a quarterly basis.
Notices under this Agreement shall go to the respective signers of this
Agreement or their successors.
Article VII - Term, Termination
1. This Agreement shall terminate at the end of 5 (five) years from the
effective date of this Agreement (the "Initial Term").
2. Either Party shall have the right to extend the Initial Term or any
extended term of this Agreement of an additional 5 (five) year period by
giving the other Party advance written notice of extension not less than
180 (one hundred eighty) days prior to expiration of the Initial Term or
any extended term of this Agreement, provided the requesting Party did not
breach the Agreement in the past if such breach has not been remedied to
the satisfaction of the other Party. Any extension after a term of 20 years
needs mutual consent of the Parties. The Parties endeavor to reach such
consent 9 months prior to expiration of the Agreement.
3. Upon termination of this Agreement, the right to use or have used (whether
directly or indirectly) the other Party's BOP KNOW HOW shall cease
immediately except for plants already supplied as far as necessary for the
after sales service and all BOP KNOW HOW shall be held in confidence by the
recipient for 15 (fifteen) years after the date of termination, unless
exempt by Article V, Sections 2.1 and / or 2.2.
Article VIII - Arbitration
1. Should any dispute, controversy or claim arise between ERC and MTU in
connection with, relating to or rising out of this Agreement, efforts to
resolve such an issue shall be made by the respective Parties. If a
resolution is not achieved, either Party may refer the issue to the
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executive officers of ERC and MTU, who shall endeavor to reach a mutually
acceptable resolution.
2. In the event an acceptable resolution is not reached within thirty (30)
days of the request to the officers made per Article VIII, Section 1., then
the issue shall be submitted to arbitration of the London Court of
International Arbitration applying their procedural rules then in effect.
The arbitration shall take place in London and the substantive law
applicable to the arbitration shall be British Law. The arbitration award
shall be final and binding upon the Parties. Such award may be confirmed in
any court having jurisdiction and reduced to final judgment.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in a manner binding upon them by their duly authorized officers as of the date
shown below.
ENERGY RESEARCH CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
Date: July 16, 1998
MTU MOTOREN-UND TURBINEN-UNION FRIEDRICHSHAFEN GmbH
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxx Xxxx
-------------------- ----------------
Name: Xxxxxx X. Xxxxxx Xxxxxxx Xxxx
Title: Senior Vice President Director
Date:
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Exhibit I of ERC / MTU BOP License Agreement
--------------------------------------------
Part A Western Europe
------
Andorra
Austria
Belgium
Cyprus
Denmark
Federal Republic of Germany
Finland
France
Great Britain and Northern Ireland
Greece
Greenland
Ireland
Island
Italy
Liechtenstein
Luxembourg
Malta
Monaco
Netherlands
Norway
Portugal
San Marino
Spain
Sweden
Switzerland
The Vatican State
Part B Eastern Europe
------
Xxxxxxx
Xxxxxxxx
Xxxxx Xxxxxxxx
Xxxxxxxx
Xxxxxxxx
Xxxxxx
Romania
All states of the former USSR including, but not limited to CIS
(Commonwealth of Independent States)
Yugoslavia
Slovenia
Croatia
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Exhibit I of ERC / MTU BOP License Agreement
--------------------------------------------
Part C Middle East
------
Bahrain
Iran
Iraq
Israel
Jordania.
Katar
Kuwait
Lebanon
Oman
Saudi-Arabia
Syria
Turkey
United Arab Emirates (UAE)
Yemen, Arab. Rep.
Yemen, Peoples Rep.
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